DIRECTORS' REPORT

Dear Members

Your directors are pleased to present the 43^rd annual report including
the audited financial statements of your company for the year ended
March 31,2023.

1. Financial summary (' in lakhs)

2. State of affairs

The performance of the company has improved marginally in
terms of Revenues and profits during the year 2022-23 despite
of the unexpected delays in clearance of deliveries in defence
segment. Operating EBIDTA has gone up from ' 2,228.32
lakhs to '2,581.54 lakhs and Profit before tax has increased to
'895.69 lakhs from ? 729.76 Lakhs during previous year. Profit
after tax stands at '668.49 lakhs as compared to '562.01 lakhs
for the year 2021-22. 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 15.40 million pieces as against
24.43 million pieces in previous year. The Company has
executed several orders in defence during the year.

Operation & Maintenance contract at Sriharikota has been
satisfactory during the Financial Year 2022-23. The production
of bulk explosives increased to 7886 tonnes from previous

year's 6,221 tonnes. The prices and supplies of Ammonium
Nitrate price 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 ' 1873.91 lakhs on fixed assets and ' 80.41 lakhs on
intangible assets .

4. Dividend

The Board of Directors of your company, at their Meeting
held on May 16, 2023, has recommended payment of '1.70/-
(Rupees One and Seventy paise only) (17%) per equity share,
as final dividend for the financial year ended March 31, 2023.
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 2022-23
would aggregate to '182.79 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.

5. Share capital and reserves

a) Share capital

The paid up Equity Share Capital of the Company as
on March 31, 2023 was ? 10,75,22,390/- divided into
1,07,52,239 equity shares of '10/- each fully paid up.
There was no change in the Share Capital during the year
under review.

b) 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

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

9. Subsidiary companies, Jointly controlled entity and
consolidated financial statements

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
'0.90 lakh during 2022-23 ('0.85 lakh during 2021-22).

As on 31^st March, 2023, 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, YadadriBhuvanagiri
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 incurred a net profit before tax of ? 27.68
lakhs during the year ended March 31, 2023 and the
company has accumulated loss of ? 33.58 lakhs as at
March 31, 2023 (Revenue of ? Nil_ lakhs and Net loss of
? 39.04 lakhs during previous year).

As on 31^st March, 2023, 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

This joint venture is yet to commence commercial
operations and has been inoperative for the past several
years due to lack of business opportunities. Hence during
the year, the Board has decided to close the Company
and accordingly forms/documents were filed with the
Registrar of Companies, Pune, Maharashtra, to strike off
the name of the company from the register of companies
under Section 248 of the Companies Act, 2013

The company incurred a net loss of ' 2.00 lakh during
2022-23 (' 1.11 lakh during 2021-22).

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 started getting large orders in defence segment
especially from counter measures. Your company has completed
the designing and development orders of various Rocket
motors for overseas buyers. During the year your company has
received supply orders for these products and the deliveries
against the orders have started.

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.

Special focus on overseas market started yielding the results
and the company is getting high value export orders from
various countries. Indian Defence exports have grown almost
eleven times from ? 1,500 crore to ? 16,000 crore in the past six
years.

In the last two years, India has brought out three lists with a total
of 310 equipment and weapon systems, which will undergo a
phased import ban within specified deadlines.

The lists comprise latest high tech platforms such as light weight
tanks, naval utility helicopters, missiles, mounted artillery gun
systems as well as medium altitude long endurance unmanned
aerial vehicles, and loitering munitions.

While the lists were primarily meant to put an end to defence
imports, they were clearly drawn considering the manufacturing
capabilities of India's private industry and public sector working
in the field of defence. This will give lot of opportunities to our
company in coming days.

The operations in Bulk explosives division are also getting
stabilized and looking bright with the existing supply order
from Singareni and future requirements of Coal India with the
cooling off of the commodity / raw material prices.

