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Pearl Polymers Ltd.

BSE: 523260 Sector: Industrials
NSE: PEARLPOLY ISIN Code: INE844A01013
BSE LIVE 15:28 | 20 Nov 39.00 0.80
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NSE 15:29 | 20 Nov 38.65 1.90
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OPEN

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HIGH

39.00

LOW

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OPEN 38.90
PREVIOUS CLOSE 38.20
VOLUME 2927
52-Week high 48.90
52-Week low 16.15
P/E
Mkt Cap.(Rs cr) 66
Buy Price 37.05
Buy Qty 100.00
Sell Price 39.00
Sell Qty 124.00
OPEN 38.90
CLOSE 38.20
VOLUME 2927
52-Week high 48.90
52-Week low 16.15
P/E
Mkt Cap.(Rs cr) 66
Buy Price 37.05
Buy Qty 100.00
Sell Price 39.00
Sell Qty 124.00

Pearl Polymers Ltd. (PEARLPOLY) - Director Report

Company director report

DIRECTORS

Dear Members

Your Directors are pleased to present the 43 Annual Report and the Company's auditedaccounts for the financial year ended March 31 2014.

MANAGEMENT DISCUSSION AND ANALYSIS

Cautionary Statement

Certain statements in this section may be forward looking and be based on expectations/projections about the future. Company's actual results performance could thus differmaterially from those projected in any such forward looking statements. The companyassumes no responsibility to publicly amend modify or revise any of such forward lookingstatements on the basis of subsequent developments information or events.

Industry Structure and Development

Over the past few decades the Indian plastic industry has grown rapidly and has beenable to find application in both the Industrial and household sector with innovation inspecification and designs of varied products. This has provided an impetus to those in theindustry to acquire technical expertise achieve high quality standards and buildcapacities in various facets of industry.

Pearl Polymers Limited (PPL) is one of the leading manufacturers and exporters of PETbottles and containers representing the Indian Plastic Industry under the brand name"PEARLPET" with dominance in both institutional and retail segment state of theart production facilities at four locations viz. Baddi Pant Nagar Mahad and Jigani inclose proximity to our diversified customer base involved in manufacturing of blow-mouldedPET bottles & containers and other injection-moulded plastic products.

PPL an ISO: 9001 certified Company integrates the finest quality of certified rawmaterials using advanced injection stretch blow molding technology and stringent qualitycontrol procedures at all its units. The Company ensures getting new models and designs ofits product with the best and unbeatable quality at reasonable prices to cater to therequirements and preferences of its customers.

Financial Highlights

During the year under review the Industry growth remained flat and the economicconditions continued to be under pressure. High interest rate low policy visibilityincrease in raw material prices depreciation of rupee alongwith increasing inflation hasimpacted the profitability of the Company.

Despite these challenges your Company has managed to overcome the obstacles andachieved a reasonable growth in gross Sales by 2.35%. The financial performance of theCompany for the year ended March 31 2014 as compared with the previous year's performanceis summarised below:

(Rs in Lacs)
Particulars For the year ended For the year ended
31.03.2014 31.03.2013
Net Revenue from Operations 22513.42 21849.33
Other Income 122.10 273.32
Total Revenue 22635.52 22122.65
Total Expenditure 22583.46 22902.50
Profit before Tax and
Exceptional Items (PBT) 52.06 (779.85)
Exceptional Items - (2427.89)
Tax Expenses:
- Current Tax 5.68 407.00
- Demand Tax (7.51) (194.98)
- Tax adjustment for earlier year 0.00 15.43
Profit after Tax (PAT) 53.89 1420.59

Dividend

The Directors consider it prudent to retain the profits of the Company for the currentyear for funding future expansion in the Company and regret their inability to recommenddividend on Equity shares of the Company for the financial year ended March 31 2014.

