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Directors Report of Premier Explosives Ltd.

Mar 31, 2023

DIRECTORS'' REPORT

Dear Members

Your directors are pleased to present the 43rd annual report including
the audited financial statements of your company for the year ended
March 31,2023.

1. Financial summary ('' in lakhs)

Standalone

Consolidated

2022-23

2021-22

2022-23

2021-22

Profit / (Loss) for the year

Operating revenue

20,203.01

19,912.77

20,203.01

19,912.77

Other income

215.66

189.68

216.58

281.77

Total revenue

20,418.67

20,102.45

20,419.59

20,194.54

EBIDTA

2,581.54

2,228.32

2,590.04

2,093.12

% to Operating revenue

12.78%

11.20%

12.82%

10.50%

Profit / (Loss) before tax

895.69

729.76

932.47

698.82

Profit / (Loss) after tax

668.49

562.01

696.52

522.20

% to Total revenue

3.27%

2.80%

3.41%

2.58%

EPS ('')

6.22

5.23

6.42

4.93

Appropriations

Retained earnings at
beginning of the year

8,824.00

8,261.99

8,766.61

8,236.60

Profit / (Loss) for the
year

668.49

562.01

690.73

530.01

Non-controlling interest

Dividend paid for
previous year and tax
thereon

(161.28)

0.00

(161.28)

0.00

Retained earnings at
end of the year

9,331.21

8,824.00

9,296.06

8,766.61

2. State of affairs

The performance of the company has improved marginally in
terms of Revenues and profits during the year 2022-23 despite
of the unexpected delays in clearance of deliveries in defence
segment. Operating EBIDTA has gone up from '' 2,228.32
lakhs to ''2,581.54 lakhs and Profit before tax has increased to
''895.69 lakhs from ? 729.76 Lakhs during previous year. Profit
after tax stands at ''668.49 lakhs as compared to ''562.01 lakhs
for the year 2021-22. The Raw Material supplies and prices were
stabilized during the year which will give positive impact in
near future. The operations in commercial explosives improved
significantly during the year.

Operations

Production of detonators was 15.40 million pieces as against
24.43 million pieces in previous year. The Company has
executed several orders in defence during the year.

Operation & Maintenance contract at Sriharikota has been
satisfactory during the Financial Year 2022-23. The production
of bulk explosives increased to 7886 tonnes from previous

year''s 6,221 tonnes. The prices and supplies of Ammonium
Nitrate price have stabilized during the year which has been
reflected in our overall performance during the year.

3. Capital expenditure

During the year the company incurred the capital expenditure
of '' 1873.91 lakhs on fixed assets and '' 80.41 lakhs on
intangible assets .

4. Dividend

The Board of Directors of your company, at their Meeting
held on May 16, 2023, has recommended payment of ''1.70/-
(Rupees One and Seventy paise only) (17%) per equity share,
as final dividend for the financial year ended March 31, 2023.
The payment of final dividend is subject to the approval of the
shareholders at the ensuing Annual General Meeting (AGM) of
the Company.

The dividend on equity shares for the financial year 2022-23
would aggregate to ''182.79 Lakhs.

In view of the changes made under the Income-tax Act, 1961,
by the Finance Act, 2020, dividends paid or distributed by the
Company shall be taxable in the hands of the Shareholders.
The Company shall, accordingly, make the payment of the final
dividend after deduction of tax at source.

5. Share capital and reserves

a) Share capital

The paid up Equity Share Capital of the Company as
on March 31, 2023 was ? 10,75,22,390/- divided into
1,07,52,239 equity shares of ''10/- each fully paid up.
There was no change in the Share Capital during the year
under review.

b) Transfer to Reserves

The company retained the entire surplus in the Profit and
Loss Account and hence no transfer to General Reserve
was made during the year.

6. Deposits

During the year, the Company has not accepted any deposits
from the public falling within the ambit of Section 73 of the
Companies Act, 2013 and the Companies (Acceptance of
Deposits) Rules, 2014.

7. Change in the nature of business, if any

During the year, there was no change in the nature of business
of the company.

8. Material changes and commitments after the reporting
period

There were no material changes and commitments affecting
the financial position of the company which have occurred
between the end of the financial year of the Company to which
these financial statements relate and the date of this Report.

9. Subsidiary companies, Jointly controlled entity and
consolidated financial statements

a) PELNEXT Defence Systems Private Limited, a 100%
subsidiary company

Incorporated on July 15, 2016 PELNEXT is expected to
be operated as a special purpose vehicle in defence
explosives business. The company incurred a net loss of
''0.90 lakh during 2022-23 (''0.85 lakh during 2021-22).

As on 31st March, 2023, Premier Explosives Limited held
10,000 Equity shares in PELNEXT representing 100% of
equity share capital.

b) Premier Wire Products Limited (PWPL), an 80%
subsidiary company

PWPL was engaged in manufacture of Galvanised Iron
(GI) Wire catering to the requirements of detonator-
manufacturers, having its registered office at
Secunderabad, Telangana. The Company''s manufacturing
facilities are located at Ramajipet, YadadriBhuvanagiri
District of Telangana. Due to lower demand for GI wire
from detonator-manufacturers, the company has sold
major property, plant and equipment, dismantled
building, terminated all the employees and intimated
closure of factory to various authorities during the year
2021-22.

The company incurred a net profit before tax of ? 27.68
lakhs during the year ended March 31, 2023 and the
company has accumulated loss of ? 33.58 lakhs as at
March 31, 2023 (Revenue of ? Nil_ lakhs and Net loss of
? 39.04 lakhs during previous year).

As on 31st March, 2023, Premier Explosives Limited held
52,00,000 Equity shares in PWPL representing 80% of
their equity share capital.

c) BF Premier Energy Systems Private Limited (BFPES), a
50% jointly controlled entity

This joint venture is yet to commence commercial
operations and has been inoperative for the past several
years due to lack of business opportunities. Hence during
the year, the Board has decided to close the Company
and accordingly forms/documents were filed with the
Registrar of Companies, Pune, Maharashtra, to strike off
the name of the company from the register of companies
under Section 248 of the Companies Act, 2013

The company incurred a net loss of '' 2.00 lakh during
2022-23 ('' 1.11 lakh during 2021-22).

d) Consolidated financial statements

Pursuant to Section 129(3) of the Companies Act, 2013
(Act) and SEBI Listing Regulations, the Consolidated
Financial Statements prepared in accordance with the
Indian Accounting Standards, notified under the Act is
attached to this report.

In accordance with the provisions of Section 136 of the
Companies Act, 2013, the audited financial statements
of the company including consolidated financial
statements and related information of the company and
the financial statements of the subsidiaries, are available
on the website of the company www.pelgel.com. Any
Member desirous of obtaining copies of the said financial
statements may write to the company at investors@
pelgel.com

These documents will also be available for inspection
during business hours at the registered office of the
Company.

Details of consolidated entities are given in the Annexure
1, Form AOC-1: Statement containing salient features
of the financial statements of subsidiaries / associate
companies / joint ventures.

10. Future outlook

Your company started getting large orders in defence segment
especially from counter measures. Your company has completed
the designing and development orders of various Rocket
motors for overseas buyers. During the year your company has
received supply orders for these products and the deliveries
against the orders have started.

At the macro level, ''Make in India'' is transforming into
''Atmanirbhar Bharat'' in the wake of COVID-19 and more
specifically in defence supplies in the aftermath of Ukraine
problem and Galwan clashes with China.

The Company is focused on increasing exports by developing
new customers and higher volumes with existing customers.
The Company will maintain its thrust in exports by adding
products in existing markets and foraying into new markets.

Special focus on overseas market started yielding the results
and the company is getting high value export orders from
various countries. Indian Defence exports have grown almost
eleven times from ? 1,500 crore to ? 16,000 crore in the past six
years.

In the last two years, India has brought out three lists with a total
of 310 equipment and weapon systems, which will undergo a
phased import ban within specified deadlines.

The lists comprise latest high tech platforms such as light weight
tanks, naval utility helicopters, missiles, mounted artillery gun
systems as well as medium altitude long endurance unmanned
aerial vehicles, and loitering munitions.

While the lists were primarily meant to put an end to defence
imports, they were clearly drawn considering the manufacturing
capabilities of India''s private industry and public sector working
in the field of defence. This will give lot of opportunities to our
company in coming days.

The operations in Bulk explosives division are also getting
stabilized and looking bright with the existing supply order
from Singareni and future requirements of Coal India with the
cooling off of the commodity / raw material prices.

11. Board matters

A. Directors'' Responsibility Statement pursuant to the
provisions of Section 134 of the Companies Act, 2013-

Your Board of Directors hereby confirms that:

a) In the preparation of the annual accounts of the
Company for the year ended March 31, 2023,
the applicable accounting standards had been
followed along with proper explanation relating to
material departures, if any;

b) the accounting policies selected were applied
consistently and the judgments and estimates
made are reasonable and prudent so as to give
a true and fair view of the state of affairs of the
company as at March 31, 2023 and of the profit
and loss of the company for the year ended on that
date;

c) proper and sufficient care has been taken for the
maintenance of adequate accounting records
in accordance with the provisions of the Act for
safeguarding the assets of the company and
for preventing and detecting fraud and other
irregularities;

d) the annual accounts have been prepared on a
going concern basis;

e) adequate internal financial controls have been
laid down, have been followed and have been
operating effectively;

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

B. Declaration of independent directors

The Company has received declarations from all its
Independent Directors that they meet the criteria of
Independence as laid down under Section 149(6) of the
Companies Act, 2013 and Securities Exchange Board of
India (Listing Obligations and Disclosure Requirements)
Regulations, 2015. Independent Directors have also
confirmed that they have complied with the Code for
Independent Directors prescribed in Schedule IV of the
Companies Act, 2013. Independent Directors of the
company have registered their names in the Independent
Director''s Database maintained by the Indian Institute of
Corporate Affairs (IICA).

C. Board meetings

During the financial year 2022-23, Five (5) Board meetings
were convened and held on 26th May, 2022; 03rd August,
2022; 27th October, 2022; 2nd January, 2023 and 10th
February, 2023.

D. Board evaluation

Criteria and other details of Board evaluation have
been provided in the Annexure -2, Report on Corporate
Governance.

E. Directors and Key Managerial Personnel

During the year under review, there were no new
appointments or resignations or changes in the the
Board of Directors and Key Managerial Personnel (KMPs)
of the Company.

Directors

Retirement by Rotation

As per the provisions of the Companies Act, 2013,
Mr. Y. Durga Prasad Rao (DIN:08072805) Director-
Operations, is liable to retire by rotation at the ensuing
Annual General Meeting and being eligible, offers himself
for reappointment and the resolution under item No 3,
seeking approval of the Members for his re-appointment
has been incorporated in the Notice convening the 43rd
Annual General Meeting of the Company along with brief
details about him.

The disclosures as required pursuant to Regulation
36(3) of the SEBI (Listing Obligations and Disclosure
Requirements) Regulations, 2015 and Clause 1.2.5 of the
Secretarial Standard are given in the Notice convening
43rd AGM, forming part of the Annual Report.

