Premier Explosives Ltd

Dear Members

Your directors are pleased to present the 44^th annual report including the audited financial statements of your company for the year ended March 31,2024.

1. Financial summary

(Rs in lakhs)

2. State of affairs

The performance of the company has improved in terms of Revenues and profits during the year 2023-24. Operating EBIDTA has gone up from Rs 2,581.54 Lakhs to Rs 5850.31 lakhs and Profit before tax has increased to Rs 4024.65 from Rs 895.69 lakhs during previous year. Profit after tax stands at Rs 2812.15 lakhs as compared to Rs 668.49 lakhs for the year 2022-23. The Raw Material supplies and prices were stabilized during the year which will give positive impact in near future. The operations in commercial explosives improved significantly during the year.

Operations

Production of detonators was 11.55 million pieces as against 15.40 million pieces in previous year. The Company has executed several orders in defence during the year

Operations & maintenance contracts at Sriharikota has been satisfactory during the Financial Year 2023-24.

The production of bulk explosives increased to 8522 tonnes from previous year's 7,886 tonnes. The prices and supplies of Ammonium Nitrate have stabilized during the year which has been reflected in our overall performance during the year.

3. Capital expenditure

During the year the company incurred the capital expenditure of Rs 1926.77 lakhs on fixed assets, Rs 5.00 lakhs on right-of-use of asset and Rs 126.60 lakhs on intangible assets .

4. Dividend

The Board of Directors of your company, at their Meeting held on May 30, 2024, has recommended payment of Rs 2.50/- (Rupees Two and Fifty paise only) (25%) per equity share of Rs10/- each, as final dividend for the financial year ended March 31, 2024. The payment of final dividend is subject to the approval of the shareholders at the ensuing Annual General Meeting (AGM) of the Company.

The dividend on equity shares for the financial year 2023-24 would aggregate to Rs 268.81 Lakhs.

In view of the changes made under the Income-tax Act, 1961, by the Finance Act, 2020, dividends paid or distributed by the Company shall be taxable in the hands of the Shareholders. The Company shall, accordingly, make the payment of the final dividend after deduction of tax at source.

a) Stock Split

After the end of the financial year under review and as on the date of this report, the existing equity shares of the company have undergone sub-division/ split, such that 1 (one) equity share having face value of Rs 10/- each, fully paid-up, was sub-divided/ split into 5 equity shares having face value of Rs 2/- each, fully paid-up, ranking pari-passu in all respects with effect from June 21, 2024 ("Record Date"), pursuant to the approvals received from the shareholders of the company thorugh postal ballot by way of remote e-voting on Saturday, May 25, 2024 (being the last date of remote e-voting).

b) Alteration of AOA and MOA of the company

After the end of the financial year under review and as on the date of this report, the Capital Clause (Clause V) of the Memorandum of Association of the Company was altered/amended, pursuant to the split of face value of equity shares of the company from Rs 10/- (Rupees Ten) each to Rs 2/- (Rupees Two) each, through Postal Ballot process (Postal Ballot Notice dated April 19, 2024) by way of remote e-voting. The approval of the members was received on Saturday, May 25, 2024 (being last date of remote e-voting).

c) Share capital

During the year under review, there is no change in the Share Capital of the Company, which stood at Rs 15,00,00,000/- (Rupees Fifteen Crores Only) divided into 1,50,00,000 (One Crore Fifty Laths) equity shares having face value of Rs 10/- each and he paid up Share Capital of the Company as on March 31,2024 was Rs 10,75,22,390/- divided into 1,07,52,239 equity shares of Rs 10/- each fully paid up.