Economic Scenario and Industry Outlook

PET is one of the most versatile and widely used plastics in the world. Many everydayproducts like food containers synthetic fibres and almost all plastic bottles are madefrom PET. The Indian polymer market growth is closely linked to GDP growth. The Indian percapita plastic consumption is advancing at 1.5 times its GDP growth making India among theworld's fastest growing polymer markets with a five-year CAGR of 10.7% (2008-2013).Approximately 65 million tonnes of PET are estimated to have been produced globally in2012. This tonnage has grown at a compound annual growth rate of 7.25% over the last 20years.

Despite strong growth over last few decades the Indian market remainsunder-penetrated. The lower demand growth can be attributed to economic slowdowndeferment of capital expenditure by the government on infrastructure currency volatilityand liquidity crunch caused by higher interest rates.

However the size of the India's plastics industry may touch Rs.1.7 lakh crores by 2015on account of rising consumption of the material for producing various goods. With theformation of new government economic growth is expected to accelerate in the next fiscal2014-15. The Company remains cautiously optimistic in its outlook for the currentfinancial year.

Opportunities and Challenges

The Indian plastic industry clearly has the potential to continue its fast growth. Itis expanding at a phenomenal pace with plastic being significantly used in innovating newapplications in industries like automobile electronics food processing packinghealthcare thereby increasing the demand for plastics altogether.

However India's Plastic Industry still suffers competitively because it's much smallerthan China's plastics sector. China has three to 20 times more production of most types ofpolymers than India even though their populations are relatively equal. Over the next fewyears competition in the industry is also expected to increase considerably as a resultof global trends which will become applicable to the liberalizing economy of country.

To survive the competition both polymer manufacturers and processors will need toadopt radically new methods and approaches to reduce costs improve market and customerservice and management of performance. Other factors that need consideration are weakIndian Currency Dumping of products by China at lower price un-organized sectorinflation etc.

Risk Management

In today's modern economy with the changing preferences the business environment ischanging at a very fast pace exposing the Company to different types and levels of risk.However the Company has a well structured risk assessment and minimization mechanismwhich is periodically reviewed by the Board of Directors.

Management of your Company always keeps stakeholders' interests in mind while takingall decisions such that their interests are not adversely affected. The Company has alsoput in place a risk management framework to identify assess prioritize and alleviaterisk. The risks are periodically assessed and reviewed and corrective actions are taken tomitigate effects.

Internal Control System

Your Company has adequate internal control systems to ensure maintenance of properaccounting records their accuracy and Accounting Standards safeguarding of Company'sassets and assessing its risk for insurance coverage. The internal audit function teamcomprises of well-qualified experienced professionals who control regular audits acrossthe Company's operations. The management duly considers and takes appropriate action onthe recommendations made by the Statutory Auditors Internal Auditors and the IndependentAudit Committee of the Board of Directors.

CEO/CFO certification also confirms adequacy of internal control system and proceduresin the Company.

Human Resource and Industrial Relations

PPL believes that human resources are the most precious assets of the Company.Company's ongoing thrust is to maintain productive work culture and to orient theemployees to effectively face the new and emerging challenges emanating from thecompetitive environment. Your Company is privileged to have the right blend ofprofessionals and executives in the organization and makes sincere efforts to ensurenumerous opportunities for their growth in the organization. As on March 31 2014 577numbers of employees were on Company's Roll.

The Company also employed casual workers through contractors during the year. The jobdescription of each member has been defined and performance indicators are monitoredaccordingly to improve motivation level and to encourage talent. The Industrial relationsat all levels of the Company remained cordial during the year.

Listing of Equity Shares

The equity shares of the Company are listed on the Bombay Stock Exchange Ltd. (BSEScrip Code 523260) and the National Stock Exchange of India Ltd (NSE Scrip codePEARLPOLY).

Public Deposits

During the year under review deposits amounting to Rs.7.82 Lacs in respect of 47depositors have been repaid/renewed and as on March 31 2014 a sum of Rs.14.60 Lacsrelating to 82 depositors remained unclaimed. In accordance with the provisions of theCompanies Act 1956 deposits along with interest thereon remaining unclaimed for a periodof seven years have been deposited by the Company into the Investor Education andProtection Fund (IEPF) established by the Central Government.

