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Directors Report of Kallam Spinning Mills Ltd.

Mar 31, 2014

Dear members,

The directors have pleasure in presenting the Twenty-Second Annual Report of the Company together with the Audited Statements of Accounts for the year ended 31st March 2014.

I. FINANCIAL RESULTS :

The financial results for the year ended 31st March 2014 are summarized below :

S.No. Particulars 2013-2014 2012-2013 (Rs.in lacs) (Rs.in lacs)

01 Revenue from operation 21464.04 18302.65

02 Other income 472.95 350.59

03 Increase/(Decrease) in stock 396.53 -387.56

04 Operating Expenditure 17967.06 14919.08

05 Profit before Interest, 4366.45 3346.60 Depreciation & Tax

06 Depreciation 780.62 757.22

07 Interest 1474.25 1404.46

08 Profit before tax 2111.58 1184.92

09 Provision for income tax

i) Current year Tax 451.00 255.00

ii) Deferred Tax 193.67 -314.43

10 Profit after tax 1466.90 615.49

11 Earning per share 21.41 8.98

Transfers & appropriations from the profit are as detailed below :

12 Net Profit after tax 1466.90 615.49

13 Balance brought forward 3746.53 3131.04 from previous year

14 Profit for appropriations 5213.43 3746.53

APPROPRIATIONS

15 Transfer to General Reserve 37.00 -

16 Proposed Equity Dividend 81.21 -

17 Tax on Proposed Equity Dividend 13.97 -

18 Balance carried forward 5080.25 3746.53

The Turnover of the company for the period under review increase to Rs.21464.04 Lakhs as compared to Rs. 18302.65 Lakhs registering a growth of Rs 117.27 percent on annualized basis. The profit before interest and taxes of the company has increased by 138.48% on annualized basis from Rs 2589.38 lakhs in previous year to Rs.3585.83 lakhs in the period under review.

II. DIVIDEND :

In view of the company''s profitable performance, your directors are pleased to recommend for approval of Shareholders a Final Dividend of 12% on 68,51,100 Equity shares of the company in respect of the financial year 2013-2014.

The paid up capital of the company remained unchanged at Rs 685.11 Lakhs. Earnings per share was Rs 21.41 and cash per earning share was Rs 32.80.

III. EXPANSION & MODERNISATION :

During the financial year under review the following expansion cum modernization had taken place in various divisions.

IV.FIXED DEPOSITS :

Your company has not accepted any public deposits from the public, except some of the unsecured loans brought by promoters Directors and their relatives and as such no amount on account of principal or interest on public deposits was outstanding on the date of the Balance Sheet.

V.FUTURE OUTLOOK :

The company is projecting Rs 250 crores Turnover during the current financial Year. The O.E. Unit and Ginning Units are expected to add bottom line to the company.

VI.DIRECTORS :

In accordance with the provisions of the Companies Act, 1956 and Articles of Association of the Company Sri.M.V.Subba Reddy will retire by rotation at the ensuing Annual General Meeting and being eligible offers themselves for re-appointment. None of the Directors of the Company are disqualified for being appointed as Directors as specified in Section 274 of the Companies Act, 1956.

VII. ENERGY, TECHNOLOGY AND FOREIGN EXCHANGE :

Additional information on conservation of energy, technology absorption, foreign exchange earnings and outgoings as required to be disclosed in terms of 217(1) (e) of the Companies act, 1956 read together with the companies (Disclosure of particulars in the Report of Board of Directors ) Rules, 1988 is annexed herewith and forms part of this report.

VIII. PARTICULARS OF EMPLOYEES :

There were no employees coming under the purview of Section 217 (2A) of the companies Act, 1956.

IX. AUDITORS :

The Statutory Auditors M/s. Brahmayya & Co., (Regd.No.000153S) Chartered Accountants, Guntur, retire at the ensuring Annual General Meeting and have confirmed their eligibility and willingness to accept office , if reappointment. Your Directors propose the reappointment of M/s Brahmayya &Co., as Statutory Auditors to hold office until the conclusion of the next Annual General Meeting of the Company.

X. COST AUDITORS:

Pursuant to the provisions of the Section 233B of the Companies Act, 1956, the Board of Directors of your Company have reappointed subject to the approval of the Central Government Mr. P. Srinivas Cost Accountant, Hyderabad to carry out an audit of Cost accounts of the Company in respect of Textiles for accounting year ending 31st March 2014.

XI. CORPORATE GOVERNANCE :

Your Directors are pleased to inform that your Company has implemented all the stipulations prescribed under clause 49 of listing agreement with the stock exchange(s). A Certificate from the Statutory Auditors of the Company in line with Clause 49 is annexed to and forms part of the Directors Report.

XII. REGISTRAR''S AND SHARE TRANSFER AGENTS :

Your Registrar and Share Transfer Agents of the Company M/s Big share Services Private Limited, 306, 3rd Floor, Right Wing, Amrutha Ville, Opp. Yashodha Hospital, Raj Bhavan Road, Somajiguda, Hyderabad - 500 082.

XIII. CASH FLOW ANALYSIS:

In conformity with the provisions of Clause 32 of the Listing agreement the Cash Flow Statement for the year ended 31.03.2014 is annexed hereto.

XIV. DIRECTORS RESPONSIBILITY STATEMENT :

Pursuant to the requirement under Section 217(2AA) of the Companies Act, 1956 with respect to Directors responsibility statement, it is here by confirmed that;

a) In the preparation of the annual accounts, the applicable Accounting standards have been followed, in the opinion of the Board of Directors, along with proper explanations for material departures if any;

b) The directors have selected such accounting policies and applied them consistently and made judgements and estimates that 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, 2014 and the profit of the Company for the year ended on that date;

c) The directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the companies Act, 1956 for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities; and

d) The directors have prepared the annual accounts on a ''going concern'' basis.

XV. TRANSFER OF UNPAID AND UNCLAIMED AMOUNT TO IEPF :

Pursuant to the provisions of section 205A(5) of the companies Act 1956, the declared dividends which remained un paid or unclaimed for a period of seven years, have been transferred by the company to the Investor Education and Protection Fund (IEPF) established by the Central Government pursuant to section 205C of the Said Act.

The following are the details of dividends paid by the Company and respective due dates for transfer of unclaimed dividend to IEPF.

XVI. ACKNOWLEDGEMENTS:

Your Directors wish to express their grateful appreciation for the assistance, co-operation and support received from Bankers, financial institutions and various other Departments of both State and Central Governments. Your directors also wish to convey their appreciation for the personnel as well as collective contribution and the hard work of employees across all levels without their commitments dreams and hard work. Shareholders appreciation of the managements efforts at the General Meeting of the Company and otherwise is also a great fillip to strive for better performance year after year.

Year Date of Declaration Due date for of Dividend transfer to IEPF

2006-07 10-09-2007 15-10-2014

2007-08 20-09-2008 25-10-2015

2008-09 19-09-2009 24-10-2016

2009-10 18-09-2010 23-10-2017

2010-11 27-08-2011 02-10-2018

For and on behalf of the Board of Directors

P. Venkateswara Reddy Managing Director

Place : Chowdavaram Date: 27.05.2014


Mar 31, 2013

TO THE MEMBERS OF THE KALLAM SPINNING MILLS LIMITED.,

The directors have pleasure in presenting the 21st Annual Report of the Company together with the Audited Statements of Accounts for the year ended 31st March 2013.