Appointments, Resignations and Changes

During the year under review, the Members at the AGM
held on September 16, 2022 through special resolution
had re-appointed Mr. Y. Durga Prasad Rao (DIN: 08072805)
as Wholetime Director designated as Director-operations
for a second consecutive term of five years commencing
from August 10, 2022.

Key Managerial Personnel

Pursuant to the provisions of Section 2(51) and 203 of
the Companies Act, 2013, the Key Managerial Personnel
(KMP) of the Company are Mr. T.V. Chowdary, Managing
Director, Mr. Srihari Pakalapati, Chief Financial Officer and
Mrs. K. Jhansi Laxmi, Company Secretary.

F. Committees of the Board

As required under the Act, and the Listing Regulations,
the Company has constituted the following statutory
committees:

• Audit Committee

• Nomination and Remuneration Committee

• Stakeholders Relationship Committee

• Corporate Social Responsibility Committee

Details of all the Committees such as terms of reference,
composition and meetings held during the year under
review are disclosed in the Corporate Governance Report,
a part of this Annual Report.

G. Company''s policy on appointment and remuneration
of directors

a) Criteria for appointment of directors

Director must have relevant experience in

finance, law, management, sales, marketing,
administration, research, corporate governance,
technical operations or other disciplines related to
company''s business.

Director should possess the highest personal and
professional ethics, integrity and values.

Director must be willing to devote sufficient
time and energy in carrying out their duties and
responsibilities.

Nomination and Remuneration Committee shall
identify and ascertain the integrity, qualification,
expertise and experience of the person for
appointment as director and recommend to the
Board his / her appointment or re-appointment.

The committee has discretion to decide whether
qualification, expertise and experience possessed
by a person are sufficient or satisfactory for the
concerned position.

While appointing an independent director,
Nomination and Remuneration Committee shall
consider the ''independence'' of the person also in
addition to the above.

b) Policy on directors'' remuneration

i. Policy

The Company shall remunerate its
directors, key managerial personnel, senior
management, other employees and workers
appropriately to retain and motivate them as
well as to attract new talent when required.

ii. Components of remuneration

Remuneration package shall include fixed
component for all employees and variable
component to the extent desirable and
practicable.

iii. Fixed remuneration

It shall be competitive and based on
the individual''s education, experience,
responsibilities, performance, industry
benchmark in the area, etc.

Fixed remuneration shall comprise of basic
salary and other allowances like house rent
allowance, conveyance allowance, etc. which
are calculated as certain % of basic salary.

iv. Variable remuneration

It is paid to encourage the employees to achieve set targets and variable remuneration shall be determined on the
following basis:

Category

Nature

Basis of variable remuneration

Whole time Directors

Commission

X% of Profit in a year during the contract period (% as recommended
by Board and approved by Shareholders.

Management Team
(CFO, Company Secretary,
President, Vice President, GM)

Profit sharing bonus

X% of Profit divided among them in proportion of their basic salary (%
as decided by Committee of Whole time Directors)

Officers (Below GM level)

Profit sharing bonus

X% of Profit divided among them in proportion of their basic salary.
(Minimum period of services and other conditions for eligibility are
decided by Committee of Whole time Directors)

Staff and Workers

Production incentive

Quantity of production, as per the Wage Agreement revised every 3
years at Pedda kandukuru (Those who are engaged in production and
allied activities are eligible.

v. Statutory benefits

Employee benefits like Contribution to Provident Fund, Gratuity, Bonus, Employees State Insurance, Workmen
Compensation, etc. shall be provided to all eligible employees as per the respective Acts.

vi. Perquisites and other benefits

Perquisite

Amount

Reimbursement of medical expenses for self and family /
Medical allowance

Up to one month basic salary in a year to whom ESI is not
applicable

Mediclaim and personal accident insurance

Reasonable coverage to whom ESI is not applicable

Leave travel allowance

Workers - as per wage agreement

Use of Company car with driver or reimbursement of driver
salary, fuel, maintenance and insurance

For Directors-as recommended by Board and approved by

ji icu ci iuiuci j

Telephone at home, Club fee

Gas, electricity, water, servant, security, gardener and soft
furnishing.(Up to 10% of basic salary)

For Management team-as approved by Committee of Whole
time Directors

vii. Increments

Increments are made taking into account
the individual performance, inflation and
company performance.

Workers are given Variable Dearness
Allowance as per Consumer Price Index semi¬
annually on 1st of April and 1st of October.

Wages of workers at Peddakandukuru are
revised every 3 years as per the agreement
between the management and unions.

Increments of other employees are made
effective 1st April every year, as approved by
Committee of Whole time Directors upon
recommendation of heads of departments.

Mid-year increments are given in exceptional
cases, as approved by the Managing Director,
upon recommendation of concerned
director and head of department.

viii. Remuneration to Independent and Non¬
Executive Directors

Remuneration / Commission shall be in
accordance with the statutory provisions of
the Companies Act, 2013 and the rules made
thereunder and the Listing Regulations, for
the time being in force and shall be entitled
to such sitting fee in respect of the Board
and Committee meetings attended, at the
rates approved by the Board and within the
applicable provisions of the Companies Act,
2013.

ix. Service contracts, notice period and
severance fees:

Executive directors have entered into a
service contracts with the company. The
tenure of the contract is three/five years.
Reappointment is done by the Board based
on the recommendation of the Nomination
and Remuneration Committee. Notice period
is as mutually agreed between the director
and the Board.

None of the directors is eligible for severance pay.

H. Formal annual evaluation by the Board

The Board has evaluated its own performance and of
individual directors. The details as required u/s 134(3)
(p) of the Companies Act, 2013, are mentioned in the
Annexure 2: Report on Corporate Governance.

12. Transfer of shares and unclaimed dividend to Investor
Education and Protection Fund (IEPF)

During the year under review, your Company transferred
unclaimed dividend amount of ? 3,23,974.00 (pertaining
to dividend for the financial year 2014-15) lying with the
Company for a period of seven years to the Investor Education

and Protection Fund (IEPF) in compliance with the applicable
provisions of the Companies Act, 2013. As required under
Section 124 of the Companies Act, 2013, your Company also
transferred during the year 6,237 shares to IEPF Authority,
in respect of which dividend had remained unclaimed for a
consecutive period of 7 years. Details of the shares transferred
to IEPF Authority have been uploaded on website of the
Company.

13. Auditors

a) Independent Auditors

The Members of the Company at the 42nd Annual
General Meeting held on September 16, 2022 had re¬
appointed M/s. Majeti & Co., Chartered Accountants,
(Firm Registration No 015975S) as the Statutory Auditors
of the Company for a second term of five (5) consecutive
years from the conclusion of 42nd AGM till the conclusion
of 47th AGM.

b) Internal Auditor

In terms of Section 138 of the Companies Act, 2013,
the Board of Directors of the Company has appointed
M/s.B.M. Kumar & Associates, Chartered Accountants,,
as Internal Auditors to conduct Internal Audit of the
Company for the financial year 2023-24.

There was no qualification, reservation or adverse remark
disclaimer in the auditors report, cost audit report .

c) Cost Auditor

The Company has maintained cost records for relevant
products prescribed by the Central Government under
the Companies Act, 2013 and Companies (Cost Records
and Audit) Rules, 2014. These records have been audited
by M/s. S.S.Zanwar& Associates, Cost Accountants during
the financial year 2022-23.

The Board of Directors of the Company, on the
recommendations of the Audit Committee, have
re-appointed M/s S. S. Zanwar & Associates, Cost
Accountants, as the Cost Auditors of the Company to
conduct the audit of the cost records of certain products
for the financial year for 2023-24 and M/s. SS Zanwar
& Associates, Cost Accountants being eligible have
consented to act as the Cost Auditors of the Company
for the financial year 2023-24.. As per the provisions
of Section 148(3) of the Companies Act, 2013, the
remuneration of the Cost Auditors has to be ratified by
the Members and accordingly the resolution relating to
the Cost Auditors'' remuneration is being placed before
the Members for their ratification.

d) Secretarial auditor

In terms of Section 204 of the Companies Act, 2013 and
Rules made thereunder, the Board of Directors have re¬
appointed Mr. K.V. Chalama Reddy, Practicing Company
Secretary as Secretarial Auditor of the Company to
conduct the secretarial audit of the Company for the
Financial Year 2023-24. They have confirmed their
eligibility for the re-appointment.

14. Independent auditors'' report

The Statutory Auditor''s report to the Members on the
standalone and consolidated financial statement of the
Company for the financial year ended March 31,2023 does not
contain any qualification, reservation, adverse remark or any
disclaimer.

Reporting of fraud

During the year under review, there were no instances of fraud
reported by the Statutory Auditors under Section 143(12) of the
Companies Act, 2013.

15. Credit Rating

During the year under review, ICRA Limited has retained and
assigned the following ratings for Long Term and Short Term
Bank facilities of the Company:

a) Long Term Rating - ''[ICRA] BBB (Stable)''

b) Short Term Rating - ''[ICRA] A2''

16. Management discussion and analysis Report

A detailed review of operations, performance and future
outlook of your Company and its businesses is given in the
Management Discussion and Analysis, which forms part of
this Report as stipulated under Regulation 34(2)(e) of the SEBI
(Listing Obligations and Disclosure Requirements) Regulations,
2015

17. Corporate governance

In terms of Regulation 34 of SEBI (Listing Obligations &
Disclosure Requirements) Regulations, 2015. a separate report
on Corporate Governance along with the Auditors'' Certificate
on its compliance with the corporate governance requirements
is annexed herewith as
Annexure - 2, Auditors'' Certificate as
Annexure-3 and CEO & CFO Certificate as Annexure-4 to this
Report.

18. Secretarial audit report

Pursuant to the provisions of Section 204 and other applicable
provisions, if any, of the Companies Act, 2013, the Board
has appointed Mr. K.V. Chalama Reddy, Practicing Company
Secretary, Hyderabad as Secretarial Auditor, to undertake the
Secretarial Audit of the Company for the financial year 2022-23.
The Secretarial Audit Report for the financial year ended March
31, 2023 is annexed herewith as
Annexure-5. There are no
qualifications, observations or adverse remarks, or disclaimers
in the said report.

Annual Secretarial Compliance Report

The Company has undertaken an audit for the financial year
2022-23 for all applicable compliances as per Securities and
Exchange Board of India Regulations and Circulars / Guidelines
issued thereunder. The Annual Secretarial Compliance Report
issued by Mr. K.V. Chalama Reddy, Practising Company Secretary,
Hyderabad has been submitted to the Stock Exchanges within
the specified time.

Compliance with Secretarial Standards

The Company has complied with Secretarial Standards notified
by the Institute of Company Secretaries of India (ICSI).

19. Conservation of energy, technology absorption and foreign
exchange earnings and outgo

The Information on conservation of energy, technology
absorption and foreign exchange earnings and outgo stipulated
under Section 134(3) (m) of the Companies Act, 2013 read with
Rule 8 of the Companies (Accounts) Rules, 2014, is annexed
herewith as
Annexure- 6 to this Report.

