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PG Electroplast Ltd.

BSE: 533581 Sector: Engineering
NSE: PGEL ISIN Code: INE457L01011
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OPEN 351.35
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VOLUME 17258
52-Week high 356.70
52-Week low 123.00
P/E 142.38
Mkt Cap.(Rs cr) 554
Buy Price 338.00
Buy Qty 35.00
Sell Price 0.00
Sell Qty 0.00
OPEN 351.35
CLOSE 0.00
VOLUME 17258
52-Week high 356.70
52-Week low 123.00
P/E 142.38
Mkt Cap.(Rs cr) 554
Buy Price 338.00
Buy Qty 35.00
Sell Price 0.00
Sell Qty 0.00

PG Electroplast Ltd. (PGEL) - Director Report

Company director report

To

The Members

PG Electroplast Limited

Your Directors have pleasure in presenting the 14th Annual Report along withAudited Financial Statements for the financial year ended on 31st March 2016.

1. Business of the Company:

The Company is an electronic manufacturing services (EMS) provider for originalequipment manufacturers (OEMs) of consumer electronic products in India.

The Company is engaged in the manufacturing of consumer durables which comprise mainlyof

• Molding division: Main products are parts of AC Washing Machine RefrigeratorAutomobile parts Bathroom fittings etc.

• Electronics Division: Main products are printed circuit board assembly of LEDTV etc.

• Tooling Division: Moulds for various products

• Complete products: assembly/manufacturing of kitchen appliances like JuicerMixer flask Chopper Microwave kits Plastic Container Solar Lamp Water Purifier SetTop Boxes and Air Coolers.

The Company has five manufacturing facilities: Three in Greater Noida (Uttar Pradesh)One in Ahmednagar (near Pune Maharastra) and One in Roorkee.

2. Financial highlights & State of Company's Affairs:

Particulars

Amount in crore

FY 2015-16 FY 2014-15
Revenue from operations (net) 260.25 238.73
Other income 3.14 3.33
TOTAL REVENUE 263.39 242.06
EXPENDITURE 242.11 226.93
Earnings before interest tax depreciation and amortization 21.28 15.13
Depreciation and amortization expense 9.72 9.47
Finance costs 9.65 10.20
Profit / (Loss) before tax 1.91 (4.54)
Tax expenses -
Profit/ (Loss) for the year 1.91 (4.54)
EPS (Basis & Diluted) - in Rupees 1.16 (2.77)

During the year the Company has achieved a net profit of Rs. 1.91 crore (as comparedto previous year loss of Rs. 4.54 crore) due to increase in turnover change in productmix more diversified client base and reduction in finance cost.

Your Company performed better in most of its operation with comparison to lastfinancial year. The company has been achieving success in effort to enhance product mixand client base;.

The Company has performed better in production of Setup box tube light patti waterpurifier chasis for CTV kitchen appliances AC parts washing machine parts automotiveparts etc. Both production & productivity were maintained at the satisfactory levelthroughout the period under review.

3. Capital expenditure program:

During the last financial year the Company invested Rs. 15.87 Crore as capex in itsfactories.

4. Material Changes and Commitments:

To meet the requirement of diversified client base your Company has set up Fifth Unitof the Company named - "Tooling Division" to design & develop moulds. ThisUnit has started its operation during the period under review.

No material Change and commitments have occurred after the close of the Financial Yeartill the date of this report which affect the financial position of the Company.

5. Dividend:

In view of brought forward losses your company is unable to declare any dividend.

6. Deposits:

Your Company has not accepted any public deposit & no amount of principal as wellas interest was outstanding as at the end of the year

7. Directors & KMPs:

According to the provisions of the Companies Act 2013 Mr. Promod Gupta & Mr. VikasGupta Director of the Company will retire by rotation at the ensuing AGM and they areeligible for reappointment.

Tenure of Managing Director (Mr. Promod Gupta) & whole time Directors (Mr. AnuragGupta Mr. Vikas Gupta & Mr. Vishal Gupta) has expired on 14th July 2016.Board of Directors has recommended their re-appointment (vide resolutions passed at theBoard Meeting held on 21/05/2016) for further term of three years w.e.f. 15thJuly 2016.