I. FINANCIAL RESULTS:

The financial results for the year ended 31st March 2013 are summarized below:

S. No. Particulars 2012-2013 2011-2012 (Rs. in lacs) (Rs.in lacs)

01 Sales 18302.65 15197.10

02 Other income 350.59 395.02

03 Increase/(Decrease) in stock -387.56 710.46

04 Expenditure 14919.08 14361.01

05 Profit before Interest, Depreciations Tax 3346.60 1941.57

06 Depreciation 757.22 692.40

07 Interest 1404.46 1238.01

08 Profit before tax 1184.92 11.16

09 Provision for income tax

i) Current Year Tax 255.00 2.15

ii) Deferred Tax -314.43 -51.29

10 Profit after tax 615.49 60.30

11 Earning per share 8.98 0.88

Transfers & appropriations from the profit are as detailed below:

12 Net Profit aftertax 615.49 60.30

13 Balance brought froward from previous year 3131.04 3070.74

14 Profit for appropriations 3746.53 3131.04

APPROPRIATIONS

15 Transfer to General Reserve -- --

16 Proposed Equity Dividend -- --

17 Tax on Proposed Equity Dividend -- --

18 Balance carried forward 3746.53 3131.04



The Turnover of the company for the period under review increase to Rs. 18302.65 Lakhs as compared to Rs. 15197.10 Lakhs registering a growth of Rs 20.43 percent on annualized basis. The profit before interest and taxes of the company has increased by 107.29% on annualized basis from Rs 1249.17 lakhs in previous year to Rs.2589.38 lakhs in the period under review.

II. DIVIDEND:

In view of the company''s have Projects in hand the Board Directors has not recommended dividend in respect of the financial year 2012-2013.

The paid up capital of the company remained unchanged at Rs 685.11 lakhs. Earnings per share was Rs 8.98 and cash per earning share was Rs 20.04.

III. EXPANSION & MODERNISATION:

During the financial year under review the following expansion cum modernization had taken place in various divisions.

A) KSML RING SPINNING DIVISION:

Kallam Spinning Mills Limited started its production on 22 March 1995 with 12096 spindles. KSML is an ISO 9001 -2000 Certified Company by TUV since 2000. The unit is located on Golden Quadrilateral NH-5 connecting Chennai and Calcutta. KSML today operates 56400 spindles of Ring Spinning out of which 31488 spindles are compact.

The premium quality yam is exported to number of customers across the world. The company relies on consistent supply of international standard quality yarn. Having clear vision, well placed systems, guided by a team of professionals & steered by an enterprising management, KSML continuous to diversify its products and extend its customers reach.

Product Range:

Ring Spinning Yarn Ne.30s to Ne.80s combed warp/compact.

TFOYarn : Ne.30/2 to Ne.80/2 combed warp/compact.

Production per Month : Ring Spinning Yarn, 420 tons.

Maintenance of Machines:

The company strictly follows all scheduled activities which are routine and preventive activities are followed as per its documented plans in quality manual. On regular basis internal system audits as well as machine audits are carried out to ensure the effectiveness of the preventive maintenance. The mill follows machines maintenance as per SITRA recommendation and as per its own experience. The maintenance activity is given at most priority. All the spares are replaced as per machine manufacturer''s suggestion and are purchased directly from the Machine manufacturers to get quality parts. The mill replaces capital machines on regular basis with the latest technology.

Quality Control Measures:

Raw material inspection will be carried out on Uster HVI Spectrum and Uster Afis Pro -2 for 2.5% SL, uniformity, MIC, Strength, Short fiber content % and neps/grm. Bale management system is followed for consistent superior yarn quality, and for this, cotton stock required for minimum 5 6 months is maintained. Carding and combing process optimized for NRE of 75% to 85% and 65% to 70% respectively. RIETER D35 /D40 draw frames are maintained for a% less than 0.50. In ring frame breakages are maintained below 5 to 6 breaks per 100 spindle hour. In autoconer utmost care is taken for achieving 85% splice strength with defect-free packages. Apart from in process inspection system, mill has adopted very stringent final inspection procedure before dispatching yarn to its customers.

We maintain regional quality test center, do extensive testing of cotton yarn for mills in and around Guntur. The quality testing dept is a profit center on its own.

B) KSML Open End Spinning Division:

KSML established its Open End unit in the year 2009-10 with an initial capacity of 1248 Rotors. The total Rotors capacity of Open End Unit was increased to 2912.

KSML have proved its OE yam quality in the international market and have continuous demand in the market. Repeated orders are getting continuously. The premium quality yarn is exported to number of customers across the world. The company relies on consistent supply of international standard quality.

Having clear vision, well place systems, guided by a team of professionals and steered by an enterprising management. KSML continuous to diversity its products and extend its customer reach.

Product Range:

OEYarn : Ne10stoNe20s

TFOYarn : NeOE20s/2

Production Capacity : 18000 kg / day.

Consistent commitment to high quality standards and innovations has been the secrete of success.

Superior open end unit ensure the supply of consistent quality yarn to manufacture the cloth.

C) KSMLGinning Division:

KSML started its Ginning Division in March 2011 with 24 ginning machines. These ginning machines are increased to 28 nos. It has most modernized Automatic bale pressing unit and auto seed booster compressor to seed storage tank. This is one of the best and most modern TMC units in entire Guntur dist

Machinery Infrastructure:

Roller Ginning Nipha

Auto Seed Boosting & Collection : Auditya Quality

Automatic Bale Press : Karunanand

The Ginning Division has capacity to press 200 bales / day and 50,000 bales in a year.

D) HYDRO ELECTRIC DIVISION:

Our company has three hydro electric plants with 4.0 MW capacities at Nelakondapally Mandalam, Khammam District of Andhra Pradesh, These plants are on 16lh & 17''" branch canal of Nagarjuna Sagar project left main canal. The canal flows for 7 to 8 months in a year. Typically the canal is opened in Aug/Sep and closed by end April. The first two projects of 0.8 MW and 1.6 MW were commissioned in Jan 2002. We have successfully commissioned the third hydro electric plant of 1.6 MW capacities on 27th March 2011. All the generators produce electricity at 6.6 KV voltage level. The generated voltage is enhanced to 33 KV by a power transformer and fed to the state electricity grid. The hydel power generation solely dependent on the canal water flow. The 0.8 MW hydro electric projects is financed by IREDA-, New Delhi and remaining two Nos. of 1.6 MW hydro electric projects are financed by Andhra Bank. We have good electrical and mechanical engineering team at the hydro electric plants. They ensure the availability of plant by more than 98% when water is flowing in the canal. Due to lack of rain in encashment areas of Krishna river during the financial year 2012-13 we have generated only 7,55,830 Units. Out of the generation 70% of the units are wheeled and consumed in spinning mill and 30% of the units are sold to AP Transco.

E) WEAVING UNIT:

The Company had commenced the civil work for the 250 Looms Project at Kunkupadu village, Addanki mandalam, Prakasam district, Andhra Pradesh. The Project cost is 146 crores and Indian Bank had sanctioned a term loan of Rs. 106.92 crores.