20. Particulars of loans, guarantees or investments in terms of
section 186 of the Companies Act, 2013

Your company

a) has not given any loan to any person or other body
corporate other than usual advances for supply of
materials and services

b) has not given any guarantee or provide security in
connection with a loan to any other body corporate or
person and

c) has not acquired the securities of any other body
corporate by way of subscription, purchase or otherwise,
exceeding sixty percent, of its paid-up share capital, free
reserve and securities premium account or one hundred
percent of its free reserves and securities premium
account whichever is more.

21. Particulars of contracts or arrangements with related
parties

All related party transactions entered by the Company during
the financial year 2022-23 with related parties were on arm''s
length basis and in the ordinary course of business. No material
related party transactions / arrangements were entered into
during the financial year by the Company.

All transactions with related parties were reviewed and
approved by the Audit Committee. Prior omnibus approval of
the Audit Committee is obtained on a yearly basis for related
party transactions which are of repetitive nature and entered
in the ordinary course of business and on an arm''s length basis.
There were no materially significant related party transactions
that may have potential conflict with the interest of the
Company at large.

The particulars of transactions with related parties referred
in section 188(1) of the Companies Act, 2013 entered by the
Company during the financial year ended March 31, 2023 in
prescribed Form AOC-2 is annexed herewith as
Annexure - 7
to this Report.

The details of the transactions with related parties were also
provided in the notes to the financial statements.

22. Risk management policy

Your company recognizes Risk Management as a very
important part of business and has kept in place necessary

policies, procedures and mechanisms. The company proactively
identifies monitors and takes precautionary and mitigation
measures in respect of various risks that threaten the operations
and resources of the company.

The Risk Management Policy of the company is available at the
link
http://www.pelgel.com/prm.htm.

23. Vigil mechanism policy

Pursuant to the provisions of Section 177 (9) and (10) of
the Companies Act, 2013 a Whistle Blower policy has been
established. The policy is available at the website link
http://
www.pelgel.com/pwb.htm.

24. Corporate social responsibility (CSR) activities

During the year 2022-23, your company has spent an amount
of ? 8.87 (? 11.86 lakhs in previous year) on CSR activities,
against the minimum mandatory amount of Nil (?11.86 lakhs
in previous year), being 2% of average profit for the last three
years.

Details of CSR activities are given in Annexure - 8.

25. Disclosure under the Sexual Harassment of Women at

Workplace (Prevention, Prohibition and Redressal) Act,

2013 (Nirbhaya Act)

There are 66 women employees in your company as on March
31, 2023 (64 a year ago) and your company has formulated an
anti harassment policy to ensure safe working environment.
Your company also has set up an Internal Complaint Committee
to redress complaints of women employees regarding sexual
harassment. During the year under review, there were no
cases received/filed pursuant to the provisions of the Sexual
Harassment of Women at Workplace (Prevention, Prohibitions
and Redressal) Act, 2013.

Details of awareness programmes and complaints are listed in
Annexure - 9.

26. Disclosure of significant and material orders passed by
regulators etc. under Rule 8(5)(vii) of the Companies
(Accounts) Rules 2014

During the year under review, there were no significant or
material order(s) passed by the Regulators /Courts or Tribunals
which would impact the going concern status of the Company
and its future operations.

During the year under review, there is no application/
proceeding pending against the Company under the Insolvency
and Bankruptcy Code, 2016, nor the Company has done any
one time settlement with any Bank or Financial Institutions.

27. Disclosure of internal financial control systems and their
adequacy Rule 8(5)(viii) of the Companies (Accounts) Rules

2014

Your company has in place adequate internal financial controls
with reference to financial statements. The Board has adopted

the policies and procedures for ensuring the orderly and
efficient conduct of its business, including adherence to the
Company''s policies, safeguarding of its assets, prevention and
detection of frauds and errors, accuracy and completeness of
the accounting records, and aid in the timely preparation of
reliable financial statements.

28. Annual Return

Pursuant to the provisions of Section 92(3) of the Companies
Act, 2013, the Annual Return in Form MGT-7 is available on the
company''s weblink
www.pelgel.com/annual returns.html

29. Remuneration of directors and employees and related
disclosures

Remuneration is paid to directors and employees in accordance
with the remuneration policy of the company and applicable
statutory provisions.

Disclosure pertaining to the remuneration and other details as
required under Section 197(12) of the Act and the Rules framed
thereunder is enclosed as
Annexure-10 to this Report.

30. Details of amount received from a director of the company:

During the year under report, the Company has not received
any amount from any Director of the Company pursuant to Rule
2 (1) (c) (viii) of the Companies (Acceptance of Deposits) Rules,
2014.

31. Listing on stock exchanges

The Company''s Equity shares are listed on BSE Limited (Scrip
Code: 526247) and the National Stock Exchange of India
Limited(Scrip Code: PREMEXPLN) and the Listing Fees has been
paid to them up to date.

32. Human Resources and Industrial relations

Your directors thank all the employees for their cooperation
and the contribution towards harmonious relationship and
progress of the company.

33. Acknowledgements

Your directors place on record their appreciation of the
continued support and cooperation received from all
employees, customers, suppliers, financial institutions, banks,
Government of India and various regulatory authorities,
members and other business associates during the year under
review.

For and on behalf of the Board

Dr. A.N. Gupta T.V. Chowdary

Secunderabad Chairman Managing Director

01.09.2023 DIN:00053985 DIN: 00054220


Mar 31, 2018

Dear Members

1. The directors are pleased to present the 38th annual report including the audited financial statements of your company for the year ended 31st March, 2018.

Standalone

Consolidated

2017-18

2016-17

2017-18

2016-17

Profit for the year

Operating revenue

26,590.85

23,029.76

27,458.90

23,778.44

Other income

220.49

66.82

222.52

69.50

Total revenue

26,811.34

23,096.58

27,681.42

23,847.94

EBIDTA from continuing operations

2,001.64

2,897.68

1,955.89

2,956.14

% to Operating revenue

7.53%

12.58%

7.12%

12.43%

Profit before tax from continuing operations

1,343.94

2,202.31

1,264.12

2,234.94

Profit from discontinued operations, after tax

-

55.47

-

55.47

Profit after tax

873.41

1,546.14

814.92

1,576.43

% to Total revenue

3.26%

6.69%

2.94%

6.61%

EPS (Rs.)

8.42

17.46

7.72

17.80

Appropriations

Retained earnings at beginning of the year

9303.39

7957.25

9425.40

7989.16

Profit for the year

873.41

1546.14

814.92

1576.43

Adjustment on acquisition of Premier Wire Products Limited as on June 30, 2016

-

-

-

59.81

Transfer to general reserve

-

(200.00)

-

(200.00)

Dividend and tax thereon

(384.08)

-

(384.08)

-

Retained earnings at end of the year

9792.72

9303.39

9856.24

9425.40

2. Indian Accounting Standards (Ind AS)

The financial statements of your company up to the year ended March 31, 2017 were prepared in accordance with Indian GAAP.

With effect from April 1, 2017 your company has adopted Ind AS with the date of transition as April 1, 2016.

Thus the financial statements for the year 2017-18 (with comparative data for previous year 2016-17) have been prepared in accordance with new accounting standards pursuant to the Ministry of Corporate Affairs notification dated February 16, 2015 notifying the Companies (Indian Accounting Standard) Rules, 2015.

3. State of affairs

During the year under review, your company’s operating revenue has gone up by 15% to Rs. 26590.85 lakhs from Rs. 23029.76 lakhs during previous year.

EBIDTA decreased by 31% to Rs. 2001.64 lakhs from Rs. 2897.68 lakhs, due to lower realisation from few of the explosive products in an unhealthy competitive market.

Consequently, profit after tax declined by 44% to Rs. 873.41 lakhs from Rs. 1546.14 lakhs.

4. Operations

Production of explosives went up by 9% to 43,397 tonnes from previous year’s 39,957 tonnes.

Production of detonators increased to 49.79 million pieces from 48.98 million pieces a year ago, which is an increase of 2%.

During the year your company has, for the first time, made Chaffs and supplied to Indian Air Force, while there has been a decline in off take of solid propellants for missiles.

Operations & maintenance contracts at Sriharikota and Jagdalpur have been satisfactory. In July 2018, your company has completed the 11-year contract at Sriharikota and it is expected the contract would be extended for another 10 years.

5. Capital expenditure

During the year the company incurred a capital expenditure of Rs. 471.95 lakhs for defence and non-defence products. There have been deductions from fixed assets for an amount of Rs. 30.57 lakhs. Capital work in progress has gone up by Rs. 1210.21 lakhs.

6. Dividend

Your Board, in their Board meeting held on May 23, 2018 has recommended a dividend of Rs. 2.50 per share (25%) and this proposal is subject to your approval at the ensuing Annual General Meeting.

7. Share capital and reserves

a) Share capital

During the year your company raised equity share capital by way of qualified institutional placement (QIP) by issuing 16,51,000 equity shares of Rs. 10 each at Rs. 400 per share, including a premium of Rs. 390 per share.

Your company also made preferential allotment of 1,27,564 equity shares of Rs. 10 each at Rs. 408 per share, including a premium of Rs. 398 per share, to promoters (75,020 shares) and others (52,544 shares).

Thus the equity share capital increased to Rs. 1063.71 lakhs as at 31.03.2018 from Rs. 885.86 lakhs as at 31.03.2017.

b) Share warrants

During the year, your company made preferential allotment of 1,35,100 warrants, each convertible into one equity share of Rs. 10 each at Rs. 408 per share, including a premium of Rs. 398 per share, to promoters (100,100 shares) and others (35,000 shares).

c) Fair value / Revaluation surplus

As provided in ‘Ind AS 101 First-time Adoption of Indian Accounting Standards’, your company, as the first time adopter of Ind AS, has elected fair value of freehold land as its deemed cost as at the date of transition to Ind AS, i.e. April 1, 2016. In view of this, the amount of revaluation surplus arising upon revaluation of freehold land as at December 31, 2016 has been nullified during the year 2017-18.

8. Deposits

Your company has not accepted any deposits during the year and there were no deposits outstanding as at end of the year.

9. Material changes and commitments after the reporting period

Participation in RFI

Your company has submitted two bids to Ministry of Defence for manufacture of ammunition under ‘Make in India’ initiative. If successful the order would be for a period of ten years and your company has made technology tie up with foreign original equipment manufacturers (OEMs).

10. Subsidiary companies, Jointly controlled entity and consolidated financial statements

a) PELNEXT Defence Systems Private Limited, a 100% subsidiary company

Incorporated on July 15, 2016 PELNEXT is expected to be operated as a special purpose vehicle in defence explosives business. The company incurred a net loss of Rs. 0.45 lakh during 2017-18 (Rs. 0.42 lakh during 2016-17).

