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Directors Report of Shri Lakshmi Cotsyn Ltd.

Mar 31, 2015

The Directors have the pleasure in presenting the 27th Annual Report along with the Audited financial statements of the Company for the financial year ended on 31st March, 2015:

FINANCIAL RESULTS :

Highlights of financial results (Stand-alone & Consolidated) for the year were as under:

(Rs. in Crores)

2014-15 2013-14 2014-15 2013-14 (12 months) (9 months) (12 months) (9 months) Stand Alone Stand Alone Consoli dated Consoli dated

Sales and other income 601.04 753.75 738.76 880.08

Operating profit before interest, depreciation and (222.29) (177.3) (221.03) 177.76

Less: Interest and other financial charges 171.01 196.70 172.46 199.48

Depreciation 110.78 78.47 111.71 79.01 Extraordinary items

Exceptional Items 430.22 171.68 (424.47) (168.33)

Loss before tax (934.30) (624.15) (929.67) (624.58)

Less: Income Tax (including deferred tax) - 0.59 0.08

Loss after tax (934.30) (624.15) (930.26) (624.66)

Proposed dividend - - - -

Dividend tax - - - -

Balance carried to Balance Sheet (934.30) (624.15) (930.26) (624.66)

PERFORMANCE:

Performance Highlights - Stand-alone :

Your Directors wish to inform you that during the year 2014-15, Company faced lot of problems on account of financial stress hence operations of the units were restricted between 25 to 30% of its installed capacity.

During 2014-15, the Company recorded sales and operating income at Rs.601.04 crores as compared to Rs. 753.76 crores in 2013-14 (9 months). The profit before tax was Rs. (934.30) crores in 2014-15 (12 months) as compared to Rs. (624.15) crores in 2013-14 (9 months). The profit/loss after tax was Rs. (934.30) crores in 2014-15 (12 months) as compared to Rs. (624.15) crores in 2013-14(9 months).

Performance Highlights - Consolidated :

During 2014-15, the Company recorded sales and operating income at Rs. 738.76 crores as compared to Rs. 880.08 in 2013- 14 (9 months). The profit before tax was Rs. (929.67) crores in 2014-15 as compared to Rs. (624.58) crores in 2013-14 (9 months). The profit/loss after tax was Rs. (930.26) crores in 2014-15 as compared to Rs. (624.66) in 2013-14 (9 months).

JOB WORK:

The company is in stringent working capital situation and hence the company is currently unable to source yarn for its own production. (Yarn is the prime input both in quantitative & price terms for any product in the textile sector). Accordingly, during the year, company has earned a portion of its revenue from jobwork. Jobwork has been done for world renowned suppliers of denims, sheeting & terry towel who are inclined to increase their jobwork in the company in view of imported machinery, state of art infrastructure and superior quality product. Jobwork has enabled the company to reduce its cash losses & increase its capacity utilization. The company expects increase in revenue contribution from jobwork in future adding to the bottom line.

PRESENT STATUS OF CORPORATE DEBT RESTRUCTURING PACKAGE (CDR ) OF M/S SHRI LAKSHMI COTSYN LTD.:

The CDR package filed by the company was approved by CDR Cell in its meeting dated 24.06.2013 and LOA dated 28.06.2013 was issued. In compliance of the LOA, Master Restructuring Agreement (MRA) was signed on 29.06.2013.

As per the terms of Letter of Approval (LOA), the Company has brought promoters' contribution to the tune of Rs. 93.90 crore within the prescribed time of 120 days from signing of Master Restructuring Agreement (MRA). Besides all other terms of LOA relating to perfection of security were also complied with by the Company except the conversion of promoters contribution into equity and pledging thereof to CFSL This could not be possible due to the Non receipt of approval of Stock exchange an account of selling of promoters shares by IFCI.

At present, the company is operating through its TRA accounts with Central Bank for running its day to day operations. The consortium members banks at their Joint Lenders Meeting (JLM) held on 16th June 2015 have decided to settle the accounts under One Time Settlement (OTS) and accordingly directed the company to search PE investor.

The company is continuously in dialogue with PE investors and also appointed NITRA (Northern India Textile Research Association) for TEV study and Valuation so that the sustainability of debt as well as the maximum turnover and EBIDTA can be achieved.

In the CDR EG Meeting held on 26th August 2015, Central Bank of India has submitted its review note and shown willingness for exiting from CDR. The Company has presented its objection and repercussions on the Company as well as on the Banks on exiting from CDR.

The CDR EG has asked the opinion from the other Banks on this issue which shall be discussed at next CDR EG.

PRESENT STATUS OF THE BOARD FOR INDUSTRIAL AND FINANCIAL RECONSTRUCTION (BIFR):

The Company is registered under the Board for Industrial and Financial Reconstruction in terms of the provisions of section 15(1) of Sick Industrial Companies (Special Provisions) Act 1985 vide registration number 45/2014. The Board at its first date of hearing held on 06.07.2015 directed the banks to file their objections within 4 weeks time. The next date of hearing has been fixed on 01.10.2015. The Company is taking necessary steps to ensure the necessary compliances with the requirements of the statute.

WINDING UP PETITION AGAINST M/S SHRI LAKSHMI COTSYN LTD.:

Few cases of Winding up filed by the following parties with the Allahabad High Court are stayed due to registration of the company with BIFR:

1- Ketan Kantilal Shah (FCCB Bond Holder) amount Rs. 2.8 million.

2- Satya Ram Agro Industries Vs. SLCL amount Rs. 16.91 lacs.

3- Satya Ram Agro Industries Vs. SLDSL amount Rs. 3.57 lacs.

4- Ambika Corporation amount Rs. 1.42 crore.

5- Soil & Environment Industries Pvt. Ltd. Rs. 9.34 lacs

PETITION BEFORE DEBT RECOVERY TRIBUNAL (DRT) BY IFCI AGAINST M/S SHRI LAKSHMI COTSYN LTD.: Following parties have filed the case against the Company before DRT Allahabad & New Delhi:

1- IFCI Ltd. Recovery Suit for an amount of Rs. 9.91crore at DRT, New Delhi.

2- UCO Bank has also filed recovery suit at DRT Allahabad.

EXPORTS

Despite all adverse situations, the Company recorded an export of Rs 218.82 crores in 2014-15 as against Rs. 220.63 crores in 2013-14 (9 Months) on Stand-alone basis.

On Consolidated basis, the Company recorded an export of Rs 219.64 crores in 2014-15 as against Rs. 220.63 crores in 2013- 14 (9 Months).

RECOGNITIONS :

The company is registered with the following organisations:

1. Director General of Quality Assurance (DGQA)

2. Director General of Suppliers & Disposals (DGS&D)

3. Ordnance Board Group of Factories.

4. D.M.S.R.D.E.

5. Trade Mark Agency having brand names STAR TRACK, DYFI, HEBE

6. Office of the Textile Commissioner as a Composite Mill.

7. Bureau of Indian Standards (BIS)

8. Department of Industrial Development, Ministry of Industry.

Company is duly registered with Export Promotional Council and Posses valid Import Export code and RCMC issued by Federation of Indian Export Organisation.

Further based upon past performance of exports, Company is also registered with Ministry of Commerce and Industry as STAR EXPORT HOUSE.

