Pradeep Metals Ltd. — Earnings Release 2021

May 27, 2021

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27[th] May, 2021

The Secretary BSE Limited P J Towers, Dalal Street, Mumbai- 400 001.

Dear Sir,

Sub: Outcome of Board Meeting dated 27[th] May, 2021:

Scrip Code: 513532

This is in continuation to our letter dated 19[th] May, 2021 and pursuant to Regulation 33, 30 and other applicable regulations, if any, of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (the Listing Regulations).

We wish to state that the Board of Directors of the Company in its meeting held today has interalia:

Approval of Audited Financials Results:

• Approved the Audited Financial Results of the Company on Standalone and Consolidated basis for the quarter/year ended 31[st ] March, 2021 along with Auditors' Reports thereon with unmodified opinions.

Recommendation of Final Dividend:

• Recommended Final Dividend of 10% i.e., Re 1 per equity share of Rs.10 each for the financial year ended 31st March, 2021.

Re-appointment of Directors:

Subject to approval of Members in the forthcoming AGM:

• Re-appointment of Mr. Jayavardhan Dhar Diwan as Independent Director (NonExecutive) for a second term of five years w.e.f. 13[th] May, 2022 subject to approval of members in the forthcoming AGM.

• Re-appointment of Mrs. Neeru Goyal, who retires by rotation, but being eligible, offers herself for reappointment subject to approval of members in the forthcoming AGM.

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Alteration in Object Clause of Memorandum of Association:

• Approved alteration in Object Clause of Memorandum of Association of the Company subject to approval of Members in the forthcoming AGM. Brief details are as below:

The Company is presently engaged in the business of manufacturing and sale of metal forgings and castings, automotive and machinery parts, tools, pipe fittings. In view of prevailing market condition, the Company intends to engage in manufacture and sell of ammunition and other forged and/or machined components to be used in industrial defence and aerospace sector, which may be conveniently and advantageously combined with the existing business of the Company. Hence relevant object clause is proposed to be inserted in the Memorandum of Association.

Fixing date of 38[th] Annual General Meeting of Board and Book-closure dates:

• The 38[th] Annual General Meeting of the Company shall be held on 13[th] August, 2021 at 3.00 p.m.

• The Register of Members and Register of Transfers be closed from 6[th] August, 2021 to 12[th] August, 2021 (both days inclusive).

A copy of the said results, notes thereto and Auditors Report and Cash Flow Statement is enclosed for your records.

The meeting of the Audit Committee/Board of Directors of the Company commenced at 5.00 p.m. and concluded at 9.15 p.m.

Please take the same on record.

For Pradeep Metals Limited

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Nivedita Nayak Company Secretary & Compliance Officer FCS: 8479

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27[th] May, 2021

The Secretary BSE limited PJ Towers, Dalal Street, Mumbai 400 001.

Dear Sir/Madam,

Sub: Declaration pursuant to Regulation 33(3)(d) of the Securities & Exchange Board of India (listing Obligations and Disclosure Requirements) Regulations, 2015

Scrip Code: 513532

(CIN: L99999MH1982PLC026191) having its Registered Office at R 205, MIDC, Rabale, Navi Mumbai- 400701, Maharashtra, hereby declare that, the Statutory Auditors of the Company M/s. N. A. Shah and Associates, LLP, Chartered Accountants have issued an Audit Report with unmodified opinion on Audited Financial Results of the Company (Standalone and Consolidated) for the quarter and year ended March 31, 2021.

This declaration is given in compliance with Regulation 33(3)(d) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 read with Circular DCS/COMP/04/2016-17 dated June 1, 2017.

Kindly take this declaration on your records.

Thanking you, Yours truly,

For and on behalf of Pradeep Metals Limited

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Pradeep Goyal Chairman and Managing Director

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MODY MILAN NAVIN
Date: 2021.05.27 20:47:50 +05'30' a4b35b24166dbb248fbc3, cn=MILAN NAVIN MODY serialNumber=b53fc37c6a6ccc5435460835a4d6b0fe9c18f4b228e 453272ccde090e68f, postalCode=400028, st=MAHARASHTRA, 2.5.4.20=0e3e9555c7d43306842716cf5b463cb460b64f9658d8d8e pseudonym=c14c7df51e8efaf846ab7b462457ab0088b67cd4, DN: c=IN, o=Personal, title=7027, Digitally signed by MILAN NAVIN MODY
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MODY MILAN NAVIN
Date: 2021.05.27 20:48:08 +05'30' ea4b35b24166dbb248fbc3, cn=MILAN NAVIN MODY serialNumber=b53fc37c6a6ccc5435460835a4d6b0fe9c18f4b228 e453272ccde090e68f, postalCode=400028, st=MAHARASHTRA, 2.5.4.20=0e3e9555c7d43306842716cf5b463cb460b64f9658d8d8 pseudonym=c14c7df51e8efaf846ab7b462457ab0088b67cd4, DN: c=IN, o=Personal, title=7027, Digitally signed by MILAN NAVIN MODY
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Auditor’s Report on standalone financial results of Pradeep Metals Limited pursuant to the Regulation 33 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (as amended)