As on 31st March, 2018, Premier Explosives Limited held 10,000 Equity shares in PELNEXT representing 100% of equity share capital.

b) Premier Wire Products Limited (PWPL), an 80% subsidiary company

PWPL is engaged in manufacture of Galvanised Iron (GI) Wire catering to the requirements of detonator-manufacturers including Premier Explosives Limited. The company’s revenue for the year 2017-18 was Rs. 1035.66 lakhs and there was a loss of Rs. 68.33 lakhs (Revenue of Rs. 1154.11 lakhs and net profit of Rs. 17.94 lakhs during previous year).

As on 31st March, 2018, Premier Explosives Limited held 52,00,000 Equity shares in PWPL representing 80% of their equity share capital.

c) BF Premier Energy Systems Private Limited (BFPES), a 50% jointly controlled entity

This joint venture is yet to commence commercial operations. The company incurred a net loss of Rs. 0.72 lakh during 2017-18 (Rs. 8.08 lakh during the year 2016-17).

Your company and Kalyani Strategic Systems Limited, each hold 1,00,000 equity shares in the share capital of BFPES, as on 31st March, 2018.

d) Consolidated financial statements

Your company has prepared consolidated financial statements in accordance with section 129 (3) of the Companies Act, 2013.

Details of consolidated entities are given in the Annexure 1, Form AOC-1: Statement containing salient features of the financial statements of subsidiaries / associate companies / joint ventures.

11. Future outlook

Recent release of Draft Defence Production Policy 2018 contains helpful guidelines that promote indigenisation and private sector participation in building defence ecosystem which augurs well for your company’s business.

After facing the teething troubles with GST and demonetisation, the economy is expected to take growth path again in near future. Demand uptick for mining, power and infrastructure is expected to offer better opportunities for your company’s explosive products.

12. Board matters

A. Directors’ responsibility statement pursuant to section 134 of the Companies Act, 2013

Your directors confirm that

a) the applicable accounting standards have been followed;

b) the accounting policies selected were applied consistently and the judgments and estimates made are reasonable and prudent so as to give a true and fair view of the state of affairs of the company as at March 31, 2018 and of the profit of the company for the year ended on that date;

c) proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

d) the annual accounts have been prepared on a going concern basis;

e) adequate internal financial controls have been laid down, have been followed and have been operating effectively;

f) proper systems have been devised to ensure compliance with the provisions of all applicable laws and those systems have been adequate and operating effectively.

B. Declaration of independent directors

All the independent directors confirmed that they have met the criteria of independence as required u/s 149 of the Companies Act, 2013.

C. Board meetings

During the financial year 2017-18 there were 6 Board meetings held on 14th April 2017, 12th May 2017, 27th May 2017, 18th August 2017, 29th November 2017 and 10th February 2018.

D. Board evaluation

Criteria and other details of Board evaluation have been provided in the Annexure -2, Report on Corporate Governance.

E. Change in directors

a) Resignation of director

During the year Col Vikram Mahajan resigned as Director (Marketing).

b) Rotation of director

Mr. T.V.Chowdary, Deputy Managing Director retires by rotation at the ensuing Annual General Meeting and being eligible offers himself for reappointment. The Board recommends reappointing him as a Director.

c) Reappointment of director

Current Term of Dr.Amarnath Gupta as Chairman and Managing Director is expiring on February 13, 2019. The Board recommends his reappointment as Chairman and Managing Director with effect from February 14, 2019 for a term of three years.

F. Company’s policy on appointment and remuneration of directors

a) Criteria for appointment of directors

Director must have relevant experience in finance, law, management, sales, marketing, administration, research, corporate governance, technical operations or other disciplines related to company’s business.

Director should possess the highest personal and professional ethics, integrity and values.

Director must be willing to devote sufficient time and energy in carrying out their duties and responsibilities.

Nomination and Remuneration Committee shall identify and ascertain the integrity, qualification, expertise and experience of the person for appointment as director and recommend to the Board his / her appointment or re-appointment.

The committee has discretion to decide whether qualification, expertise and experience possessed by a person are sufficient or satisfactory for the concerned position.

While appointing an independent director, Nomination and Remuneration Committee shall consider the ‘independence’ of the person also in addition to the above.

b) Policy on directors’ remuneration

i. Policy

The Company shall remunerate its directors, key managerial personnel, senior management, other employees and workers appropriately to retain and motivate them as well as to attract new talent when required.

ii. Components of remuneration

Remuneration package shall include fixed component for all employees and variable component to the extent desirable and practicable.

iii. Fixed remuneration

It shall be competitive and based on the individual’s education, experience, responsibilities, performance, industry benchmark in the area, etc.

Fixed remuneration shall comprise of basic salary and other allowances like house rent allowance, conveyance allowance, etc. which are calculated as certain % ‘s of basic salary.

iv. Variable remuneration

It is paid to encourage the employees to achieve set targets and variable remuneration shall be determined on the following basis:

Category

Nature

Basis of variable remuneration

Whole time Directors

Commission

X% of Profit in a year during the contract period (% as recommended by Board and approved by Shareholders.)

Management Team (CFO, President, Vice President, Company Secretary, GM)

Profit sharing bonus

X% of Profit divided among them in proportion of their basic salary (% as decided by Committee of Whole time Directors)

Officers (Below GM level)

Profit sharing bonus

X% of Profit divided among them in proportion of their basic salary.(Minimum period of services and other conditions for eligibility are decided by Committee of Whole time Directors)

Staff and Workers

Production incentive

Quantity of production, as per the Wage Agreement revised every 3 years at Peddakandukuru (Those who are engaged in production and allied activities are eligible.)

v. Statutory benefits

Employee benefits like Contribution to Provident Fund, Gratuity, Bonus, Employees State Insurance, Workmen Compensation, etc. shall be provided to all eligible employees.

vi. Perquisites and other benefits

Perquisite

Amount

Reimbursement of medical expenses for self and family / Medical allowance

Up to one month basic salary in a year to Whom ESI is not applicable

Mediclaim and personal accident insurance

Reasonable coverage to whom ESI is not applicable

Leave travel allowance

Workers - as per wage agreement Others - one month basic salary p.a.

Use of Company car with driver or reimbursement of driver salary, fuel, maintenance and insurance

For Directors-as recommended by Board and approved by

Telephone at home, Club fee

Shareholders

Gas, electricity, water, servant, security, gardener and soft furnishing.

(Up to 10% of basic salary)

For Management team-as approved by Committee of Whole time Directors

vii. Increments

Increments are made taking into account the individual performance, inflation and company performance.

Workers are given Variable Dearness Allowance as per Consumer Price Index semi-annually on 1st of April and 1st of October.

Wages of workers at Peddakandukuru are revised every 3 years as per the agreement between the management and unions.

Increments of other employees are made effective 1st April every year, as approved by Committee of Whole time Directors upon recommendation of heads of departments.

Mid-year increments are given in exceptional cases, as approved by CMD upon recommendation of concerned director and head of department.

viii. Remuneration to independent and non-whole time directors

Remuneration consists of sitting fee in respect of the Board and Committee meetings attended, at the rates approved by the Board and within the applicable provisions of the Companies Act, 2013.

ix. Service contracts, notice period and severance fees:

Executive directors have entered into a service contracts with the company. The tenure of the contract is three years. Reappointment is done by the Board based on the recommendation of the Nomination and Remuneration Committee. Notice period is as mutually agreed between the director and the Board.

None of the directors is eligible for severance pay.

G. Formal annual evaluation by the Board

The Board has evaluated its own performance and of individual directors. The details as required u/s 134(3) (p) of the Companies Act, 2013, are mentioned in the Annexure 2: Report on Corporate Governance.

13. Transfer of shares to IEPF

As required under Section 124 of the Companies Act, 2013, 46,902 equity shares, in respect of which dividend has not been claimed by the members for seven consecutive years or more, have been transferred by the Company to the Investor Education and Protection Fund Authority (IEPF) during the financial year 2017-18. Details of shares transferred have been uploaded on the website of the Company.

14. Auditors

a) Independent auditors

The Members at the 37th Annual General Meeting of the Company held on September 27, 2017, had appointed M/s. Majeti & Co., Chartered Accountants (Firm Registration No. 015975S) as the Statutory Auditors of the Company to hold office for a term of five years, i.e., from the conclusion of the said Annual General Meeting until the conclusion of 42nd Annual General Meeting of the Company to be held in 2022, subject to ratification of their appointment by the shareholders, every year.

The Ministry of Corporate Affairs vide its Notification dated May 7, 2018, has dispensed with the requirement of ratification of Auditors’ appointment by the shareholders, every year. Hence, from that date onwards, there is no requirement of shareholders’ resolution for ratification of Auditors’ appointment.

b) Internal auditors

M/s M. Venkata Ratnam & Associates, Chartered Accountants were the internal auditors for the year 2017-18 and they being eligible, the Board has reappointed them for the year 2018-19.

c) Cost auditors

M/s S. S. Zanwar & Associates, Cost Accountants were cost auditors for 2017-18 and they being eligible, the Board has re-appointed them for the year 2018-19 and their remuneration is subject to the ratification of shareholders in the ensuing annual general meeting. The Board recommends ratification of their remuneration.

d) Secretarial auditor

Mr. K.V. Chalama Reddy, a practicing company secretary, was the secretarial auditor for the financial year 2017-18 and he being eligible, the Board has reappointed him for the year 2018-19.

15. Independent auditors’ report

There are no qualifications, reservations or adverse remarks made by the Independent auditors in their report.

16. Ratings

ICRA has reaffirmed the long-term credit rating at ‘[ICRA] A (Stable)’ and short-term credit rating at ‘[ICRA] A1’.

Dun & Bradstreet enhanced rating ‘5A2 Condition: Good’.

17. Management discussion and analysis

A report on management discussion and analysis is placed as a separate section in the annual report.

18. Corporate governance

Pursuant to Schedule V of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, a detailed report is given at Annexure-2 along with the auditors’ certificate in the Annexure-3 and CEO and CFO certificate in the Annexure-4.

19. Secretarial audit report

In accordance with section 204 of the Companies Act, 2013, the secretarial audit report is attached as Annexure-5 and there are no qualifications, reservations or adverse remarks made by the Independent auditors in their report.

20. Conservation of energy, technology absorption and foreign exchange earnings and outgo

Information required under Section 134(3) (m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014 is given in Annexure- 6 to this Report.

21. Particulars of loans, guarantees or investments in terms of section 186 of the Companies Act, 2013

Your company

a) has not given any loan to any person or other body corporate other than usual advances for supply of materials and services

b) has not given any guarantee or provide security in connection with a loan to any other body corporate or person and

c) has not acquired the securities of any other body corporate by way of subscription, purchase or otherwise, exceeding sixty percent, of its paid-up share capital, free reserve and securities premium account or one hundred percent of its free reserves and securities premium account whichever is more.

22. Particulars of contracts or arrangements with related parties

Contracts or arrangements with related parties referred in section 188(1) of the Companies Act, 2013 have been at arm’s length and the particulars are reported in the Annexure - 7.