WHOLLY-OWNED SUBSIDIARY COMPANIES:

The Company has three subsidiary companies, details of which are as under:

M/s SLCL Overseas FZC, Sharjah U.A.E

The Company is a 100% subsidiary of SLCL, which has been set up at Sharjah Airport International Free Zone, Sharjah, and UAE. It is engaged in trading of 100% Polyester fabric material, garments and alike products and also exporting to other countries, besides trading in Sharjah itself.

M/S SLCL Overseas FZC, Sharjah U.A.E., a wholly-owned subsidiary, recorded a turnover of Rs. 124.53 Crores in 2014-15 as compared with Rs. 104.33 Crores in the last year. During the year, the Company has earned a profit of Rs. 3.12 Crores in comparison with Rs. 2.31 Crores in the previous year.

M/s Shri Lakshmi Defence Solutions Ltd.

SLDSL manufactures bullet proof jacket, bullet proof helmet, armored vehicles, bullet proof morchas and other ballistic products for defense and homeland security. The company was incorporated on 19.12.2006 and has started functioning recently. The Company has introduced a new range of indigenously designed models based on advance armouring technology for armed and police forces namely Dhruv, Drona and Viper. These Vehicles are equipped to help the security forces to encounter ever increasing security threats from naxalities groups and other terrorists' activities.

During 2014-15, the Company recorded sales of Rs. 11.73 Crores as compared with Rs. 21.63 Crores in 2013-14 (9 months), thus registered a decline in sales. The Company has incurred net loss of Rs. 4.82 crores in 2014-15 as compared to a net loss of Rs.1.49 crores in 2013-14 (9 months).

Registered supplier for defence products

Approved Supplier Registered with

Indian Army, Navy, Air Force, Ordinance Factories Directorate General of Supplies & Disposal

All central paramilitary State Police forces Director General of Quality Assurance

Indian Railways Forces Ministry of Defence (Navy)

Defence Material Stores R&D Est

Federation of Indian Export Organization

RDSO (Indian Railways)

Indian Postal Department

M/s Synergy Global Home Inc.

M/s Synergy Global Home Inc., is a wholly-owned subsidiary and was incorporated at U.S.A.; which deals in trading of home furnishing items.

During the year, M/s Synergy Global Home Inc., U.S.A has achieved nil revenue as compared with Rs. 0.42 Crores in 2013-14 (9 months). However, the company, suffered a loss of Rs. 0.01 lakhs in 2014-15 as compared with a previous year's loss of Rs. 8.54 Lacs.

EXEMPTION UNDER SECTION 129 OF THE COMPANIES ACT, 2013 FOR NOT ATTACHING THE BALANCE SHEET OF THE SUBSIDIARY COMPANIES:

In view of the directions issued by the Ministry vide General Circular No: 2 /2011, dated 08.02.2011 in regard to exemption under Section 129 of the Companies Act, 2013 for not attaching the balance sheet of the subsidiary concerned; therefore, Board of Directors of your Company have given their consent for not attaching the balance sheet of the subsidiary concerned;

The Annual Accounts of the subsidiary companies shall also be kept for inspection by any shareholders in the head office of the holding company and of the subsidiary companies concerned. The Company shall furnish a hard copy of details of accounts of subsidiaries to any shareholder on demand.

STATUS OF ONGOING EXPANSION OF M/S SHRI LAKSHMI COTSYN LTD.:

Due to part disbursement of the priority loan amounting Rs. 34 crores (approx.) out of Rs. 65.40 crores, the projects namely Technical Textiles, Spinning and Yarn Dyed Shirting's projects could not be fully commissioned.

DIRECTORS:

Changes in Directors and Key Managerial Personnel

During the period, Mr. Dileep Bajaj and Mr. R.K. Garg have resigned from the Directorship of the Company w.e.f. 14.08.2014. The Board places on record their appreciation of the valuable advice and guidance given by them while they were Directors of the Company.

Pursuant to the provisions of Section 149 (10) of Companies Act 2013, an independent director shall hold office for a term up to five consecutive years on the Board of a Company, but shall be eligible for reappointment for next five years on passing of a special resolution by the Company .

Therefore Shri G.N. Mathur, independent director of the company who has completed the term of consecutive 5 years, is proposed to be re-appointed as an independent director for a further term of five consecutive years subject to the approval of the Shareholders by way of special resolution.

Declaration by an Independent Director (s) & re- appointment, if any

A declaration by an Independent Director(s) that he/ they meet the criteria of independence as provided in sub-section (6) of Section 149 of the Companies Act, 2013 has been obtained.

NUMBER OF MEETINGS OF THE BOARD OF DIRECTORS

A calendar of Meetings is prepared and circulated in advance to the Directors.

During the year five Board Meetings and three Audit Committee Meetings were convened and held, the details of which are given in the Corporate Governance Report. However, the intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013.

AUDIT COMMITTEE

The composition of an Audit Committee and details of meeting are stated in the Corporate Governance Report

Details of establishment of vigil mechanism for directors and employees

The vigil mechanism for directors and employees to report genuine concerns has been established as per the provisions of Section 177(9) read with Rule 7 of the Companies (Meeting of Board and its Powers) Rules, 2014 for directors and employees to report their genuine concerns or grievances.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS UNDER SECTION 186

Details of Loans, Guarantees and Investments covered under the provisions of Section 186 of the Companies Act, 2013 are given in the notes to the Financial Statements.

RELATED PARTY TRANSACTIONS

All related party transactions that were entered into during the financial year were on an arm's length basis and were in the ordinary course of business. There are no materially significant related party transactions made by the Company with Promoters, Directors, Key Managerial Personnel or other designated persons which may have a potential conflict with the interest of the Company at large.

All Related Party Transactions are placed before the Audit Committee as also the Board for approval. Prior omnibus approval of the Audit Committee is obtained on a quarterly basis for the transactions which are of a foreseen and repetitive nature. None of the Directors has any pecuniary relationships or transactions vis-a-vis the Company.

BOARD EVALUATION

Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement, the Board has carried out an annual performance evaluation of its own performance, the directors individually as well as the evaluation of the working of its Finance, Audit Grievance, Nomination & Remuneration and Compliance Committees etc.. The Management evaluates the performance of committees and its functioning at regular intervals.

REMUNERATION & NOMINATION POLICY

The Board has framed a policy which lays down the framework in relation to selection and appointment of Directors, Senior Management of the Company and in relation to their remuneration.

RISK MANAGEMENT POLICY

A statement indicating development and implementation of a risk management policy for the Company are set out in the corporate governance report forming part of the Board report.

SHARE CAPITAL

During the Financial Year 2014-15, the Company has not issued any equity shares, so there has been no change in share capital.

DIVIDEND

Since the Company and its subsidiaries have incurred the loss, your Directors, have not recommended any dividend for the year ended on 31st March, 2015.

AUDITORS

M/s Pradeep & Associates, Chartered Accountants, Auditors of the Company, retire at the conclusion of the ensuing Annual General Meeting and, being eligible, offer themselves for reappointment. The observations of Auditors in their report read with notes to the accounts are self-explanatory and do not call for further explanation.

COST AUDITOR

The Central Government's Cost Auditor order specifies an audit of cost accounting records of the textile Company every year. This is applicable to the products manufactured by the Company. The Board of Directors, subject to the approval of the Central Government, appointed Mr. A.K. Srivastava, Cost Accountants, Kanpur, to carry out cost audit for the current year.