To The Board of Directors of Pradeep Metals Limited

Report on the audit of the standalone financial results

Opinion

We have audited the accompanying statement of standalone financial results (“the Statement”) of Pradeep Metals Limited (“the Company”) for the year ended 31[st] March 2021, attached herewith, being submitted by the Company pursuant to the requirement of Regulation 33 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, as amended (‘Listing Regulations’).

In our opinion and to the best of our information and according to the explanations given to us these Standalone financial results:

• i. are presented in accordance with the requirements of Regulation 33 of the Listing Regulations in this regard; and

• ii. give a true and fair view in conformity with the recognition and measurement principles laid down in the applicable Indian Accounting Standards and other accounting principles generally accepted in India of the net profit and other comprehensive income and other financial information for year ended 31[st] March 2021

Basis for Opinion

We conducted our audit in accordance with the Standards on Auditing (SAs) specified under section 143(10) of the Companies Act, 2013 (the Act). Our responsibilities under those Standards are further described in the Auditor’s Responsibilities for the Audit of the Standalone financial results section of our report. We are independent of the Company in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India together with the ethical requirements that are relevant to our audit of the financial results under the provisions of the Companies Act, 2013 and the Rules thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion on Standalone financial results.

Emphasis of matter

Reference is invited to note 3 of the notes to financial results. In view of accumulated losses in the wholly owned subsidiary (WOS) and step down subsidiary (SDS), expected business impact of Covid-19 and provision for impairment of goodwill by SDS, the Company carried out impairment assessment in respect of its investment in WOS and loans granted to WOS. Based on such assessment, the Company has made a provision for impairment of Rs. 270 lakhs in the value of its investment in WOS for the year ended 31[st] March 2021 (aggregate impairment provision upto 31[st] March 2021 is Rs.540 lakhs). In the view of management, considering the long term and strategic nature of investment, the balance carrying value of investment would yield the required benefits and the loan given to the WOS is considered as fully recoverable. This matter was also reported under ‘Emphasis of matter’ paragraph in our reports for earlier quarters of current year and for the year ended 31[st] March 2020.

Our opinion is not modified in respect of above matter. Our opinion was not modified in earlier quarters and previous year also.

Management’s responsibility for the standalone financial results

These standalone financial results have been prepared on the basis of the standalone annual financial statements.

The Company’s Board of Directors are responsible for the preparation of these standalone financial results that give a true and fair view of the net profit/loss and other comprehensive income and other financial information in accordance with the applicable Indian accounting standards (Ind As) prescribed under Section 133 of the Act read with relevant rules issued thereunder and other accounting principles generally accepted in India and in compliance with Regulation 33 of the Listing Regulations. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the Standalone financial results that give a true and fair view and are free from material misstatement, whether due to fraud or error.

In preparing the standalone financial results, the Board of Directors are responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Board of Directors either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

The Board of Directors are also responsible for overseeing the Company’s financial reporting process.

The statement includes the results for the quarter ended 31st March, 2021 being the derived figures between the audited figures in respect of the full financial year ended 31st March, 2021 and the published unaudited year-to-date figures up to 31st December, 2020, being the date of the end of the third quarter of the financial year, which were subjected to a limited review.

Auditor’s responsibility

Our objectives are to obtain reasonable assurance about whether the standalone financial results as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these Standalone financial results.

As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the Standalone financial results, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under Section 143(3)(i) of the Act, we are also responsible for expressing our opinion on whether the company has adequate

internal financial controls with reference to financial statements in place and the operating effectiveness of such controls.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Board of Directors.

• Conclude on the appropriateness of the Board of Directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial results or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Company to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the Standalone financial results, including the disclosures, and whether the financial results represent the underlying transactions and events in a manner that achieves fair presentation.