Our plant capacity of production is one Lakh meter per day of woven fabric including 70% yarn dyed shirting and 30% of bottom weight fabric. We have the state of art machineries in weaving preparatory, weaving loom shed and sophisticated testing equipment and instruments aimed at continuing to be a market leader in quality during the future years.

We, Kallam Spinning Mills Limited are one of the leading textile manufacturers. We create emotions. Our possibilities of fabrics are boundless, such as Dobby yarn dyed shirting, fabrics with cotton 100% and blended with lyrcra stretch, polyester, nylon, Linen and viscose fabrics. It does not which fabric or design Is concerned, Our name guarantees perfect workmanship at all time. The weaving industry Is professionally managed with techno-commercial professionals at the helm of affairs.

We have the state of art machines from various leaders of manufacturers around the world. We are procuring from with the countries of Belgium, Japan, Swiss, Spain, German, China and Italy.

WEAVING PREPARATORY

We have plan to install the following type of machines for our green field weaving project.

1. Direct wrapping Machines (2 no''s)

a) Karlmayer-Germany with 784 creel and PLC Controlled

b) Prashanth West Point India with 690 creel and PLC Controlled

2. Sectional Wrapping Machines (2 no''s)

a) Prashanth Gamma Tex: Indo Italy collaborated with fully automatic microprocessor control and lasertonic system.

3. Sizing Machine (2 no''s)

a) Karlmayer Germany, with 20 beams creel and beam to beam sizing capacity & Prashanth west point US collaborated width beam to beam sizing for yam dyed shirting.

4. Automatic Drawing in Machine

a) StaubliDelta-110-fully automatic with camera control and 100% fault free machine.

b) This is the world''s No. 1 machine for auto drawing. It saves lot of man power and timings. WEAVING LOOM SHED

1. PICANOLOMNI PLUS SUMMUM AIRJET (102 no''s)

High speed air jet loom with 1150 RPM capacity to produce 300 mtrs to 650 mtrs in a loom per day as per pick density. These are Belgium made machines.These are the state of art machine for producing the 100% cotton and blended with polyester, viscose, linen and Lycra fabric. The loom working width is 190 cm. and it has 800mm & 1000mm beam flanges. The machine will have very sturdy side frames and back rest systems to match with our requirements for producing bottom weight and yam dyed shirting. Picanol Omni plus Summum is the most advance loom with sumo motor and ELSY motion, cramming motion, multiple weft insertion and Lycra Stretch Systems. SUMO motor is the pattent righted for Picanol, since the sumo motor will work with software control to increase and decrease the RPM within a fraction of a minute. Whereas the old system stake minimum half an hour to reduce or increase the speed changing the pulleys. ELSY motion is the electronic selvedge motion with separate control of selvedge of ends to bring more designs in selvedge alone. Picanol is the only loom in the world which will have this system cramming motion is the most advanced technology to control the take up motion to bring the exclusive design in weft way. This Summum brand is running one more special advantage in filling cutter for multi- color weft control facility. This will work in different timings of weft filling according to the color and count varieties. The machine works without belt drive to ensure the zero defects in the fabric. Where the all other brands will have belt drive only.

2. PICANOL OPTIMAX RAPIER LOOMS (42 no''s)

This is the most modernized Belgium made loom with 20 shaft dobby made by Staubli-Swiss. This machine is more suitable rapier technology to produce endless colors in wrap way and 8 colors in weft way. 20 shaft dobby motions is suitable for any critical dobby yarn dyed shirting fabrics. The rapier technology with flexible drive system to ensure the zero breaks down and to increase the utilization. Picanol optimax rapier looms are most sophisticated looms of rapier weft insertion followed by their earlier types of Picanol, GTM, GTX, GTMAS, GAMMA and GAMMAX. This machine is also having Sumo motor, ELSY selvedge crank motion, multiple weft insertion and so many otherfacilities like touch screen micro software to against the settings according to the qualities. The machine has three set cards to transfer the settings from one loom to another loom and preserve the settings exclusively. The loom installed RPM is 650. All dobby weave fabrics as well normal yarn dyed products may be produce with zero defect.

3. TOYOTA JAT 810 AIR JET (104 no''s)

This is Toyota-Japan make who are the leaders in loom manufacturers in last two centuries. This is high speed air jet technology looms which is suitable for yarn dyed shirting, bottom weight and suiting with 100% cotton and blended with polyester, linen, nylon, viscose and lyera stretch fabrics. Toyota first time in India offering JAT 810 Air jet looms to produce 380 to 700 mtrs per day in one machine. This machine is having special feature of crank to non-plain fabric separately, also we have 7 shafts and 1681 type Staubli cam box attachment to run various weave designs like twill, drill, sateen, matt & oxford etc. this is the fault free loom to produce zero defect fabric with minimum maintenance cost and maximum utilization. The Toyota Air jet has earlier models like JAT 610 & JAT 710. This model JAT 810 is more beneficial for air consumption control by their "P" monitor attachment. Also the machine has very friendly software for monitoring the loom mechanical setting and fabric settings. The machine has more facilities to arrest the fabric damages like bumping mark, starting mark, etc. the special Lycra stretch system will be suitable for producing Lycra weft fabric which is most popular in the market.

D) DYEING UNIT:

The Company had taken up dying of cotton Yarn 5000 kgs per day production. The project is being implemented at cost of Rs. 12.5 crores and Bank of Baroda is financing Rs.9.90 crores by means of term loan.

1. PROJECT CAPACITY/EQUIPMENT

DYEING 11 MACHINES FROM 3 KGS TO 500 KGS/MACHINE

The project is catering to yarn dyed shirting in weaving and will require small to large quantities of dyed yarn in various shades, depending upon the customer order. We have facility to run the dyeing vessel from 100% to 50% capacity with out change in MCR ration with air pad technology.

Each machine has 2 carriers are in the machine & second ready for next loading. Each carrier has several spindles and maximum of 10 cones /spindle can be loaded based on the machine capacity. We have scheduled dyeing Machines; with a capacity of 2110 kgs /load. Based on an average of light/medium, dark shades & bleach, we will be able to dye 2.5 lots/day of 24 hours. Thus the maximum capacity of plant of 5275 kgs.

2. HYDRO EXTRACTOR-DETTIN-ITALY

Cotton after wet dyeing usually has moisture and has to be squeezed or extracted by centrifugal rotation of the material. Earlier technology was to dump all cones into a perforated basket and rotate at high speed, thus removing around 50 % moisture and retaining 50% to be dried on the radio frequency drier. The cones are loaded onto individual cone spindles and each cone rotates at high speed on its own axis, thus achieving same as earlier results, but without de-shaping the cones, as it is not manually handled. The capacity of BERTA 36 model matches the dyeing capacity of 275 kgs/hr. The machine operates continuously.

3. RADIO FREQUENCY DRYING.STALLAM

Subsequent to dyeing and extraction on dyeing machine, the moisture content is to be brought down from 50% to 10% and we need to dry the yarns. Earlier drying was done by passing steam through the cheeses, which was very expensive and time consuming. We have adopted the latest Radio Frequency system, wherein the drying is carried out by acting only on moisture at a particular frequency. Although this consumes high power,{105 Kw] ,the yam strength does not reduce as in older technology and the process is continuous and instantaneous.We have gone for the STALLAM R.F.DRIER FROM EUROPE which has various safety features. The capacity is matching our dyeing requirement of 275 kgs/hour.