The Company has also filed a statement regarding deposits existing as on April 01 2014and Return of Deposits alongwith a Certificate from the Statutory Auditors thereon withthe Registrar of Companies NCT of Delhi and Haryana in pursuance of the Companies(Acceptance of Deposits) Rules 2014.

Directors

The composition of the Board of Directors is in accordance with the provisions of theCompanies Act 1956 / Companies Act 2013 the Articles of Association of the Company andsatisfies the requirements envisaged in the Listing Agreement entered into with the StockExchanges.

Pursuant to the provisions of Section 152(6) of the Companies Act 2013 readwith therules made thereunder and Articles of Association of the Company Mr. Varun Seth Wholetime Director retires by rotation at the ensuing Annual General Meeting and beingeligible offers himself for re-appointment.

As per the provisions of the Section 149 and other applicable provisions of theCompanies Act 2013 your Directors are seeking appointment of Sh. Ravi Mehra Smt. MeeraJohri and Sh. Ashish Harish Bhuva as Independent Directors in the ensuing Annual GeneralMeeting. Details of the proposal for appointment of Sh. Ravi Mehra Smt. Meera Johri andSh. Ashish Harish Bhuva are mentioned in the Explanatory Statement under Section 102 ofthe Companies Act 2013 of the Notice calling 43 Annual General Meeting of the members ofthe Company.

The Company has received notice(s) in writing proposing their candidature for theoffice of Director. The necessary resolutions for their appointment are being placedbefore you.

During the year under review Dr. Sai Ramachandran resigned from the Board of theCompany. Your Directors expressed deep sense of gratitude and wishes to place on recordtheir appreciation of the valuable contribution made by him during his tenure.

Directors' Responsibility Statement

Pursuant to the provisions of Section 217(2AA) of the Companies Act 1956 pertaining tothe Directors' Responsibility Statement your Directors hereby confirm that:

(i) in preparation of annual accounts applicable accounting standards have beenfollowed;

(ii) the Accounting Policies selected in consultation with the Statutory Auditors havebeen applied consistently and judgments and estimates made are reasonable and prudent soas to give a true and fair view of the state of affairs of the Company as at March 312014 and of profit of the Company for that period;

(iii) proper and sufficient care has been taken to the best of knowledge and abilityfor maintenance of adequate accounting records in accordance with the provisions of thisAct for safeguarding the assets of the Company and for preventing and detecting fraud andother irregularities;

(iv) the annual accounts for the year have been prepared on a "going concernbasis".

Auditors and Auditors' Report

M/s Sehgal Mehta & Co. (Firm Registration No. 003330N) Chartered AccountantsStatutory Auditors of the Company retire at the forthcoming Annual General Meeting. Theyoffer themselves for re-appointment from the conclusion of the Forty-third Annual GeneralMeeting till the conclusion of the Forty-sixth Annual General Meeting as per theprovisions of the Companies Act 2013 read with the Companies (Audit and Auditors)Rules’ 2014.

The notes to the financial statements referred to in the Auditors' Report areself-explanatory and therefore do not require any further comments.

Energy Conservation Technology Absorption & Foreign Exchange Earnings and Outgo

Within the Company there are continuous efforts to improve operational efficiencies andminimizing consumption of natural resources. Your Company actively makes efforts toincrease awareness about the need to sustain the environment and constantly evaluates newinitiatives that could reduce waste and emissions within the Company.

A statement on details pertaining to Energy Conservation Technology absorption andForeign Exchange Earnings and Outgo required under Section 217(1)(e) of the CompaniesAct 1956 read with Companies (Disclosure of particulars in report of Board of Directors)Rules 1988 forms part of this Directors' Report as Annexure-I

Particulars of Employees

During the financial year ended March 31 2014 none of the employees was in receipt ofremuneration exceeding limit specified under Section 217(2A) read with the amendedCompanies (Particulars of Employees) Rules 1975.