INTERNAL AUDITOR

The Company appointed a firm of Chartered Accountants M/s Srivastava S and Company of Kanpur as internal auditors to review the internal control systems of the Company and report thereon. The Report of the Internal Auditors is reviewed by the Audit Committee.

ENVIRONMENTAL SUSTAINABILITY

With an increasing concern towards ecology and global warming, consumers are favoring organic and eco-friendly textile products. Therefore, the demand of organic cotton is accelerating with brands and retailers continuing to implement long-term commitment to increase their use of organic cotton. Your Company also continues to pursue its mission for environmental excellence and constantly explores opportunities to improve ecology and the environment.

RESEARCH AND DEVELOPMENT

The company posses in-house R&D facilities which results in cost saving. The continuous R&D efforts enabled the company to product innovation.

Company's R&D strategy is anchored on the development and speedy commercialization of globally competitive products, processes and technologies through best-in-class research interventions backed by world-class infrastructure. It has a strong R&D cell for advanced testing laboratories.

INSURANCE

All the insurable assets of your Company including inventories, building, plant and machinery were adequately insured.

SECRETARIAL AUDIT REPORT FOR THE YEAR 2014-15:

Pursuant to the provisions of section 204(1) of the Companies Act 2013 and The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed Mr. Akhilesh Singh (Membership no. A25789) Company Secretary in Practice, to undertake the Secretarial Audit of the Company. The Report of the Secretarial Audit Report is annexed herewith as "Annexure A".

CORPORATE GOVERNANCE AND MANAGEMENT DISCUSSION & ANALYSIS REPORTS FOR THE YEAR 2014-15:

The Corporate Governance and Management Discussion & Analysis Report, which form an integral part of this Report, forms part of this Report and is annexed in the Annual Report, together with the Certificate from the auditors of the Company regarding compliance with the requirements of Corporate Governance as stipulated in Clause 49 of the Listing Agreement.

GREEN INITIATIVE FOR PAPER LESS COMMUNICATIONS:

In accordance with MCA's recent circulars bearing no.17/2011 dated 21.04.2011 and 18/2011 dated 29.04.2011, your company can mail documents and various other notices (including notice calling Annual General Meeting, Audited Financial Statements, Directors' Report, Auditor's Report etc) to the shareholders through electronic mode to the registered e-mail addresses of shareholders.

STATUTORY INFORMATION:

(A) Particulars of employees

The industrial relations throughout the year under review remained cordial. As none of the employees of the Company was in receipt of remuneration in excess of the limits prescribed, hence the particulars of employees under the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, are not given in the report.

(B) Conservation of energy, technology absorption and foreign exchange earnings and outgo Particulars with respect to conservation of energy, among others, as required under Section 134(3)clause (m) of the Companies Act, 2013 read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 are set out in the Annexure forming part of this Report.

(C) Directors' responsibility statement

As required under clause (c) of sub-section (3) of Section 134 of the Companies Act, 2013, your Directors confirm that:

1. In the preparation of the annual accounts, the applicable accounting standards were followed and there are no material departures;

2. The Directors selected such accounting policies and applied them consistently and made judgments' and estimates that were 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 of the profit or loss of the Company for the period;

3. The Directors took proper and sufficient care to maintain adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

4. The Directors prepared the annual accounts on a going concern basis.

5. The Directors had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively.

6. The directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

STATUTORY DISCLOSURES

None of the Directors are disqualified under the provisions of Section164 (2) of the Companies Act, 2013. The Directors have made the requisite disclosures, as required under the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement.

Extract of the Annual Return :

The extract of the annual return in Form No. MGT - 9 shall form part of the Board's report.. The details forming part of the extract of the Annual Return in form MGT-9 is annexed herewith as " Annexure C".

Corporate Social Responsibility (CSR)

The disclosures under Rule 9 of Companies (Corporate Social Responsibility Policy) Rules, 2014 is not required to be made since clause (o) of sub-section (3) of section 134 of the Act and Rule 9 of the Companies (Corporate Social Responsibility) Rules, 2014 is not applicable to the Company. However, the Company undertakes numerous initiatives towards the welfare of employees, society, environment etc.

ACKNOWLEDGEMENTS

Your Directors wish to place on record their appreciation of the timely support provided by the Company's bankers, CDR cell officials, all the vendors and tie-up entities and the dedication and commitment of the employees at all levels. Your Directors convey their grateful thanks to all the Government authorities and shareholders for their continued and unstinted assistance, co-operation and patronage.

We also take this opportunity to thank all the valued customers who have appreciated our products and have patronized them.

For and on behalf of the Board Registered office:

19/X-1, Krishna Puram sd/- sd/-

G.T. Road, Kanpur Dr M P Agarwal Devesh Gupta

Date : 12th August, 2015 Chairman and Managing Director Deputy Managing Director


Mar 31, 2014

Dear Members,

The Directors have the pleasure in presenting the 26th Annual Report along with the Audited financial statements of the Company for the nine months financial year ended on 31st March, 2014 :

FINANCIAL RESULTS:

Highlights of financial result (Stand-alone & Consolidated) for the year were as under:

(Rs. in Crores) 2013-14 2012-13 2013-14 2012-13 (9 months) (12 months) (9 months) (12 months) Particulars Stand Alone Stand Alon Consolidated Consolidated

Sales and other income 753.76 1767.27 880.08 1946.54

Operating profit before (177.29) 94.60 177.76 91.55 interest, depreciation and tax

Less:

Interest and other financial 196.71 354.49 199.48 356.73 charges

Depreciation 78.47 100.89 79.01 101.70

Extraordinary items - - (168.33) (0.81)

Exceptional Items 171.68 - - -

Profit/ Loss before tax (624.15) (360.78) (624.58) (367.69)

Less: Income Tax (including - 47.85 0.09 47.85 deferred tax)

Profit/ Loss after tax (624.15) (408.63) (624.67) (415.54)

Proposed dividend - - - -

Dividend tax - - - -

Balance carried to balance (624.15) (408.63) (624.67) (415.54) sheet



PERFORMANCE:

Performance Highlights - Stand-alone:

Your Directors wish to inform you that during entire period of 9 months, Company faced lot of problems on account of financial stress hence operations of the units were restricted between 25 to 40% of its installed capacity.

During 2013-14, the Company recorded sales and operating income at Rs. 753.76 crore in 9 months Accounting period as compared to Rs. 1767.27 in 2012-13 (12 months). The profit before tax was Rs. (624.15) crore in 2013-14 (9 months) as compared to Rs. (360.78) crore in 2012-13 (12 months). The profit/loss after tax was Rs. (624.15) crore in 2013-14(9 months) as compared to Rs. (408.63) crore in 2012-13(12 months). However the difficult external environment had a direct bearing on the Company''s financial results.

Performance Highlights - Consolidated:

During 2013-14, the Company recorded sales and operating income at Rs. 880.08 crores in 9 months Accounting period as compared to Rs. 1946.54 in 2012-13 (12 months). The profit/ loss before tax stood at Rs. (624.58) crores in 2013-14 (9 months) as compared to Rs. (367.69) in 2012-13 (12 months). The profit/loss after tax was Rs. (624.67) crores in 2013-14(9 months) as compared to Rs. (415.54) in 2012-13(12 months).