After the end of the financial year under review and as on the date of this report, the existing equity shares of the company have undergone sub-division/ split, such that 1 (one) equity share having face value of Rs 10/- each, fully paid-up, was sub-divided/ split into 5 equity shares having face value of Rs 2/- each, fully paid-up, ranking pari-passu in all respects with effect from June 21, 2024 ("Record Date")

Consequent to the stock split as mentioned above, as on the date of this report, the Authorised Share Capital of the Company stood at Rs 15,00,00,000/- (Rupees Fifteen Crore only) divided into 7,50,00,000 (Seven Crore Fifty lakh) equity shares of Rs 2/- each and the issued and paid- up capital of the Company is Rs 10,75,22,390/- divided into 5,37,61,195 equity shares of Rs 2/- each.

Apart from the above, the company has not raised any funds or issued further shares in the form of equity during the financial year ended on March 31,2024.

d) Transfer to Reserves

The company retained the entire surplus in the Profit and Loss Account and hence no transfer to General Reserve was made during the year.

6. Deposits

During the year, the Company has not accepted any deposits from the public falling within the ambit of Section 73 of the Companies Act, 2013 and the Companies (Acceptance of Deposits) Rules, 2014.

7. Change in the nature of business, if any

During the year, there was no change in the nature of business of the company.

8. Material changes and commitments after the reporting period

After the end of the financial year under review and as on the date of this report, the existing equity shares of the company have undergone sub-division/ split, such that 1 (one) equity share having face value of Rs 10/- each, fully paid-up, was sub- divided/ split into 5 equity shares having face value of Rs 2/- each, fully paid-up, ranking pari-passu in all respects with effect from June 21, 2024 ("Record Date"), pursuant to the approvals received from the shareholders of the company through postal ballot by way of remote e-voting on Saturday, May 25, 2024 (being the last date of remote e-voting).

There have been no material changes and commitments affecting the financial position of the company, which have occurred between the end of the financial year to which the financial statements relate and the date of this Report.

a) PELNEXT Defence Systems Private Limited, a 100% subsidiary company

Incorporated on July 15, 2016 PELNEXT is expected to be operated as a special purpose vehicle in defence explosives business. The company incurred a net loss of Rs 0.90 lakh during 2023-24 (Rs)0.90 lakh during 2022-23).

As on 31^st March, 2024, Premier Explosives Limited held 10,000 Equity shares in PELNEXT representing 100% of equity share capital.

b) Premier Wire Products Limited (PWPL), an 80% subsidiary company

PWPL was engaged in manufacture of Galvanised Iron (GI) Wire catering to the requirements of detonator- manufacturers, having its registered office at Secunderabad, Telangana. The Company's manufacturing facilities are located at Ramajipet, Yadadri Bhuvanagiri District of Telangana. Due to lower demand for GI wire from detonator-manufacturers, the company has sold major property, plant and equipment, dismantled building, terminated all the employees and intimated closure of factory to various authorities during the year 2021-22.

The company earned a net profit before tax of Rs 37.99 lakhs during the year ended March 31, 2024 and the company has accumulated loss of Rs 3.07 lakhs as at March 31, 2024 (Revenue of Rs Nil lakhs and Net Loss of Rs 33.58 lakhs during previous year).

As on 31^st March, 2024, Premier Explosives Limited held 52,00,000 Equity shares in PWPL representing 80% of their equity share capital.

c) BF Premier Energy Systems Private Limited (BFPES), a 50% jointly controlled entity

The Registrar of Companies, Pune, has duly approved the strike-off application under Section 248 of the Companies Act, 2013, of BF Premier Energy Systems Private Limited, a joint venture between Premier Explosives Limited (PEL) and Kalyani Strategic Systems Limited (KSSL) (a wholly owned subsidiary of Bharat Forge Limited), vide letter No.STK-7/000147/2023 dated November 25, 2023.

Due to prolonged inoperativeness and the inability to achieve its intended objective, the joint venture partners - PEL and KSSL had initiated the strike off process as per statutory regulations and in compliance with the applicable laws. It may be noted that the strike-off action has no material impact on the financials or operations of the Company.

d) Consolidated financial statements

Pursuant to Section 129(3) of the Companies Act, 2013 (Act) and SEBI Listing Regulations, the Consolidated Financial Statements prepared in accordance with the

Indian Accounting Standards, notified under the Act is attached to this report.