Corporate Governance

Your Company believes that good Corporate Governance is the basis of stakeholders'satisfaction and is thus committed to attain the highest level of transparencyaccountability and compliance of law in all facets of operations.

A detailed report on Corporate Governance along with the certificate from the StatutoryAuditors confirming compliance with the conditions of Corporate Governance as stipulatedunder Clause 49 of the Listing Agreement with the Stock Exchanges forms part of thisreport.

Acknowledgement & Appreciation

Your Directors take this opportunity to express their gratitude for the assistance andcooperation received from the shareholders customers vendors financial institutionsbanks Government authorities for their consistent support and cooperation to the Companyduring the year under review. Your Directors also wish to place on record their deep senseof appreciation for the committed services by the executives staff and workers of theCompany.

On Behalf of the Board
Pearl Polymers Ltd.
Chand Seth
Chairman & Managing Director
Place: New Delhi
Date : 1st September 2014

ANNEXURE TO THE DIRECTORS' REPORT

ANNEXURE-I

STATEMENT OF PARTICULARS WITH RESPECT TO ENERGY CONSERVATION TECHNOLOGY ABSORPTION ANDFOREIGN EXCHANGE EARNINGS AND OUTGO IN ACCORDANCE WITH THE COMPANIES (DISCLOSURE OFPARTICULARS IN THE REPORT OF THE BOARD OF DIRECTORS) RULES 1988

A. CONSERVATION OF ENERGY

a) Energy Conservation measures taken:

Energy conservation through continuous improvement is given top most priority at allour offices & production units. In our endeavor of making our production facilitiesmore energy efficient following steps have been taken during the year under review.

1. Recently we have procured 02 nos. state of the art high capacity water chillingplants (Chillers) for our Mahad & Jigani operations. These chillers are provided withmulti stage pumps & Scroll compressors which ensures optimum flow of chilled waterthrough moulds at lesser power consumption.

2. One technically advanced injection moulding machine has been installed at our Mahadunit for production of preforms this machine provide best in class energy efficiency.

3. We are in process of installing 02 nos Extrusion Blow moulding machines at our Baddi& Jigani units. These machines are having capability of processing PP as well as HDPEmaterial. These machines require only Low Pressure air to blow & are less powerconsuming.

4. The average Power Factor of all the units are being maintained at 0.99 with the helpof automatic power factor analyze & corrector. Better power factor attracts handsomerebate from state electricity boards on monthly power bills.

5. Few of the Asbestos /Tin sheets of plant's roof have been replaced with translucentfiber sheets. These sheets enable entry of direct sunlight to plant and store area in daytime which effectively reduces power consumption on lighting.

6. All cooling towers have been provided with accurate temperature sensors &controllers. These controllers switch off the tower fan automaticly whenever tower watertemp goes below a set value. This arrangement saves a significant amount of powerspecially in winter months.

7. We are working on idea of using Geothermal Cooling technology for keeping ourproduction areas cool. This is green energy & attracts tax rebates from Govt of Indiaapart from this the cost of running the system is significantly low in comparison toconventional air conditioning.

8. Our experiments in the direction of using recyclable outer cartons proved successful& some of our major clients have started using recyclable cartons. Efforts like thisnot only save energy but also reduces load on our forest reserves which are essential forfighting 'Global Warming'.

b) Additional Investments and Proposals if any being implemented for reduction ofconsumption of energy:

Energy Conservation has been given top priority in our organization being a continuousprocess regular monitoring is being carried out by management to improve our performanceand profit margins.

c) Impact of measures taken already and proposed vide (a) & (b) above are aimed at:

As a result of above mentioned efforts we successfully managed to keep impact of powertariff hike to a minimum on our operation costs.

