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Pearl Global Industries Ltd.

BSE: 532808 | NSE: PGIL |

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Series: EQ | ISIN: INE940H01014 | SECTOR: Textiles - Readymade Apparels

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Annual Report

For Year :
2018 2016 2015 2014 2013 2012 2011 2010 2009

Director’s Report

To the Members,

The Directors are pleased to present the 29th Annual Report and Audited Financial Statements for the financial year ended 31st March 2018, together with the Auditors’ Report thereon.

WORKING RESULTS OF THE COMPANY (STANDALONE)

(Rs. in Crore)

Particulars

2017-18

2016-17

Income from operations

710.77

858.14

Other Income

48.02

45.35

Profit before Tax

6.78

18.16

Provision for Tax

4.11

1.15

Profit After Tax

2.66

17.01

Other comprehensive income

(0.42)

(0.02)

Total comprehensive income

2.24

16.99

Transfer to General Reserves

----

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WORKING RESULTS OF THE COMPANY (CONSOLIDATED)

(Rs. in Crore)

Particulars

2017-18

2016-17

Income from operations

1496.04

1538.06

Other Income

47.56

30.09

Profit before Tax

32.40

49.21

Provision for Tax

9.32

7.22

Profit After Tax

23.09

41.99

Other comprehensive income

(1.70)

(4.12)

Total comprehensive income

21.39

37.87

STATE OF THE AFFAIRS OF THE COMPANY

During the year, your Company’s consolidated income from operations was Rs. 1496.04 Crore as against Rs. 1538.06 Crore in the previous year and Net Profit Rs. 23.09 Crore as against Net Profit Rs. 41.99 Crore in the previous year.

The income from operations for the year under review for the Company on Standalone basis was Rs. 710.77 Crore as compared to Rs. 858.14 Crore in the previous year and Net Profit Rs. 2.66 Crore as compared to Net Profit Rs. 17.01 in the previous year.

Pearl Global Industries Limited (PGIL) is one of the India’s largest listed garment exporters, manufacturing from multiple sourcing regions within India and countries within South Asia. A preferred long-term vendor to most leading global brands, we are amongst the leading player in our Industry. Our mainstay business is to create value from competitively manufacturing and exporting fashion garments to leading global brands. We have now also ventured into e-retail through established digital channels and our own e-com portal SbuyS.in, giving consumers access to global fashion at attractive values.

Our product range includes knits, woven and bottoms (basic and complex designs) across men, women and kids wear segments. We have a well diversified and de-risked manufacturing base across India, Indonesia and Bangladesh. We have a total capacity to manufacture around 5.5 million garments per month (including own and outsourced facilities).Our revenue structure is primarily export based, with a major contribution coming from exports to the United States and Europe . We provide total supply chain solutions to customers-value retailers and high end fashion brand, retails in the United States and Europe. Our business model enables us to offer superior quality products across various countries, catering to all kinds of consumers. Our esteemed global clientele includes premium retailers in USA and Europe, including GAP, Banana Republic, Kohl’s, Macy, Ralph, Lauren, Tom Tailor and next among others.

We strive to be the most preferred vendor to the top global apparel brands and be ranked amongst the top garment manufacturers in the world, in terms of quality, service standards and ultimately-customers satisfaction, keeping in line with our broader vision.

We are geographically well positioned to produce from the most cost effective supply bases in Asia, keeping us highly competitive and relevant to our customers. We expect to maintain and step up our profitability from superior value added products and meticulous management of our costs and processes.

DIVIDEND

The Board of Directors recommend a dividend Rs.2/- per equity share for the year 2017-18 amounting to Rs.433.28 Lakhs (exclusive of tax on dividend).The dividend payout is subject to approval of the members at the forthcoming Annual General Meeting.

DIRECTORS AND KEY MANAGERIAL PERSONNEL

In accordance with the provisions of the Companies Act, 2013 and the Articles of Association of your Company, Mrs. Shefali Seth and Mr. Vinod Vaish, Directors, would retire by rotation at the ensuing Annual General Meeting and being eligible, offer themselves for re-appointment.

The Board of Directors of your Company met four times on May 26, 2017, September 12, 2017, December 13, 2017, and February 14, 2018 during the financial year 2017-18.

DIRECTORS’ IDENTIFICATION NUMBER (DIN)

The following are the Directors Identification Number (DIN) of your Directors:

Mr. Deepak Seth

- 00003021

Mr. Chittranjan Dua -

00036080

Mr. Pulkit Seth

- 00003044

Mr. Abhishek Goyal -

01928855

Mrs.Shefali Seth

- 01388430

Mr. Rajendra Kumar Aneja -

00731956

Mr. Anil Nayar

- 01390190

Mr. Vinod Vaish -

01945795

The Company has received necessary declaration from each independent Director of the Company under Section 149(7) of the Companies Act, 2013 that the Independent Directors of the Company meet with the criteria of their Independence as laid down in Section 149(6) of the Companies Act, 2013.