APPOINTMENT & RESIGNATION: During the reporting year there has been no changein composition of Board of Directors and key managerial personnel except appointment ofDr. Rita Mohanty as Independent Director was approved by the shareholders of the Companyin the previous Annual General Meeting (She was appointed as an additional Directorearlier). None of the Directors have incurred any disqualification on account ofnon-compliance with any of the provisions of the Act.

During the year non executive directors of the Company had no pecuniary relationshipor transactions with the Company other than sitting fees for the purpose of attendingmeetings of the Company.

The Company has received declarations from all Independent Directors that they meet thecriteria of independence as laid down under Section 149(6) of the Act and there has beenno changes in the circumstances which may affect their status as independent directorduring the year.

8. Meeting of Board & Committee:

Please refer report on corporate governance provided as ANNEXURE I for detailsof composition of the Board & its Committee and meetings held during the year underreview.

9. Formal Annual Evaluation by the Board:

Formal Annual evaluation of performance of Directors has been carried out in separatemeeting of Independent Directors on 31/03/2016 as well as in first meeting of Nomination& remuneration Committee and Board Meeting held on 21/05/2016 after the closing of theyear 2015-16.

The evaluation process of individual directors was based on peer-evaluation. With theinputs received from all the directors an analysis and evaluation of performance of eachDirector was carried out. Chairman requested the members to consider additional parametersfor evaluation if they wish. Evaluation of Independent directors have been made byconsidering various factors like their objectivity while exercising duties in bona fidemanner time and attention they pay to the Company maintaining status of independenceetc. While evaluation of Managing & Whole time Directors have been made by consideringtheir performance & role assigned to them.

During the evaluation of the Board various people & process factors werediscussed. The Committees of the Board have been evaluated by considering itseffectiveness performance and term of reference. Board of Directors discussed theperformance of Committees & the Board of Directors.

10. Familiarization program for Independent Directors:

The Company proactively keeps its Directors informed of the regulatory updatesoperation of the Company and provides an overall industry perspective as well as issuesbeing faced by the industry. The details of modal familiarization programs provided to theIndependent Directors is available at the link http://pgel.in/uploadimages/pdf/1429163383s.pdf

11. Directors Responsibility Statement:

In accordance with the provisions of Section 134(5) of the Companies Act 2013 theBoard of Directors to the best of their knowledge and belief confirm that:

a) in the preparation of the annual accounts for the financial year ended 31stMarch 2016 the applicable accounting standards had been followed along with properexplanation relating to material departures;

b) the directors had selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the Company as at 31st March 2016 and ofthe profit /loss of the Company for that year;

c) the directors had taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 2013 forsafeguarding the assets of the company and for preventing and detecting fraud and otherirregularities;

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

e) the directors had devised proper systems to ensure compliance with the provisions ofall applicable laws and that such systems were adequate and operating effectively.

f) the directors had laid down internal financial controls to be followed by thecompany and that such internal financial controls are adequate and were operatingeffectively.

12. Risk Management & Internal Finance Control:

The Company has devised and implemented a mechanism for risk management and internalfinance control. Appropriate procedures have been incorporated in the workflow of theCompany to identify the elements of risks if any which may threaten the existence of thecompany. The Audit Committee and the Board of Directors review the risks if any involvedin the Company from time to time. As per the periodic evaluation and review by the AuditCommittee and the Board of Directors no reportable weakness in the design and operationwas observed during the period under review.

The Company has adequate internal financial control system with reference to thefinancial statements commensurate with the nature and size of its business operations.Specific procedures are designed to ensure sound management of Company's operationsafekeeping of assets optimal utilization of resources reliability of financialinformation and compliance. Clearly defined roles and responsibilities have beeninstitutionalized. Systems and procedures are periodically reviewed to keep pace with thegrowing size and complexity of your Company's operation.

