DIRECTORS' REPORT To The Members of Precision Electronics Ltd., Your Directors have pleasure in presenting the 36* Annual Report on the business and operations of the Company along with the Audited Statements of Accounts for the Financial Year ended March 31, 2015. DIVIDEND In view of conservation of financial resources of the Company, your Directors do not recommend any dividend for the financial year under review. TRANSFER TO RESERVE Amount transferred to the general reserve is nil however, an amount of Rs 2.5 million has been retained in the surplus. 2. REVIEW OF OPERATION AND STATE OF COMPANY AFFAIR Overall revenue of the company for the year ended 31st March 2015 was recorded at Rs.278 million which is more than double as compared to previous financial year (2013-14) revenue of Rs.134 million. Consequently, net profit after tax was Rs.2.5 million as against a loss of about Rs.22 million in the previous year (2013-14).The performance was good due to contribution of infra services division of the Company. There is no Change in the nature of business of the Company which is segmented in two business divisions; 'Electronics & Telecommunication' and 'Infra services'. 2.1 Electronics & Telecommunication Division Telecom division revenue during the year ended 31st March, 2015 is Rs. 136.51 million as against Rs. 113.71 million in the previous year (2013-14). Manufacturing plants are located at Noida UP (in the NCR region) and Roorkee (Uttarakhand) 2.2 Infrastructure Division Infrastructure division revenue during the year ended 31st March, 2015 is Rs. 139.05 million as against Rs. 1.8 million in the previous year (2013-14). The division undertakes turnkey assignments of civil, electrical and networking work and turnkey installation and commissioning of radars, sensors, data links and the command and control room at defence airfields and harbors. No material changes and commitments have occurred after the close of the financial year till the date of this report, which affect the financial position of the Company. 3. MANAGEMENT DISCUSSION AND ANALYSIS INDUSTRY STRUCTURE AND DEVELOPMENTS India imports over two-third of its defence requirements. Manufacturing and Defence R&D has been limited to Government owned Public Sector Units (DPSU), Ordinance Factories and Defence Research and Development Organisation (DRDO). Private sector participation has been limited and it is an accepted fact that substantive self-reliance in Defence cannot be achieved without active private sector participation. The present Government has undertaken to amend Policies and Procedures to make it industry friendly and to ensure a level playing field with special emphasis to the MSME sector. OPPORTUNITIES, THREATS, RISK & CONCERNS Opportunities Make in India initiative of the Prime Minister aims to maximize the indigenous content of the Defence equipment by facilitating a globally best in class manufacturing infrastructure in the Country. The Defence Procurement Procedure is being amended to align itself to this goal which will provide a boost to your Company that is well entrenched in the sector with global partnerships. If Offset policy and Make procedures are amended, as promised, this will present a huge business opportunity to MSME Company like ours for years to come. Threats, Risk & Concerns Your Company is in the technology intensive sector wherein continuous investments are required to keep pace with the latest in technology. If the Government policies do not align to MSME business interests they may pose a major threat. New cash rich entrants, trying to create a footprint in the sector, are a threat as they tend to "buy themselves in." Main Business Risks and Concerns are due to the fact that your Company is dependent on business from the Government and quasi government entities which are tender oriented and takes long time to fructify. Liquidity management and retention of highly trained manpower is a challenge. OUTLOOK The strategy to become turnkey solutions provider ranging from Design, Production, Testing, Certification, Integration, Installation, Commissioning and MRO by forming an industrial consortium has been much appreciated by the foreign vendors and significant business is expected to flow upon amendment of the Offset policy. PEL continues to follow the strategy to 'de-risk' its business that is 'not be dependent on a product or a sector'. We will continue to leverage our demonstrated strengths in design, engineering and manufacturing, our partnerships with global majors and our presence in both defence and non-defence sectors. The business prospects are good and the Company is expected to deliver a positive result in the current financial year i.e. 201516. FINANCIAL FACILITIES The Company continues to enjoy the support of its Banker Punjab National Bank (PNB), Noida Branch for both fund and non-fund based facilities. 4. DIRECTOR'S RESPONSIBILITY STATEMENT Pursuant to Section 134(5) of the Companies Act, 2013 with respect to Directors Responsibility Statement, it is hereby confirmed: a) that in the preparation of the accounts for the Financial Year ended 31st March, 2015, the applicable Accounting Standards read with requirements set out under Schedule III to the Act, have been followed and there are no material departures from the same; b) that the Directors have 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 of the Company for the year under review; c) that the Directors have taken proper and sufficient care for the maintenance of adequate Accounting Records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; d) that the Directors have prepared the annual accounts on a 'going concern' basis; e) the directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and are operating effectively; and f) that the Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively. 