23. Risk management policy

Your company recognizes Risk Management as a very important part of business and has kept in place necessary policies, procedures and mechanisms. The company proactively identifies monitors and takes precautionary and mitigation measures in respect of various risks that threaten the operations and resources of the company.

The Risk Management Policy of the company is available at the link http://www.pelgel.com/prm.htm.

24. Vigil mechanism policy

Pursuant to the provisions of Section 177 (9) and (10) of the Companies Act, 2013 a Whistle Blower policy has been established. The policy is available at the website link http://www.pelgel.com/pwb.htm.

25. Corporate social responsibility (CSR) activities

During the year 2017-18 your company has spent an amount of Rs. 33.19 lakhs (Rs. 26.89 lakhs in previous year) on CSR activities, against the minimum mandatory amount of Rs. 33.13 lakhs, being 2% of average profit for the last three years.

Details of CSR activities are given in Annexure - 8.

26. Disclosure under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 (Nirbhaya Act)

There are 95 women employees in your company as on 31st March, 2018 (100 a year ago) and your company has formulated an anti harassment policy to ensure safe working environment. Your company also has set up an Internal Complaint Committee to redress complaints of women employees.

Details of awareness programmes and complaints are listed in Annexure - 9.

27. Disclosure of significant and material orders passed by regulators etc. under Rule 8fe)(vii) of the Companies (Accounts) Rules 2014

There were no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and company’s operations in future.

28. Disclosure of internal financial control systems and their adequacy Rule 8(5)(viii) of the Companies (Accounts) Rules 2014

The company has in place adequate internal financial controls with reference to financial statements through

- reviews of operations by Board and committees

- vetting of various reports by management

- periodical internal audits

- setting and implementing financial policies

- checks and balances in the ERP system and other measures.

29. Extracts of annual return and other disclosures under the Companies (Appointment & Remuneration) Rules, 2014

Extract of Annual Return in form no. MGT-9 as per Section 92(3) of the Companies Act, 2013 and Rule 12 (1) of the Company (Management & Administration) Rules, 2014 is annexed hereto and forms part of this report as Annexure-10.

30. Remuneration of directors and employees and related disclosures

Remuneration is paid to directors and employees in accordance with the remuneration policy of the company and applicable statutory provisions.

Particulars required u/s 197(12) of the Act read with rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are given as Annexure-11.

31. Listing on stock exchanges

Your Company’s shares are listed on the Bombay Stock exchange (BSE) and National Stock Exchange (NSE).

During the year under review, your company’s share price on BSE had moved between a maximum of Rs. 526.30 and a minimum of Rs. 317.85. The price closed at Rs. 335.00 on March 28, 2018, a decrease of 4% over the price of Rs. 349.90 on March 31, 2017.

On NSE, your company’s share price had moved between a maximum of Rs. 526.40 and a minimum of Rs. 319.55. The price closed at Rs. 335.55 on March 28, 2018, a decrease of 4% over the price of Rs. 350.05 on March 31, 2017.

The strength of shareholders has increased from 9,715 on 31.03.2017 to 10,258 on 31.03.2018.

32. Industrial relations

Your directors thank all the employees for their cooperation and the contribution towards harmonious relationship and progress of the company.

33. Acknowledgements

Your directors place on record their appreciation of the continued support and cooperation from all employees, customers, suppliers, financial institutions, banks, regulatory authorities and other business associates.

Dr. A.N. Gupta

Chairman & Managing Director

Secunderabad

09.08.2018


Mar 31, 2015

Dear Members

The directors are pleased to present the 35th annual report including the audited financial statements of your company for the year ended 31st March, 2015.

1. Financial summary (Rs. in lakhs)

Profitability 2014-15 2013-14

Sales 14899.45 14471.03

Other operating revenue 49.71 69.35

Other income 74.04 140.67

Revenue 15023.20 14681.05

EBIDTA 1328.38 1766.87

% to Revenue 9% 12%

Profit before tax 762.23 1295.50

% to Revenue 5% 9%

Profit after tax 532.05 921.31

% to Revenue 4% 6% Diluted EPS (Rs.) 6.10 11.17

Appropriations 31.03.15 31.03.14

Opening balance of surplus 3286.17 2828.89

Depreciation due to revision in estimated useful lives of fixed assets (66.66) -

Profit for the year 532.05 921.31

Total available for appropriations 3751.56 3750.20

Proposed dividend (177.17) (225.68)

Dividend tax on the above (36.07) (38.35)

Dividend paid for earlier year (13.50) -

Dividend tax paid on the above (2.30) -

Transfer to general reserve (150.00) (200.00)

Closing balance of surplus 3372.52 3286.17

2. State of affairs

Your company's sales grew to Rs. 14899 lakhs from Rs. 14471 lakhs, an increase of 3% over previous year. Gross profit decreased by 25% from Rs. 1767 lakhs to Rs. 1328 lakhs. Profit before tax has decreased 41% from Rs. 1295 lakhs to Rs. 762 lakhs. Net profit for the year came down by 42% to Rs. 532 lakhs from Rs. 921 lakhs. Basic EPS has decreased to Rs. 6.10 from Rs. 11.25 for the previous year.

3. Operations

Production of explosives increased to 24,066 tonnes from previous year's 20,703 tonnes.

Production of detonators decreased to 42.20 million pieces from 53.27 million pieces a year ago due to lower demand from mining and infrastructure industries, caused by unseasonal / long rains, restrictions on movement of explosives during elections, etc.

These factors together with severe competition has resulted in un-remunerative prices for accessories like detonators and detonating fuse.

Defense products contribution has been satisfactory and the company expects a decent growth with improved order book on hand.

Operations & maintenance contracts at Sriharikota and Jagdalpur have been satisfactory. Contract at Jagdalpur has been extended by five years, i.e. from April 2015 till April 2020.

Windmill generated 13.67 lakh units of power compared to 19.84 lakh units during the previous year, a decline of 31%. Previous year 2013-14 was exceptionally good year for wind power generation but weather dynamics were not favorable in 2014-15.

4. Capital expenditure

During the year the company incurred a net capital expenditure of Rs. 398.53 lakhs including land development at new site and balancing equipment and incremental assets at the existing sites.

5. Dividend

Your directors recommend a dividend of Rs. 2.00 per share for the year ended 31st March, 2015 on the amount of paid up share capital as on record date for dividend. The dividend, if approved and declared at the forthcoming annual general meeting, would result in a cash outlaw of Rs. 177.17 lakhs towards dividend and Rs. 36.07 lakhs towards tax on dividend, totaling to Rs. 213.24 lakhs.

6. Share capital and reserves

a) Share capital

Equity share capital has increased from Rs. 835.86 lakhs as on 31.03.2014 to Rs. 885.86 lakhs as on 31.03.2015 upon allotment of 5,00,000 equity shares against an equivalent number of warrants.

b) Securitas premium

Securitas premium account has gone up by Rs. 258.85 lakhs with receipt of premium @ Rs. 51.77 per share on allotment of 5,00,000 equity shares referred above.

c) Transfer to general reserve

Your directors propose to transfer an amount of Rs. 150 lakhs (previous year Rs. 200 lakhs) from the current year profit to general reserve.

d) Total reserves as at 31st March, 2015

Including the share premium received on allotment of equity shares mentioned above and net of the proposed dividend and tax thereon, total reserves and surplus as on 31st March, 2015 increased to Rs. 5305 lakhs from last year's Rs. 4810 lakhs.

7. Utilization of proceeds from preferential issue of share warrants

During 2013-14 and 2014-15 your company issued a total of 7,31,000 equity shares of Rs. 10 each at a premium of Rs. 51.77 per share and received a total of Rs. 451.54 lakhs. The amount so received was utilized for working capital and fixed assets, being objects of the issue.

8. Deposits

During the year the company has repaid all the fixed deposits in terms of Section 74 of the Companies Act, 2013 and has not accepted any new deposits.

9. Material changes after end of the financial year

a) Voluntary retirement scheme

With a view to rationalize the human resources the company has agreed for retirement of 56 employees in 2015-16 which will have a onetime cost of Rs. 369.56 lakhs.

b) Industrial licenses

Your company has received industrial licenses for manufacture of various defense products, namely, Mob dispersion devices, Ammunition of 40mm and above caliber, Rockets and missiles, Mines related to Defense, Bombs, Flexible liner shape charge, Explosives reacting armor, Single base propellant, Military fuses of all types including filling and assembling, Munitions of 20 mm and above caliber including felling and assembling.

Your company is taking necessary steps to obtain technology to ups and to prepare business plans in respective of a few of the above products.

Your company also received industrial licenses for capacity expansion of Site mixed explosives and Cartridge explosives. Related new or expansion plants would be set up at an opportune time.

10. Future outlook

Recent coal mining auctions, amendment of mining regulations, relaxation of foreign direct investment in construction sector and general improvement in economy are expected to result in increased demand for commercial explosives and accessories.

'Make in India' imitative, accelerated issuance of defense licenses, encouragement of private sector for defense production, revised defense procurement and offset policies, etc. would help the company in scaling up military explosives business.

11. Board maters

A. Directors' responsibility statement pursuant to section 134 of the Companies Act, 2013

Your directors conform that

a) the applicable accounting standards have been followed;

b) the accounting policies selected were applied consistently and the judgments and estimates made are reasonable and prudent so as to give a true and fair view of the state of affairs of the company as at 31st March, 2015 and of the profit of the company for the year ended on that date;

c) proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

d) the annual accounts have been prepared on a going concern basis;

e) adequate internal financial controls have been laid down, have been followed and have been operating effectively;

f) proper systems have been devised to ensure compliance with the provisions of all applicable laws and those systems have been adequate and operating effectively.

B. Declaration of independent directors

All the independent directors confirmed that they have met the criteria of independence as required u/s 149 of the Companies Act, 2013.

C. Training of directors

During the year, both independent and non- independent directors were provided a technical session by a senior practicing company secretary regarding provisions of the Companies Act, 2013.

D. Board meetings

During the financial year 2014-15 there were 4 Board meetings held on 24th May, 2014, 13th August 2014, 06th November, 2014 and 07th February, 2015.

E. Board evaluation

Criteria and other details of Board evaluation has been provided in the Annexure -1 Report on Corporate Governance.

F. Change in directors

a) Mr. K. Chalil had retired as Director upon reaching Superannuation on 30th of September, 2014 and the company places on record its appreciation of the valuable services rendered by him during his tenure as director.

b) Filling the above casual vacancy, the Board has appointed Colonel Vikram Mahajan (Retd.) as Additional Director on 06th of November, 2014, to hold office until the conclusion of this Annual General Meeting and being eligible offers himself for re-appointment as Director.

The Board recommends reappointment of Colonel Vikram Mahajan (Retd.) as a Director.

G. Rotation of director

Dr. N.V. Srinivasa Rao will retire by rotation at the ensuing Annual General Meeting and being eligible offers himself for reappointment.

The Board recommends reappointing him as a Director.

H. Company's policy on appointment and remuneration of directors

Criteria for appointment of directors and policy on directors' remuneration are given at paras 2.7 and 4.5 of the Report on corporate governance, Annexure-1.

