Message from the Chairman
It's an honour and privilege to present you the FY 2019 20 AnnualReport of PG Electroplast Ltd (PGEL). During the previous year my father and theerstwhile Chairman of our Company Late Shri Promod Gupta left for his heavenly abode. Hewas a visionary first generation entrepreneur and a charismatic leader. He was truly apeople's person and fostered enduring relationships. Along with his ethos of hard work andethics he has left a rich legacy of vision mission and compassion for the existingleadership team of PGEL.
PG Group was started in 1977 with a humble beginning a singledimensional plastic moulding business that has turned into multi-dimensional diversebusinesses covering a wide spectrum of capabilities and capacities in different fields.All these are achievements of his astute determination and persistent hard work. We atPGEL are fortunate to have been guided by such legend and are determined to uphold andgrow his rich legacy. He will remain with us forever to motivate and inspire us and willcontinue to be a guiding light for the PGEL family.
Although the external market environment continued to pose challengeswe are glad to share that the year under review has been satisfactory for the Company interms of operational performance. The long term objective of enhancing our value-addeddeliveries was streamlined through better economies of scale focus towards the ODM modelforward integration and acquisition of new clients.
Global economy was in a precarious position in early 2019 due to tradewar and rising protectionism although was starting to stabilise post the US-China tradedeal however the Novel Coronavirus (Covid-19) hit the world in late
December 2019. The outbreak of Covid-19 has triggered majorsupply-chain disruptions across industries. Also severe demand and supply shocks are beingobserved across discretionary spend categories. Given the severity of the pandemic and therelated lockdowns the global economy is projected to contract sharply by close to 5% in2020.
The Indian economy has started to recover from the severe lockdown inApril-May 2020 and many sectors are seemingly adjusting to a new normal. To aid economicrecovery Government of India and regulators have announced a slew of measures to easeliquidity and improve sentiments among the general public and small businesses. On thepositive side despite a slowdown in GDP consumption is likely to remain resilient withstrong demand growth from rural India and semi-urban India.
Rising disposable income increasing urbanisation changing lifestyleand easy financing options are the major factors driving the growth of electronics andhome appliance industry in India. The government's increased focus on domestic electronicmanufacturing with initiatives like 'Make in India' and 'Digital India' also the schemeslike production linked incentives (PLI) and Phased manufacturing plan (PMP) augur well forthe domestic contract manufacturers and electronic manufacturing service (EMS) providers.
Furthermore rising labour costs in China and the global trade war arecompelling various global brands to shift or expand manufacturing location outside China.With a favourable policy structure to develop a manufacturing ecosystem for valueadditions lower corporate tax rate and lower cost of labour India could be one of thebeneficiaries from this shift. To support the industry and attract global playersrecently in April 2020 the government launched several incentives including Rs. 410billion production linked incentive (PLI) programme to incentivise large electronicmanufacturers to set up production bases in the Country.
Performance Overview and Way Forward
PGEL has emerged as a leading and prominent player in plastic mouldingand electronic manufacturing services. Our Company has established long standingrelationship with diversified and reputed client base. With proven capabilities andlarge-scale manufacturing capacities our Company today is a one-stop solution partner andpreferred vendor of choice to its OEM clients in the consumer durable and automotive spacein India.
Our strategy of building new capabilities and capacities has bornefruitful results across segments. In the last few years our client relationship havestrengthened and enabled us to increase our market share within their outsourcingrequirements. We have achieved new milestone this year by foraying into Room AC IDU(Indoor Unit) and successfully commissioned the new heat exchanger and assembly line setupfor it. During the year under review our semi-automatic washing machine platform underODM models were well received by the market and going forward we aim to expand ODM Modelby introducing new products like fully automatic washing machine air conditioner aircooler etc.
Our Company has achieved the highest revenue mark which crossed Rs. 6billion in FY 2020. Total Income stood at Rs. 6418.9 million in FY 2020 as compared toRs. 5115.4 million in FY 2019 recording a growth rate of 25.5% despite loss of last 15days revenue due to lockdown' in March 2020. EBIDTA for the FY 2020 stood atRs. 423.83 million a growth of 25.2% YoY. The Company reported Net Profit of Rs. 26.2million in FY 2020 as compared to Rs. 99.4 million in FY 2019 representing a decline of73.7%. The decline in net profit is attributed to exceptional loss of Rs. 20.1 millionowing to unfortunate fire incident in the factory and forex losses. The profit was furtherimpacted by higher tax expense as the Company adopted section 115BAA of the Income TaxAct 1961 during the year under review.
For FY 2021 and beyond we see the current economic challenges due toCovid 19 as a temporary phase and expect the business to ramp up significantly as normalcyreturns. We will continue to focus on introducing new products higher value addition inthe existing offerings acquiring new clients deepening existing relationships andimproving operational efficiencies while strengthening the balance sheet.
Every year we at PGEL strive to grow stronger with bettercapabilities stronger client relationships and higher value add in our offerings. Weenvisage a stronger and robust business for PGEL with improving profitability strongerbalance sheet and higher share of revenues being driven by products. We are looking toclearly move to higher orbits and grow faster than the Industry in our focus segments. Asthe Chairman I promise to continue to uphold the value system that binds the large PGELfamily together.
A Gratitude to Our Stakeholders
I take this opportunity to convey thanks to our Board Members for theirconstant guidance and support. I would like to thank all our stakeholders including ourvendors customers bankers financial institutions central and state government bodiesbusiness associates and employees for their firm support and involvement. On behalf of theBoard I thank our shareholders for believing in us and assure them that we will strivefor higher goals and better profitability in coming years.
|Anurag Gupta |