5. CORPORATE GOVERNANCE In compliance with the requirements of Clause 49 of the Listing Agreement with Bombay Stock Exchange (BSE), a separate report on Corporate Governance along with the Auditors' Certificate on its compliance forms a part the Annual Report. 6. HUMAN RESOURCE DEVELOPMENT The Company has been successful in building a performance oriented culture with high levels of engagement and empowerment in an environment of teamwork. The focus has been on creating reserves through cross functional and interdisciplinary exposure at all levels to ensure redundancy and robustness in the organization. The morale of the team is at a high level. 7. CORPORATE SOCIAL RESPONSIBILITY(CSR) The company is not covered for Corporate Social Responsibility, pursuant to the provision of Section 135 of the Companies Act, 2013 ("the Act") read with the Companies (Corporate Social Responsibility Policy) Rules, 2014. 8. CONTRACTS AND ARRANGEMENTS WITH RELATED PARTIES There were no contracts or arrangement with related parties referred to in Section 188 (1) of the Companies 2013 during the year. 9. RISK MANAGEMENT Your Company has constituted a "Risk Management Committee" which has been entrusted with the responsibility to assist the Board in mitigating the risk faced by the Company in the ordinary course of business. Committee has presented risk management plan of risk assessment and minimization procedures. In the opinion of the Board there is no risk which may threaten the existence of the Company. 10. INTERNAL FINANCIAL CONTROL The Company has in place adequate internal financial controls with reference to financial statements. During the year no reportable material weakness in the system was observed. 11. DIRECTORS AND KEY MANAGERIAL PERSONNEL Lt Gen (Dr.) Rajesh Pant PVSM, AVSM, VSM (Retd.) (DIN: 069069307) has joined the Board of Directors as Additional Director and Non Executive Chairman with effect from July 27, 2015. It is indeed a matter of pride to have such a decorated and distinguished officer as a part of our team. His induction will enhance the image of the company in the eyes of our customers belonging to the defence forces, highlighting our credibility, capability and capacity to meet their requirements, besides providing an impetus to the offset business which we are earnestly targeting. Precision will benefit immensely from his wisdom, guidance and experience. We seek your support in confirming his appointment in the forthcoming Annual General Meeting. Two Non- Executive Directors Mr. Deepto Roy (DIN 01241534) and Mrs. Ranjana Gudoo (DIN 06956595) were appointed by the shareholders to comply with the requirements of the Listing agreement. In accordance to Section 203 of the Company Act 2013, Key Managerial Personnel as appointed by the Board of Directors are; Mr Ashok K Kanodia (Managing Director), Mr Jagjit Singh Chopra (Chief Financial Officer) and Mr Gurvinder Singh Monga (Company Secretary). The present term of appointments of Mr Ashok Kumar Kanodia as Managing Director of the Company has expired on 5th June 2015. In terms of Companies Act 2013, the Nomination and Remuneration Committee of the Board has recommended his appointment to the Board. Board has accordingly appointed him as Managing Director subject to approval by shareholders in general meeting. We seek your support for confirming his appointment in forthcoming Annual General Meeting. The present term of appointments of Mr Pradeep Kumar Kanodia as Executive Director of the Company has expired on 5* June 2015. He continues to be a non-executive Director of the Company. Information on the particulars of Director eligible for re-appointment in terms of Clause 49 of the Listing Agreement has been provided in the notes convening the Annual General Meeting. DECLARATION BY INDEPENDENT DIRECTORS The Independent Directors have submitted their disclosures to the Board confirming that they fulfill all the requirements to qualify for their appointment as Independent Director under the provisions of the Companies Act, 2013 as well as Clause 49 of the Listing Agreement. BOARD EVALUATION The Board of directors has carried out an annual evaluation of its own performance, Board committees and individual directors which include criteria for performance evaluation of the Non-Executive Directors and Executive Directors pursuant to the provisions of the act and the corporate governance requirements as prescribed by Securities & Exchange Board of India (SEBI) under clause 49 of the Listing Agreement. The Company has devised an evaluation matrix for the performance evaluation and an external consultant was engaged to collate the evaluation results. A meeting of Independent Director was held on 26th March, 2015 without the attendance of other directors (Non-Independent) to review the performance of Non-Independent Directors, the Board as a Whole, Chairman of the Company/ Meetings, to assess the flow of information between Company Management and the Board. POLICY ON DIRECTORS APPOINTMENT AND REMUNERATION The requisite details as required by Section 134(3)(e) is disclosed under the Corporate Governance Report. 