4. AUTO DYE WEIGH & AUTO LIQUID CHEMICAL DISPENSING [ ELLIAR AUTO LIQUID DISPENSING]

Until recently all dyes and chemicals were manually weighed, prepared and dispensed. This manual activity gave scope for errors and thus added one more variable for shade differences between lots. Over last few years there has been lot of work on auto dispensing, and it has been observed that in addition to reducing costly errors in weighing .there is atleast 10 to 15% savings in chemicals by avoiding spilling and excess use due to approximations. Also the auto system is connected to online system .which indicates real time , stock, consumption, re-order levels highlighting etc reducing clerical work and consequent errors. By going for bulk dispensing we also save in getting chemicals in larger containers instead of smaller cans manually.

The bulk auto dispensing is mainly meant for savings, less manual intervention apart from accuracy. In case of laboratory auto dispensing tecnorama mentioned separately in this write it is mainly for accuracy at very low scale levels of few millilitres.

We also have gone for semi auto dye weighing wherein the actual weighing of dyes is done automatically and errors avoided by means of bar-coding of dye drums and real time stock maintenance.

However we need to dispense the the dyes after dissolving & preparation manually into the individual dye machines.

5. DYED CONE REWINDING

Subsequent to the R.F. Drying ,the yarn cones are unloaded, weighed, checked for evenness of dyeing are rewound as soft packages on Schlafhorst auto-coners ,so that it is ready for warping or for weft insertion in weaving section. We need around 5 machines of 60 spindles each for our capacity and need segregation of each machine, to avoid fluff contamination of one shade into the other. It is helpful if humidification air changes are provided ,so that fluff is going into the return trench and not flying around in the winding area.

6. LABORATORY QUALITY CONTROL

Subsequent to dyeing .drying, we need to check various parameters for fastness of dyeing. We need to carry out following checks.

a. WASH FASTNESS TESTS

Here we simulate the domestic washing in a wash tester wherein the volume of water, quantity of soap used, temperature of washing etc are controlled based on the level of fastness required. The dyed sample is sandwiched between two scoured white standard on both sides, and after washing the comparison of staining of the adjacent whites is assessed by a standard GREY SCALE and rating of fastness given pass/fail

b. RUBBING OR CROCKING TEST

Here the dyed sample is rubbed into a white standard fabric 20 times with controlled pressure and the staining on the adjacent white is assessed and rated. The same fastness can be done as dry rub fastness and wet rub fastness. All tests are simulating extreme conditions of customer use and are constantly upgraded based on new end user requirements.

c. PERSPIRATION FASTNESS

We use a perspirometer .wherein the fastness to human perspiration is tested by using certain chemicals which match the perspiration properties synthetically. There are acid and alkaline perspiration chemicals .Based on the diet of the person [vegetarian or otherwise] and also ethnicity of the people .there are alkaline or acidic perspiration. Both are tested in all cases and rated.

d. LIGHT FASTNESS

It is common that certain shades fade to sunlight exposure than others. This is tested by simulating sunlight over long periods by Xenon lamps of high energy and the test takes 4 to 8 hours but gives effect of several days of light exposure through sunlight.

The light fastness is purely dependant on type of dyes used, and we will select suitable dyes of high light fastness. Once selection is done ,there is no need to test each time. It is not process related. Generally light shades have less fastness compared to darker shades and thus tests are done at various depth levels.

7. SHADE MATCHING EQUIPMENT IN LABORATORY.

a. INFRA RED DYEING OF 5gm to 20 gm SAMPLES

Before going for bulk dyeing ,there is a lot of home-work done at the Laboratory stage. Afew decades back dyeing was considered as a skill and experience was very critical to the results. However with advent of technology and electronics, robotics etc. most of the manual functions like weighing dyes / chemicals .dissolving the same .controlling of dye process temperature, time of treatment etc. Thus many of the manual errors have been eliminated. However despite all this experience and systems play a very important part in achieving high quality dyeing results. We still cannot control many parameters within the dyeing process .especially selection of dyes, chemicals, compatibility, keeping in mind the cost and time of process.

The first step before bulk dyeing is to set up a recipe of dyes & a process sequence. For this we start with dyeing 5 gm hanks in a pot on INFRA RED DYEING LAB MACHINE. Here we add dyes in certain proportions based on base data and experience, and have to carry out several iterations to come close to customers target shade. Initially it takes more effort and as we build up more recipe we will reduce the iterations, since we can bank upon past lab data.

b. COMPUTER COLOR MATCHING.

During last few decades'' lot of work has been done on measuring color in the visible regions of human eye. This has enabled to quantify color based on some mathematical values , considering human eye, Light source under which it is measured and the color of target. Color is described in terms of hue[tone] depth [darker/lighter] and chroma[ brightness/dullness] With these broad parameters color is measured and described by delta H,L AND C[ difference in hue, depth and brightness] The cumulative value is described as DELTA E OR COLOR DIFFERENCE BETWEEN STANDARD AND SAMPLE DYED. Based on the calibrations of various dyes being used ,the COLOR MATCHING COMPUTER predicts various recipe purely mathematically, we then fix limits of metamarism, compatibility of dyes fastness characteristics etc and the zero in to a few practicable recipe and carry out 5 gm samples on IR DYEING in lab. We then also get corrected recipe of the samples. This if used in conjunction with experience, can reduce the iterations needed for reaching a target shade. The same computer can be also used for bulk dyed lots and is a very helpful tool for the dyer to reduce errors and time of process. It is generally observed that if system is used diligently substantial savings in dyes is possible compared to manual predictions.

c. AUTO WEIGHING .SOLUTION MAKER, DISPENSING.AND DYEING TECNORAMA-ITALY

Great efforts are made in last few decades to achieve perfection in the laboratory ,so that we can achieve near perfection in bulk dyeing. At present the TECNORAMA SYSTEM has succeeded in carrying out all the manual functions except loading and unloading the samples. Thus a good number of error possibilities are minimized in laboratory. As seen in INFRA RED DYEING of 5 gm sample the flow characteristics are different from a package or cone. Also a 5 gm Sample is too small to be scaled up to 25 kgs or higher bulk lots. As such it becomes essential that we carry out ''100-200 gm cone samples, which exactly simulates the thermodynamic flow characteristics of bulk package dyeing with IN to OUT and OUT to IN FLOW with fixed trimmings of interchange. Thus on TECNORAMA , we can get much closer results and can then directly transfer the recipe and process to 25 kg or 50 kg machines. Further tuning can be done on bigger machines based on this.

8. EFFLUENT TREATMENT OF DYED LIQOURS.

This is an area of great concern for maintaining a proper environment and avoid pollution of the environment around us. During the last few decades ,the laws on pollution have been less stringent ,and even so the various dyeing units have flouted these norms and caused immense damage to the water to the water table below ground by drawing of excess ground water have increased the harmful parameters. Off late, this has led to the Pollution Authorities enforcing more stringent norms. Earlier it was common that part of the less harmful portion of effluent was allowed for ground discharge within the units premises for cultivation after some minor chemical treatment. However now they have introduced ZLD [ZERO LIQUID DISCHARGE] which means no water is allowed to be discharged into ground even after treatment. In other words we have to excessively treat the effluent ,such that it is almost like fresh water and fit to be reused into process again. Thus our drawing of ground water is hardly required maintaining the ground table and quality of sources.

