WIXLIB

Chairman’sreviewDear MembersWelcome to the annual report of yourcompany for the year 2018-19!A few months ago elections were over anda more decisive government has beenformed at the centre. This augurs wellfor the country in general. One particularpoint I would like to mention is, whilethere has been part-time defence ministerinitially in the previous government, nowthere is a full time defence minister. I amhopeful of a proactive approach in defenceindigenisation and other areas.FinancialsDuring FY19, your company earned a profitafter tax of 1172.55 lakhs compared to 873.41 lakhs during FY18, which resultedin higher EPS of 11.00 for the current yearas against 8.42 for the previous year. Thisimprovement in profit is despite declinein operating revenue to 24093.35 lakhs inFY19 from 26590.85 lakhs in FY18, mainlycontributed by lower consumption of rawmaterials and increase in the price of certaincommercial products. Decline in top line isaffected by factors like long delay in receiptof defence orders, especially for Chaff.Key developmentsAs mentioned in last year annual report,your company supplied Chaffs to Indian AirForce in FY18 and your company is the firstIndian company to have supplied theseproducts. Again now in June 2019 yourcompany received a repeat order for Chafffor an amount of 100.08 crores, includingtaxes. This is the largest single defence orderreceived by your company.Your company recognised the businessopportunity in countermeasures likeChaff and Flare and has been workingto enhance its presence in that vertical,including obtaining manufacturing licensesfrom foreign OEM, collaborating withdefence laboratories, product developmentagreement with defence forces, etc.Premier Explosives Limited 39th Annual Report 2018-1911

In June 2019 we received repeat orderfor Chaff for an amount of 100.08crores, including taxes. This is thelargest single defence order receivedby your company.Obtaining quality approvals for indigenouslydeveloped defence products has been a longprocess, much beyond our expectations and yourcompany’s Air Target Imitator is awaiting ordersafter getting approval from MSQAA.Tenders for supply of Bi-modular charge systems(BMCS) and ammunition, in which your companyparticipated, are yet to be opened. Your companybelieves new government would expedite thetender process.On commercial explosives front, it is hearteningto note that India’s production of coal during2018-19 was 8.1% higher than in 2017-18. Expectingthis growth to continue, your company is hopeful ofimprovement in its commercial explosivesbusiness.New projectsYour company’s’ Greenfield project at Katepally,near Hyderabad, is in advanced stage of completion.This project will house facilities for manufacture ofsolid propellants, RDX, HMX, mines, war heads andother defence products.points at company level and defence ecology levelthat would help our defence foray in FY20 and later: As the Katepally unit is now ready, your companyis preparing for manufacture of solid propellant forsatellite launch vehicle of ISRO. MRSAM missile crossed the ‘development’ phaseand entered ‘induction’ phase. Order flow for solidpropellant for missiles started with initial order for 14.99 crores. Development of prototype propellant for an Israelicustomer is in final stage and getting ready forproduction schedule. Your company is awaiting order from Indian AirForce for supply of Air Target Imitator. Enquiries arereceived from other wings of defence also. Astra, Brahmos, Pinaka and other missiles / rocketoffer good potential and your company is waiting forthe fertile time. Your company bagged a substantial value orderfrom IAF for supply of countermeasures under OEMcertification. Your company developed coloured smokemarkers and received initial orders from TelanganaPolice. One export order also has been receivedfrom UK. To meet the requirement of smoke generators,signalling flares and Identification of Friend and Foe(IFF) flares, your company has developed differentcolours compositions and supplied to Indian Navyand paramilitary forces. Your company has signed a Memorandum ofAgreement (MoA) with IAF for development ofNATO origin countermeasures under “Make in India”category II. These would replace East Europeancountermeasures and adapt to NATO CMDS(Counter Measure Dispensing System) which havebeen developed by Bharat Dynamics Limited.On successful trials and acceptance by IAF weforesee to be self reliant and fulfil countermeasuresrequirement of IAF. Your company is awaiting the opening of tenders forBMCS and ammunition.First phase started on 4th July, 2019 with theinauguration of Ammonium Perchlorate ProcessingBuilding by Deputy Chief Controller of Explosives,Hyderabad Mr. S.M.Kulkarni. Inspection of otherprocess and storage buildings of Propellant Plantalso has been conducted that day.During the year, your company obtained Transfer ofTechnology for manufacture of solid propellant forBrahmos missile and the induction of technology isin progress.A new government has been formed at AndhraPradesh in June 2019 and your company initiated afresh dialogue for allotment of land at Sriharikota forsetting up solid propellant plant.Going forwardStepping into FY20 we see encouraging signs of ourindigenisation efforts which are expected to deliverbetter results. I would like to share a few important12Premier Explosives Limited 39th Annual Report 2018-19On commercial explosives front, itis heartening to note that India’sproduction of coal during2018-19 was 8.1% higher than in2017-18. Expecting this growth tocontinue, your company is hopefulof improvement in its commercialexplosives business.