Materiality is the magnitude of misstatements in the Standalone Financial Results that, individually or in aggregate, makes it probable that the economic decisions of a reasonably knowledgeable user of the Standalone Financial Results may be influenced. We consider quantitative materiality and qualitative factors in (i) planning the scope of our audit work and in evaluating the results of our work; and (ii) to evaluate the effect of any identified misstatements in the standalone financial results.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

For N. A. Shah Associates LLP Chartered Accountants Firm’s Registration No. 116560W/W100149

Digitally signed by MILAN NAVIN MODY DN: c=IN, o=Personal, title=7027, MILAN NAVIN pseudonym=c14c7df51e8efaf846ab7b462457ab0088b67cd4, 2.5.4.20=0e3e9555c7d43306842716cf5b463cb460b6 4f9658d8d8e453272ccde090e68f, MODY postalCode=400028, st=MAHARASHTRA, serialNumber=b53fc37c6a6ccc5435460835a4d6b0fe9c18f4b228ea4b35b24166dbb248fbc3, cn=MILAN NAVIN MODY Date: 2021.05.27 20:49:26 +05'30'

Milan Mody Partner Membership number: 103286 UDIN: 21103286AAAACP5218

Place: Mumbai Date: 27[th] May, 2021

Auditor’s Report on consolidated financial results of Pradeep Metals Limited pursuant to the Regulation 33 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (as amended)

To The Board of Directors of Pradeep Metals Limited

Report on consolidated financial results for the year ended 31[st] March 2021

Opinion

We have audited the accompanying Statement of Consolidated Financial Results (“the Statement”) of Pradeep Metals Limited (“the Company”) and its Wholly Owned Subsidiary (WOS) and Step Down Subsidiary (SDS) (collectively referred to as ‘the Group’) for the year ended 31[st] March 2021, attached herewith, being submitted by the Company pursuant to the requirement of Regulation 33 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (as amended).

In our opinion and to the best of our information and according to the explanations given to us and based on consideration of the management certified financial statements referred to in “Other Matter” paragraph below and on other financial information of the subsidiaries, these consolidated financial results:

• a) includes annual unaudited financial results of the following entities:

Name of the Entity	Relationship
Pradeep Metals Limited Inc., USA	Wholly Owned Subsidiary (WOS)
Dimensional Machine Works LLC, USA	Step Down Subsidiary (SDS)

• b) have been presented in accordance with the requirements of Regulation 33 of the Listing Regulations, 2015 (as amended) in this regard; and

• c) give a true and fair view in conformity with the Ind AS and other accounting principles generally accepted in India of the total comprehensive income comprising of net profit and other comprehensive income and other financial information of the Group for the year ended 31[st] March, 2021.

Basis for Opinion

We conducted our audit in accordance with the Standards on Auditing (SAs) specified under section 143(10) of the Companies Act, 2013 (“Act”). Our responsibilities under those Standards are further described in the Auditor’s Responsibilities for the Audit of the Consolidated Financial Results section of our report. We are independent of the Group, in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India together with the ethical requirements that are relevant to our audit of the consolidated financial statements under the provisions of the Companies Act, 2013 and the Rules thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Emphasis of matter

Reference is invited to note 8 of the statement. In respect of SDS:

• a) The management has carried out impairment assessment in respect of goodwill and tangible assets considering the accumulated losses and assessment of financial impact on account of Covid-19 on future cash flows. Based on such assessment, the excess of carrying value of goodwill over the recoverable amount has been accounted as impairment provision of Rs. 270 lakhs for year ended 31st March 2021 (aggregate impairment provision upto 31[st] March 2021 is Rs. 540 lakhs). Management is of the view that expected growth in the demand of the

SDS’s products and other steps taken by the management, will generate sufficient cash flows to cover balance carrying value of goodwill and the carrying value of the tangible assets as at 31[st] March 2021.

• b) In respect of inventory: (i) ageing of slow/non-moving items of inventories is not available from the system. Management is of the view that there is demand for the SDSs products and these inventories have realizable value greater than cost. Based on the management estimate, provision is made wherever considered necessary. We have relied on the management for the demand estimate and expected price realization. (ii) Further, the improvement in the systems and processes of maintaining the inventory records is in process.

Our opinion is not modified in respect of above matters. The matters in paragraph (a) and (b) above, were reported in our report for earlier quarters of current year and for the year ended 31[st] March, 2020. Our opinion was not modified in earlier quarters and previous year also.

Management’s responsibility for Consolidated Financial Results

These consolidated financial results have been prepared on the basis of the consolidated annual financial statements.