I. Formal annual evaluation by the Board

The Board has evaluated its own performance and of individual directors. The details as required u/s 134(3) (p) of the Companies Act, 2013, are mentioned in the Annexure 1: Report on Corporate Governance.

12. Company Secretary & Compliance Offer

Mr. Avinash Kumar Singh resigned on 20th March, 2015 as Company Secretary & Compliance Offer. Subsequently, the Board has appointed Ms. K. Vijayashree in that position on 20th May, 2015.

13. Auditors

a) Independent auditors

The Independent auditors M/s. P.V.R.K. Nageswara Rao & Co., Chartered Accountants (Firm's Registration Number: 0022835) have been appointed as Statutory Auditors of the Company at the Annual General Meeting held on 13th of August, 2014 to hold office until the conclusion of the Annual General meeting to be held in the year 2019 subject to ratification of their appointment at every AGM.

Accordingly, the reappointment is placed for ratification by the members at this Annual General Meeting.

The Board recommends ratification of their re-appointment.

b) Internal auditors

M/s M. Venkata Ratnam & Associates, Chartered Accountants were the internal auditors for the year 2014-15 and they being eligible, the Board has re- appointed them for the year 2015-16.

c) Cost auditors

M/s S. S. Zanwar & Associates, Cost Accountants were cost auditors for 2014-15 and they being eligible, the Board has re-appointed them for the year 2015-16 and their remuneration is subject to the ratification of shareholders in the ensuing annual general meeting. The Board recommends ratification of their remuneration.

d) Secretarial auditor

Mr. K.V. Chalama Reddy, a practicing company secretary, was the secretarial auditor for the financial year 2014-15 and he being eligible, the Board has re- appointed him for the year 2015-16.

14. Independent auditors' report

Independent Auditors' report contains a matter of emphasis that managerial remuneration of the Chairman & Managing Director exceeded the limit prescribed under provisions of the Companies Act, 2013. The company is taking necessary steps to obtain the Central Government approval required in this respect.

15. Ratings

ICRA has maintained the long-term credit rating at '(ICRA) A- (Stable)' and short-term credit rating at '(ICRA)A2 '.

Dun & Bradstreet allotted D&B D-U-N-S® NUMBER: 65- 063-6121 to the company and assigned the rating '4A2 Condition: Good'.

16. Management discussion and analysis

A report on management discussion and analysis is placed as a separate section in the annual report.

17. Corporate governance

Pursuant to clause 49 of the listing agreement with the stock exchange, a detailed report is given at Annexure-1 along with the auditors' certificate in the Annexure-2 and CEO and CFO certificate in the Annexure-3.

18. Secretarial audit report

Pursuant to section 204 of the Companies Act, 2013, every listed company shall annex the secretarial audit report with the Board's report. Secretarial Audit Report contains an observation that the Remunerator paid to the Chairman and Managing Director, for the year 2014-15 is in excess of the limits prescribed under Section 197 read with Schedule V of the Companies Act, 2013 by Rs. 40,90,981. The Company is taking necessary steps to obtain the Central Government approval required in respect of the aforesaid amount. The secretarial audit report is attached as Annexure-4.

19. Conservation of energy, technology absorption and foreign exchange earnings and outgo

Information required under Section 134(3) (m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014 is given in Annexure- 5 to this Report.

20. Particulars of loans, guarantees or investments in terms of section 186 of the Companies Act, 2013 Your company

a) has not given any loan to any person or other body corporate other than usual advances for supply of materials and services

b) has not given any guarantee or provide security in connection with a loan to any other body corporate or person and

c) has not acquired the securities of any other body corporate by way of subscription, purchase or otherwise, exceeding sixty percent, of its paid-up share capital, free reserve and securities premium account or one hundred percent of its free reserves and securities premium account whichever is more.

21. Particulars of contracts or arrangements with related parts

Contracts or arrangements with related parts referred in section 188(1) of the Companies Act, 2013 have been at arm's length and the particulars are reported in the Annexure - 6.

22. Risk management policy

Your company recognizes Risk Management as a very important part of business and has kept in place necessary policies, procedures and mechanisms. The company proactively identifies monitors and takes precautionary and mitigation measures in respect of various risks that threaten the operations and resources of the company.

In accordance with Clause 49 of the Listing Agreement, the Company has constituted a Risk Management Committee and formulated a policy on the Risk Management. Details of Committee and its terms of reference are set out in the Corporate Governance Report forming part of the Board's Report.

The Risk Management Policy of the company is available at the link htp://www.pelgel.com/prm.htm.

23. Vigil mechanism policy

Pursuant to the provisions of Section 177 (9) and (10) of the Companies Act, 2013 a Whistle Blower policy has been established. The policy is available at the website link htp://www.pelgel.com/pwb.htm.

24. Corporate social responsibility (CSR) actives

During the year your company has spent an amount of Rs. 29.70 lakhs on CSR actives, against the minimum mandatory amount of Rs. 29.63 lakhs, being 2% of average profit for the last three years.

Details of CSR actives are given in Annexure - 7.

25. Disclosure under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 (Nirbhaya Act)

There are 107 women employees in your company as on 31st March, 2015 and your company has formulated an ant harassment policy to ensure safe working environment. Your company also has set up an Internal Complaint Committee to redress complaints of women employees.

Details of awareness programmes and complaints are listed in Annexure - 8.

26. Disclosure of significant and material orders passed by regulators etc. under Rule 8(5)(vii) of the Companies (Accounts) Rules 2014

There were no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and company's operations in future.

27. Disclosure of internal financial control systems and their adequacy Rule 8(5)(viii) of the Companies (Accounts) Rules 2014

The company has in place adequate internal financial controls with reference to financial statements through

- reviews of operations by Board and committees

- vetting of various reports by management

- periodical internal audits

- setting and implementing financial policies

- checks and balances in the ERP system and other measures.

28. Extracts of annual return and other disclosures under the Companies (Appointment & Remunerator) Rules, 2014

Extract of Annual Return in form no. MGT-9 as per Section 92(3) of the Companies Act, 2013 and Rule 12 (1) of the Company (Management & Administrator) Rules, 2014 is annexed hereto and forms part of this report as Annexure- 9.

29. Remunerator of directors and employees and related disclosures Remunerator is paid to directors and employees in accordance with the remuneration policy of the company and applicable statutory provisions.

Particulars required u/s 197(12) of the Act read with rule 5(1) of the Companies (Appointment and Remunerator of Managerial Personnel) Rules, 2014 are given as Annexure - 10.

30. Listing on stock exchange

Your Company's shares are listed on the Bombay stock exchange. During the year under review, your company's share price had moved between a maximum of Rs. 329.70 and a minimum of Rs. 70.30. The price closed at Rs. 240.80 on 31st March 2015, an increase of 209% over the price of Rs. 78.00 on 31st March, 2014.

The strength of shareholders has increased from 5,895 on 31.03.2014 to 8,811 on 31.03.2015.

31. Asia Pacific Entrepreneurship Award to Dr. A.N.Gupta

The Board is pleased to inform you that Dr. A.N.Gupta, Chairman and Managing Director of the company, has been conferred the Asia Pacific Entrepreneurship Award in Outstanding category on 21st March, 2015.

32. Industrial relations

Your directors thank all the employees for their cooperation and the contribution towards harmonious relationship and progress of the company.

33. Acknowledgements

Your directors place on record their appreciation of the continued support and cooperation from all employees, customers, suppliers, financial institutions, banks, regulatory authorities and other business associates.

Secunderabad Dr. A.N. Gupta

11.08.2015 Chairman & Managing Director


Mar 31, 2013

Dear Members

The directors are pleased to present the 33rd annual report together with the audited accounts of the company for the year ended 31st March, 2013.

1. Financial performance

(Rs. in lakhs)

2012-13 2011-12

Gross sales 11941.73 11569.18

Excise duty (1058.13) (834.58)

Net sales 10883.60 10734.60

Other operating revenue 56.50 96.93

Other income 206.47 169.89

Net revenue 11146.57 11001.42

Gross profit 1175.04 1908.54

Finance costs (179.89) (101.62)

Depreciation (214.50) (186.66)

Exceptional items(net) (37.06) 39.20

Profit before tax 743.59 1659.46

Provision for tax (209.67) (465.36)

Profit after tax 533.92 1194.10

EPS (Rs.) 6.57 14.69

Net worth 4,845.68 4549.43

Book value per share (Rs.) 59.62 55.98

Your company has achieved a marginal increase in sales revenue at Rs.10884 lakhs for the year 2012-13 compared to Rs. 10735 lakhs in the previous year.

However, production of high-margin detonators being affected by accident, gross profit decreased from Rs. 1909 lakhs to Rs.1175 lakhs and profit before tax from Rs.1659 lakhs to Rs.744 lakhs.

Net profit for the year stood at Rs.534 lakhs, as against Rs.1194 lakhs for the previous year, resulting in a lower EPS at Rs.6.57 coming down from Rs.14.69 for the previous year.

2. Dividend

Your directors recommend a dividend of Rs.2.50 per share for the year ended 31st March, 2013 on the amount of paid up share capital.

3. Reserves

Total reserves as on 31st March, 2013, after providing for dividend for the year, stood at Rs. 4033lakhs, representing an increase of 8% from last year''s Rs.3737 lakhs.

Book value increased from Rs.55.98 per share to Rs.59.62, after providing for the proposed dividend of Rs.2.50 and corporate dividend tax of Re.0.43 per share.

4. Deposits

There were no deposits at the end of the year which were due but not paid.

5. Credit rating

ICRA has maintained the long-term credit rating at ''(ICRA)A-(Stable)'' and short-term rating at ''(ICRA)A2 ''.

6. Accident at detonators plant

There was an unfortunate accident on 16th July, 2012 in ASA section of detonators plant at our Peddakandukuru premises. Apart from damage to assets and stocks, we lost production of about 30 million detonators in the financial year.

Sadly, two of our workers lost their lives.

We analysed the root-cause of the accident and after a thorough debate replaced the highly sensitive chemical ASA with a safer one, NHN. So far this chemical has been tested only at lab scale and no one has attempted to use it at commercial scale, but your company took it as a challenge and started production of NHN detonator after meeting the applicable regulatory requirements. You will be pleased to note the innovative detonator has been accepted by the market as a quality product.

Apart from being safer in production, these new detonators are eco-friendly also, containing no element of lead.

This innovative initiative has consumed a lot of our time and we had to forego some of our revenues in 2012-13.

However, we are happy to inform you that production of detonators has already reached normal level in the first two months of 2013-14.

7. Operations

Owing to the accident, we lost production of about 30 million detonators.

Production of bulk explosives increased to 15,380 tons from previous year''s 14,984 tons, helped by new orders in some locations, though at other locations some old contracts ended or renewals came late.

Packaged explosives plant, commenced in the second half of the year, had stabilized and started yielding revenues.

There had been remarkable improvement in defence and allied products assuaging the other negative impacts to some extent.

Operations & maintenance contracts have given steady streams of revenues.