11. Board matters

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, 2023,
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, 2023 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 2022-23, Five (5) Board meetings
were convened and held on 26^th May, 2022; 03^rd August,
2022; 27^th October, 2022; 2^nd January, 2023 and 10^th
February, 2023.

D. Board evaluation

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

E. Directors and Key Managerial Personnel

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

Directors

Retirement by Rotation

As per the provisions of the Companies Act, 2013,
Mr. Y. Durga Prasad Rao (DIN:08072805) Director-
Operations, is liable to retire by rotation at the ensuing
Annual General Meeting and being eligible, offers himself
for reappointment and the resolution under item No 3,
seeking approval of the Members for his re-appointment
has been incorporated in the Notice convening the 43rd
Annual General Meeting of the Company along with brief
details about him.

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
43^rd AGM, forming part of the Annual Report.

Appointments, Resignations and Changes

During the year under review, the Members at the AGM
held on September 16, 2022 through special resolution
had re-appointed Mr. Y. Durga Prasad Rao (DIN: 08072805)
as Wholetime Director designated as Director-operations
for a second consecutive term of five years commencing
from August 10, 2022.

Key Managerial Personnel

Pursuant to the provisions of Section 2(51) and 203 of
the Companies Act, 2013, the Key Managerial Personnel
(KMP) of the Company are Mr. T.V. Chowdary, Managing
Director, Mr. Srihari Pakalapati, Chief Financial Officer and
Mrs. K. Jhansi Laxmi, Company Secretary.

F. Committees of the Board

As required under the Act, and the Listing Regulations,
the Company has constituted the following statutory
committees:

• Audit Committee

• Nomination and Remuneration Committee

• Stakeholders Relationship Committee

• Corporate Social Responsibility Committee

Details of all the Committees such as terms of reference,
composition and meetings held during the year under
review are disclosed in the Corporate Governance Report,
a part of this Annual Report.

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 1^st 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 ? 3,23,974.00 (pertaining
to dividend for the financial year 2014-15) 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 6,237 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.

13. Auditors

a) Independent Auditors

The Members of the Company at the 42nd 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 42nd AGM till the conclusion
of 47th 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.B.M. Kumar & Associates, Chartered Accountants,,
as Internal Auditors to conduct Internal Audit of the
Company for the financial year 2023-24.

There was no qualification, reservation or adverse remark
disclaimer in the auditors report, cost audit report .

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 2022-23.

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 2023-24 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 2023-24.. 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, Practicing Company
Secretary as Secretarial Auditor of the Company to
conduct the secretarial audit of the Company for the
Financial Year 2023-24. 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 31,2023 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, Practicing Company
Secretary, Hyderabad as Secretarial Auditor, to undertake the
Secretarial Audit of the Company for the financial year 2022-23.
The Secretarial Audit Report for the financial year ended March
31, 2023 is annexed herewith as Annexure-5. 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
2022-23 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, Practising Company Secretary,
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- 6 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 2022-23 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, 2023 in
prescribed Form AOC-2 is annexed herewith as Annexure - 7
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 2022-23, your company has spent an amount
of ? 8.87 (? 11.86 lakhs in previous year) on CSR activities,
against the minimum mandatory amount of Nil (?11.86 lakhs
in previous year), being 2% of average profit for the last three
years.

Details of CSR activities are given in Annexure - 8.

25. Disclosure under the Sexual Harassment of Women at

Workplace (Prevention, Prohibition and Redressal) Act,

2013 (Nirbhaya Act)

There are 66 women employees in your company as on March
31, 2023 (64 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 - 9.

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 www.pelgel.com/annual returns.html

29. 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.

30. Details of amount received from a director of the company:

During the year under report, the Company has not received
any amount from any Director of the Company pursuant to Rule
2 (1) (c) (viii) of the Companies (Acceptance of Deposits) Rules,
2014.

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.

For and on behalf of the Board

Dr. A.N. Gupta T.V. Chowdary

Secunderabad Chairman Managing Director

01.09.2023 DIN:00053985 DIN: 00054220