13. Nomination & Remuneration Committee:

The Nomination & Remuneration Committee of the Company comprises of 4 Directorsout of which 3 are Independent Directors namely- Mr. Devendra Jha (Chairman) Mr. AyodhyaPrasad Anand Dr. Rita Mohanty & fourth one is Mr. Promod Gupta Chairman of theCompany.

14. Audit Committee:

The details pertaining to composition of Audit Committee are included in CorporateGovernance Report forming part of the Board report.

15. Disclosure Requirements:

As per SEBI (Listing Obligation & Disclosure Requirements) 2015 corporategovernance report along with the compliance certificate issued by a Practicing CompanySecretary and management's Discussion & Analysis Report for the year ended March 312016 has been presented as ANNEXURE I & ANNEXURE II respectively.

16. Particulars of contracts or arrangement made with related parties:

The particulars of every contract or arrangements entered into by the Company withrelated parties referred to in sub-section (1) of section 188 of the Companies Act aredisclosed in Annexure III.

There was no materially significant related party transaction (under section 188 of theCompanies Act 2013) entered into by the company during the year under review. All relatedparty transactions entered into during the year under review by your Company wereapproved by the Audit Committee. The Company has formulated a policy on materiality ofRelated Party Transactions and also on dealing with Related Party Transactions. The policyis available on the Company's website www.pgel.in.

17. Subsidiary Joint Venture or Associate Company:

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

18. Particulars of loan given investments made guarantee given and securitiesprovided under section 186 of the Companies Act 2013:

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 during the financialyear ended March 31 2016.

19. Extract of Annual Return:

The details forming part of the extract of the Annual Return in form MGT 9 is annexedwith this report as ANNEXURE-IV.

20. Policy on Directors' appointment & Remuneration & Board Diversity:

The nomination & remuneration policy of the Company has been disclosed in corporategovernance report which forms parts of this report as annexure V.

21. Corporate Social Responsibility:

The Company does not falls under criteria provided for CSR under Section 135 of theCompanies Act 2013 & rules made there under. Thus the Company is not required toconstitute a CSR committee. However the Company undertakes to act in a sociallyresponsible manner and serve the society at large.

22. Vigil Mechanism:

The Company has established a Vigil Mechanism / Whistle Blower Policy. All Employees ofthe Company and various stakeholders of the company are eligible to make ProtectedDisclosures in writing or through mail under the Policy in relation to matters concerningthe Company. The Vigil Mechanism or whistle blower policy may be accessed at Companieswebsite at link http://pgel.in/investor.php?id = 13.

23. Auditors:

M/s. Chitresh Gupta & Associates Chartered Accountants Delhi has been appointedas Statutory Auditors in 12th AGM of the Company to hold office up toconclusion of 15th Annual General Meeting of the Company. However theirappointment is subject to ratification by members at every subsequent Annual GeneralMeeting. They have confirmed their eligibility to the effect that their reappointment ifmade would be within the prescribed limit under the Companies Act 2013 and that they arenot disqualified. Hence the appointment of M/s. Chitresh Gupta & AssociatesChartered Accountants as the Statutory Auditors of the Company is proposed forratification by shareholders in the Notice of 14th Annual General Meeting ofthe Company.

24. Cost Auditors:

The Board of Directors have appointed M/s Amit Singhal & Associates CostAccountants having Firm Registration Number: 101073 as Cost Auditors to audit the costrecords of the financial year 2016-17 and recommends ratification of their remuneration bythe shareholders at the ensuing annual general meeting.

25. Secretarial Audit:

Pursuant to the provisions of Section 204 of the Act and the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 the Board of Directors had appointedM/s RSJ Associates Practicing Company Secretary for conducting secretarial audit ofCompany for the financial year 2015-16.

26. Auditors Report:

• The Statutory Auditor's Report on Financial Statements for the year ended on 31stMarch 2016 and Secretarial Audit Report for the year ended on 31st March 2016does not contain any qualification reservation adverse remarks or disclaimer.