Windmill at Pushpathur generated 16..41 lakh units of power compared to 16.12 lakh during the previous year.

8. Future outlook

General economic conditions, environmental issues, slowdown in infrastructure projects, etc. are the concerns that can impact the demand for explosives. However, early indications for 2013-14 have been positive so far and your company has been taking necessary steps to achieve better performance during 2013-14.

In June 2013, Ministry of Defence promulgated the Defence Procurement Procedure 2013 aimed at developing a robust indigenous defence sector and creating level playing field between the private and public sectors.

The changes in new policy include simplification of "Buy & Make (Indian)" Procedure, clear definition of indigenous content, finalization of Defence Items List for clarity on licensing, doing away with requirement of licensing for dual-use items (with civil as well as military applications), etc.

The new policy would help in your company''s ambitions to build up defence product capabilities. Premier has already entered defence production sector in a significant way and today it is a niche player in the missile / rocket field and is one amongst a handful of companies with its competence to design and develop the rocket motors. Having been working with many defence entities for about a decade, Premier looks forward to contribute its bit towards strengthening the national defence and security.

9. Statutory auditors

M/s P.V.R.K. Nageswara Rao & Co., Chartered Accountants, Hyderabad retire at the forthcoming annual general meeting and being eligible offer themselves for reappointment.

10. Auditors'' report

Auditors'' report contains a matter of emphasis and a qualification.

Matter of emphasis is about our interests injoint ventures. The company has made full provisions against the investments in joint ventures. As the accounts of these joint ventures are not available, the company''s share of assets and liabilities and income and expenditure could not be given. There is no impact on the profit for the year due to non-disclosure of these details.

Qualification is about the requirement of approval of Central Government for the remuneration paid to Chairman & Managing Director. His remuneration, for a period of three years, had been approved by the shareholders in the Annual General Meeting held on 31st July, 2010, subject to the approval of Central Government, if required. In view of satisfactory financial performance, approval of the Central Government had not been required for the managerial remuneration paid during the years 2010-11 and 2011-12. However, during the year 2012-13 there was an accident in the detonators plant and the operations had been adversely affected. Consequential inadequacy of profit resulted in the managerial remuneration being in excess of the amount payable in terms of sections 198 and 309 read with schedule XIII of the Companies Act, 1956. The company is taking necessary steps to obtain the approval of Central Government.

11. Directors

Mr. P.R.Tripathi and Dr. (Mrs.) Kailash Gupta retire by rotation at the ensuing annual general meeting and being eligible offer themselves for reappointment.

12. Directors'' responsibility statement pursuant to section 217 (2AA) of Companies Act, 1956

Your directors confirm that

a) the applicable accounting standards have been followed;

b) the accounting policies selected were applied consistently and the judgments and estimates made are reasonable and prudent so as to give a true and fair view of the state of affairs of the company as at 31st March, 2013 and of the profit of the company for the year ended on that date;

c) proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

d) the annual accounts have been prepared on a going concern basis.

13. Management discussion and analysis

A report on management discussion and analysis is placed at Annexure-1.

14. Corporate governance

Pursuant to clause 49 of the listing agreement with the stock exchange, a detailed report is given at Annexure-2 along with the auditors'' certificate in the Annexure-3 and CEO & CFO certificate in the Annexure-4.

15. Conservation of energy, technology absorption and foreign exchange earnings and outgo

Information pursuant to section 217(1) (e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the report of Board of Directors) Rules, 1988 is given in the Annexure-5.

16. Particulars of employees

In accordance with the provisions of section 217 (2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules 1975, particulars of employees of the company are furnished in the Annexure-6.

17. Green initiatives

Your company is installing a new 250KW solar PV plant during the year 2013-14, at Peddakandukuru premises, to ensure uninterrupted production in the power starved state of Andhra Pradesh.

Together with the existing windmill and rooftop solar PV plant, the company would henceforth produce a lot more of green power than the grid-power it consumes.

Your company has been sending electronic documents to the shareholders and thus reducing the paper consumption to an extent.

We reiterate our request to the relevant shareholders to register their email id''s with their depository participants.

E-communication Registration Form (Annexure-7) has been enclosed for this purpose.

18. Research and development

Your company pursues applied research to be able to produce new products and also to produce the old products better.

As mentioned earlier, NHN detonator is one of the products that resulted from our R&D pursuits.

During the year we also produced a unique solid propellant for a prestigious missile program, meeting all the technical parameters.

This year we saw our collaboration with University of Gulbarga yielding the first Ph.D.

The research scholar who worked at Premier''s research centre as part of his doctorate program got the degree for his thesis "Synthesis, characterization and studies of some important noble metal and metal oxide nano- particles as energy materials" under the supervision of two of our directors.

19. Industrial relations

Your directors thank all the employees for their cooperation and the contribution towards harmonious relationship and progress of the company.

20. Acknowledgements

Your directors place on record their appreciation of the continued support and cooperation from all employees, customers, suppliers, financial institutions, banks, regulatory authorities and other business associates.

For and on behalf of the Board

Secunderabad Dr. A.N. Gupta

29.05.2013 Chairman & Managing Director


Mar 31, 2012

The directors are pleased to present the 32nd annual report together with the audited accounts of the company for the year ended 31st March, 2012.

A summary of the results is given below:

1. Financial performance

(Rs. in lakhs)

2011-12 2010-11

Gross revenue 11836.00 10391.68

Excise duty (834.58) (748.99)

Net revenue 11001.42 9642.69

Gross profit 1908.54 1807.39

Finance costs (101.62) (125.79)

Depreciation (186.66) (176.61)

Exceptional items (net) 39.20 -

Profit before tax 1659.46 1504.99

Provision for tax (465.36) (503.46)

Profit after tax 1194.10 1001.53

Earnings per share(Rs.) 14.69 12.33

Dividend per share (Rs.) 2.50 2.00

(subject to approval of the shareholders)

Total shareholders' funds 4549.43 3591.32

Book value per share (Rs.) 55.98 44.19

Your company has achieved a growth of 14% in gross revenue at Rs.11836 lakhs for the year ended 31st March, 2012 compared to Rs. 10392 lakhs in the previous year. Most of the increase has been contributed by accessories while there has been satisfactory growth in other products also. Exports increased from Rs.542 lakhs to Rs.760 lakhs, recording a growth of 40%.

In line with top line, gross profit increased from Rs. 1807 lakhs to Rs.1909 lakhs and profit before tax from Rs.1505 lakhs to Rs.1659 lakhs.

Net profit for the year stood at Rs.1194 lakhs, as against Rs.1002 lakhs for the previous year, resulting in the EPS reaching Rs.14.69 from Rs.12.33 for the previous year.

Book value increased from Rs.44.19 per share to Rs.55.98, after providing for proposed dividend of Rs.2.50 and corporate dividend tax of Rs.0.40 per share.

2. Operations

In the explosives & accessories division, some products have fared well while others could not. Production of detonators increased to 65 million numbers from 48 million last year. However, production of bulk explosives declined to 14,984 tons from previous year's 16,544 tons. Operations & maintenance contracts have been carried out at SHAR,Sriharikota, SFC,Jagdalpur and ARDE, Pune to the satisfaction of our principals.

Windmill at Pushpathur produced 16.12 lakh units of power compared to 14.70 lakh during the previous year.

3. Dividend

In view of higher net profit, your directors recommend a dividend of Rs.2.50 per share for the year ended 31st March, 2012 on the amount of paid up share capital. This is 25% higher than the previous year's dividend of Rs.2.00 per share.

4. Reserves

Total reserves as on 31st March, 2012, after providing for dividend for the year, stood at Rs.3737 lakhs, representing an increase of 34% from last year's Rs.2779 lakhs.

5. Future outlook

Despite some concerns about environmental impact, increasing need for power is expected to result in expanded mining activity which would create higher demand for the company's products.

Revenues from defence explosives are expected to increase after having commissioned the expansion project in March, 2012, as Government has allocated larger funds for defence procurement.

There has been severe competition in some of the recent tenders and the company decided to withdraw from participation. Your company is taking necessary steps, like focusing on exports, to create alternative income streams for maintaining healthy growth.

6. Deposits

There were no deposits at the end of the year which were due but not paid.

7. Credit rating

During the year ICRA has upgraded the long-term credit rating from 'LBBB (Stable)' to '(ICRA)A-(Stable)' and short-term rating from 'A2' to '(ICRA)A2 '.

Further improving balance sheet is expected to lead to better rating in coming years.

8. Green initiatives

This year also, windmill and rooftop solar PV plant produced more green power (around 16 lakh units) than the grid power (around 13 lakh units) drawn by the company.

Following the "Green Initiative for Corporate Governance", your company has sent notices and documents to the shareholders by electronic means, thus reducing the paper consumption to an extent.

Your company appreciates the shareholders for wholeheartedly agreeing for electronic communication.

Shareholders, who have not yet registered their email id's, are once again requested to send the E-communication Registration Form to their depository participants or to the company, to make this green initiative 100% successful.

9. Statutory auditors

M/s P.V.R.K. Nageswara Rao & Co., Chartered Accountants, Hyderabad retire at the forthcoming annual general meeting and being eligible offer themselves for reappointment.

10. Auditors' report

Auditors have made an observation in their report pertaining to note no. 31.2.16 of Notes on accounts. This note is self explanatory.

11. Directors

Dr. Haridwar Singh and Mr. Anilkumar Mehta will retire by rotation at the ensuing annual general meeting and being eligible offer themselves for reappointment.

12. Directors' responsibility statement pursuant to section 217 (2AA) of Companies Act, 1956

Your directors confirm that

i) the applicable accounting standards have been followed;

ii) the accounting policies selected were applied consistently and the judgments and estimates made are reasonable and prudent so as to give a true and fair view of the state of affairs of the company as at 31st March, 2012 and of the profit of the company for the year ended on that date;

iii) proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

iv) the annual accounts have been prepared on a going concern basis.

13. Management discussion and analysis

A report on management discussion and analysis is placed at Annexure-1.

14. Corporate governance

Pursuant to clause 49 of the listing agreement with the stock exchange, a detailed report is given at Annexure-2 along with the auditors' certificate in the Annexure-3 and CEO & CFO certificate in the Annexure-4.

15. Conservation of energy, technology absorption and foreign exchange earnings and outgo

Information pursuant to section 217(1) (e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the report of Board of Directors) Rules, 1988 is given in the Annexure-5.

16. Particulars of employees

In accordance with the provisions of section 217 (2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules 1975, particulars of employees are furnished in the Annexure-6.

17. Industrial relations

Your directors thank all the employees for their cooperation and the contribution towards harmonious relationship and progress of the company.

18. Acknowledgements

Your directors place on record their appreciation of the continued support and cooperation from all employees, customers, suppliers, financial institutions, banks, regulatory authorities and other business associates.

For and on behalf of the Board

Secunderabad Dr. A.N. Gupta

23.05.2012 Chairman & Managing Director


Mar 31, 2011

The directors are pleased to present the 31st annual report together with the audited accounts of the company for the year ended 31st March, 2011.