IMPLEMENTATION OF CORPORATE DEBT RESTRUCTURING PACKAGE OF M/S SHRI LAKSHMI COTSYN LTD.:

The CDR package filed by the company was approved by CDR Cell in its meeting dated 24.06.2013 and LOA dated 28.06.2013 was issued. In compliance of the LOA, Master Restructuring Agreement (MRA) was signed on 29.06.2013. As per TEV report submitted by CFSL, subsidiary of Central Bank of India, following assumptions were taken for viability of the company: -

a. Company will receive Rs. 166 Crore on account of TUFS subsidy by 30.06.2013 and no additional working capital was demanded from the Lenders in the package.

b. CFSL finalized that company need a capex of Rs. 65.40 Crore for installation of balancing equipments mainly in their Technical Textile plant and Spinning plant to become the projects operational which would be available to the company by 01.08.2013, so that all equipments required to revive the operations can be installed upto 31st Jan'' 2014 & start working in 4-5 months to improve the operations mainly in Technical Textile unit and Spinning unit. Accordingly company requested all the Lenders to release their share to the company. The Lenders requested to the company to bring the promoter''s contribution first then to release share of priority loan. After induction of promoter''s contribution, company again requested to disburse the loan but banks linked the disbursement with the matter of perfection of security, though there was no such condition given in LOA. In view of difficulties faced by the company, it was decided in Lenders meeting dated 17.01.2014 that company should be allowed prorata share of priority loan based on value of the properties required to be mortgaged and actually mortgaged. Accordingly, Central Bank of India requested all the Banks vide their letter no. CFB/DEL/2013-14/1270 dated 03.02.2014 to release 70% loan to the company i.e. 45.80 Crore. Inspite of our regular follow up, Rs. 33.97 Crore was only disbursed till date and equipments which was to be installed by Jan'' 2014 would not be available even for next 6 months as disbursement of full loan will take further time.

EROSION OF NET WORTH OF M/S SHRI LAKSHMI COTSYN LTD.:

Due to non receipt of TUFS subsidy and blockage of substantial funds in slow/non moving stocks and debtors, the company faced severe liquidity crunch and huge scarcity in the working capital funds. In order to partially mitigate the working capital fund scarcity and to arrest the further deterioration in the quality of the stocks, the stocks of slow moving/non moving stock of fabric/yarn lying in warehouse were sold at prevailing market prices which were substantially lower than the cost of procurement/production which resulted in substantial losses to the Company. Further, the Company also entered into settlements with its old debtors by allowing quality discount and taking the material back, which has also contributed to the losses of the company, resulting in erosion of the entire net worth of the Company as at the year end.

REFERENCE TO THE BOARD FOR INDUSTRIAL AND FINANCIAL RECONSTRUCTION (BIFR):

As the Accumulated Losses of the Company at the end of the financial year 2014 are in excess of its entire net worth, the Company is obligated to file a reference with the Board for Industrial and Financial Reconstruction in terms of the provisions of section 15(1) of Sick Industrial Companies (Special Provisions) Act 1985. The Company is taking necessary steps to ensure the necessary compliances with the requirements of the statute.

WINDING UP PETITION AGAINST OF M/S SHRI LAKSHMI COTSYN LTD.:

In Financial Year 2007-08, the company had issued 5-year Zero-coupon Foreign Currency Convertible Bonds of the nominal value of US $ 10 million with YTM of 7.5%. As per the terms of the Offering Circular dated 20.09.2007 issued by the company, conversion price of the bond was Rs. 108.49 and the bond holders have converted the FCCB Bonds amounting to US $ 4.5 Mn into equity. However subsequently due to unfavorable share prices the Bond holders could not exercise their conversion right for FCCB worth USD 5.5 Mn till the date of maturity and as such the Bonds had fallen due for redemption on 27.09.2012.

Out of that, FCCB worth USD 3.50 mn (including interest FCCB of USD 5.00 mn) have been redeemed by availing ECB of USD 5.00 mn from UCO Bank.

Current FCCB outstanding is USD 2 mn (including interest FCCB of USD 3.00 mn) which could not be redeemed in view of stringent financial position of the company. Due to non-payment of the dues to FCCB Holders, some of them have filed the winding up petition before Hon''able High Court, Allahabad for recovery of their dues. The winding up petition filed by the FCCB Holders have since been admitted by the Hon''able High Court and the matter is pending before the Hon''able High Court.

PETITION BEFORE DEBT RECOVERY TRIBUNAL (DRT) BY IFCI AGAINST M/S SHRI LAKSHMI COTSYN LTD.:

The company had availed a short term loan of Rs 30 Crores from IFCI Ltd. on 30th September 2011 and present Outstanding is Rs. 6.37 crores including interest. The said loan was secured by two time security in the form of pledge of shares and mortgage of collateral security of land of its group company. To recover the loan the IFCI had served upon the company a notice under SARFAESI Act, which was suitably replied by the company. Besides the IFCI has now filed petition to DRT to recovery of their loan which the company is contesting before DRT also.

EXPORTS

Despite all adverse situations, the Company recorded an export (consolidated) of Rs 220.63 crores in 9 months period ending on 31st March 2014 as against Rs. 276.43 crores in 2012-13 (12 Months).

On Stand-alone basis, the Company recorded an export of Rs 220.63 crores in 9 months period ending on 31st March 2014 as against Rs. 274.20 crores in 2012-13 (12 Months).

RECOGNITIONS & AWARDS:

The company is registered with the following organisations:

1. Director General of Quality Assurance (DGQA)

2. Director General of Suppliers & Disposals (DGS&D)

3. Ordnance Board Group of Factories.

4. D.M.S.R.D.E.

5. Trade Mark Agency having brand names STAR TRACK, DYFI, HEBE

6. Office of the Textile Commissioner as a Composite Mill.

7. Bureau of Indian Standards (BIS)

8. Department of Industrial Development, Ministry of Industry.

Company is duly registered with Export Promotional Council and Posses valid Import Export code and RCMC issued by Federation of Indian Export Organisation. Further based upon past performance of exports, Company is also registered with Ministry of Commerce and Industry as STAR EXPORT HOUSE.

WHOLLY-OWNED SUBSIDIARY COMPANIES:

The Company has three subsidiary companies, details of which are as under:

M/s SLCL Overseas FZC, Sharjah U.A.E

The Company is a 100% subsidiary of SLCL, which has been set up at Sharjah Airport International Free Zone, Sharjah, and UAE. It is engaged in trading of 100% Polyester fabric material, garments and alike products and also exporting to other countries, besides trading in Sharjah itself.

M/S SLCL Overseas FZC, Sharjah U.A.E., a wholly-owned subsidiary, recorded a turnover of Rs. 104.33 Crores as compared with Rs. 142.74 Crores in the last year.

M/s Shri Lakshmi Defence Solutions Ltd.

SLDSL manufactures bullet proof jacket, bullet proof helmet, armored vehicles, bullet proof morchas and other ballistic products for defense and homeland security. The company was incorporated on 19.12.2006 and has started functioning recently. The Company has introduced a new range of indigenously designed models based on advance armouring technology for armed and police forces namely Dhruv, Drona and Viper. These Vehicles are equipped to help the security forces to encounter ever increasing security threats from naxalities groups and other terrorists'' activities.

