Premco Global Ltd Management Discussions

OVERVIEW

The financial year 2023 continued to face the snowballing effects from continued headwinds, most notably the turmoil with the Russia-Ukraine war entering its second year, energy crises in Europe, among others.

The baseline forecast for global output growth estimated for 2023 at 2.8% and 3.0% for 2024. As per IMF, Indian Economy is likely to see a growth rate of 5.9% and 6.3% for the financial year 2023 & 2024 respectively.

Extract : From WTO Report.

	2022	Projections (%)
		2023	2024
World Output	3.4	2.8	3.0
Advanced Economies	2.7	1.3	1.4
Emerging Market and Developing Economies	4.0	3.9	4.2
Emerging and Developing Asia	4.4	5.3	5.1
China	3.0	5.2	4.5
India	6.8	5.9	6.3

As per the National Statistical Office, Ministry of Statistics and Programme Implementation, Indias Real GDP and Nominal GDP are projected to grow by 7 per cent (YoY) and 15.9 per cent (YoY), respectively, in 2022-23. On the demand side, private consumption has witnessed continued momentum. It is estimated to grow at 7.3 per cent in 2022-23 compared to 11.2 per cent in 2021-22, reflecting the rebound demand witnessed in the current year on account of the release of pentup demand for contact-intensive services. Exports are projected to grow at 11.5 per cent in 2022-23 despite sustained supply chain disruptions and an uncertain geopolitical environment. The share of exports in GDP (at 2011-12 prices) also increased to 23.1 per cent in 2022- 23 compared to 22.1 per cent in 2021-22

INDIAN TEXTILE INDUSTRY

The Indian domestic textile and apparel market was estimated at US $ 99 bn in 2021-22 and has seen a 30% recovery since 2020-21. The market is expected to grow at 10% CAGR from 2019-20 to reach US 190 bn by 2025-26.

India has a share of 4.6% of the global trade in textile and apparel. USA, EU-27 and UK continue to be the major textile and apparel export destinations for India and account for approximately 50% of Indias textiles and apparel exports.

The Union Budget 2023 continued to various incentives to help the textile sector cover losses incurred during the pandemic and grow as a global player

Indias textiles industry contributed 7% to the industry output (by value) . The Indian textiles and apparel industry contributed 2.3% to the GDP, 12% to export earnings and employs more than 21% of total employment.

Indias textiles industry has around 4.5 crore employed workers including 35.22 lakh handloom workers across the country. Exports of textiles (RMG of all textiles, cotton yarns/fabs/made- ups/handloom products, man-made yarns/fabs/made-ups, handicrafts excluding handmade carpets, carpets and jute mfg. including floor coverings) stood at US$ 29.8 billion between April-December 2021.

The Indian textiles market is expected to be worth more than US$ 209 billion by 2029.

TECHNICAL TEXTILES IN INDIA

PREMCO GLOBAL LIMITED, is a member of Technical Textiles Association. Technical textiles are textiles materials and products used for their technical performance and functional properties. Technical Textile has a huge scope in India and is a sunrise sector.

India is the fifth largest producer of technical textiles in the whole world with a market size of nearly USD 22 billion, which is expected to reach USD 300 billion by 2047.

India accounts for 11% (USD 22 Billion) of the worlds technical textile production (USD 197 Billion) Technical textile makes around 13% of Indias overall textile and garment industry and adds 0.7 percent to Indias GDP. According to commerce ministry of India, the Technical Textile sector is expected to grow at a significant growth rate of 20% p.a. over the next five years.

OPPORTUNITIES AND THREATS FOR THE COMPANY

OPPORTUNITIES:

For the apparel industry in general and our market in particular:

• Company has a locational advantage of supplying goods to its overseas customers, as it also has a plant in VIETNAM, which is presently a large global textile Hub, and ranks amongst the most rapidly growing countries for textiles manufacturing and exporting.

• Increasing fashion consciousness, higher disposal incomes and consumers becoming more aspirational, discerning and brand savvy, will help the brands for which Company has been manufacturing ELASTIC TAPES grow rapidly and will increase the demand for Companys products.