A summary of the results is given below:

1. Financial performance

(Rs. lacs)

2010-11 2009-10

Gross revenue 10391.68 9668.94

Excise duty (748.99) (606.50)

Net revenue 9642.69 9062.44

Gross profit 1821.80 2340.36

Financial costs (140.21) (153.24)

Depreciation (176.61) (147.65)

Profit before exceptional

items and tax 1504.98 2039.47

Exceptional items:

Write-offs / provisions relating

to joint ventures - (740.97)

Profit after exceptional items &

before tax 1504.98 1298.50

Provision for tax (including

deferred tax) (503.46) (704.18)

Profit after tax 1001.52 594.32

Profit brought forward 1452.07 1147.21

Profit available for appropriation 2453.59 1741.53

Appropriations

- Dividend (162.51) (162.48)

- Dividend tax (26.36) (26.98)

- General Reserve (250.00) (100.00)

Balance carried forward 2014.72 1452.07

Earning per share (Rs.)3 12.33 7.32

Your company has recorded a growth of 7% in gross revenue at Rs.10392 lacs for the year ended 31st March, 2011 compared to Rs. 9669 lacs in the previous year. Increase in sales from defence products and from Neyveli and Jagdalpur divisions exceeded the shortfall in detonators division and overall there had been a net increase in sales. Exports also increased from Rs.419 lacs to Rs.542 lacs.

However, gross profit decreased from Rs. 2340 lacs to Rs.1822 lacs due to lower production of detonators on account of longer than normal monsoon and due to higher employee cost.

After making provisions relating to joint ventures (current year: nil, previous year: Rs.741 lacs), net profit for the year stood at Rs.1001 lacs, as against Rs.594 lacs for the previous year.

EPS for the current year is Rs.12.33 compared to Rs.7.32 for the previous year

2. Operations

a) Bulk explosives - production at 16,544 tons was slightly lower than previous years 16,959 tons. Higher production at Neyveli compensated the decrease in other units.

b) Detonators - prolonged monsoon had brought down the production volume to 48 million pieces from 68 million in previous year.

c) Operations & Management contracts at Sriharikota and Jagdalpur generated steady income streams.

d) Windmill at Pushpathur produced 14.70 lac units of power.

3. Future outlook

Having the economic crisis behind, the countrys economy is on growth path again. This assures the company a promising performance in the coming years.

Private sector participation is being encouraged in defence supplies and the company plans to enhance its presence in this arena.

4. Dividend

Your directors are glad to recommend a dividend of Rs.2.00 per share for the year ended 31st March, 2011 on the amount of paid up share capital.

5. Reserves

The total reserves as on 31st March, 2011, subject to declaration of dividend for the year, stood at about Rs.2779 lacs, representing an increase of 39% from last years Rs.2,000 lacs.

6. Deposits

There were no deposits at the end of the year which were due but not paid.

7. Dues to financial institutions

There were no delays in payment of interest and principal amounts to financial institutions during the financial year.

With full repayment of term loan from Export Import Bank of India during the year, there were no term loans outstanding at the end of the year.

8. Credit rating

During the year ICRA has upgraded the long-term credit rating from LBBB to LBBB+(Stable) and short-term rating from A3+ to A2.

This rating is expected to improve further with a more strengthened balance sheet now.

9. Change of registered office

During the year your company has constructed a new office building and shifted the registered office to the new premises on 12th February, 2011.

10. Green initiatives

- As mentioned in the previous report, your company has commissioned a 0.80 MW windmill in September 2010. In February 2011, a 20 KW rooftop solar PV plant was installed at the new office building. With these green initiatives, the quantum of power added to the grid (around 15 lac units) is more than that drawn by the company from the grid (around 12 lac units). Thus the companys manufacturing and operations, in net effect, are carbon-positive.

- As part of "Green Initiative for Corporate Governance", recently, the government has allowed companies to send notices and documents to their shareholders electronically to facilitate paperless communication.

This will ensure prompt communication and avoid loss of documents in transit.

Hence, shareholders are requested to register their email ids with their depository participants or with the company.

11. Statutory auditors

M/s P.V.R.K. Nageswara Rao & Co., Chartered Accountants, Hyderabad retire at the forthcoming annual general meeting and being eligible offer themselves for reappointment.

12. Auditors report

Auditors have made an observation in their report pertaining to note no. 20 of Notes to Accounts (Schedule 27). This note is self explanatory.

13. Directors

Dr. A. Venkataraman and Mr. K. Ramarao will retire by rotation at the ensuing annual general meeting and being eligible offer themselves for reappointment.

14. Directors responsibility statement pursuant to section 217 (2AA) of Companies Act, 1956

Your directors confirm that

i) the applicable accounting standards have been followed;

ii) the accounting policies selected were applied consistently and the judgments and estimates made are reasonable and prudent so as to give a true and fair view of the state of affairs of the company as at 31st March, 2011 and of the profit of the company for the year ended on that date;

iii) proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

iv) the annual accounts have been prepared on a going concern basis.

15. Management discussion and analysis

A report on Management Discussion and Analysis is placed at Annexure-1.

16. Corporate governance

Pursuant to clause 49 of the listing agreement with the stock exchange, a detailed report is given at Annexure-2 along with the auditors certificate in the Annexure-3 and CEO & CFO certificate in the Annexure-4.

17. Conservation of energy, technology absorption and foreign exchange earnings and outgo

Information pursuant to section 217(1) (e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the report of Board of Directors) Rules, 1988 is given in the Annexure-5.

18. Particulars of employees

In accordance with the provisions of section 217 (2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules 1975, particulars of employees of the company are furnished in the Annexure-6.

19. Industrial relations

Your directors thank all the employees for their cooperation and the contribution towards harmonious relationship and progress of the company.

20. Acknowledgement

Your directors place on record their appreciation of the continued support and cooperation from all employees, customers, suppliers, financial institutions, banks, regulatory authorities and other business associates.

For and on behalf of the Board

Secunderabad A.N. Gupta

19.05.2011 Chairman & Managing Director


Mar 31, 2010

The Directors are pleased to present the 30th annual report together with the audited accounts of the Company for the year ended 31st March, 2010.

A summary of the results is given below:

1. Financial performance

(Rs. Lacs) 2009-10 2008-09 Gross Revenue 9668.94 7812.19 Excise Duty (606.50) (734.82) Net Revenue 9062.44 7077.37 Gross profit from operations 2340.36 1548.96 Finance charges Depreciation (153.24) (279.04) (147.65) (120.75) Profit before exceptional items and tax 2039.47 1149.17 Exceptional items: Write-offs / provisions relating to joint ventures (740.97) (537.01) Profit after exceptional items & before tax 1298.50 612.16 Provision for tax (including deferred tax & fringe benefit tax) (704.18) (326.10) Profit after tax 594.32 286.06 Profit brought forward 1147.21 1063.70 Profit available for appropriation 1741.53 1349.76 Appropriations • Dividend (121.84) • Dividend tax (20.71) • Transfer to General Reserve (60.00) Balance carried forward 1741.53 1147.21

Your Company has recorded a growth of 24% at gross revenue of Rs.9669 lacs for the year ended 31st March, 2010 compared to Rs.7812 lacs in the previous year. Gross profit increased to Rs.2340 lacs from Rs.1549 lacs showing an increase of 51%. Profit after tax stood at Rs.594 lacs against Rs.286 lacs (after exceptional items of Rs.741 lacs and Rs.537 lacs respectively)

2. Operations

a) Bulk explosives production was higher at 16,959 tons compared to 11,470 tons during the previous year. During the year an additional facility was commissioned at Neyveli, which started production from October 2009 and contributed 1,401 tons of production.

b) Detonators and Detonating Fuse production was also higher despite stiff competition in the market.

c) During the year, your Company secured Operations & Management contract from Solid Fuel Complex (SFC), Jagdalpur under severe competition and have started the operations from November 2009.

d) Wind power: Your Company has established an 800 kW wind mill in Pushpathur village in Tamilnadu. It was commissioned during September 2009, which may be seen as the Companys contribution towards low carbon footprint.

3. Future outlook

Based on the gradually improving general economic conditions, your directors foresee a better performance in the year 2010-11 subject to unforeseen circumstances.

Defence and space is a promising sector on a long term basis and the Company foresees a good contribution from this sector in the coming years.

The new operations at Neyveli, Jagdalpur and Pushpathur which have commenced during the middle of the year will contribute on full year basis in the year 2010-11.

4. Dividend

Your Directors are glad to recommend dividend at Rs.2.00 per share for the year ended 31st March, 2010 on the amount paid up.

5. Reserves

The total reserves as on 31st March 2010, subject to declaration of dividend for the year, stood at about Rs.2,190 lacs, representing an increase of 37% from last years Rs.1,596 lacs.

6. Deposits

There were no deposits at the end of the year which were due but not paid.

7. Dues to financial institutions

There were no delays in payment of interest and principal amounts to financial institutions during the financial year.

8. NABL accreditation

Your company obtained accreditation from the National Accreditation Board for Testing and Calibration Laboratories (NABL) for its laboratory situated at Peddakandukur.

9. Statutory auditors

M/s P.V.R.K. Nageswara Rao & Co., Chartered Accountants, Hyderabad retire at the forthcoming annual general meeting and being eligible offer themselves for re-appointment.

10. Auditors report

Auditors have made an observation in their report pertaining to note nos.6 and 19 of Notes to Accounts (Schedule 26). These notes are self explanatory.

11. Directors

Mr. P. R. Tripathi and Dr. (Mrs.) Kailash Gupta will retire by rotation at the ensuing annual general meeting and being eligible, offer themselves for reappointment.

12. Directors responsibility statement pursuant to section 217 (2AA) of Companies Act, 1956

Your Directors confirm that

i) the applicable accounting standards have been followed;

ii) the accounting policies selected were applied consistently and the judgments and estimates made are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31st March, 2010 and of the Profit of the Company for the year ended on that date;

iii) proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

iv) the annual accounts have been prepared on a going concern basis.

13. Management discussion and analysis

A report on Management Discussion and Analysis is placed at Annexure - 1.

14. Corporate governance

Pursuant to clause 49 of the listing agreement with the stock exchanges, a detailed report is given at Annexure - 2 along with the auditors certificate in the Annexure - 3 and CEO/CFO certificate in the Annexure - 4.

15. Conservation of energy, technology absorption and foreign exchange earnings and outgo

Information pursuant to Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the report of Board of Directors) Rules, 1988 is given in the Annexure - 5.

16. Particulars of employees

In accordance with the provisions of Section 217 (2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules 1975, particulars of employees of the company are furnished in the Annexure - 6.

17. Industrial relations

Your Directors thank all employees for their cooperation and the contribution towards harmonious relationship and progress of the Company.

18. Acknowledgement

Your directors place on record their appreciation of the continued support and cooperation from all employees, customers, suppliers, financial institutions, banks, regulatory authorities and other business associates.

For and on behalf of the Board A.N. GUPTA Chairman & Managing Director Place: Secunderabad Date : 15.05.2010

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