In accordance with the provisions of Section 136 of the Companies Act, 2013, the audited financial statements of the company including consolidated financial statements and related information of the company and the financial statements of the subsidiaries, are available on the website of the company www.pelgel.com. Any Member desirous of obtaining copies of the said financial statements may write to the company at investors@ pelgel.com

These documents will also be available for inspection during business hours at the registered office of the Company.

Details of consolidated entities are given in the Annexure 1, Form AOC-1: Statement containing salient features of the financial statements of subsidiaries / associate companies / joint ventures.

10. Future outlook

Your company received large orders in defence segment especially from counter measures during FY 2023-24. Your company has completed the designing and development orders of various kinds of Rocket Motors for overseas buyers. Your company has received supply orders for these products and executed part of the orders.

At the macro level, 'Make in India' is transforming into 'Atmanirbhar Bharat' in the wake of COVID-19 and more specifically in defence supplies in the aftermath of Ukraine problem and Galwan clashes with China.

The Company is focused on increasing exports by developing new customers and higher volumes with existing customers. The Company will maintain its thrust in exports by adding products in existing markets and foraying into new markets.

The operations in Bulk explosives division are also getting stabilized with the existing supplies order from Singareni Collieries.

A. Directors' Responsibility Statement pursuant to the provisions of Section 134 of the Companies Act, 2013-

Your Board of Directors hereby confirms that:

a) In the preparation of the annual accounts of the Company for the year ended March 31, 2024, the applicable accounting standards had been followed along with proper explanation relating to material departures, if any;

b) the accounting policies selected were applied consistently and the judgments and estimates made are reasonable and prudent so as to give a true and fair view of the state of affairs of the company as at March 31, 2024 and of the profit and loss of the company for the year ended on that date;

c) proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

d) the annual accounts have been prepared on a going concern basis;

e) adequate internal financial controls have been laid down, have been followed and have been operating effectively;

f) proper systems have been devised to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

B. Declaration of independent directors

The Company has received declarations from all its Independent Directors that they meet the criteria of Independence as laid down under Section 149(6) of the Companies Act, 2013 and Securities Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015. Independent Directors have also confirmed that they have complied with the Code for Independent Directors prescribed in Schedule IV of the Companies Act, 2013. Independent Directors of the company have registered their names in the Independent Director's Database maintained by the Indian Institute of Corporate Affairs (IICA).

C. Board meetings

During the financial year 2023-24, Five (5) Board meetings were convened and held on 16^thMay, 2023; 19^th July, 2023; 1^st September, 2023; 30^th October, 2023 and 24^thJanuary, 2024.

D. Board evaluation

Criteria and other details of Board evaluation have been provided in the Annexure -2, Report on Corporate Governance.

a. Directors

During the year under review, there were no new appointment or resignations or changes in the Board of Directors and Key Managerial Personnel (KMPs) of the Company.

The Composition of the Board of Directors as on 31.03.2024 is as under:

None of the directors of the company are disqualified under the provisions of the Companies Act, 2013 ('Act') or under the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

Independence of the Board:

The Board comprises of optimal number of Independent Directors. Based on the confirmation/ disclosures received from the Directors and on evaluation of the relationships disclosed, the following Non-Executive Directors are independent in terms of Regulations 16(1)(b) and 25 of the SEBI (LODR) Regulations, 2015 and Section 149(6) of the Act:

1. Sri P R Tripathi (DIN:00376429)

2. Sri K. Rama Rao (DIN:02678860)

3. Sri Anil Kumar Mehta (DIN: 00040517)

4. Dr. A Venkataraman (DIN: 02669952)

5. Lt Gen. P R Kumar (DIN:07352541)

All the above named Directors have registered themselves with the Independent Directors Databank maintained by Indian Institute of Corporate Affairs ('IICA') and are either exempted from or have complied with the requirements of online proficiency self-assessment test conducted by IICA. The Board is of the opinion that the Independent Directors of the Company possess the requisite qualifications, experience, proficiency, expertise and hold high standards of integrity.

b. Retirement by Rotation

As per the provisions of the Companies Act, 2013, Mrs. Shonika Prasad (DIN:00250015) Director, is liable to retire by rotation at the ensuing Annual General Meeting and being eligible, has offered herself for reappointment.

