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PG Electroplast Ltd.

BSE: 533581 | NSE: PGEL | Series: NA | ISIN: INE457L01011 | SECTOR: Consumer Goods - Electronic

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Annual Report

For Year :
2018 2016 2015 2014 2013 2012 2011

Director’s Report

DEAR MEMBERS,

The Board of Directors have pleasure in presenting the 16th Annual Report on business & operations of the Company and Audited Financial Statements, for the financial year ended 31st March, 2018.

1. RESULTS ON OPERATIONS:

(Rs. in Lakh except EPS)

Particulars

FY 2017-18

FY 2016-17

Revenue from operations

39,942.07

36,635.00

Other income

531.05

313.45

Profit after Tax

748.50

336.18

Other Comprehensive Income

20.64

18.67

EPS

4.69

2.16

Your company has adopted Indian Accounting Standards (IND-AS) with effect from 1st April 2017 with a transition date of 1st April 2016. The financial statements for the year ended 31st March 2018 has been prepared in accordance with IND-AS & the financial statements for the year ended 31st March 2017 has been restated to comply with IND-AS to make them comparable.

2. PERFORMANCE OVERVIEW:

During the year under review, your company''s revenue grew by 9.03%, primarily due to increase in sales. The profit after tax for the financial year was Rs748.50 lakh as against Rs 336.18 lakh in the previous year which increased by 122.65%. Earnings per share of the Company also increased by more than double from EPS of previous financial year.

As required under regulation 34 of SEBI (Listing Obligation & Disclosure Requirements) regulations 2015, the Managements Discussion & Analysis Report, containing more details on state of Company Affairs, is attached & forms part of this Annual Report.

3. PROJECTS & EXPANSION PLAN:

During the year, the Company has incurred Rs 6,623.40 Lakhs on capital expenditure. The Company has installed several new injection moulding machines in its factories and increased covered area of existing factories by constructing new buildings/floors The Company added new capacity of PU paint shop, started UF thermoset moulding seat facility. Tool Room facility for making moulds has been further ramped up during the year and company commercially launched Washing machine under ODM model.

4. DIRECTORS AND KEY MANAGERIAL PERSONNEL:

Biographical details of members of the Board as at the date of this report are set out on pages 18 to 19. There has been no change in composition of Board of Directors during the year.

In accordance with the provisions of the Companies Act 2013, Mr. Vishal Gupta, Director of the Company will retire by rotation at the ensuing AGM and being eligible, offer himself for reappointment.

None of the Directors have incurred any disqualification on account of non-compliance with any of the provisions of the Act. During the year, non-executive directors of the Company had no pecuniary relationship or transactions with the Company, other than sitting fees for the purpose of attending meetings of the Company.

DECLARATION GIVEN BY INDEPENDENT DIRECTORS

The Company has received declarations from each of the Independent Directors confirming that they meet the criteria of independence as prescribed under Section 149(6) of the Companies Act, 2013 and there has been no change in the circumstances which may affect their status as independent director during the year. The independent directors have also confirmed that they have complied with the Company''s code of conduct.

MEETINGS OF BOARD OF DIRECTORS & ITS COMMITTEES

Five meetings of the Board of Directors were held during the period under review. For details of Composition & Meetings of the Board and its Committees, please refer to the Report on Corporate Governance, which forms part of this Report as Annexure I.

CHANGE IN KMPs.

Mr. K. A. Khandelwal, CFO (designated as KMP) has resigned w.e.f. 04/11/2017.

5. DIVIDEND:

The Board of Directors have not recommended any dividend.

6. BOARD EVALUATION AND FAMILIARIZATION PROGRAMME:

The Board has carried out a formal annual evaluation of performance of the Board itself, its Committees and individual Directors pursuant to the provisions of the Companies Act, 2013 and Regulation 17 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The evaluation of individual Directors including chairman was done by the Directors other than the one being evaluated by Board & Nomination Remuneration Committee. For evaluation of Board itself & its Committee, the Board followed internal evaluation methodology, which was based on criteria be set by the Nomination and Remuneration Committee.

Further, the Independent Directors also, at their separate meeting assessed the quality, quantity and timeliness of flow of information between the company management and the Board.

The details of program for familiarization of Independent Directors of your Company are available at webpage http:// www.pgel.in/investor.aspx.

