Premier Explosives Ltd

Dear Shareholders,

It is my pleasure and pride to present to you the Annual Report of the Company for the financial year ended 31st March 2023, through which I shall communicate to you the happenings in the Indian economy and its influence on the defence sector, as well as a brief spotlight on the global scenario. Before I commence the narration, it is with great pride I announce that Premier Explosives Limited has won defence orders from the Central Government worth approximately Rs. 629.05 crores. The Indian Air Force, Ministry of Defence, has placed one order for the supply of chaffs worth Rs 292.11 crores (including GST), while another order is for the supply of flares worth Rs. 260.15 crores and Rs.76.79 crores (including GST). As per the government orders, all these three orders have to be executed within a tenure of 12 months. During the year, the Company has also received regular production orders for Rocket motors from our overseas customers, after successfully developing various new products.

Defence is a sector with high entry barrier. A critical and strategic industry encompassing various aspects of national security, including military capabilities, technology development and manufacturing, it also significantly safeguards the country's borders, ensuring regional stability and contributing to its overall security posture. The defence sector in India is a dynamic and evolving field, influenced by technological advancements, geopolitical developments and the country's strategic objectives. The Indian government and defence establishments continue to work toward enhancing the country's defence capabilities, achieving self-sufficiency in manufacturing and securing its national interests.

While a strong economy provides essential support to the defence sector, a well-managed and efficient defence sector can also contribute to economic growth. The defence industry can drive technological innovation, job creation and export earnings, thereby contributing to the country's overall economic development. The Prime Minister of India has recently declared in the Aero India show, that apart from being a potential defence partner and a global powerhouse, India would soon serve as the biggest manufacturing base in the world. As a means to this end, the Central Government of India has a vision of fuelling the total turnover of USD 25 billion and exports to reach USD 5 billion by 2024-25. 25% of defence R&D budget has been reserved for private industry and start-ups which will pave the way for the innovation of new defence technologies in India. With defence equipment already being exported to almost 75 countries as on date, India is well charted on this path, opening greater opportunities for our sector. In another strategic move, India recently concluded a road map for defence industry cooperation with USA, which would deepen the ties between the two countries and reinforce India's defence manufacturing ambitions. In addition, it would act as a counterweight to China's supremacy in this sector and reduce India's dependency on Russia for defence imports. The collaboration would enable technology cooperation and co-production in air combat, land mobility systems, intelligence, surveillance and reconnaissance, munitions, and the undersea domain.

PEL has been making continuous efforts to strengthen the Intellectual Property for the manufacture of high-energy material in the sectors of defence and industrial mining. Since it operates the high-energy materials processing plants on GOCO (Government Owned and Company Operated) basis, the demand for the products of the Company is highly receptive to policies. The demand is expected to escalate owing to the Government's increasing budgetary allocation for defence. The Government's list of imports to be banned works in favour of the Company because it encourages domestic production. On the other hand, authorising exports of certain products also offers growth prospects for PEL. The recent order from the Indian Airforce Ministry of Defence is testimony to the capabilities of the Company, its robust performance over the past four decades and its strong order book.

India, one of the largest mining and industrial explosives market and the second largest coal producer, offers tremendous opportunities to PEL. With a direct connection to the level of industrialisation activities and construction and infrastructure projects in the nation, the demand for explosives has been on the rise, which endows benefits to PEL. Manufacturing a diverse range of explosives with indigenous technology and technology transfer, PEL is able to keep itself on a high growth trajectory.

I conclude with a token of gratitude to all the shareholders, board members, employees, customers, suppliers, banks, regulatory bodies, governments and all stakeholders for providing a robust support system for the Company, without which the growth and progress would never be possible.