The Board of Directors recommends her re- appointment at Item No. 3 of the Notice convening 44^th Annual General Meeting of the Company for consideration of the shareholders along with brief details about her.

The disclosures as required pursuant to Regulation 36(3) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and Clause 1.2.5 of the Secretarial Standard are given in the Notice convening 44^th AGM, forming part of the Annual Report.

c. Appointment of Non-Executive Independent Directors:

After the end of the financial year under review and as on the date of this report, on the recommendation of Nomination and Remuneration Committee the Board have considered and approved the following:

i) Appointment of Dr. Narendra Kumar Nanda (DIN: 02455894) as an Additional Director (Non-Executive Independent Director) of the Company, not liable to retire by rotation for a period of Five (5) consecutive years commencing from August 13, 2024 at the meeting of Board of Directors held on July 18, 2024, subject to approval of members of the Company through Resolution on or before November 12, 2024.

ii) Appointment of Dr. Gnana Sekaran Venkatasamy (DIN: 02012032) as an Additional Director (Non-Executive Independent Director) of the Company, not liable to retire by rotation for a period of Five (5) consecutive years commencing from August 13, 2024 at the meeting of Board of Directors held on July 18, 2024, subject to approval of members of the Company through Resolution on or before November 12, 2024.

iii) Appointment of Mr. Ch Seshagiri Rao

(DIN:10595215) as an Additional Director

(Non-Executive Independent Director) of the Company, not liable to retire by rotation for a period of Five (5) consecutive years commencing from August 13, 2024 at the meeting of Board of Directors held on July 18, 2024, subject to approval of members of the Company through Resolution on or before November 12, 2024.

iv) Appointment of Dr.(Mrs.) Kumuda Raghavan (DIN:10698094) as an Additional Director (Non-Executive Independent Woman Director) of the Company, not liable to retire by rotation for a period of Five (5) consecutive years commencing from August 13, 2024 through Circular Resolution dated August 12, 2024, subject to approval of members of the Company through Resolution on or before November 12, 2024.

d. Cessation of Directors:

After the end of the financial year under review and as on the date of this report, the following Directors ceased to be Non-Executive Independent Directors of your Company:

1. Sri Prabhakar Ram Tripathi (DIN: 00376429), Non-Executive Independent Director of the Company has completed his second term on August 12, 2024 and accordingly ceased to be an Independent Director of the Company with effect from August 13, 2024.

2. Sri Anil Kumar Mehta (DIN: 00040517), Non-Executive Independent Director of the Company has completed his second term on August 12, 2024 and accordingly ceased to be an Independent Director of the Company with effect from August 13, 2024.

3. Sri K. Rama Rao (DIN: 02678860), Non- Executive Independent Director of the Company has completed his second term on August 12, 2024 and accordingly ceased to be an Independent Director of the Company with effect from August 13, 2024.

4. Dr. A Venkataraman (DIN: 02669952), Non- Executive Independent Director of the Company has completed his second term on August 12, 2024 and accordingly ceased to be an Independent Director of the Company with effect from August 13, 2024.

Key Managerial Personnel ('KMP'):

Pursuant to the provisions of Section 2(51) and 203 of the Act read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the following have been designated as Key Managerial Personnel of the Company:

Mr. T.V. Chowdary, Managing Director

Mr. Srihari Pakalapati, Chief Financial Officer

Mrs. K. Jhansi Laxmi, Company Secretary.

No changes were made in the Directors and Key Managerial Personnel, and the Company is in compliance with the required provisions of the Act and Listing Regulations during the year under review.