7. CORPORATE GOVERNANCE REPORT & MANAGEMENT DISCUSSION AND ANALYSIS REPORT:

Corporate Governance Report and Management Discussion & Analysis Report as stipulated under SEBI (Listing Obligation & Disclosure Requirements) Regulations, 2015 which forms integral part of this report, are presented as ''Annexure I'' & on page no. 20 to 27 respectively. Compliance certificate on corporate Governance, issued by M/s RSJ Associates, Practicing Company Secretary also form a part of the said Corporate Governance Report.

8. POLICY ON DIRECTORS'' APPOINTMENT & REMUNERATION:

The Board has, on the recommendation of the Nomination & Remuneration Committee framed a policy on appointment & remuneration of Directors and Senior Management Employees. This policy is attached as ''Annexure II'' to this report.

9. DIRECTORS RESPONSIBILITY STATEMENT:

The Board of Directors, to the best of their knowledge and belief, confirm that:

a) in the preparation of the annual accounts of Financial Year 2017-18, the applicable accounting standards had been followed along with proper explanation relating to material departures;

b) They had 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 and of the profit and loss of the company for that period;

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

d) They had prepared the annual accounts on a going concern basis; and

e) They had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively.

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

10. RISK MANAGEMENT & INTERNAL CONTROL SYSTEMS:

The Company has developed & implemented a Risk Management framework for identification, evaluating and management of risks, including the risks which may threaten the existence of the Company. In line with your Company''s commitment to deliver sustainable value, this framework aims to provide an integrated and organized approach for evaluating and managing risks. Regular exercise has been carried out to identify, evaluate, manage and monitor the risks.

Your Company''s internal control systems are commensurate with the nature of its business and the size and complexity of its operations. The Company has in place adequate controls, procedures and policies, ensuring 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 accounting records, and timely preparation of reliable financial information.

The internal controls cover operations, financial reporting, compliance with applicable laws and regulations, safeguarding assets from unauthorized use and ensure compliance of corporate policies. Internal controls are reviewed periodically by the internal auditors and are subject to management reviews with significant audit observations and follow up actions reported to the Audit Committee. The Audit Committee actively reviews the adequacy and effectiveness of internal control systems and suggests improvements for strengthening them in accordance with the changes in the business dynamics, if required.

11. STATUTORY AUDITORS & THEIR REPORT:

During the reporting period, M/s Chitresh Gupta & Associates has been re-appointed as Statutory Auditors of the Company to hold office from 15th AGM to 19th AGM, which shall be held in year 2021. The Statutory Auditor''s Report on Financial Statements, for the year ended on 31st March 2018, does not contain any qualification, reservation, adverse remarks, disclaimer or observations. The report is self-explanatory and do not call for any further clarifications.

12. SECRETARIAL AUDIT & THEIR REPORT:

Pursuant to the provisions of Section 204 of the Act and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board of Directors had appointed M/s RSJ Associates, Practicing Company Secretary, for conducting secretarial audit of Company for the financial year 2017-18. Their report is annexed with Board Report as''Annexure III. The Secretarial auditor''s report does not contain any qualification, reservation, adverse remarks, disclaimer or observations except following:

The Auditors mentioned about Order dated 02.08.2017, passed by the Adjudicating Officer of Securities & Exchange Board of India, please refer para 22 of this report for more explanations.

They have also written about requirements of registration under E-Waste (Management) Rules and Plastic Waste (Management and Handling) Rules. The Company has applied for registration as manufacturer (not being producers or brand owner as defined in the said rule) under E-Waste (Management) Rules and the registration has not yet been received by the Company during the financial year ended on 31st March 2018.

Other parts of this report are self-explanatory and do not call for any further clarifications.

13. COST AUDITORS:

The Board of Directors have re-appointed M/s Amit Singhal & Associates, Cost Accountants, having Firm Registration Number-101073, as Cost Auditors to audit the cost records of the financial year 2018-19 and recommends ratification of their remuneration by the shareholders at the ensuing annual general meeting. Cost Audit Report for FY 2017-18 will be filed with Ministry of Corporate affairs

14. CORPORATE SOCIAL RESPONSIBILITY (CSR):

During the preceding financial year 2016-17, the Company did not match the criteria of net worth or turnover or net profit for applicability of CSR, provided under Section 135 of the Companies Act 2013 & rules made there under. Thus, the Company was not required to constitute a CSR committee during financial year 2017-18. However, the Company is committed to act in a socially responsible, ethical and environment friendly manner and serve the society at large.