• In 2018-19, Company received SINGLE STAR EXPORT HOUSE CERTIFICATE, which will enable our company to be recognized for ease of operation with tax and banking officials.

• Setting up of new factory: As Committed, the Company is setting up a new Factory in Gujarat, at Umbergaon with a capital outlay of Rs.18 crores to be funded through internal Accruals of Company and bank borrowings. The Plant is expected to be in operation by the end of March 2024.

THREATS

Many major international apparel brands and textile companies have commenced operations in India realizing that Indian markets are likely to emerge as one of the largest markets in the world in the next few decades. Due to this we expect enhanced competition for the Companys Products.

Companys Exposure to Foreign Currency Risks due to Overseas Operations.

SEGMENTWISE PERFORMANCE:

The Company is mainly engaged in the business of Manufacturing of Woven & Knitted Elastic Tapes and all other activities of the Company revolve around the main business, and as such, there are no separate reportable segments.

OUTLOOK

Company continues to strive for maximizing its capacity utilization in India & Vietnam by concentrating on new customers and innovating and expanding its Product Mix for its Products.

I. FINANCIAL SUMMARY HIGHLIGHTS

The Financial Performance for financial year 2022-2023 is summarized in the following table: -

Rs. in Lakhs

Particulars	Standalone		Consolidated
	March 2023	March 2022	March 2023	March 2022
Total Revenue	7,304.30	8,922.66	9,647.03	13,190.86
Expenses	5,867.07	7,327.73	7,946.02	10,197.13
Profit Before Finance Cost & Depreciation	1,437.23	1,594.93	1,701.01	2,993.73
Finance Cost	55.29	76.98	192.70	196.14
Depreciation & Amortization Exp.	267.14	198.62	546.05	473.60
Profit/(Loss) before Extraordinary Items	1,114.80	1,319.33	962.26	2,323.99
Extraordinary Items	(20.00)	(17.32)	(139.99)	(17.32)
Profit/(Loss) before Taxation	1,134.80	1,336.65	1,102.25	2,341.31
Less : Provision for current Taxation	266.00	306.00	277.81	406.85
Deferred Taxation adjustment	(18.54)	76.40	(18.54)	76.39
Short/(Excess) Income Tax Provision	(7.17)	18.26	(100.93)	82.21
Profit/(Loss) After Taxation	894.51	935.99	943.91	1,775.86
Minority Interest	-	-	0.69	120.51
Other Comprehensive Income (Net of Tax)	32.40	12.50	32.40	12.49
Total Comprehensive Income	926.91	948.49	975.62	1,667.84
Paid up Equity Share Capital	330.48	330.48	330.48	330.48
Earnings Per Share (Rs.)	27.07	28.32	28.54	50.09

FINANCIAL PERFORMANCE, OPERATIONS AND STATE OF THE COMPANYS AFFAIRS STANDALONE ANALYSIS

During the year under review, the total revenue stood at Rs. 7,304.30 Lacs as against Rs. 8,922.66 Lacs in the previous year. Companys revenue from operations stood at Rs. 7,085.97 Lacs as against Rs. 8,640.22 Lacs in the previous year. Other Income stood at Rs. 218.32 Lacs as compared to Rs. 282.44 Lacs in previous year. The Company incurred Net Profit after Tax of Rs. 894.51 Lacs as compared to Net Profit after Tax of Rs. 935.99 Lacs during the previous accounting year.

CONSOLIDATED ANALYSIS

During the year under review, on consolidated basis, the total Revenue stood at Rs. 9,647.03 Lacs as compared to Rs. 13,190.86 Lacs in the previous year. Revenue from operations stood at Rs. 9,334.15 Lacs as against Rs. 12,822.69 Lacs in the previous year. Other Income stood at Rs. 312.87 Lacs as compared to Rs. 368.17 Lacs in previous year. Net Profit after Tax stood at Rs. 943.91 Lacs as compared to the Net Profit after Tax of Rs. 1,775.86 Lacs during the previous accounting year.