F. Committees of the Board

As required under the Act, and the Listing Regulations, the Board has constituted the following Committees:

• Audit Committee

• Nomination and Remuneration Committee

• Stakeholders Relationship Committee

• Corporate Social Responsibility Committee

A detailed disclosure on the Board, its Committees, composition, brief terms of reference, and no of board and committee meetings held and attendance of the directors at each meeting is provided in the Corporate Governance Report, a part of this Annual Report.

Pursuant to the Cessation of Sri P R Tripathi, Sri K. Rama Rao, Sri Anil Kumar Mehta and Dr. A. Venkataraman as Non-Executive Independent Directors of the Company, on completion of their second term of five consecutive years on August 12, 2024:

i) The Audit Committee was re-constituted w.e.f. 13.08.2024. The Audit Committee at present (w.e.f 13.08.2024) comprises of Dr. Narendra Kumar Nanda (Chairman-Independent Director), Mr. Ch. Seshagiri Rao (Member-Independent Director), Lt.Gen P R Kumar (Member-Independent Director) and Dr. Amarnath Gupta (Member-Non-Executive Non-Independent Director) as its Members.

ii) The Nomination and Remuneration Committee was re-constituted w.e.f. 13.08.2024. The Nomination and Remuneration Committee at present (w.e.f. 13.08.2024) comprises of Dr. V G Sekaran (Chairman-Independent Director), Mr. Ch. Seshagiri Rao (Member-Independent Director), Lt.Gen P R Kumar (Member-Independent Director) and Dr. Amarnath Gupta (Member-Non-Executive Non-Independent Director) as its Members

iii) The Stakeholders' Relationship Committee was re-consituted w.e.f. 13.08.2024. The Stakeholders' Relationship Committee at present (w.e.f. 13.08.2024) comprises of Lt.Gen P R Kumar (Chairman-Independent Director), Mr. Ch. Seshagiri Rao (Member-Independent Director), Mr. T V. Chowdary (Member-Managing Director) and Dr.(Mrs.) Kailash Gupta (Member-Non-Executive Director)

iv) After the re-constitution of CSR Committee, presently, the Corporate Social Responsibility Committee comprises of three Members viz., Dr.(MRs.) Kumuda Raghavan (Chairman- Independent Director), Mr. T V. Chowdary (Member- Managing Director) and Dr.(Mrs.) Kailash Gupta (Member-Non-Executive Director)

G. Company's policy on appointment and remuneration of directors

a) Criteria for appointment of directors

Director must have relevant experience in finance, law, management, sales, marketing, administration, research, corporate governance, technical operations or other disciplines related to company's business.

Director should possess the highest personal and professional ethics, integrity and values.

Director must be willing to devote sufficient time and energy in carrying out their duties and responsibilities.

Nomination and Remuneration Committee shall identify and ascertain the integrity, qualification, expertise and experience of the person for appointment as director and recommend to the Board his / her appointment or re-appointment.

The committee has discretion to decide whether qualification, expertise and experience possessed by a person are sufficient or satisfactory for the concerned position.

While appointing an independent director, Nomination and Remuneration Committee shall consider the 'independence' of the person also in addition to the above.

b) Policy on directors' remuneration

i. Policy

The Company shall remunerate its directors, key managerial personnel, senior management, other employees and workers appropriately to retain and motivate them as well as to attract new talent when required.

ii. Components of remuneration

Remuneration package shall include fixed component for all employees and variable component to the extent desirable and practicable.

iii. Fixed remuneration

It shall be competitive and based on the individual's education, experience, responsibilities, performance, industry benchmark in the area, etc.