We have now decided to treat 180 m3/day partially [biological treatment, filtration] and use for our plantations at site. The remaining HTDS effluent [high total dissolved solids] stream of 150 m3/day will be further treated by ultra-filtration, reverse osmosis -2 stages, nano-filtration etc to basically recover good water at each of these stages and bring down the water to the bare minimum for the very expensive multistage evaporation [MEE].Thus from 150 m3/day we narrow down to only 20 m3/day for evaporation. After lot of deliberations with some of the best Italian and Indian effluent plant suppliers we finally decided that in terms of technology, quality of instruments and components, experience with Indian norms and conditions, CONFIDENT ENGINEERING PVT LTD. [CEPL] on a total turnkey basis to be completed in 6 months including civil works. They are also responsible for achieving the final results as per the norms of APPCB. Also we have entered into a operations/maintenance contract for 5 years, so that we can concentrate on the core production area of dyeing and avoid divided attention.

9. MULTI-STAGE EVAPORATOR

As mentioned earlier subsequent to reducing the effluent volume to 20 m3/day, we need to evaporate the same by going through 3 stages of evaporation. Since this is a high steam consuming process, we have gone for a MEE from KETAV CONSULTANTS, wherein we use fresh steam only at first stage evaporation and reuse the steam. Additionally we have installed TVR [THERMO VAPOUR RECOMPRESSOR] wherein by means of venturi the steam pressure is enhanced and saves the consumption. We have gone for total automation and PLC to reduce labour and manual intervention. We are also going for turnkey basis, so that the execution will be taken care by suppliers.

After evaporation, we will be able to recover 96 % of fresh water for process and 2 m3/day of salt slurry passes through a Pusher Centrifugal [mechanical extraction] which finally gives us salt with only 10 % moisture, to be collected and disposed off through Ramky who are designated effluent waste management concern.

The MEE is located between boiler and ETP so that we minimize the pipelines and to enable handling all aspects economically.

IV. FIXED DEPOSITS:

Your corfipany has not accepted any public deposits from the public, except some of the unsecured loans brought by promoters Directors and their relatives and as such no amount on account of principal or interest on public deposits was outstanding on the date of the Balance Sheet.

V. FUTURE OUTLOOK:

The company is projecting Rs 250 crores Turnover during the current financial Year. The O.E. & Ginning Unit is expected to add bottom line to the company.

VI. DIRECTORS

In accordance with the provisions of the Companies Act, 1956 and Articles of Association of the Company Sri.K Haranadha Reddy, and Sri S.Pulla Rao will retire by rotation at the ensuing Annual General Meeting and being eligible offers themselves for re-appointment. None of the Directors of the Company are disqualified for being appointed as Directors as specified in Section 274 of the Companies Act, 1956.

VII. ENERGY, TECHNOLOGY AND FOREIGN EXCHANGE:

Additional information on conservation of energy, technology absorption, foreign exchange earnings and outgoings as required to be disclosed in terms of 217(1) (e) of the Companies act, 1956 read together with the companies (Disclosure of particulars in the Report of Board of Directors) Rules, 1988 is annexed herewith and forms part of this report.

VIII. PARTICULARS OF EMPLOYEES:

There were no employees coming under the purview of Section 217 (2A) of the companies Act, 1956.

IX. AUDITORS:

The Statutory Auditors M/s. Brahmayya & Co., (Regd.No.000153S) Chartered Accountants, Guntur, retire at the ensuring Annual General Meeting and have confirmed their eligibility and willingness to accept office , if reappointment. Your Directors propose the reappointment of M/s Brahmayya &Co., as Statutory Auditors to hold office until the conclusion of the next Annual General Meeting of the Company.

X. COSTAUDITORS:

Pursuant to the provisions of the Section 233B of the Companies Act, 1956, the Board of Directors of your Company have re-appointed subject to the approval of the Central Government Mr. P. Srinivas Cost Accountant, Hyderabad to carry out an audit of Cost accounts of the Company in respect of Textiles for accounting year ending 31" March 2013.

XI. CORPORATE GOVERNANCE:

Your Directors are pleased to inform that your Company has implemented all the stipulations prescribed under clause 49 of listing agreement with the stock exchange(s). A Certificate from the Statutory Auditors of the Company in line with Clause49 is annexed to and forms part of the Directors Report.

XII REGISTRAR''S AND SHARE TRANSFER AGENTS:

Your Registrar and Share Transfer Agents of the Company M/s Big share Services Private Limited, 306, 3r" Floor, Rigt Wing, Amrutha Ville, Opp. Yashodha Hospital, Raj Bhavan Road, Somajiguda, Hyderabad 500082.

XIII. CASH FLOW ANALYSIS:

In conformity with the provisions of Clause 32 of the Listing agreement the Cash Flow Statement for the year ended 31.03.2013 is annexed hereto.

XIV. DIRECTORS RESPONSIBILITY STATEMENT:

Pursuant to Section 217(2AA) of the Companies Act, 1956 your Directors state that:

a. In the preparation of the annual accounts, the applicable Accounting standards have been followed, in the opinion of the Board of Directors, along with proper explanations for material departures if any;

b. The directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year 2012-2013 and the profit or loss of the Company for that period.

c. The directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the companies Act, 1956 for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

d. The-directors have prepared the annual accounts on a ''going concern'' basis.

XV. TRANSFEROFUNPAIDANDUNCLAIMEDAMOUNTTO IEPF:

Pursuant to the provisions of section 205A(5) of the companies Act 1956, the declared dividends which remained un paid or unclaimed for a period of seven years, have been transferred by the company to the Investor Education and Protection Fund (IEFP) established by the Central Government pursuant to section 205C of the Said Act.

The following are the details of dividends paid by the Company and respective due dates for transfer of unclaimed dividend to IEPF.

Dividend Year Date of Declaration of Dividend Due date for transfer to IEPF

2005-06 25-09-2006 30-10-2013

2006-07 10-09-2007 15-10-2014

2007-08 20-09-2008 25-10-2015

2008-09 19-09-2009 24-10-2016

2009-10 18-09-2010 23-10-2017

2010-11 27-08-2011 02-10-2018



XVI. ACKNOWLEDGEMENTS:

Your Directors wish to express their grateful appreciation for the assistance, co-operation and support received from Bankers, financial institutions and various other Departments of both State and Central Governments. Your directors also wish to convey their appreciation for the personal as well as collective contribution and the hard work of employees across all levels without their commitments dreams and hard work. Shareholders appreciation of the managements efforts at the General Meeting of the Company and otherwise is also a great fillip to strive for better performance year after year.



By order of the Board of Directors

Place : Chowdavaram P. Venkateswara eddy

Date : 30-05-2013. Managing Director


Mar 31, 2012

TO THE MEMBERS OF THE KALLAM SPINNING MILLS LIMITED,

The Directors have pleasure in presenting the 20th Annual Report of the Company together with the Audited Statements of Accounts for the year ended 31st March 2012.