12. AUDITORS AND AUDITOR'S REPORT STATUTORY AUDITOR At the Annual General Meeting held on 27th September, 2014, M/s Rajendra K. Goel & Co., Chartered Accountants, were appointed as statutory auditors of the Company to hold office till the conclusion of the 38th Annual General Meeting. In terms of the first proviso to Section 139 of the Companies Act, 2013, the appointment of the auditors shall be placed for ratification at every Annual General Meeting. Accordingly, the appointment of M/s Rajendra K. Goel & Co., Chartered Accountants, as statutory auditors of the Company, is placed for ratification by the shareholders. The notes on financial statements referred to in the Auditor's report are self-explanatory and do not call for any further comments. The Auditor's Report does not contain any qualification, reservation or adverse remark. SECRETARIAL AUDITOR The Board has appointed M/s Munish K Sharma & Associates, Company Secretaries to conduct Secretarial Audit for the financial year 2014-15. The Secretarial Audit Report for the financial year ended 31st March, 2015 is annexed herewith marked as Annexure I to this Report. The observations contained in the Secretarial Audit Report are self explanatory. The Board has appointed M/s Munish K Sharma & Associates Company Secretaries, as Secretarial Auditor of the Company for the financial year 2015-16. 13. DISCLOSURES VIGIL MECHANISM A vigil mechanism of the Company which also includes a Whistle Blower Policy pursuant to Section 177(9) & 10 of Companies Act, 2013, has also been established and can be accessed on the Company website. AUDIT COMMITTEE The Audit Committee comprises Independent Directors namely Shri. S. K. Kataria (Chairman), Shri. Anant Kanoi, Shri. Suresh Vyas and Non Independent Director Shri Deepto Roy as other member. All the recommendations made by the Audit Committee were accepted by the Board. NOMINATION AND REMUNERATION COMMITTEE Details pertaining to composition of Nomination and Remuneration Committee are included in the Corporate Governance Report. MEETINGS OF THE BOARD The Board of Directors met four times on 30 May, 2014, 12 August 2014, 12 November 2014 and 12 February 2015 during the financial year 2014-15 ending March 31, 2015. For further details, please refer report on Corporate Governance of this Annual Report. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS. There was no transaction of the nature covered under Section 186 of the Companies Act, 2013. EXTRACT OF THE ANNUAL RETURN As required pursuant to Section 92(3) of the Companies Act, 2013 and rule 12(1) of the Companies (Management and Administration) Rules, 2014, an extract of annual return in MGT 9 as a part of this Annual Report as Annexure II. PARTICULARS OF CONSERVATION OF ENERGY, ABSORPTION OF TECHNOLOGY AND FOREIGN EXCHANGE EARNINGS AND OUTGO The information relating to conservation of energy, as required under Section 217(1) (e) of the Companies Act, 1956 read with the Companies (Disclosure of particulars in the Report of Board of Director) Rules 1988 as required to be disclosed under the Act, are provided in Annexure III to this Report. PARTICULARS OF EMPLOYEES The table containing the names and other particulars of employees in accordance with the provisions of Section 197(12) of the Companies Act 2013, read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is appended as Annexure IV to this Report. The Company does not have any employee employed throughout the financial year and in receipt of remuneration of Rs.60 Lakh or more, or employed for part of the year and in receipt of Rs.5 Lakh or more a month, under Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014. FIXED DEPOSITS The Company has not invited or accepted any deposits during the year under review or in the past and hence no amount of principal or interest was outstanding as of the Balance Sheet date. SIGNIFICANT & MATERIAL ORDERS: There are no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and Company's operations in future. DISCLOSURE UNDER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION & REDRESSAL) ACT, 2013. No case was reported and or filed during the year under the aforesaid Act. 14. LISTING OF SECURITIES The Shares of the Company are listed with The Bombay Stock Exchange Limited, Pheroze Jeejeebhoy Towers, Dalal Street, Mumbai. (Scrip Code: 517258). It is confirmed that the Company has paid Annual Listing Fee up to the Current Financial Year to BSE. 15. ENVIRONMENTAL PROTECTION, HEALTH AND SAFETY During the year, the Company enhanced its efforts to address Health, Safety and Environment matters. The Safety & Health of employees and external stakeholders are embedded in the core organizational values of the Company. The HSE policy aims to ensure safety of public employees, plant & equipment, ensure compliance with all statutory rules and regulations, imparting training to its employees, carrying out safety audits of its facilities, and promoting eco - friendly activities. The Company continues to maintain excellent track record on safety. The site had no accidents during the year 2014-15. PEL also has a Workman Safety Committee under section 41G of Factories Act 1948.This Committee meets at regular intervals to take measures for worker's protection in order to make PEL a safe place to work. 16. CAUTIONARY STATEMENT Certain Statements made in Management Discussion & Analysis Report relating to the Company objectives, projections, outlook, expectations, estimates etc. may constitute 'forward looking statements' within the meaning of applicable laws & regulations. Actual results may differ from such expectations, projections etc. whether express or implied. 17. ACKNOWLEDGMENTS Your Directors express their deep appreciation and gratitude for the valuable support received from Punjab National Bank, its Customers, Business Associates, Government Departments and Shareholders and look forward to similar support and co-operation in future. Your directors appreciate the sincere efforts put in by the employees at all levels. FOR AND ON BEHALF OF THE BOARD Place: Noida Date: August 14th, 2015 Chairperson |