Precision Electronics Ltd. — Regulatory Filings 2020

Jun 2, 2020

VEENITA KHURANA

Digitally signed by VEENITA KHURANA DN: c=IN, o=Personal, postalCode=201304, st=UTTAR PRADESH, serialNumber=8bbc84dd6a9be41289bb39f52e314e3e2d722b003ed1aa458399d110ad520fb3, cn=VEENITA KHURANA Date: 2020.06.02 12:12:59 +05'30'

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- DISCLOSURE OF MATERIAL IMPACT OF COVID 19 PANDEMIC

Pursuant to SEBI circular SEBI/HO/CFD/CMD1/CIR/P/2020/84 dated May 20, 2020 on disclosure of material impact of Covid-19, pandemic are as follows:

1. Impact of the CoVID-19 pandemic on the business

The Company's Noida manufacturing facilities remained closed from March 23, 2020 till date which has impacted its operations during April and May 2020. Manufacturing would commence only after the supply chain is active and parts are delivered to us. This is a challenge as our suppliers are small units and spread all over the NCR region wherein interstate movements are restricted/erratic.

2. Ability to maintain operations including the factories/units/office spaces functioning and closed down;

The Company is fully prepared to restart its operations on receiving the permission, adhering to the safety norms prescribed by Government of India.

3. Schedule, if any, for restarting the operations

The Company’s Roorkee manufacturing facility resumed operation albeit at a lower capacity since 6th April 2020 and despatches are taking place. Permission to start operations at Noida Unit is awaited. With relaxed COVID norms, we are hopeful that the permission would be available in early June 2020. Limited operations could begin within a week thereof.

4. Steps taken to ensure smooth functioning of operations

Mandatory SOP prescribed by the MHA have been applied and accounted for. The Company is taking utmost care of its staff and work force w.r.t sanitisation, social distancing, mandatory mask wearing, thermal check at the gate, maintaining proper hygiene. Supply chain is being monitored to ensure availability of material. We are in the process of rationalising costs, capital expenditure and measures to be taken for managing cash flows efficiently.

5. Estimation of the future impact of CoVID-19 on its operations

April - June' 2020 being lockdown months, the revenues and profitability of the Company are likely to be adversely impacted. If the budgets of the various Government departments are not slashed, operations are expected to normalize from the third quarter onwards of the financial year 2020-21.

6. Details of impact of CoVID-19 on listed entity’s: -

 Capital and Financial resources

The Company's capital and Banking facilities remain intact. As of now the liquidity is available and with additional limits made available by the Government under the GCEL scheme announced by the Finance Minister for the MSME sector, we are reasonably confident to sail through this challenging period.

 Profitability

In view of lock down, the profitability during 1[st] quarter (April to June) and 2[nd] quarter are likely to be adversely impacted. We do hope that the business situation should normalise during 3[rd] and 4[th ] quarter.

 Liquidity position

As explained above, there are no immediate liquidity concerns and Banks are considering enhancing our existing limits. However, customers not paying in time could pose a challenge to the liquidity position.

 Ability to service debt and other financing arrangements

The Company has sufficient unutilised working capital limits to meet its financial requirements and serve its debt.

 Internal financial reporting and control

The Company has taken Cash flow control and overhead cost control measures to manage the operations; regular review mechanism is adopted to monitor the account receivables and measures taken to control the capital expenditure.

 Demand for its products/services

The company is confident that demand for its product and services will not be severely impacted as the company’s field of operation is specialized.