During 2013-14 (9 months), the Company recorded sales and operating income of Rs. 21.63 Crores as compared with Rs. 18.49 Crores in 2011-12, thus registered a growth of 16.98 % over the last year. However the Company has incurred net loss of Rs.1.49 crores in 2013-14 as compared to a profit of Rs. 1.86 crores in 2012-13.

Registered supplier for defence products

Approved Supplier Registered with

Directorate General of Supplies & Disposal

Indian Army, Navy, Air Force, Director General of Quality Assurance

Ordinance Factories

Forces Ministry of Defence (Navy)

All central paramilitary

Defence Material Stores R&D Est

State Police forces

Federation of Indian Export Organization

Indian Railways

RDSO (Indian Railways

Indian Postal Department

M/s Synergy Global Home Inc.

M/s Synergy Global Home Inc., is a wholly-owned subsidiary and was incorporated at U.S.A.; which deals in trading of home furnishing items.

During the year, M/s Synergy Global Home Inc., U.S.A has achieved revenue of Rs. 0.56 crores as compared with Rs. 0.18 Crores in 2012-13. However, the company, suffered a loss of Rs. 0.09 crores in 2012-13 as compared with a previous year''s profit of Rs. 0.11 crores.

EXEMPTION UNDER SECTION 129 OF THE COMPANIES ACT, 2013 FOR NOT ATTACHING THE BALANCE SHEET OF THE SUBSIDIARY COMPANIES:

In view of the directions issued by the Ministry vide General Circular No: 2 /2011, dated 08.02.2011 in regard to exemption under Section 129 of the Companies Act,2013 for not attaching the balance sheet of the subsidiary concerned; therefore, Board of Directors of your Company have given their consent for not attaching the balance sheet of the subsidiary concerned;

The Annual Accounts of the subsidiary companies shall also be kept for inspection by any shareholders in the head office of the holding company and of the subsidiary companies concerned. The Company shall furnish a hard copy of details of accounts of subsidiaries to any shareholder on demand

STATUS OF ONGOING EXPANSION OF M/S SHRI LAKSHMI COTSYN LTD.:

After receipt of part disbursement of priority loan amounting Rs. 34 crores (approx.), the company has made the payment to the machinery suppliers for critical capex out of 65.40 crores. However, the projects namely Technical Textiles, Spinning and Yarn Dyed Shirting''s projects cannot be fully commissioned without release of full priority loan. However Company is in the process of commissioning the machines whatever are being received at site.

DIRECTORS:

Pursuant to the provisions of the Companies Act, 2013 and Articles of Association of the Company, the Directors of the Company namely, Shri Pramod Kumar Singh and Shri G.N Mathur are liable to retire by rotation at the ensuing Annual General Meeting of the Company and being eligible, have offered themselves for reappointment.

SHARE CAPITAL

During the year 2013-14, the Company has not allotted any equity shares:

EXTERNAL COMMERCIAL BORROWINGS (ECB) OF M/S SHRI LAKSHMI COTSYN LTD.:

Your company had raised External Commercial Borrowings (ECB) to the tune of USD 5.00 Mn from UCO Bank and the proceeds thereof were utilized for redemption of FCCBs worth USD 5.00 MN held by UCO Bank itself. The said ECB is due for repayment along with Interest and UCO Bank has sent the Recall notice of its debt. The company has given a reply mentioning its critical financial position and asking some more time with a request for reschedulement of ECB giving moratorium of 2 years.

PLEDGE OF SHARES

As per the terms and conditions stipulated in CDR package of M/s Shri Lakshmi Cotsyn Ltd., 42,23,568 nos. of equity shares belonging to promoter group were pledged with M/s Centbank Financial Services Ltd., a security trustee appointed by the Lender Banks and 2,00,000 nos. of equity shares belonging to promoter group were pledged with Union Bank of India.

Besides, M/s Shri Lakshmi Defence Solutions Ltd., has given a Corporate Guarantee towards the entire financial assistance availed by M/s Shri Lakshmi Cotsyn Ltd., in favour of Centbank Financial Services Ltd., a security trustee appointed by the Lender Banks. Further, the Company has also pledged its 27.22 % of its total shareholding with M/s Centbank Financial Services Ltd.

DIVIDEND

Since the Company and its subsidiaries have incurred the loss, your Directors, have not recommended any dividend for the accounting year ended on 31st March, 2014.

CREDIT RATING

Since M/s Shri Lakshmi Cotsyn Ltd., is under implementation of CDR package therefore the CARE Rating, a credit rating agency has reconfirmed the rating to the Long term bank facilities, Short term bank facilities and Non-Convertible Debenture (NCD) as CARE D (Single D) due to the stressed liquidity position of the Company vide their letter dated March 28, 2014.

CRISIL Ratings has assigned the rating of M/s Shri Lakshmi Defence Solutions Ltd., as CRISIL D to its Long term bank facilities and Short term bank facilities respectively.

AUDITORS

M/s Pradeep & Associates, Chartered Accountants, Auditors of the Company, retire at the conclusion of the ensuing Annual General Meeting and, being eligible, offer themselves for reappointment. The observations of Auditors in their report read with notes to the accounts are self-explanatory and do not call for further explanation.

COST AUDITOR

The Central Government''s Cost Auditor order specifies an audit of cost accounting records of the textile Company every year. This is applicable to the products manufactured by the Company. The Board of Directors, subject to the approval of the Central Government, appointed Mr. A.K. Srivastava, Cost Accountants, Kanpur, to carry out cost audit for the current year.

INTERNAL AUDITOR

The Company appointed a firm of Chartered Accountants M/s Ajai Shanker and Company of Kanpur as internal auditors to review the internal control systems of the Company and report thereon. The Report of the Internal Auditors is reviewed by the Audit Committee.

ENVIRONMENTAL SUSTAINABILITY

With an increasing concern towards ecology and global warming, consumers are favouring organic and eco-friendly textile products. Therefore, the demand of organic cotton is accelerating with brands and retailers continuing to implement long-term commitment to increase their use of organic cotton. Your Company also continues to pursue its mission for environmental excellence and constantly explores opportunities to improve ecology and the environment.

RESEARCH AND DEVELOPMENT

Innovation has always been a part of SLCL policy. The continuous R&D efforts enabled the company to product innovation. The company posses in-house R&D facilities which results in cost saving.

Company''s R&D strategy is anchored on the development and speedy commercialization of globally competitive products, processes and technologies through best-in-class research interventions backed by world-class infrastructure. It has a strong R&D cell for advanced

testing laboratories. The Company is recognized as an In-house R&D unit by Department of Science and Industrial Research, Ministry of Science and Technology.

INSURANCE

All the insurable assets of your Company including inventories, building, plant and machinery were adequately insured.

MANAGEMENT DISCUSSION AND ANALYSIS FOR THE YEAR 2013-14:

As required under Clause 49 of the Listing Agreement with Stock Exchanges, Management discussion and analysis for the year 2013-14 forms part of this Report and is annexed in the Annual Report.

CORPORATE GOVERNANCE REPORT FOR THE YEAR 2013-14:

Corporate Governance Report for the year 2013-14 as required by Clause 49 of the Listing Agreement together with the Report of the Auditors of the Company in this regard is annexed herewith.