• Report of Secretarial Auditor is given as an ANNEXURE-VI which forms part ofthis report. The Secretarial auditor's report does not contain any qualificationreservation adverse remarks or disclaimer however it have certain observations in theirreport which are self explanatory.

27. Disclosures under Sexual Harassment of Women at Workplace (Prevention Prohibition& Redressal) Act 2013:

The Company always strives to ensure a gender friendly atmosphere at workplace. TheCompany has not received any complaints during the year under review.

28. Particulars of employees:

The disclosure pertaining to remuneration and other details of directors and employeesas required under section 197(12) of the Companies Act 2013 read with Rule (5) of theCompanies (Appointment and remuneration of Managerial Personal) Rules 2014 and theamendment thereof have been provided in the ANNEXURE-VII forming part of this report.

29. Deployment of IPO proceeds:

Given below are the details of utilization of IPO proceeds as on 31st March2016: (Rs./Lacs)

Particulars Up to 31.03.2016 As mentioned in the prospectus
Proceeds from IPO 12064.50 12064.50
Less utilization
Issue related expenses (net of reimbursements) 993.39 900.74
Expansion of manufacturing facility under Phase II 5977.05 5114.29
Capital Expenditure (Building Plant & Machinery) 1040.66 0.00
General Corporate Purpose 0.00 2139.47
Repayment of Loans 2274.44 2410.00
Working Capital 1293.19 1500.00
Total Expenditure 11578.73 12064.50
Unutilized balance lying in Escrow Account 485.77

For more details please refer point 5 to Notes to Account -26. Board has beenauthorized to reschedule alter or modify utilization of IPO proceeds vide resolutionpassed at AGM held on 12/09/2012. As per requirements of listing agreements Details ofdeviation/variations are published (on website of Company & website of StockExchanges) on quarterly basis also.

30. Conservation of energy technology absorption foreign Exchange earning &outgo:

(A) Conservation of Energy:

a) In our Endeavour to conserve energy the Company put efforts on continuous basis foroptimum use fuels & power.

b) The Company uses VFD at all its auxiliary equipment's which helps to saves power onregular basis significantly.

c) The Company tries to maintain power factor close to 1.

d) The Company has installed turbo ventilation on all its roofs which decreases theneed of using exhaust fan.

e) The Company uses invertors' technology in compressor in AC plant which Cheating& AC plants which control the speed of the compressor motor so as to continuouslyregulate the temperature reduce energy consumption.

f) Company is now 100% high electricity efficient lighting system.

g) All the street lights & main machine flow highbay has been converted into LED.

(B) Technology absorption:

a) The Company has started facility of manufacturing tools up to 600 tons for plasticmoulding in-house.

b) The Company has purchased some PCB & SMT assembly & automation machines.

c) The Company has also installed Blow Molding Equipments.

d) The Company has stated using injunction moulding machine with survo drive technologyThese initiatives help the Company to manufacture long lasting cheaper and compatibleproducts. The expenditure incurred on Research and Development: Rs. 11.24 Lakh.

(C) Foreign exchange earnings and Outgo-

The information in this regard is provided in point 8 of Note no 26-other notes onAccount.

31. Regulatory Orders:

No significant and material orders were passed by the Regulators Courts or Tribunalsimpacting the going concern status and Company's Operations in future.

32. Transfer of amounts to investor education and protection fund:

Your Company did not have any funds lying unpaid or unclaimed for a period of sevenyears. Therefore there were no funds which were required to be transferred to InvestorEducation and Protection Fund (IEPF).

Acknowledgment

The Directors express their sincere appreciation of the invaluable contribution made bythe Company's employees which made it possible for the Company to achieve its goals. Theyalso thanks to the valued shareholders bankers and customers suppliers businessassociates for their support.

For and on Behalf of Board of Directors
Date: 05/08/2016
Place: Greater Noida (Mr. Promod Gupta) (Mr. Vishal Gupta)
Managing Director Whole Time Director
DIN:00181800 DIN: 00184809
B-15 Kalindi Colony Delhi-110064 B-15 Kalindi Colony Delhi-110065