Dear Shareholder,
I am pleased to report that PG Electroplast continues to grow at
Industry leading growth rates and the Company's long-term transformational path, which it
began a few years ago, is gaining steam. The building blocks put in place in last few
years along with the hard work of the execution team, have started bearing fruits of
success. Today your company stands amongst the leaders in the Electronic Manufacturing
Services (EMS) and Contract manufacturing space in India.
The fiscal year 2024 was an important milestone for the organisation in
a variety of ways. The company has grown its capacity in washing machines and room air
conditioners while boosting production to new levels. By leveraging strong customer
relationships and increased R&D investment, we aim to boost our revenues and increase
our market share further. The outlook on all segment of Business remains robust and we are
confident of continued strong performance.
Performance review
In the last eight years, PGEL revenues have grown more than 10x at a
CAGR oF 34% to Rs.2,760 crores in the Financial year 2023-2024. Company's EBITDA has also
grown at a CAGR of 38% in last 8 years to W 275 crores in the reported year. The company's
return on capita employed (RoCE) has inched up to 21.6% during the year. All this is a
testament to the strength of our steadily improving financial metrices.
During the year, company completed its QIP Issues oF W500 crores and
strengthened its Balance sheet. Also Company has formed a 50-50 Joint Venture - Goodworth
Electronics Limited, with Jaina Group for manufacturing of TV . Goodworth Electronics has
also been approved for the IT hardware PLI scheme.
During the year, our consolidated sales grew by 27.2%, surpassing
Rs.2,746 crores. The product business contributed 60.7% share in our overall sales. In
FY2023-24, Net profit grew by 77.2% to W1373 crores. We have also made capital
expenditures of around W277 crores in Fiscal 2024 and paid W 45 crores for acquiring a
company (Next Generation manufacturing limited) to add impetus to our business expansion
plans.
The product business was a key driver of sales growth, with the room
air conditioner segment contributing Rs.1,317 crores, a 25.7% increase year-over-year. The
washing machine segment also performed well, delivering a 20% growth year-overyear in
revenues. Despite a challenging environment with a steep fall in average selling prices
(ASP), our cooler segment managed to sustain the revenues.
By streamlining and standardising our processes, we aim to further
optimise our manufacturing processes and improve coordination. We are adopting advanced
technologies to enhance process efficiencies and productivity at our plants. Thus,
ensuring we maximise our operating leverage and continue maintain our cost leadership to
deliver high-quality products to further expand our market share in focus segments.
Growth strategy
We are preparing ourselves to achieve strong growth through a
well-defined three-pronged strategic plan. First, we intend to capitalise on vast
prospects in consumer durables and plastic moulding business segment, notably in
high-demand areas including washing machines, room air conditioners, refrigerators,
ceiling fans, and sanitaryware. Second, we are aggressively growing our ODM business,
focusing on innovative offering in air coolers, washing machines, room air conditioners
and in Sanitary ware products. Third, by improving operational efficiency, we want to
improve profitability and generate strong cash flows, which we will be reinvesting to
strengthen our strategic competencies. We are committed on sweating our assets to increase
operational efficiencies and profitability.
We have earmarked W380 crores for capex in FY25, and out of this
approximately W170-180 crore will be dedicated to land and building development. We intend
to build nearly 1 million square feet of new space, which will play a crucial role in our
expansion plans. We are confident that by completing a significant portion of this
expansion within coming financial year, we will be well-positioned to capitalise on
emerging opportunities and drive sustained growth.
Future Opportunities and Long-term Potential
The Immediate global economic outlook remains mixed as though global
inflation is expected to cool off in coming months, but employment picture is also showing
signs of moderation, continued trade wars and geopolitical tension in Europe and Middle
East further complicate the situation. However, the China+1 Shift in global manufacturing
is leading to shift in global supply chains and is opening new opportunities for Indian
EMS and contract manufacturing companies. Moreover, company's current focus areas of
product Room AC and Washing machines have very low penetration among Indian households at
7-8% and 13-14% respectively. Given the positive demographic changes and increasing
household incomes, strong structural growth is expected in the consumer durable segment in
India. Therefore, we believe that in coming years, your company has huge potential market
in existing areas of focus and large new opportunities are emerging due to shift in global
supply chains.
To capture these opportunities, the company has readied itself with the
introduction of new products and aggressively ramped up R&D spending to create added
innovation for its product lines as well as developing cutting edge bespoke solutions.
Further, company has been spending heavily on capacity expansion and backward integration
to maintain its Cost leadership while striving for product leadership in focus areas.
With a strong balance sheet, consistent cash flow generation, and a
clear focus on long-term value creation, we believe that PGEL is well-positioned to
continue its leadership position in the market and delivering sustained profitable growth.
A Gratitude to Our Stakeholders
I take this opportunity to convey thanks to our Board Members for their
constant guidance and support. I would like to thank all our stakeholders, including our
vendors, customers, bankers, financial institutions, central and state government bodies,
business associates and employees for their firm support and involvement. On behalf of the
Board, I thank our shareholders for believing in us, and assure them that we will strive
for higher goals and better profitability in coming years.