Net profit of the Company for the financial year 2017-18 was Rs 7.48 Crores. Thus, the Company has constituted CSR committee in ongoing financial year & will take CSR initiatives during the ongoing financial year.

15. VIGIL MECHANISM:

The Company has established a Vigil Mechanism /Whistle Blower Policy for dealing with instances of fraud & mismanagements. All Employees of the Company and various stakeholders of the company can make Protected Disclosures in writing or through mail in relation to matters concerning the Company/unethical behavior/ actual or suspected fraud/ violation of codes & policies of the Company.

Your Company hereby confirm that no directors/employee have been denied access to the chairman of the Audit Committee. There was no complain received through the said mechanism during the financial year 2017-18.

The Vigil Mechanism or whistle blower policy may be accessed at web-link http://www.pgel.in/PDF/VigilMechanismWhistle BlowerPolicy.pdf.

16. PARTICULARS OF CONTRACTS OR ARRANGEMENT MADE WITH RELATED PARTIES:

During the year, the Company had not entered into any contract/arrangement/transaction with related parties which could be considered material in accordance with SEBI (Listing Obligation & Disclosure Requirements) Regulations 2015 & policy of the Company.

All related party transactions entered by your Company, during the year under review, were approved by the Audit Committee. Prior omnibus approval has been obtained for related party transactions which are repetitive in nature and/or entered in ordinary course of business and at arm''s length. There are no materially significant related party transactions that may have potential conflict with interest of the Company at large.

To fuel future growth, promoters have further infused Rs 22.63 Crores in the Company as an interest free loan during the year, after approval of Audit Committee & the Board of Directors. For more detail refer Note No. 35 of ''Notes to Financial Statements''.

The policy on materiality of Related Party Transactions and policy on dealing with Related Party Transactions are available at web-link http://www.pgel.in/PDF/RelatedPartyTransactionsPolicy.pdf.

The particulars of contract or arrangements entered by the Company with related parties referred to in section 134 of the Companies Act are disclosed in form AOC-2 as ''Annexure IV''.

17. SUBSIDIARY, JOINT VENTURE OR ASSOCIATE COMPANY:

Your Company does not have any subsidiary, joint venture or associate Company. During the year under review, no company became or ceased to be subsidiary of the Company.

18. PARTICULARS OF LOAN GIVEN, INVESTMENTS MADE, GUARANTEE GIVEN, AND SECURITIES PROVIDED UNDER SECTION 186 OF THE COMPANIES ACT, 2013:

During the financial year 2017-18, the Company has not given any loan or guarantee, has not made any investment & provided any securities under section 186 of the Companies Act, 2013.

19. EXTRACT OF ANNUAL RETURN:

The Extract of Annual Return in prescribed form MGT-9 is enclosed as ''Annexure - V''. Annual Return is also available on weblink http://www.pgel.in/PDF/Annual_Return_2017-18.pdf

20. PARTICULARS OF EMPLOYEES:

The disclosure pertaining to remuneration and other details of directors and employees as required under section 197(12) of the Companies Act 2013 read with Rule 5 of the Companies (Appointment and remuneration of Managerial Personal) Rules, 2014 and the amendment thereof have been provided in the ''Annexure VI'' forming part of this report.

21. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNING & OUTGO:

(A) Conservation of Energy:

Conservation of energy is key focus area in operations and in our endeavour to conserve energy, the Company continuously makes efforts to optimize use of fuels, power & water. The following steps has been taken for conservation of energy:

a) The Company purchased several Injection Moulding Machines that use Servo-Hybrid Technologies which use 60% less power than older Injection Moulding Machines.

b) Shop floors which run manufacturing process have been transitioned to LED highbay lights which have further reduced the energy costs by about 60%.

c) The Company is also maintaining a power factor of about close to 1.

d) A turbo ventilation system has been installed on all roofs which has reduced the use of exhaust fans.

e) The Company has installed variable frequency drivers in all electric motors which have helped sustain a lower power factor.

f) Using invertor technology to control the speed of the compressor''s motor in the AC plant better temperature regulation has been achieved and has hence reduced energy consumption.

g) All street lights & main machine flow highbay lights have been substituted for greener LED alternatives.

h) The Company continuously evaluate new technologies and techniques to make infrastructure more energy efficient.