Fixed remuneration shall comprise of basic salary and other allowances like house rent allowance, conveyance allowance, etc. which are calculated as certain % of basic salary.

iv. Variable remuneration

It is paid to encourage the employees to achieve set targets and variable remuneration shall be determined on the following basis:

v. Statutory benefits

Employee benefits like Contribution to Provident Fund, Gratuity, Bonus, Employees State Insurance, Workmen Compensation, etc. shall be provided to all eligible employees as per the respective Acts.

vi. Perquisites and other benefits

vii. Increments

Increments are made taking into account the individual performance, inflation and company performance.

Workers are given Variable Dearness Allowance as per Consumer Price Index semi- annually on 1st of April and 1st of October.

Wages of workers at Peddakandukuru are revised every 3 years as per the agreement between the management and unions.

Increments of other employees are made effective 1st April every year, as approved by Committee of Whole time Directors upon recommendation of heads of departments.

Mid-year increments are given in exceptional cases, as approved by the Managing Director, upon recommendation of concerned director and head of department.

viii. Remuneration to Independent and Non- Executive Directors

Remuneration / Commission shall be in accordance with the statutory provisions of the Companies Act, 2013 and the rules made thereunder and the Listing Regulations, for the time being in force and shall be entitled to such sitting fee in respect of the Board and Committee meetings attended, at the rates approved by the Board and within the applicable provisions of the Companies Act, 2013.

ix. Service contracts, notice period and severance fees:

Executive directors have entered into a service contracts with the company. The tenure of the contract is three/five years. Reappointment is done by the Board based on the recommendation of the Nomination and Remuneration Committee. Notice period is as mutually agreed between the director and the Board.

None of the directors is eligible for severance pay.

H. Formal annual evaluation by the Board

The Board has evaluated its own performance and of individual directors. The details as required u/s 134(3) (p) of the Companies Act, 2013, are mentioned in the Annexure 2: Report on Corporate Governance.

12. Transfer of shares and unclaimed dividend to Investor Education and Protection Fund (IEPF)

During the year under review, your Company transferred unclaimed dividend amount of Rs 3,34,860.00 (pertaining to interim dividend for the financial year 2015-16) lying with the Company for a period of seven years to the Investor Education and Protection Fund (IEPF) in compliance with the applicable provisions of the Companies Act, 2013. As required under Section 124 of the Companies Act, 2013, your Company also transferred during the year 4,602 shares to IEPF Authority, in respect of which dividend had remained unclaimed for a consecutive period of 7 years. Details of the shares transferred to IEPF Authority have been uploaded on website of the Company.

a) Independent Auditors

The Members of the Company at the 42^nd Annual General Meeting held on September 16, 2022 had re-appointed M/s. Majeti & Co., Chartered Accountants, (Firm Registration No 015975S) as the Statutory Auditors of the Company for a second term of five (5) consecutive years from the conclusion of 42^nd AGM till the conclusion of 47^th AGM.

b) Internal Auditor

In terms of Section 138 of the Companies Act, 2013, the Board of Directors of the Company has appointed M/s. R S N L & Associates, Chartered Accountants, as Internal Auditors to conduct Internal Audit of the Company for the financial year 2024-2025

c) Cost Auditor

The Company has maintained cost records for relevant products prescribed by the Central Government under the Companies Act, 2013 and Companies (Cost Records and Audit) Rules, 2014. These records have been audited

by M/s. S.S.Zanwar & Associates, Cost Accountants during the financial year 2023-24.

The Board of Directors of the Company, on the recommendations of the Audit Committee, have re-appointed M/s S. S. Zanwar & Associates, Cost Accountants, as the Cost Auditors of the Company to conduct the audit of the cost records of certain products for the financial year for 2024-25 and M/s. SS Zanwar & Associates, Cost Accountants being eligible have consented to act as the Cost Auditors of the Company for the financial year 2024-25.. As per the provisions of Section 148(3) of the Companies Act, 2013, the remuneration of the Cost Auditors has to be ratified by the Members and accordingly the resolution relating to the Cost Auditors' remuneration is being placed before the Members for their ratification.

d) Secretarial auditor

In terms of Section 204 of the Companies Act, 2013 and Rules made thereunder, the Board of Directors have re-appointed Mr. K.V. Chalama Reddy, K.V.C. Reddy & Associates, Company Secretaries as Secretarial Auditor of the Company to conduct the secretarial audit of the Company for the Financial Year 2024-25. They have confirmed their eligibility for the re-appointment.