I. FINANCIAL RESULTS:

The financial results for the year ended 3151 March 2012 are summarized below:

S.No. Particulars 2011-2012 2010-2011 (Rs. in lacs) (Rs.inlacs)

01 Sales 15197.10 13574.70

02 Other income 395.02 168.53

03 Increase/(Decrease) instock 710.46 442.75

04 Expenditure 14361.01 10872.95

05 Profit before Interest, Depreciation & Tax 1941.57 3313.03

06 Depreciation 692.40 566.90

07 Interest 1238.01 748.23

08 Profit before tax 11.16 1997.90

09 Provision for income tax

i) Current Year Tax 2.15 402.36

ii) Deferred Tax -51.29 197.56

10 Profit aftertax 60.30 1397.98

11 Earning per share 0.88 20.41

Transfers & appropriations from the profit are as detailed below:

12 Net Profit aftertax 60.30 1397.98

13 Balance brought forward from previous year 3070.71 1921.08

14 Profit for appropriations 3131.01 3319.07

APPROPRIATIONS

15 Transfer to General Reserve - 1050.00

16 Proposed Equity Dividend - 123.32

17 Tax on Proposed Equity Dividend - 20.01

18 Balance carried forward 3131.01 3070.71

The Sales of the company for the period under review increase to Rs.15197.10 Lakhs as compared to Rs. 13574.70 Lakhs registering a growth of Rs 11.95 percent on annualizes basis. The profit before interest and taxes of the company has reduced by 54.51 % on annualized basis from Rs2746.13 lakhs in previous year to Rs. 1249.17 lakhs in the period under review.

II. DIVIDEND:

In view of the company's low profitable performance and the projects in hand, the Board of Directors has not recommended dividend in respect of the financial year 2011-2012

The paid up capital of the company remained unchanged at Rs 685.11 lakhs .Earning per share was Rs 0.88 and cash per earning share was Rs 10.98

III. EXPANSION & MODERNISATION:

During the financial year under review the following expansion cum modernization had taken place in various divisions.

A) KSML RING SPINNING DIVISION:

Kallam Spinning Mills Limited started its production on 22 March 1995 with 12096 spindles. KSML is an ISO 9001-2000 Certified Company by TUV since 2000. The unit is located on Golden Quadrilateral NH-5 connecting Chennai and Calcutta. KSML today operates 56400 spindles of Ring Spinning out of which 31488 spindles are compact.

The premium quality yarn is exported to number of customers across the world. The company relies on consistent supply of international standard quality yarn. Having clear vision, well placed systems, guided by a team of professionals & steered by an enterprising management, KSML continuous to diversify its products and extend its customers reach.

Product Range:

Ring Spinning Yarn : Ne.30s to Ne.80s combed warp/compact.

TFOYarn : Ne.30/2 to Ne.80/2 combed warp/compact.

Production per Month : Ring Spinning Yarn, 420 tons.

Maintenance of Machines:

The company strictly follows all scheduled activities which are routine and preventive activities are followed as per its documented plans in quality manual. On regular basis internal system audits as well as machine audits are carried out to ensure the effectiveness of the preventive maintenance. The mill follows machines maintenance as per SITRA recommendation and as per its own experience. The maintenance activity is given at most priority. All the spares are replaced as per machine manufacturer's suggestion and are purchased directly from the Machine manufacturers to get quality parts. The mill replaces capital machines on regular basis with the latest technology.

Quality Control Measures:

Raw material inspection will be carried out on Uster HVI Sepctrum and Uster Afis Pro -2 for 2.5% SL, uniformity, MIC, Strength, Short fiber content % andneps/grm. Bale management system is followed for consistent superior yarn quality, and for this, cotton stock required for minimum 5 6 months is maintained. Carding and combing process optimized for NRE of 75% to 85% and 65% to 70% respectively. RIETER D35 /D40 draw frames are maintained for a% less than 0.50. In ring frame breakages are maintained below 5 to 6 breaks per 100 spindle hour. In autoconer utmost care is taken for achieving 85% splice strength with defect-free packages. Apart from in process inspection system mill has adopted very stringent final inspection procedure before dispatching yarn to its customers.

We maintain regional quality test center, do extensive testing of cotton yarn for mills in and around Guntur. The quality testing dept is a profit center on its own.

B) KSMLOpen End Spinning Division:

KSML established its Open End unit in the year 2009-10 with an initial capacity of 1248 Rotors. The total Rotors capacity of Open End Unit was increased to2912.

KSML have proved its OE yarn quality in the international market and have continuous demand in the market. Repeated orders are getting continuously. The premium quality yarn is exported to number of customers across the world. The company relies on consistent supply of international standard quality. Having clear vision, well place systems, guided by a team of professionals and steered by an enterprising management. KSML continuous to diversity its products and extend its customer reach.

ProductRange:

OEYarn : Ne10stoNe20s

TFO Yarn : NeOE20s/2

Production Capacity : 18000 kg/day.

Consistent commitment to high quality standards and innovations has been the secrete of success. Superior open end unit ensure the supply of consistent quality yarn to manufacture the cloth.

C) KSMLGinning Division:

KSML started its Ginning Division in March 2011 with 24 ginning machines. It has most modernized Automatic bale pressing unit and auto seed booster compressor to seed storage tankt This is one of the best and most modem TMC units in entire Guntur district. '

Machinery Infrastructure:

Roller Ginning : Nipha

Auto Seed Boosting & Collection : Auditya Quality .

Automatic Bale Press : Karunanand

The Ginning Division has capacity to press 200 bales / day and 50,000 bales in a year.

D) HYDRO ELECTRIC DIVISION:

Our company has three hydro electric plants with 4.0 MW capacity at Nelakondapally Mandalam, Khammam District of Andhra Pradesh. These plants are on 16th & 17th branch canal of Nagarjuna Sagar project left main canal. Fortunately there had been good rain fall in the encatchment areas of Nagarjuna Sagar dam during the last five years. The canal flows for 7 to 8 months in a year. Typically the canal is opened in Aug/Sep and closed by end April.

The first two projects of 0.8 MW and 1.6 MW were commissioned in Jan 2002. We have successfully commissioned the third hydro electric plant of 1.6 MW capacity on 27th March 2011. All the generators produce electricity at 6.6 KV voltage level. The generated voltage is enhanced to 33 KV by a power transformer and fed to the state electricity grid. The hydel power generation solely dependent on the canal water flow. The 0.8 MW hydro electric project is financed by IREDA, New Delhi and remaining two Nos. of 1.6 MW hydro electric projects are financed by Andhra Bank. We have good electrical and mechanical engineering team at the hydro electric plants. They ensure the availability of plant by more than 98% when water is flowing in the canal. During the financial year 2011-12 we have generated 1,32,96,945 Units. Out of the generation 70% of the units are wheeled and consumed in spinning mill and 30% of the units are sold to AP Transco..

E) WEAVING UNIT:

The company had commenced the civil work for the 250 Looms Project at Kunkupadu village , Addanki mandalam, Prakasam district, AndhraPradesh. The Project cost is 146 cores and Indian Bank had Sanctioned a term loan of Rs. 106.92 cores.

IV. FIXED DEPOSITS:

Your company has not accepted any public deposits from the public, except some of the unsecured loans brought by promoter Directors and their relatives and as such no amount on account of principal or interest on public deposits was outstanding on the date of the Balance Sheet.

V. FUTURE OUTLOOK:

The company is projecting Rs 200 crores Turnover during the current financial Year. The O.E, & Ginning Unit is expected to add bottom line to the company.