(B) Technology absorption:

In striving for continuous excellence in technology and best quality product, several initiatives have been taken:

a) With technology from Hoti (Xiamen) Plumbing Inc, the company has added a PU paint shop and a UF thermoset moulding seat facility, giving it new manufacturing capabilities.

b) The bigger moulding machines on the shop floor have been fitted with an automatic conveyor line, thereby reducing production cost while enhancing product quality.

c) Additional PCB & SMT assembly-cum-automation machines have been purchased thereby increasing production capacity.

d) New Blow Moulding Equipment has also been installed.

e) Injection moulding machines with servo drive technology have been added to the facilities.

f) Industrial robots are being installed on injection moulding machines which will reduce manpower cost.

These initiatives will help the Company to manufacture cheaper and more durable products.

The expenditure incurred on Research and Development is Rs 14.31 Lakhs.

(C) Foreign exchange earnings and Outgo:

(Rs. in Lakh)

Particulars

2017-18

2016-17

Foreign Exchange Earnings

4.50

4.16

Foreign Exchange Outgo

1801.26

2489.18

22. SIGNIFICANT & MATERIAL REGULATORY ORDERS:

An adjudication order dated August 2, 2017 has been passed by Adjudicating officer (AO) of SEBI in the matter of alleged irregularities in Initial Public Offer of the Company in the period August 2011 to September 2011 for issue of 57,45,000 equity shares of face value Rs 10/- each through 100% book building process.

In this matter a show cause Notice dated September 11, 2013 was issued under rule 4 of SEBI (Procedure for holding inquiry and imposing penalties by Adjudicating Officer) Rules 1995 read with section 15I(2) of SEBI Act 1992. SEBI initiated adjudication proceedings under the Act to inquire into and adjudge the alleged violations of certain provisions/Section/ regulation of the SEBI Act, 1992; SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulation, 2003 (PFUTP Regulations); SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009 (ICDR Regulations) by the Company and its directors namely, Mr. Promod Gupta, Mr. Anurag Gupta, Mr. Vishal Gupta and Mr. Vikas Gupta.

Now, vide order dated August 2, 2017 Adjudicating officer of SEBI has imposed monetary penalties of Rupees One Crore on the Company and Rupees One Crore on each of four directors (mentioned in above paragraph) for the violation of ICDR Regulations. AO has also imposed penalty on 26 entities for violation of the provisions of Section 11C(2) and (3) of the SEBI Act, 1992, they are not related to PG Electroplast Limited. As regards the violation of the provisions of PFUTP Regulations by the Company and its directors, AO find that the Hon''ble SAT (Order dated August 30, 2016) has not found any merit in the said allegations. The Company has filed appeal before SAT against said adjudication order.

23. MATERIAL CHANGE & COMMITMENT OCCURRED BETWEEN END OF FINANCIAL YEAR & THE DATE OF REPORT:

There is no material change and commitment occurred between 31st March 2018 and date of this report, which may affect financial position of the Company.

24. COMPLIANCE OF APPLICABLE SECRETARIAL STANDARD:

During the reporting period, your company has duly complied with all applicable secretarial standards.

25. OTHER DISCLOSURE:

The Board of Directors states that there is nothing to report in relation to following subjects/topic, because nothing has happened in matter of such subjects.

a) Details related to deposits covered under chapter V of the Companies Act 2013,

b) Details of frauds reported by the Auditors under section 143(12) other than those which are reportable to central government,

c) Issue/redemption of any kind of share or debenture,

d) Amount transferred to Reserve,

e) Complaints received under Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) act, 2013

f) Disclosures with respect to demat suspense account/ unclaimed suspense account

g) Amount required to be transferred to Investor Education and Protection Fund (IEPF), as Company did not have any funds lying unpaid or unclaimed for a period of seven years.

ACKNOWLEDGMENT

The Directors express their sincere appreciation for the invaluable contribution made by the Company''s employees which made it possible for the Company to achieve its goals. They would like to appreciate their valued shareholders, bankers and customers, suppliers, business associates and government authorities for their continuous support & assistance.

For and on Behalf of Board of Directors of

PG Electroplast Limited

Date: 11/08/2018

Place: Greater Noida

(Mr. Anurag Gupta) (Mr. Vishal Gupta)

Chairman Executive Director

DIN: 00184361 DIN: 00184809

B-15, Kalindi Colony B-15, KALINDI Colony

Delhi-110065 Delhi-110065

Director’s Report