14. Independent auditors' report

The Statutory Auditor's report to the Members on the standalone and consolidated financial statement of the Company for the financial year ended March 31,2024 does not contain any qualification, reservation, adverse remark or any disclaimer.

Reporting of fraud

During the year under review, there were no instances of fraud reported by the Statutory Auditors under Section 143(12) of the Companies Act, 2013.

15. Credit Rating

During the year under review, ICRA Limited has retained and assigned the following ratings for Long Term and Short Term Bank facilities of the Company:

a) Long Term Rating - '[ICRA] BBB+ (Stable)'

b) Short Term Rating - '[ICRA] A2'

16. Management discussion and analysis Report

A detailed review of operations, performance and future outlook of your Company and its businesses is given in the Management Discussion and Analysis, which forms part of this Report as stipulated under Regulation 34(2)(e) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015

17. Corporate governance

In terms of Regulation 34 of SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015. a separate report on Corporate Governance along with the Auditors' Certificate on its compliance with the corporate governance requirements is annexed herewith as Annexure - 2, Auditors' Certificate as Annexure-3 and CEO & CFO Certificate as Annexure-4 to this Report.

18. Secretarial audit report

Pursuant to the provisions of Section 204 and other applicable provisions, if any, of the Companies Act, 2013, the Board has appointed Mr. K.V. Chalama Reddy, K.V.C. Reddy & Associates, Company Secretaries, Hyderabad as Secretarial Auditor, to undertake the Secretarial Audit of the Company for the financial year 2023-24. The Secretarial Audit Report for the financial year ended March 31, 2024 is annexed herewith as Annexure-6. There are no qualifications, observations or adverse remarks, or disclaimers in the said report.

Annual Secretarial Compliance Report

The Company has undertaken an audit for the financial year 2023-24 for all applicable compliances as per Securities and Exchange Board of India Regulations and Circulars / Guidelines issued thereunder. The Annual Secretarial Compliance Report issued by Mr. K.V. Chalama Reddy, K.V.C. Reddy & Associates, Company Secretaries, Hyderabad has been submitted to the Stock Exchanges within the specified time.

Compliance with Secretarial Standards

The Company has complied with Secretarial Standards notified by the Institute of Company Secretaries of India (ICSI).

19. Conservation of energy, technology absorption and foreign exchange earnings and outgo

The Information on conservation of energy, technology absorption and foreign exchange earnings and outgo stipulated under Section 134(3) (m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014, is annexed herewith as Annexure- 7 to this Report.

20. Particulars of loans, guarantees or investments in terms of section 186 of the Companies Act, 2013

Your company

a) has not given any loan to any person or other body corporate other than usual advances for supply of materials and services

b) has not given any guarantee or provide security in connection with a loan to any other body corporate or person and

c) has not acquired the securities of any other body corporate by way of subscription, purchase or otherwise, exceeding sixty percent, of its paid-up share capital, free reserve and securities premium account or one hundred percent of its free reserves and securities premium account whichever is more.

21. Particulars of contracts or arrangements with related parties

All related party transactions entered by the Company during the financial year 2023-24 with related parties were on arm's length basis and in the ordinary course of business. No material related party transactions / arrangements were entered into during the financial year by the Company.

All transactions with related parties were reviewed and approved by the Audit Committee. Prior omnibus approval of the Audit Committee is obtained on a yearly basis for related party transactions which are of repetitive nature and entered in the ordinary course of business and on an arm's length basis. There were no materially significant related party transactions that may have potential conflict with the interest of the Company at large.

The particulars of transactions with related parties referred in section 188(1) of the Companies Act, 2013 entered by the Company during the financial year ended March 31, 2024 in prescribed Form AOC-2 is annexed herewith as Annexure - 8 to this Report.