Modernization of the armed forces andindigenization of manufacturing have emerged asfocus areas, including the ‘Make in India’ program.This is an opportune time to embark upon a newphase of self-reliance in the defence manufacturingwith technologically advanced processes withinIndia.Ph.D. for your company’s employeesI am proud to share with you that in March 2019two of our employees have been awarded Ph.D. byGulbarga University for their theses related to highenergy chemicals.SME AwardI am happy to tell you that your company hasreceived "SME- Empowering India Awards 2019"in the "Defence & Aerospace (Mid- Corporate)"category. I and my colleague Mr. T.V.Chowdary areprivileged to have received the award from Hon'bleUnion Minister of Steel, Chaudhary Birender Singh,at a ceremony held in New Delhi on 5th March, 2019.This award scheme is intended “to recognize thecontribution of such SMEs who through theirachievements and growth have empowered thenation".Following big picture developmentsin defence sector are expected to behelpful to your company’s business inthe coming years: India is in the process ofacquiring the National AdvancedSurface to Air Missile System II(NASAMS-II) from the US tocreate multi-layered shields overDelhi and Mumbai. This involvesprocurement of quite a fewmissiles. The government announced‘Open General Export License’scheme which is expected toboost defence exports fromIndia. The scheme also aims atstreamlining export permissionsprocess. ‘Roadmap of DRDO’ has beenlaunched outlining its target fornext ten years. Releasing theroadmap in June 2019, RakshaMantri stated the roadmap woulddrive cutting-edge technologiesand promote collaborationof DRDO with academia andindustry.I take this opportunity to thank all my coshareholders, co-employees, banks, customers,suppliers and other stakeholders who have been thepartners in our long journey.Yours sincerelyDr. A.N.GuptaChairman and Managing DirectorPremier Explosives Limited 39th Annual Report 2018-1913

FinancialHighlights( in 46.4116.658.42FY1911.00DEBT EQUITY 6FY172,001.64FY18BASIC EPS ( er Explosives Limited 39th Annual Report 2018-19FY18FY190.110.100.120.11

10 yearsat a glanceStatement ofProfit and LossOperating revenue(net of excise duty)Other incomeTotal revenue (net)EBIDTAOther incomeDepreciationFinance costsProfit before exceptionalitems and taxExceptional itemsProfit before taxTaxProfit for the yearOther comprehensiveincome (net)Total comprehensiveincomeEBIDTA / OperatingrevenuePBT / Total revenuePAT / Total revenueBalance sheetNon-current assetsFixed assets and IntangibleassetsDepreciation andAmortisationCapital work in progressInvestment propertyInvestmentsOther non-current assetsCurrent assetsTotal assetsShare capitalOther equity / Resesrvesand surplusShare warrantsNetworthNon-current liabilitiesLiabilities and provisionsDeferred tax liabilityCurrent liabilitiesEquity and liabilitiesReturn on capitalemployedReturn on networthDebt / equityCurrent ratioPer shareBook value per share - Earnings per share - Dividend per share - No. of shareholders( in 4.1912.332.007,30634.607.322.006,911Note: Figures from 2017-18 are as per Ind ASPremier Explosives Limited 39th Annual Report 2018-1915

From the desk ofDeputy Managing DirectorDefence / space – macro factorsPreviously there were frequent changes atthe helm of defence ministry. This importantministry in the new government is expected tobe consistent expediting the ‘Make in India’ indefence procurement.In July 2019 USA Senate has passed The NationalDefence Authorisation Act (NDAA) which bringsIndia at par with America's NATO allies andcountries like Israel, Australia, Japan and SouthKorea for increasing defence cooperation. Themove will also ease export controls for hightechnology product sales to India.'Open General Export License (OGEL)'scheme is about to be launched byGovernment of India. This will simplify exportprocedures and would create enablingenvironment for manufacture of qualityproducts at competitive cost in India. Evenbefore launch of this scheme, PremierExplosives Limited has already obtained ordersfor development and manufacture of solidpropellants from Israel. OGEL is expected tohelp the company getting and executingexport orders quickly. In July 2019 the FinanceCommission has been tasked to “addressserious concerns regarding the allocation ofadequate, secure and non-lapsable funds fordefence and internal security of India”, showingthe importance being given for defence.Major defence ordersReceived order for Operations andMaintenance (O&M) services at SHAR, ISRO,Sriharikota. This contract is for 213.58 crores(including GST) spanning a period of 10 years.We have received an order for 29.06 cores(including GST) from NLC India Limited forsupply of bulk explosives. This order is to beexecuted during the period March 2019 toAugust 2021.16Premier Explosives Limited 39th Annual Report 2018-19Received order from Indian Air Force for supplyof Chaff worth 100.08 crores. This is the largestsingle order received by the company fordefence supplies.Received order from Bharat Dynamics Limitedfor supply of solid propellants for MRSAM worth 14.99 crores. MRSAM is under induction atIndian Army and this is the first order aftercompletion of ‘development’ of the missile byIsrael Aerospace Industries, Israel and DRDO,India. Currently PEL is the supplier of solidpropellant for this missile.CapexDuring the year we have invested an amount of 1243.80 lakhs on acquisition of fixed assets and 3465.67 lakhs have been spent on capital work inprogress. As at the end of FY2019, CWIP stood at 3482.52 lakhs which is expected to be capitalisedduring the second quarter of 2019-20.Currently, the new project at Katepally is inadvanced stage of completion. AmmoniumPerchlorate processing plant has been inauguratedin July 2019. Explosives licenses have been receivedfor a few of the facilities.An amount of 434.46 lakhs has beenspent on intangible assets, mainly towardstransfer of technology for Brahmos missilepropellant.During the year we have investedan amount of 1243.80 lakhs onacquisition of fixed assets and 3465.67 lakhs have been spenton capital work in progress. As atthe end of FY2019, CWIP stood at 3482.52 lakhs which is expectedto be capitalised during thesecond quarter of 2019-20.