The Holding Company’s Board of Directors are responsible for the preparation and presentation of these consolidated financial results that give a true and fair view of the net profit and other comprehensive income and other financial information of the Group in accordance with the Indian Accounting Standards (Ind AS) prescribed under Section 133 of the Act read with relevant rules issued thereunder and other accounting principles generally accepted in India and in compliance with Regulation 33 of the Listing Regulations. The respective Board of Directors of the companies included in the Group are responsible for maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Group and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and the design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring accuracy and completeness of the accounting records, relevant to the preparation and presentation of the Statement that give a true and fair view and are free from material misstatement, whether due to fraud or error, which have been used for the purpose of preparation of the consolidated financial results by the Directors of the Holding Company, as aforesaid.

In preparing the consolidated financial results, the respective Board of Directors of the companies included in the Group are responsible for assessing the ability of the Group to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the respective Board of Directors either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.

The respective Board of Directors/ management of the companies included in the Group are responsible for overseeing the financial reporting process of the Group.

The statement includes the results for the quarter ended 31st March, 2021 being the derived figures between the audited figures in respect of the full financial year ended 31st March, 2021 and the published unaudited year-to-date figures up to 31st December, 2020, being the date of the end of the third quarter of the financial year, which were subjected to a limited review.

Auditor’s responsibility

Our objectives are to obtain reasonable assurance about whether the consolidated financial results as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of

assurance, but is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial results.

As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the consolidated financial results, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under Section 143(3) (i) of the Act, we are also responsible for expressing our opinion on whether the Holding Company has adequate internal financial controls with reference to financial statements in place and the operating effectiveness of such controls.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Board of Directors.

• Conclude on the appropriateness of the Board of Directors use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the ability of the Group to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the consolidated financial results or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the consolidated financial results, including the disclosures, and whether the consolidated financial results represent the underlying transactions and events in a manner that achieves fair presentation.

• Obtain sufficient appropriate audit evidence regarding the financial results/financial information of the entities within the Group to express an opinion on the consolidated Financial Results. We are responsible for the direction, supervision and performance of the audit of financial information of such entities included in the consolidated financial results of which we are the independent auditors.

Materiality is the magnitude of misstatements in the consolidated financial results that, individually or in aggregate, makes it probable that the economic decisions of a reasonably knowledgeable user of the consolidated financial results may be influenced. We consider quantitative materiality and qualitative factors in (i) planning the scope of our audit work and in evaluating the results of our work; and (ii) to evaluate the effect of any identified misstatements in the consolidated financial results.

We communicate with those charged with governance of the Holding Company and such other entities included in the consolidated financial results of which we are the independent auditors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. We also performed procedures in accordance with the circular issued by the SEBI under Regulation 33(8) of the Listing Regulations, as amended, to the extent applicable.

Other Matters

We did not audit the financial statements of WOS and SDS for the year ended 31[st] March 2021 included in the consolidated statement, whose financial statements reflect total assets of Rs. 7,197 lakhs as at 31[st] March 2021, total revenues (including other income) of Rs. 1,016 lakhs and Rs. 3,503 lakhs and share of total profit / (loss) after tax amounting to Rs. 228 lakhs and Rs. (317) lakhs for the quarter and year ended 31[st] March, 2021 respectively, and net cash inflow of Rs. 46 lakhs for the year ended 31[st] March, 2021, as considered in the consolidated financial statements. We have carried out limited review of the unaudited standalone financial statements of WOS and SDS for the quarter and year ended 31[st] March 2021. The unaudited financial statements / financial information of WOS and SDS are certified by the Company’s management and have been prepared by the Company in accordance with Ind AS. Our opinion on the consolidated financial statements of the Group for the year then ended to the extent they relate to the statement as stated in this paragraph, is based solely on such management certified unaudited financial statements. Our opinion on the consolidated financial results is not modified in respect of the above matter.

For N. A. Shah Associates LLP

Chartered Accountants

Firm’s Registration No. 116560W / W100149

MILAN NAVIN MODY Digitally signed by MILAN NAVIN MODY DN: c=IN, o=Personal, title=7027, pseudonym=c14c7df51e8efaf846ab7b462457ab0088b67cd4, 2.5.4.20=0e3e9555c7d43306842716cf5b463cb460b64f9658d8d8e453272ccde090e68f, postalCode=400028, st=MAHARASHTRA, serialNumber=b53fc37c6a6ccc5435460835a4d6b0fe9c18f4b228ea4b35b24166dbb248fbc3, cn=MILAN NAVIN MODY Date: 2021.05.27 20:50:26 +05'30'

Milan Mody

Partner Membership number: 103286 UDIN: 21103286AAAACQ9779

Place: Mumbai Date: 27[th] May, 2021