Over-all quality of our Products & productivity has improved significantly byinstalling new efficient Chilling plants

d) Total energy consumption and consumption per unit of production as per Form A givenbelow

FORM A

Form for Disclosure of Particulars with respect to Conservation of Energy

Year Ended Year Ended
2013-14 2012-13
(A) POWER AND FUEL CONSUMPTION
1. Electricity
a) Purchased
Units (in '000 Kwh) 30106 29491
Total amount (Rs in lacs) 1861.09 1730.79
Rate/Unit (Rs ) 6.18 5.87
b) Own Generation
(i) Through Diesel Generator
Units (in '000 Kwh) 474 2428
Units per litre of Oil 10.36 14.70
Cost /Unit (Rs ) 5.16 3.01
(ii) Through steam turbine/generator
Units (in '000 Kwh) NIL NIL
Units per litre of Fuel Oil/Gas
Cost /Unit (Rs )
2. Fuel Oils (FO FOLV LDO HSD) HSD HSD
Quantity (Kilo Litre)* 137 696
Total cost (Rs in Lacs) 72.95 307.73
Average rate/litre (Rs ) 53.43 44.23
* including fuel used for power generation
3. Coal / Coke
Quantity (MT) NIL NIL
Total cost (Rs in Lacs)
Average Rate/Kg. (Rs )
4. Others/Internal Generation NIL NIL
Quantity (MT)
Total cost (Rs in Lacs)
Average rate/Kg. (Rs )
Production (In Mt) 11764 12812
B. CONSUMPTION PER UNIT OF PRODUCTION
1 Electricity (Unit per MT) 2599.52 2491.29
2 Fuel Oils (Ltr per MT) 11.61 54.31
3 Coal NIL NIL
4 Others NIL NIL

B. EFFORTS MADE IN TECHNOLOGY ABSORPTION AS PER FORM B GIVEN BELOW:

FORM B

Form of Disclosure of Particulars with respect to Technology Absorption 2013-14

1. RESEARCH & DEVELOPMENT (R&D)

a) Specific areas in which Research & Development was carried out by the company

We have invested in new machines moulds & other utility equipments to enhance ourproduction capabilities. All this exercise has been carried out to improve our customersatisfaction level which is our prime motive.

b) Benefits derived

By installing high productivity energy efficient machines & utility equipments wehave reduced our rejection levels significantly along with enhancement of 'Brand Image'& market presence.

c) Future Plan of Action:

Efforts are 'on' in the direction of automating our packaging operations especially onour high production machine. This automatic packaging system will make our operations moreswift & reliable.

2. TECHNOLOGY ABSORPTION ADAPTATION AND INNOVATION

a) Efforts made in brief towards technological absorption adaptation and innovation

The new processes & concepts in Plastics are being worked out for diversificationwhich will promote the usage of plastic packing in various products for which presentlyGlass / Metal or other materials are used. This exercise is to enhance our presence in NonPET kitchenware market

b) Benefits derived as a result of the above efforts e.g. product improvement costreduction product development import substitution etc.

With all the above efforts we have been able to run our processing machinesefficiently. Moreover we have been successful in penetrating into new markets where PET/PP can be used as a packaging solution.

B. FOREIGN EXCHANGE EARNINGS AND OUTGO

a. Activities relating to exports initiatives taken to increase exports developmentof new export markets for products and services and export plans:

During the year under review Rs 71.35 Lacs of our revenues were derived from exportsas compared to Rs 29.85 lacs during previous financial year. Your Company is furtherexploring various possibilities of exporting PET Products to various countries.

b. Total Foreign Exchange earnings and outgo

(Rs in lakhs)
Particulars Year Ended Year Ended
March 31 2014 March 31 2013
Foreign Exchange Earnings (FOB Basis)
(a) Export of finished goods 50.82 8.49
(b) Export of capital goods 20.53 21.36
Foreign Exchange Outgo (On FOB Basis)
(a) Raw Material 21.55 -
(b) Capital Goods 3.61 4.66
(c) Travelling & Others 8.86 7.71