The Nomination and Remuneration Committee and the Board of Directors in their meetings held on 13th December, 2017, have approved the re-appointment Mrs. Shefali Seth as

Whole-Time Director of the Company for a further period of Three years with effect from 19th January, 2018. Necessary Resolution for re-appointment of Mrs. Shefali Seth as Whole-Time Director is proposed in the Notice calling 29th Annual General Meeting for approval of the Shareholders.

The Nomination and Remuneration Policy of the Company is annexed herewith as Annexure-I with this report.

BOARD EVALUATION

The Board of Directors has carried out an annual evaluation of its own performance, committees and individual Directors pursuant to the provisions of the Companies Act, 2013 and Rules made there under.

The performance of the Board was evaluated by the Board after seeking inputs from all the Directors on the basis of the criteria such as the Board composition and structure, effectiveness of Board processes, information and functioning, etc.

The performance of the committees was evaluated by the Board after seeking inputs from the committee members on the basis of the criteria such as the composition of committees, effectiveness of committee meetings, etc.

The Board and the Nomination and Remuneration Committee reviewed the performance of the individual Directors on the basis of the criteria such as the contribution of the individual Director to the Board and committee meetings like preparedness on the issues to be discussed, meaningful and constructive contribution and inputs in meetings, etc. In addition, the Chairman was also evaluated on the key aspects of his role.

In a separate meeting of independent Directors, performance of non-independent Directors, performance of the Board as a whole and performance of the Chairman was evaluated, taking into account the views of Executive Directors and Non-Executive Directors. The same was discussed in the Board meeting that followed the meeting of the Independent Directors, at which the performance of the Board, its committees and individual Directors was also discussed.

INTERNAL FINANCIAL CONTROLS

The Company has in place adequate internal control system commensurate with the size, scale and complexity of operations. During the year, such controls were tested and no reportable material weakness in the design or operation was observed.

AUDIT COMMITTEE

The Audit Committee comprises Three Non-executive Independent Directors and one Executive Director, namely Mr. Anil Nayar, Chairman, Mr. Abhishek Goyal, Mr. Rajendra Kumar Aneja and Mr. Vinod Vaish, as Members of the Committee. All the recommendations made by the Audit Committee were accepted by the Board.

VIGIL MECHANISM

The Company has set up a Vigil Mechanism, which also incorporates a whistle blower policy in terms of Listing Agreement/Regulations made by the SEBI. Protected disclosures can be made by a whistle blower through an e-mail, or dedicated telephone no. or a letter through to the Vigilance Officer or to the Chairman of the Audit Committee. The policy on vigil mechanism and whistle blower policy may be accessed on the Company’s website at the link: http://pearlglobal.com/investors/policy

CORPORATE SOCIAL RESPONSIBILITY

The Corporate Social Responsibility Committee of the Company has formulated a Corporate Social Responsibility Policy (CSR Policy) indicating the activities to be undertaken by the Company, which has been approved by the Board.

The CSR Policy may be accessed on the Company’s website at http://pearlglobal.com/investors/policy

Your Company has identified an area of education for underprivileged children and Promoting gender equality and empowering women under CSR activities. The Company had earmarked Rs. 27.00 Lakh for spending under CSR activities for the financial year 2017-18, which has been fully utilised.

The Annual Report on CSR activities is annexed herewith as Annexure-II.

SUBSIDIARY COMPANIES

During the year under review, one Company has become step down subsidiary of the Company, namely, Pearl Global Vietnam Company Limited.

Pursuant to Section 129(3) of the Companies Act, 2013, a statement containing the salient features of the financial statements of the subsidiary companies is attached to the Financial Statements in Form AOC-1. The Company will make available the said financial statements and related detailed information of the subsidiary companies upon the request by any member of the Company. These financial statements will also be kept open for inspection by any member at the Registered Office of the Company.

The financial statements of the Company, consolidated financial statements along with the relevant documents and separate audited accounts in respect of subsidiaries, are available on the website of the Company.

The Policy of determining material subsidiaries as approved may be accessed on the Company’s website at http:// pearlglobal.com/investors/policy

STATUTORY AUDITORS’ REPORT

The Auditors’ Reports (Consolidated & Standalone) for the financial year ended 31st March, 2018 do not contain any qualification, reservation or adverse remark. The Auditors’ Reports are enclosed with the financial statements in this Annual Report.

STATUTORY AUDITORS

Pursuant to the provisions of Section 139 of the Companies Act, 2013, M/s B.R. Gupta & Co. Chartered Accountants, New Delhi (Regn. No. 008352N) were appointed as Statutory Auditors of the Company, by the members of the Company in their 28th Annual General Meeting held on 28th September, 2017, for a period of five years, with effect from financial year 2017-18.