GREEN INITIATIVE FOR PAPER LESS COMMUNICATIONS:

In accordance with MCA''s recent circulars bearing no.17/2011 dated 21.04.2011 and 18/2011 dated 29.04.2011, your company now sends documents and various other notices (including notice calling Annual General Meeting, Audited Financial Statements, Directors'' Report, Auditor''s Report etc) to the shareholders through electronic mode to the registered e-mail addresses of shareholders.

STATUTORY INFORMATION:

(A) Particulars of employees

The industrial relations throughout the year under review remained cordial. As none of the employees of the Company was in receipt of remuneration in excess of the limits prescribed, hence the particulars of employees under the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, are not given in the report.

(B) Conservation of energy, technology absorption and foreign exchange earnings and outgo Particulars with respect to conservation of energy, among others, as required under Section 134(3)clause (m) of the Companies Act, 2013 read with the Companies

(Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 are set out in the Annexure forming part of this Report.

(C) Directors'' responsibility statement

As required under clause (c) of sub-section (3) of Section 134 of the Companies Act, 2013, your Directors confirm that:

1. In the preparation of the annual accounts, the applicable accounting standards were followed and there are no material departures;

2. The Directors selected such accounting policies and applied them consistently and made judgements and estimates that were 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 of the profit or loss of the Company for the period;

3. The Directors took proper and sufficient care to maintain adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

4. The Directors prepared the annual accounts on a going concern basis.

5. The directors had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively.

6. The directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

STATUTORY DISCLOSURES

None of the Directors are disqualified under the provisions of Section164 (2) of the Companies Act, 2013. The Directors have made the requisite disclosures, as required under the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement.

ACKNOWLEDGEMENTS

Your Directors wish to place on record their appreciation of the timely support provided by the Company''s bankers, CDR cell officials, all the vendors and tie-up entities and the dedication and commitment of the employees at all levels. Your Directors convey their grateful thanks to all the Government authorities and shareholders for their continued and unstinted assistance, co-operation and patronage.

We also take this opportunity to thank all the valued customers who have appreciated our products and have patronized them.

Registered office: For and on behalf of the Board 19/X-1, Krishna Puram, G.T. Road, Kanpur sd/- sd/- Date: 30th May, 2014 Dr M P Agarwal Devesh Gupta (Chairman and Managing Director) (Deputy Managing Director)


Jun 30, 2013

The Directors have the pleasure in presenting the 25th Annual Report along with the audited financial statements of the Company for the year ended on 30th June, 2013.

FINANCIAL RESULTS

Highlights of financial result (consolidated) for the year were as under:

(Rs. in Crores)

Particulars 2012-13 2011-12

Sales and other income 1,946.54 2,422.13

Operating profit before interest, depreciation and tax 91.55 446.40

Less:

Interest and other financial charges 356.73 205.07

Depreciation 101.70 61.67

Extraordinary items (0.81) 10.78

Profit/ Loss before tax (367.69) 168.88

Less: Income Tax (including deferred tax) 47.85 58.41

Profit/ Loss after tax (415.54) 110.47

Proposed dividend

Dividend tax

Balance carried to balance sheet (415.54) 110.47



PERFORMANCE

Performance Highlights:

Your Directors wish to inform you that despite of all critical sit- uations faced by the Company, products like Technical Textile/ Fusible Interlining and garments have marked their presence in the Company''s overall performance.

During 2012-13 the Company recorded sales and operat- ing income at Rs. 1946.54 as compared to Rs. 2422.13 in 2011-12. The profit before tax was Rs. (367.69) crores in 2012-13 as compared to Rs. 168.88 in 2011-12. The profit after tax was Rs. (415.54) crores in 2012-13 as compared to Rs. 110.47 in 2011-12. However the difficult external environ- ment had a direct bearing on the Company''s financial results, mainly high interest costs, have put the Company in losses.

Corporate Debt Restructuring:

Your Company followed an aggressive growth path in the last five years, it had considerably grown its balance sheet, includ- ing debt. Due to the industry situation in general viz. slowdown and company specific issues such as growing debt, delayed realisation of debtors, working capital shortfall, delay in project completion and cash flow mismatch, which had adversely af- fected the liquidity position of the company, the company was facing financial problems and finding difficulty in servicing its debt obligation. Therefore, it had approached the lenders for restructuring its debts under CDR mechanism. Centbank Fi- nancial Services Ltd. had carried out TEV study of the company and given the opinion that the company is techno -economi- cally viable considering proposed debt restructuring scheme. The CDR package will help the company in coming out of the financial problem and enable it to service debt/ interest obliga- tions in terms of the package. A Joint Lenders Meeting (JLM) was held on February 25, 2013 wherein it was decided to refer the case to the CDR Forum to restructure the Company''s debt in order to get through the present phase of industry-wide li- quidity crunch.

The Board of Directors of the Company in its Meeting held on February 28, 2013 had accorded its approval for restructuring of the debts of the Company under Corporate Debt Restruc- turing (CDR) Mechanism of the Reserve Bank of India. CDR Empowered Group (CDREG) in its meeting held on June 24, 2013 admitted the Company under CDR. Upon due consid- eration CDREG approved the financial restructuring package ("CDR Package") and issued Letter of Approval (LOA) on June 28, 2013. Thereafter CDR package related documents such as Master Restructuring Agreement, (MRA), amended Master Restructuring Agreement, TRA, STA have been executed and the CDR package is under implementation.

The salient features of the CDR package interalia are as under:

- Re-schedulement of TUF Loan to be repaid in 40 struc- tured quarterly installments; Term loans to be repaid in 32 structured quarterly installments & Short Term Loans to be repaid in 22 structured quarterly installments.

- Interest rate has been reduced to 11% per annum till June 30, 2013. Thereafter, the rate is proposed to be floating rate of Central Bank Base Rate spread of 0.75% p.a., with a right to reset the spread every year.

- Release of priority loan amounting to Rs.65.40 Crores for critical capex.

- Waiver of penal charges from the cutoff date to the date of implementation of the package

REASONS FOR POOR PERFORMANCE/TIME-OVERRUN/COST- OVERRUN

The major reasons of the company''s problem was as under:

i. Major Expansion in Last Five Years.

ii. The Terry Towel project was to be installed as brown field project at existing site Malwan but due to delay, it was implemented as Green field project at Abhayapur as a result company had to incur additional cost.

iii. Delay in financial tie up and high cost of Mezzanine Debt for Denim Expansion and Technical Textile Project.

iv. Fluctuation in Cotton and yarn prices.

v. Non-Availability of TUFS subsidy amounting to Rs.165 crore.

vi. The Company could not raise equity & other sources of capital in proportion to debt.

vii. Delay in getting working capital disbursements from banks even in piecemeal. Hence, funds could not be uti- ised for generating revenues as they were used for clear- ng the interest dues and loan instalments to save bank account from becoming NPA.

viii. The company is having substantial institutional orders from CRPF, BSF, MOD, ITBF, Assam Rifles, OCF, OEF and other Defence establishment. Due to liquidity problems, the company could not meet the demand on time speci- fied and the supplies became delayed as a result in most of the cases the company is paying liquidated damages @ 10% of order Value

ix. There was additional expenditure made in the company''s factory to the extent of Rs 206.15 crore in recently im- plemented projects which was funded out of internal ac- cruals which further added to liquidity stress.

x. The company was not able to put the balancing machin- eries at its factory units and hence, could not utilize the projected production capacity for the units.