VI. DIRECTORS

In accordance with the provisions of the Companies Act, 1956 and Articles of Association of the Company Sri.MR Naik, and Mr. A Krishna Murthy will retire by rotation at the ensuing Annual General Meeting and being eligible offers themselves for re-appointment. None of the Directors of the Company are disqualified for being appointed as Directors as specified in Section 274 of the Companies Act, 1956.

VII. ENERGY, TECHNOLOGY AND FOREIGN EXCHANGE:

Additional information on conservation of energy, technology absorption, foreign exchange earnings and outgoings as required to be disclosed in terms of 217(1) (e) of the Companies Act, 1956 read together with the companies (Disclosure of particulars in the Report of Board of Directors) Rules, 1988 is annexed herewith and forms part of this report. .

VIII. PARTICULARS OF EMPLOYEES:

There were no employees coming under the purview of Section 217 (2A) of the companies Act, 1956.

IX. AUDITORS:

The Statutory Auditors M/s. Brahmayya & Co., (Regd.No.000153S) Chartered Accountants, Guntur, retire at the ensuring Annual General Meeting and have confirmed their eligibility and willingness to accept office if reappointment. Your Directors propose the reappointment of M/s Brahmayya &Co., as Statutory Auditors to hold office until the conclusion of the next Annual General Meeting of the Company.

X. COST AUDITORS:

Pursuant to the provisions of the Section 233B of the Companies Act, 1956, the Board of Directors of your Company have re-appointed subject to the approval of the Central Government Mr.P.Srinivas Cost Accountant, Hyderabad to carry out an audit of Cost accounts of the Company in respect of Textiles for accounting year ending 31st March 2012.

XI. CORPORATE GOVERNANCE:

Your Directors are pleased to inform that your Company has implemented all the stipulations prescribed under clause 49 of listing agreement with the stock exchange(s). A Certificate from the Statutory Auditors of the Company in line with Clause 49 is annexed to and forms part of the Directors Report.

XII REGISTRAR'S AND SHARE TRANSFER AGENTS:

Your Registrar and Share Transfer Agents of the Company M/s Big share Services Private Limited,306, 3rd Floor, Ring Wing, Amrutha Ville, Opp. Yashodha Hospital,Raj Bhavan Road, Somajiguda,Hyderabad 500082.

XIII. CASHFLOWANALYSIS:

In conformity with the provisions of Clause 32 of the Listing agreement the Cash Flow Statement for the year ended 31.03.2012 is annexed hereto.

XIV. DIRECTORS RESPONSIBILITY STATEMENT:

Pursuant to Section 217(2AA) of the Companies Act, 1956 your Directors state that:

a. In the preparation of the annual accounts, the applicable Accounting standards have been followed, in the opinion of the Board of Directors, along with proper explanations for material departures if any;

b. The Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year 2011-2012 and the profit or loss of the Company for that period.

c. The Directors have taken proper artd sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the companies Act, 1956 for safeguarding the assets of . the company and for preventing and detecting fraud and other irregularities;

d. The Directorsjiave prepared the annual accounts on a 'Going concern' basis.

XV. TRANSFER OF UNPAID AND UNCLAIMED AMOUNT TO IEPF:

Pursuant to the provisions of section 205A(5) of the companies Act 1956,the declared dividends which remained un paid or unclaimed for a period of seven years, have been transferred by the company to the Investor Education and Protection Fund (lEFP) established by the Central Government pursuant to section 205C of the Said Act

The following are the details of dividends paid by the Company and respective due dates for transfer of unclaimed dividend to IEPF.

Dividend Year Date of Declaration of Dividend Due date for transfer to IEPF

2004-05 28-09-2005 27-10-2012

2005-06 25-09-2006 24-10-2013

2006-07 10-09-2007 09-10-2014

2007-08 20-09-2008 19-10-2015

2008-09 19-09-2009 18-10-2016

2009-10 18-09-2010 17-10-2017

2010-11 27-08-2011 26-09-2018

XVI. ACKNOWLEDGEMENTS:

Your Directors wish to express their grateful appreciation for the assistance, co-operation and support received from Andhra bank, Indian bank, Axisbank, IREDA, Bank of Baroda and various other Departments of both State and Central Governments. Your directors also wish to convey their appreciation for the personal as well as collective contribution and the hard work of employees across all levels without their commitments dreams and hard work. Shareholders appreciation of the managements efforts at the General Meeting of the Company and otherwise is also a great fillip to strive for better performance year after year.

By order of the Board of Directors

Place : Guntur P. Venkateswara Reddy

Date : 25-05-2012. Managing Director


Mar 31, 2010

The directors have pleasure in presenting the Eighteenth Annual Report of the Company together with the Audited Statements of Accounts for the year ended 31st March 2010.

1. FINANCIAL RESULTS:

The financial results for the year ended 31s March 2010 are summarized below:

S. No. Particulars 2009-2010 2008-2009 (Rs. inlacs) (Rs. in lacs)

01 Sales 8305.56 6723.58

02 Other income 103.10 113.04

03 Increase /(Decrease) in stock (102.71) 0.08

04 Expenditure 7516.31 6383.75

05 Prodit before Interest, Depreciation & Tax 1877.95 1391.68

06 Depreciation 486.56 400.63

07 Interest 601.75 538.11

08 Profit before tax 789.64 452.95

09 Provision for income tax

i) Current Year Tax -25.66 (3.70)

ii) Fringe Benefit Tax - 1.05

iii) Deferred Tax 208.84 109.93

10 Profit after tax 606.46 345.67

11 Earning per share 8.85 5.05

Transfers & appropriations from the profit are as detailed below

12 Net Profit after tax 606.46 345.67

13 Balance brought forward from previous year 1457.47 1183.94

14 Profit for appropriations 2063.93 1529.61

APPROPRIATIONS

15 Transfer to General Reserve 31.00 0.00

16 Proposed Equity Dividend 95.92 61.66

17 Tax on Proposed Equity Dividend(16.995 15.93 10.48

18 Balance carried forward 1921.08 1457.47

The Sales of the company for the period under review increase to Rs.8305.56 Lakhs as compared to Rs.6723.58 registering a growth of Rs 23.53 percent on annulizes basis The profit before inter- est and taxes of the company has grown by 40.39 percent on annulized basis from Rs 1391.39 lakhs in previous year to Rs. 991.06 lakhs in the period under review.

II. DIVIDEND:

In view of the companys profitable performance, your Directors are pleased to recommend for approval of shareholders a Final Dividend of 14%(Rs 1.40 paisa per share) on 68, 51,100 Equity shares of the company in respect of the financial year 2009-2010. The final Dividend if declared as above, would involve an outflow of Rs. 95.92 Lakhs towards Dividend and Rs. 15.93 lakhs towards ¦Dividend Tax resulting outflow of Rs. 111.85 Lakhs.

The paid up capital of your company remained unchanged at Rs. 685.11 lakhs. Earning per share was Rs. 8.85 and cash per earning share was Rs. 15.95.