The requirement of ratification of appointment of Statutory Auditor at every annual general meeting has been dispensed with enactment of provisions of the Companies (Amendment) Act, 2017, with effect from 7th May, 2018.

SECRETARIAL AUDITOR

The Board has appointed Mr. Deepak Somaiya, Practising Company Secretary, proprietor of M/s. Deepak Somaiya & Co., to conduct Secretarial Audit for the financial year 2017-18. The Secretarial Audit Report for the financial year 2017-18 is annexed herewith as Annexure-III. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark.

INTERNAL AUDITOR

The Board has appointed M/s. Narula & Gupta, Chartered Accountants, New Delhi (FRN 013532N), as Internal Auditor for the financial year 2017-18.

EXTRACTS OF ANNUAL RETURN

Extract of Annual Return of the Company is annexed herewith as Annexure-IV to this Report.

Pursuant to the provision of Section 92(3) of the Companies Act, 2013, as amended, Annual Return is placed at Company’s website at http://www.pearlglobal.com/investors/annual-return

RELATED PARTY TRANSACTIONS

All related party transactions entered during the financial year were in ordinary course of the business and on arm’s length basis. No material related party transactions were entered during the financial year by the Company. Accordingly, the disclosure of related party transactions as required under Section 134(3)(h) of the Companies Act, 2013 in Form AOC-2 is not applicable to the Company.

Members may refer to note no. 47 to the standalone financial statements which sets out related party disclosures pursuant to Ind AS-24.

A disclosure on related party, as required under Regulation 34(3) read with Schedule V of SEBI (Listing Obligations and Disclosures Requirements) Regulations, 2015 is annexed as Annexure-V.

PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS

Particulars of Loans, guarantees and investments covered under Section 186 of the Companies Act, 2013 is annexed as Annexure-VI.

FIXED DEPOSITS

Your Company has not accepted any Fixed Deposits from Public or Shareholders during the year, nor has any unclaimed or unpaid deposits at the end of the financial year.

RISK MANAGEMENT

The Company has implemented procedures and policies in place for risk management including identifying risk which may threaten the existence/operations of the Company.

DIRECTORS’ RESPONSIBILITY STATEMENT

Pursuant to the requirement under Section 134 (5) of the Companies Act, 2013, with respect to Directors Responsibility Statement, your Directors state that:

a) in the preparation of the annual accounts for the financial year ended 31st March 2018, the applicable accounting standards have been followed along with proper explanation relating to material departures. There are no material departures from the same;

b) the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year 31st March, 2018 and of the profit and loss of the Company for that period;

c) the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d) the Directors have prepared the annual accounts on a ‘going concern’ basis;

e) the Directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and are operating effectively; and

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

LISTING

The shares of your Company are listed at BSE Limited and National Stock Exchange of India Limited, Mumbai. The listing fees to the Stock Exchanges for the year 2017-18 have been paid.

REGISTRAR AND SHARE TRANSFER AGENT

Link Intime India Pvt. Ltd is Company’s Registrars and Share Transfer Agent (RTA) as common agency both for physical and demat shares, as required under Securities Contract (Regulation) Act, 1956. The detail of RTA forms part of the Corporate Governance Report.

CORPORATE GOVERNANCE

Report on Corporate Governance along with the certificate of the Auditors, confirming compliance of conditions of Corporate Governance as stipulated under Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, forms part of the Annual report.

MANAGEMENT DISCUSSION AND ANALYSIS

A detailed review of operations, performance and future outlook of the Company is given separately under the head “Management Discussion and Analysis”.

PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES

The details as required under Section 197 (12) of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended from time to time, is annexed as Annexure-VII to this report.

Particulars of employees as required under Rule 5(2) and (3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended from time to time, is annexed as Annexure- VIII to this report.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

The particulars relating to conservation of energy, technology absorption, foreign exchange earnings and outgo, as required under Section 134(3)(m) is annexed as Annexure-IX to this report.

DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANY’S OPERATIONS IN FUTURE

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

REPORT ON SEXUAL HARASSMENT-INTERNAL COMPLAINTS COMMITTEE

Pursuant to the provisions of The Sexual Harassment of Women at the Workplace (Prevention, Prohibition and Redressal) Act, 2013, Internal Complaints Committee has been set up to redress complaints received regarding sexual harassment. All employees (permanent, contractual, temporary, trainees) are covered under this policy. There were no complaints received during the financial year 201718.

ACKNOWLEDGEMENT

The Directors of your Company are thankful to Bankers, Business Associates, Customers, Members, Government Bodies & Regulators for the continuous support received from them and place on record their appreciation for the sincere services rendered by the employees at all level.

For and on behalf of the Board

for PEARL GLOBAL INDUSTRIES LIMITED

(VINOD VAISH) (PULKIT SETH)

Whole-Time Director Managing Director

DIN 01945795 DIN 00003044

Place: Gurugram

Date: May 29, 2018

Director’s Report