EXPORTS

During 2012-13, the Company recorded an export of Rs 276.82 crores as against Rs. 197.43 crores in 2011-12, thus registered an increase in export of 40.21 % over the last year.

RECOGNITIONS & AWARDS

Your Directors feel pleasure in reporting some of the recogni- tions bestowed on your Company during the year:

- Ranked 294th among the top 1000 companies in BS- 1000, issue 2012

- Recognition as R&D unit by DSIR Ministry of Science and Technology, Government of India

- Also recognized by Government of India as a centre for skill upgradation of Industrial workers.

The company is also registered with the following organisa- tions:

1. Director General of Quality Assurance (DGQA)

2. Director General of Suppliers & Disposals (DGS&D)

3. Ordnance Board Group of Factories.

4. D.M.S.R.D.E

5. Trade Mark Agency having brand names STAR TRACK, DYFI, HEBE

6. Office of the Textile Commissioner as a Composite Mill

7. Bureau of Indian Standards (BIS)

8. Department of Industrial Development, Ministry of Indus- try.

Company is duly registered with Export Promotional Council and Posses valid Import Export code and RCMC issued by Fed- eration of Indian Export Organisation.

Further based upon past performance of exports, Company is also registered with Ministry of Commerce and Industry

WHOLLY-OWNED SUBSIDIARY COMPANIES

M/S SLCL Overseas FZC, Sharjah U.A.E

M/S SLCL Overseas FZC, Sharjah U.A.E., a wholly-owned sub- sidiary, recorded a turnover of Rs. 142.74 Crores as compared with Rs. 234.96 Crores in the last year

Shri Lakshmi Defence Solutions Ltd.

During 2012-13, Shri Lakshmi Defence Solutions Ltd. has achieved a turnover of Rs. 18.49 Crores as compared with Rs. 15.17 Crores in 2011-12, thereby registering a growth of 21.88% over the last year. However the net profit decreased to Rs. 1.86 crores in 2012-13 as compared with Rs. 2.58 crores in 2011-12

Indian Army, Navy, Directorate General of Supplies

Air Force, Ordinance & Disposal Director General of

Factories Quality Assurance

All central paramilitary Forces Ministry of Defence (Navy) State Police forces Defence Material Stores R&D Est

Indian Railways Federation of Indian Export

Organization RDSO (Indian Railways Indian Postal Department

M/s Synergy Global Home Inc.

During the year, M/s Synergy Global Home Inc., U.S.A has achieved revenue of Rs. 18.25 crores as compared with Rs. 26.66 Crores in 2011-12. However, the company, achieved a profit of Rs. 11.08 lacs in 2012-13 as compared with a previ- ous year''s loss of Rs. 3.67 crores.

EXEMPTION UNDER SECTION 212(8) OF THE COMPANIES ACT, FOR NOT ATTACHING THE BALANCE SHEET OF THE SUB- SIDIARY COMPANIES

In view of the directions issued by the Ministry vide General Circular No: 2 /2011, dated 08.02.2011 in regard to exemp- tion under Section 212(8) of the Companies Act, for not at- taching the balance sheet of the subsidiary concerned; there- fore, Board of Directors of your Company have given their consent for not attaching the balance sheet of the subsidiary concerned;

The Annual Accounts of the subsidiary companies shall also be kept for inspection by any shareholders in the head office of the holding company and of the subsidiary companies con- cerned. The Company shall furnish a hard copy of details of accounts of subsidiaries to any shareholder on demand

ONGOING EXPANSION

Technical Textile Project

The company is one of the earliest entrants in Technical Tex- tile products which has higher margins compare to traditional textile products. The company has installed facility which is as per international standards and since the demand for technical textile products is increasing, the company would focus more on selling these products across the globe.

Spinning Unit

The company has set up a spinning project at Malwan and started commercial operations but it requires additional amount of Rs.12.00 crores which is due to cost escalation to make plant fully operational. The operation of this plant will act as a backward integration for the company and will help company to save around Rs. 24.00 crores per annum which will add into EBIDTA margin of the company. The company is currently buying yarn which is the raw material for textile from the open market. The market price for the yarn is very volatile and it affects the company margin due to huge fluctuation in prices in resent past.

DIRECTORS

Pursuant to the provisions of the Companies Act, 1956 and Articles of Association of the Company, the Directors of the Company namely, Dr G. N. Mathur and Shri R K Garg are liable to retire by rotation at the ensuing Annual General Meeting of the Company and being eligible, have offered themselves for reappointment.

CHANGE IN DIRECTORSHIP

During the year 2012-13, Mr. Pramod Kumar Singh has joined our Board as an Independent Director with effect from 28th February 2013. Mr. Pramod Kumar Singh has been a former Advisor to Union Textile Minister and has a rich experience of more than 25 years in media and politics.

During the year 2012-13, Dr. G.N. Bajpai, Mr. R.S. Srivastava and Mr. K.D. Gupta have resigned from the Directorship of the Company. The Board places on record their appreciation of the valuable advice and guidance given by them while they were Directors of the Company.

SHARE CAPITAL

During the year 2012-13, the Company has allotted the follow- ing nos. of equity shares:

(i) 376810 nos. of equity shares at a pre-determined price of Rs. 108.41 per share after conversion of FCCB amounting to USD 10,00,000. Consequently, the paid up capital of the company is increased to Rs. 28, 47, 06,450.

(ii) The Board has approved the allotment of Share Warrants to promoters / business associates, on preferential basis towards the promoters'' contribution to the CDR scheme, subject to the approval of the shareholders and regula- tory authorities.

NON-CONVERTIBLE DEBENTURES (NCDs)

During the year, the Company has issued Non- Convertible De- bentures (NCDs) worth Rs. 40 crores to Central Bank of India for a period of 5 years and the proceeds thereof were utilized for payment of their Mezzanine debt of Rs. 40 crores.

EXTERNAL COMMERCIAL BORROWINGS (ECB)

During the year, the company has raised External Commercial Borrowings (ECB) to the tune of USD 5.00 Mn from UCO Bank and the proceeds thereof were utilized for redemption of FC- CBs worth USD 5.00 MN held by UCO Bank itself.

PLEDGE OF SHARES

As per the terms and conditions stipulated in CDR package, 42,23,568 no,s of equity shares belonging to promoter group were pledged with M/s Centbank Financial Services Ltd, a se- curity trustee appointed by the Lender Banks.

DIVIDEND

Since the Company has incurred the loss, your Directors, have not recommended any dividend for the accounting year ended on 30th June, 2013.

CREDIT RATING

Since the Company has gone into CDR therefore the CARE Rating, a credit rating agency has assigned the rating to the Long term bank facilities, Short term bank facilities and Non- Convertible Debenture(NCD) as CARE D (Single D)due to the stressed liquidity position of the Company vide their letter dated March 21, 2013.

AUDITORS

M/s Pradeep & Associates, Chartered Accountants, Auditors of the Company, retire at the conclusion of the ensuing Annual General Meeting and, being eligible, offer themselves for reap- pointment. The observations of Auditors in their report read with notes to the accounts are self-explanatory and do not call for further explanation.