The details of the transactions with related parties were also provided in the notes to the financial statements.

22. Risk management policy

Your company recognizes Risk Management as a very important part of business and has kept in place necessary policies, procedures and mechanisms. The company proactively identifies monitors and takes precautionary and mitigation measures in respect of various risks that threaten the operations and resources of the company.

The Risk Management Policy of the company is available at the link http://www.pelgel.com/prm.htm.

23. Vigil mechanism policy

Pursuant to the provisions of Section 177 (9) and (10) of the Companies Act, 2013 a Whistle Blower policy has been established. The policy is available at the website link http:// www.pelgel.com/pwb.htm.

24. Corporate social responsibility (CSR) activities

During the year 2023-24, your company has spent an amount of Rs 1.92 lakhs (Rs 8.87 lakhs in previous year) on CSR activities, against the minimum mandatory amount of Rs 1.28 Lakhs (Nil in previous year), being 2% of average profit for the last three years.

Details of CSR activities are given in Annexure - 9.

25. Disclosure under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 (Nirbhaya Act)

There are 67 women employees in your company as on March 31, 2024 (66 a year ago) and your company has formulated an anti harassment policy to ensure safe working environment. Your company also has set up an Internal Complaint Committee to redress complaints of women employees regarding sexual harassment .During the year under review, there were no cases received/filed pursuant to the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibitions and Redressal) Act, 2013.

Details of awareness programmes and complaints are listed in Annexure - 10.

26. Disclosure of significant and material orders passed by regulators etc. under Rule 8(5)(vii) of the Companies (Accounts) Rules 2014

During the year under review, there were no significant or material order(s) passed by the Regulators /Courts or Tribunals which would impact the going concern status of the Company and its future operations.

During the year under review, there is no application/ proceeding pending against the Company under the Insolvency and Bankruptcy Code, 2016, nor the Company has done any one time settlement with any Bank or Financial Institutions.

27. Disclosure of internal financial control systems and their adequacy Rule 8(5)(viii) of the Companies (Accounts) Rules 2014

Your company has in place adequate internal financial controls with reference to financial statements. The Board has adopted the policies and procedures for ensuring the orderly and efficient conduct of its business, including adherence to the Company's policies, safeguarding of its assets, prevention and detection of frauds and errors, accuracy and completeness of the accounting records, and aid in the timely preparation of reliable financial statements.

28. Annual Return

Pursuant to the provisions of Section 92(3) of the Companies Act, 2013, the Annual Return in Form MGT-7 is available on the company's weblink https://www.pelgel.com/annual_returns. html

29. Other Disclosures

• The Company's equity shares were not suspended from trading during the year under review due to corporate actions or any other reasons.

• There were no revisions to the financial statements and Directors' Report during the year under review.

• Specific details required under Section 134 of the Act and the Rules made thereunder, applicable to the Company, have been provided in this report where applicable.

• There were no application made or any proceeding pending under the Insolvency and Bankruptcy Code, 2016.

30. Remuneration of directors and employees and related disclosures

Remuneration is paid to directors and employees in accordance with the remuneration policy of the company and applicable statutory provisions.

Disclosure pertaining to the remuneration and other details as required under Section 197(12) of the Act and the Rules framed thereunder is enclosed as Annexure-10 to this Report.

31. Listing on stock exchanges

The Company's Equity shares are listed on BSE Limited(Scrip Code: 526247) and the National Stock Exchange of India Limited(Scrip Code: PREMEXPLN) and the Listing Fees has been paid to them up to date.

32. Human Resources and Industrial relations

Your directors thank all the employees for their cooperation and the contribution towards harmonious relationship and progress of the company.

33. Acknowledgements

Your directors place on record their appreciation of the continued support and cooperation received from all employees, customers, suppliers, financial institutions, banks, Government of India and various regulatory authorities, members and other business associates during the year under review.