FINANCIAL VISION AND OUTLOOK:

The Company Targets to Maximize, its capacity utilization in India & Vietnam, by entering new markets like Europe and Bangladesh and introducing new Products.

Key financial measures (Standalone)

Particulars	2022-23	2021-22
Financial Stability Ratios :
Total Debt/Equity (x)	0.11	0.05
Current Ratio (x)	2.78	3.67
Quick Ratio (x)	1.48	2.22
Interest cover (x)	22.31	18.58
Performance Ratios :
Return on Assets (%)	10.25	11.16
ROCE (%)	13.83	18.61
Asset Turnover (%)	78.33	101.67
Working Capital/Sales (x)	0.33	0.36
Return on Equity (%)	12.38	13.77
Profitability Ratios :
EBITDA (%)	21.18	18.85
PBT (%)	16.63	15.66
PAT (%)	13.08	10.98
Efficiency Ratios :
Receivables in days	53	64
Inventory in days	103	88
Payables in days	37	41
Working capital cycle in days	267	253
Growth Ratios (Y-o-Y) :
Net revenue growth (%)	-18.14	37.34
Net sales growth (%)	-18.28	38.40
EBITDA growth (%)	-7.88	112.94
PBT growth (%)	-12.95	181.90
PAT growth (%)	-2.27	164.24
Key financial measures (Consolidated)
Particulars	2022-23	2021-22
Financial Stability Ratios :
Total Debt/Equity (x)	0.11	0.09
Current Ratio (x)	4.56	5.27
Quick Ratio (x)	2.92	3.49
Interest cover (x)	6.94	13.94
Performance Ratios :
Return on Assets (%)	7.53	13.43
ROCE (%)	10.89	23.46
Asset Turnover (%)	72.01	103.25
Working Capital/Sales (x)	0.60	0.48
Return on Equity (%)	9.18	18.23
Profitability Ratios :
EBITDA (%)	20.19	23.61
PBT (%)	12.27	18.39
PAT (%)	10.45	13.01
Efficiency Ratios :
Receivables in days	41	43
Particulars	2022-23	2021-22
Inventory in days	190	129
Payables in days	30	32
Working capital cycle in days	496	360
Growth Ratios (Y-o-Y) :
Net revenue growth (%)	-26.87	28.45
Net sales growth (%)	-27.50	28.17
EBITDA growth (%)	-37.77	25.88
PBT growth (%)	-51.42	32.40
PAT growth (%)	-41.50	19.96

MATERIAL DEVELOPMENT IN HUMAN RESOURCES (INCLUDING NO OF PERSONNEL EMPLOYED)

The Company believes that Human Resources is one of the most vital resources and a key pillar in providing the Organization a competitive edge in a current business environment.

The Work Environment is very challenging and performance oriented. The Company recognizes employees potential and provides them with growth opportunities and takes suitable measures for employees welfare.

As on 31st March 2023, Premco Global limited Employs 500 strong work force in Indian Operations and more than 200 Managers, Workers and staff in Vietnam.

Performance Management for Staff Members:

The Company has designed and implemented a Performance Management System (PMS) that allows individual Goal/KRA (Key Result Area) setting. This enables a two-way discussion between a Staff Member and his/her Reporting Manager (Coach) which ensures that the organizations objectives are percolated down to teams and individuals.

Talent Acquisition:

The Company continues to strengthen both leadership and managerial team. Taking into consideration the increasing scale of operation, we have inducted senior leaders and executives who bring rich experience from world-class organizations around the world, as well as youngsters, who bring fresh energy into our organization.

GROUP INSURANCE :

Company Continues to cover its employees for group insurance to ensure that the employees get a safety cover and also ensures that all the plants comply with government norms to ensure social distancing and safety measures. Company Employees in the Age Group of plus 60 has also been offered the Protection upto 3 Lacs for any disease.

WORK FROM HOME FACILITY:

During the part of the year Company offered its employees work from Home facility to ensure that Companys IT integrated Solutions are used to fullest Extent, enable Company to meet the statutory requirements as well Tax Compliances in addition to Employee Working Facility.