III. EXPANSION & MODERNISATION:

Your company continues to expand and modernize the facilities as ongoing process. During the financial year under review the following expansion cum modernization had taken place in various divisions. a) Ring spinning Division

The Ring Spinning Division turnover is 74.18 crores. In the beginning of the year the total installed spindles were 50256. This includes old Textool Ring Frame and G.5/ Ring Frames. On this ring frames the production is low. These were replaced with 5856 spindles of Auto Doffing Ring frame Spindles where in the Auto Doffing is imported from Toyata Japan. Now bringing the total spindles to 52000.

Similarly an old Murata Auto Coner was replaced by latest AC5 from Schlafhorst Germany to improve quality and productivity. Looking in to Labour shortage being experienced in recent past we are planning to replace more old spindles with Auto doffing ring frames.

The demand for value added yarns like compact Yarn, Siro yarn in increasing. We are planning to increase the capacity in this financial year.

The spindnlage installed capacity of your mill is as follows.

Financial year - No of Spindles

2000-2001 - 18144

2001-2002 - 18144

2002-2003 - 20040 2003-2004 - 21240

2004-2005 - 22608

2005-2006 - 24816

2006-2007 - 41376

2007-2008 - 44712

2008-2009 - 50256

2009-2010 - 52000 Compact spinning which is a value addition activity of your company had increased as follows :

2007 6624

2008 2208

2009 6624

2010 6624

Total 22080

TFO Capacity:

As a further value addition activity your mill had installed SSM Doufer with volkmann TFOS

2007 - 960 drums

2008 - 702 drums

b) Open End Division

The Turnover of O.E. Division was 8.25 Crores. The O.E. Plant was commissioned in this financial year with 1248 rotors. We have received 832 additional rotors and will be installed during the current financial year. We have purchased OE machine from Schlafhorst BD 416, longest machine avail- able with added features. We are using our own waste produced in ring spinning and convertiong into yarn. At this moment we are consuming two types of waste produced in ring spinning. We are in process of installing one more waste cleaning line which will enable us to consume all the wastes producing Spinning & O.E. to convert in to salable yarn.

We are augmenting the Blow Room, cards by installing latest blow room equipments such as Blendoment from Trutzschler. The yarn produced is well accepted in the local market as well as export market. We are planning to install additional 416 rotors in the next financial year. The Company had installed and successfully commissioned 33 K.V dedicated feeder line from 132/ 33K.V Vengalayapalem sub-station.

c) Ginning Division

In order to improve the quality of raw cotton we have implemented backward integration by installing 24 high production NIPHA Ginning machines. The entire plant is as per the TMC (Government of India) norms. The raw kappas is fed at one end, the material is transported automatically and fully pressed bales are delivered. This avoids contamination. The Seed removed is transported auto- matically to seed storage silos. The automatic ginning plant reduced the labour requirements significantly. The capacity of this Ginning is 200 bales per day. This is more than 50% of our requirement for the year based on the 200 days cotton season. The B Grade cotton sorted out will be consumed in O.E. division. d) Hydro Electric Division

The Company has Two Hydro Electric units of 0.8 M.W and 1.6 M.W under operation. The 3rd Hydro Electric unit of 1.6 M.W is under execution and will be completed during the financial year 2010-11.

IV.FINANCE:

Your company is planning further expansion and modernization at a cost of Rs. 20 Crores out of which the loan from bank is Rs. 16.50 Crores and the balance will be meet through from internal accuruvals. The expansion and modernization will be done in Ring spinning and O.E. Plants.

V.FIXED DEPOSITS:

Your company has not accepted any public deposits from the public, except some of the unsecured loans brought by promoters directors and their relatives and as such no amount on account of principal or interest on public deposits was outstanding on the date of the Balance Sheet.

VI.FUTURE OUTLOOK:

The company is projecting Rs. 120.00 Crores Turnover during the current financial Year. The O.E.Unit is expected to add bottom line to the company.

VII.DIRECTORS:

In accordance with the provisions of the Companies Act, 1956 and Articles of Association of the Company Sri.M.R. Naik, Mr. N. Prabhakara Rao and Mr. M.V. Subba Reddy will retire by rotation at the ensuing Annual General Meeting and being eligible offers themselves for re-appointment. Mr. A. Rajendra Prasad Director has resigned from the Board wef 17-04-2010. None of the Directors of the Company are disqualified for being appointed as Directors as specified in Section 274 of the Companies Act, 1956. VIII ENERGY, TECHNOLOGY AND FOREIGN EXCHANGE:

Additional information on conservation of energy, technology absorption, foreign exchange earnings and outgoings as required to be disclosed in terms of Section 217(1) (e) of the Companies act, 1956 read together with the companies (Disclosure of particulars in the Report of Board of Directors) Rules, 1988 is annexed herewith and forms part of this report.

IX. PARTICULARS OF EMPLOYEES:

There were no employees coming under the purview of Section 217 (2A) of the companies Act, 1956.

X. AUDITORS:

The Statutory Auditors M/s. Brahmayya & Co, (Regd. No. 000153S) Chartered Accountants, Guntur, retire at the ensuring Annual General Meeting and have confirmed their eligibility and willingness to accept office, if reappointed. Your Directors propose the reappointment of M/s Brahmayya &Co, as Statutory Auditors to hold office until the conclusion of the next Annual General Meeting of the Company.

XI. COST AUDITORS:

Pursuant to the provisions of the Section 233B of the Companies Act, 1956, the Board of Directors of your Company have re-appointed, subject to the approval of the Central Government Mr P Srinivas & Co Cost Accountant, to carry out an audit of Cost accounts of the Company in respect of textiles for accounting year ending 31a March 2011.

XII. CORPORATE GOVERNANCE:

-Your Directors are pleased to inform that your Company has implemented all the stipulations pre- scribed under clause 49 of listing agreement with the stock exchange(s). A Certificate from the Statu- tory Auditors of the Company in line with Clause 49 is annexed to and forms part of the Directors Report.

XIII REGISTRARS AND SHARE TRANSFER AGENTS:

Your Registrar and Share Transfer Agents of the Company M/s Big share Services Private Limited, G-10, Left-wing Amrutha Ville, Opp, Yashoda Hospital, Raj Bhavan Road, Somagiguda, Hyderabad 500082.

XIV. CASH FLOW ANALYSIS:

In conformity with the provisions of Clause 32 of the Listing agreement the Cash Flow Statement for the year ended 31.03.2010 is annexed hereto.

XV. DIRECTORS RESPONSIBILITY STATEMENT:

Pursuant to Section 217(2AA) of the Companies Act, 1956 your Directors state that:

(a) in the preparation of the annual accounts, the applicable Accounting standards have been followed, in the opinion of the Board of Directors, along with proper explanations for material departures if any;

(b) the directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and the profit or loss of the Company for that period.

(c) the directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the companies Act, 1956 for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

(d) The directors have prepared the annual accounts on a going concern basis.

XVI. ACKNOWLEDGEMENTS:

Your Directors Wish to express their grateful appreciation for the assistance and co-operation re- ceived from Andhra Bank, Indian Bank, Axis Bank IREDA and various other Departments of both State and Central Governments. Your directors wish to place on record their appreciation of the devoted and dedicated services rendered by all employees of the company from time to time. Shareholders appreciation of the managements efforts at the General Meeting of the Company and otherwise is also a great fillip to strive for better performance year after year.

PLACE: GUNTUR For and on behalf of the Board of Directors

DATE: 29lh May 2010. P. Venkateswara Reddy

Managing Director

 
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