Bids for ammunitionYour company submitted Bidsfor supply of Bi-Modular ChargeSystems (BMCS) and 30mmgrenades in April 2018 andMinistry of Defence (MoD) is yetto finalise those tenders. Thesuccessful bidders would beawarded with 10 years contracts.R&DDuring the year two ofour employees at thePeddakandkukuru factoryhave been awardedPh.D. by Gulbarga Universityfor their theses on "Studies onsome important High EnergyMaterials and their application"and "Synthesis and study ofCopper Chromite in HighEnergy reactions". These firsttwo Doctoral degrees are theoutcomes of Memorandum ofUnderstanding between theGulbarga University and PremierExplosives Limited.Capex forTOT 434.46lakhsPremier Explosives Limited 39th Annual Report 2018-1917

Board ofDirectors1Dr. A VenkataramanIndependent Director2Gen P.R. Kumar (Retd.)Director3T V ChowdaryDeputy Managing Director4Y. Durga Prasad RaoDirector Operations(from 10.8.2019)5Anil Kumar MehtaIndependent Director6P R TripathiIndependent Director7Dr. (Mrs.) Kailash GuptaNon-Executive Director(promoter)8Dr. A.N.GuptaChairman & Managing Director9K RamaraoIndependent Director12618Premier Explosives Limited 39th Annual Report 2018-19374859

1Dr. A VenkataramanIndependent DirectorHe is a doctorate in Chemistry andis working as Professor in GulbargaUniversity. His main fields ofinterests are materials chemistry,nanomaterials chemistry, polymernano composites, etc. He wasawarded Indo-Hungarian Fellowshipfor research at Hungarian Institutionby UGC New Delhi in 2006. Hereceived Young Scientist Awardin inorganic Chemistry in 1993from Indian Council of Chemists.He is a Commonwealth Fellowat Manchester Materials ScienceCenter, Machester, awarded by theCommonwealth High Commission,UK in 1995. He has authored around100 articles and research papers inreputed national and internationalresearch journals. He has threepatents filed to his credit.2Gen P.R. Kumar (Retd.)DirectorHe is a Graduate from Staff College,Wellington and Alumnus of NationalDefence Academy, Khadakwasla.Retired as Lieutenant General fromthe services of the Indian Army in2015. He was commissioned intothe regiment of artillery in 1976. Hehas attended prestigious HigherCommand & National Defence CollegeCourses. During his long and illustriouscareer, he held a variety of Command,Staff and Instructional assignments.He commanded the prestigious StrikeCorps, on the South Western Front,before taking over as DGMO.3T V ChowdaryDeputy Managing DirectorA chemical engineer with over 33years of experience in production ofexplosives, detonator, petrochemicals,coal tar pitches & enamels,mushrooms and solid propellants.4Y. Durga Prasad RaoDirector Operations(from 10.8.2019)A mechanical engineer having 34years experience in manufacture ofexplosives, propellants, refractoriesand also in factory management5Anil Kumar MehtaIndependent DirectorAn FCA, he is a senior partner inM.Bhaskara Rao & Co., C A, havingrich experience in auditing, taxation,company

Premier EHplo/lvel limited ;L':' August 29th, 2019 To, The Bombay Stock Exchange Limited Corporate Relationship Department Floor - 25, P.J.Towers, Dalal Street, MUMBAI- 400 001 Scrip Code: 526247 To, National Stock Exchange of India Limited listing Department, Exchange Plaza,Bandra Kurla Complex, Bandra (E), Mumbai-400051 Trading Symbol .