COST AUDITOR

The Central Government''s Cost Auditor order specifies an audit of cost accounting records of the textile Company every year. This is applicable to the products manufactured by the Com- pany. The Board of Directors, subject to the approval of the Central Government, appointed Mr. A.K. Srivastava, Cost Ac- countants, Kanpur, to carry out cost audit for the current year.

INTERNAL AUDITOR

The Company appointed a firm of Chartered Accountants M/s Ajai Shanker and Company of Kanpur as internal auditors to review the internal control systems of the Company and report thereon. The Report of the Internal Auditors is reviewed by the Audit Committee.

ENVIRONMENTAL SUSTAINABILITY

With an increasing concern towards ecology and global warm- ing, consumers are favouring organic and eco-friendly textile products. Therefore, the demand of organic cotton is acceler- ating with brands and retailers continuing to implement long- term commitment to increase their use of organic cotton. Your Company also continues to pursue its mission for environmen- tal excellence and constantly explores opportunities to improve ecology and the environment.

RESEARCH AND DEVELOPMENT

Innovation has always been a part of SLCL policy. The continu- ous R&D efforts enabled the company to product innovation. The company posses in-house R&D facilities which results in cost saving.

Company''s R&D strategy is anchored on the development and speedy commercialization of globally competitive products, processes and technologies through best-in-class research interventions backed by world-class infrastructure. It has a strong R&D cell for advanced testing laboratories. The Com- pany is recognized as an In-house R&D unit by Department of Science and Industrial Research, Ministry of Science and Technology.

INSURANCE

All the insurable assets of your Company including inventories, building, plant and machinery were adequately insured.

MANAGEMENT DISCUSSION AND ANALYSIS FOR THE YEAR 2012-13

As required under Clause 49 of the Listing Agreement with Stock Exchanges, Management discussion and analysis for the year 2012-13 forms part of this Report and is annexed in the Annual Report.

CORPORATE GOVERNANCE REPORT FOR THE YEAR 2012-13

Corporate Governance Report for the year 2012-13 as re- quired by Clause 49 of the Listing Agreement together with the Report of the Auditors of the Company in this regard is annexed herewith.

GREEN INITIATIVE FOR PAPER LESS COMMUNICATIONS

In accordance with MCA''s recent circulars bearing no.17/2011 dated 21.04.2011 and 18/2011 dated 29.04.2011, your company now sends documents and various other notices (in- cluding notice calling Annual General Meeting, Audited Finan- cial Statements, Directors'' Report, Auditor''s Report etc) to the shareholders through electronic mode to the registered e-mail addresses of shareholders.

STATUTORY INFORMATION

(A) Particulars of employees

The industrial relations throughout the year under review remained cordial. As none of the employees of the Com- pany was in receipt of remuneration in excess of the limits prescribed, the particulars of employees under Section 217(2A) of the Companies Act 1956, read with the Companies (Particulars of Employees) Amendment Rules, 2011, were not given.

(B) Conservation of energy, technology absorption and for- eign exchange earnings and outgo

Particulars with respect to conservation of energy, among others, as required under Section 217 (1) (e) of the Companies Act, 1956 read with the Companies (Disclo- sure of Particulars in the Report of Board of Directors) Rules, 1988 are set out in the Annexure forming part of this Report.

(C) Directors'' responsibility statement

As required under Section 217(2AA) of the Companies Act, 1956, your Directors confirm that:

1. In the preparation of the annual accounts, the applicable accounting standards were followed and there are no ma- terial departures;

2. The Directors selected such accounting policies and

Registered office 19/X-1, Krishna Puram, G.T Road, Kanpur Date : 5th December, 2013 applied them consistently and made judgements and estimates that were 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 of the profit or loss of the Company for the period;

3. The Directors took proper and sufficient care to maintain adequate accounting records in accordance with the pro- visions of this Act for safeguarding the assets of the Com- pany and for preventing and detecting fraud and other irregularities.

4. The Directors prepared the annual accounts on a going concern basis.

STATUTORY DISCLOSURES

None of the Directors are disqualified under the provisions of Section 274(1) (g) of the Companies Act, 1956. The Directors have made the requisite disclosures, as required under the provisions of the Companies Act, 1956 and Clause 49 of the Listing Agreement.

ACKNOWLEDGEMENTS

Your Directors wish to place on record their appreciation of the timely support provided by the Company''s bankers, CDR cell officials, all the vendors and tie-up entities and the dedication and commitment of the employees at all levels.

Your Directors convey their grateful thanks to all the Govern- ment authorities and shareholders for their continued and un- stinted assistance, co-operation and patronage.

We also take this opportunity to thank all the valued customers who have appreciated our products and have patronized them.

For and on behalf of the Board

DEVESH GUPTA DR M P AGARWAL

Managing Director Chairman and Managing Director


Jun 30, 2009

The Directors are pleased to present the 21st Annual Report along with the audited financial statements of the Company for the year ended June 30, 2009.

Financial results

Highlights of financial result for the year were as under

(Rs. in cr)

Financial results 2008-09 2007-08 Growth (%)

Sales and other income 1,169.31 936.99 24.79

Operating profit before interest, depreciation and tax 173.88 134.67 29.12

Less:

Interest and other financial charges 67.95 44.10 54.08

Depreciation 25.20 22.42 12.40

Profit before tax * 80.74 68.15 18.47

Less: Income Tax (including deferred tax and FBT) 17.78 10.44

Profit after tax 62.96 57.71 9.10

Debenture redemption reserve 10.00 10.00

Proposed dividend 3.12 0.74

Dividend tax 0.53 0.13

Balance carried to balance sheet 49.31 46.84

Performance

Your Directors are pleased to inform you that besides terry towel, denim, bottom weight, nylon coated fabrics, wider width fabric and home furnishing projects that performed stupendously during 2008-09, other products like dress material and comforters have also marked their presence in the Companys overall performance.

The Companys overall performances was remarkable which is evident that during 2008-09 your Company recorded sales and operating income at Rs. 1,169.31 cr as compared with Rs. 936.99 cr in 2007-08, thus a growth of 24.79% over the last year. The profit after tax also grew by 9.10 % being Rs. 62.96 cr during 2008-09 as against Rs. 57.71 cr in 2007- 08. The improvement in the Companys performance was possible mainly on account of improved capacity utilisation, increase in sale and cost reduction measures adopted by the Company resulting in better operational efficiency and value- added products.

Exports

During 2008-09, the Company recorded an export of Rs. 94.72 cr as against Rs. 86.45 cr in 2007-08, thus registering a growth of 9.57% over the last year.

Recognitions

Your Directors feel immense pleasure in reporting some of the recognitions bestowed on your Company during the year:

Ranked 378th among the top 500 companies of India (Source: The Economic Times and published in ET-500, November 2009 issue)

Ranked 23rd among the top 400 small-cap companies (Source: Dalai Street Journal - Small cap 400 issue)

Ranked 3rd among the fastest growing Indian companies (Source: Business Today, June 2008 issue)

Ranked 234th among the top 500 manufacturing companies in India (Source: Industry 2.0 Technology Management for Decision Makers, August-September, 2008)

> Possessing certifications like ISO 9001:2008, GOTS, OE-100, Oekotex and Reach

Ranked One Star Export house from the office of the Joint Director General of Foreign Trade, Ministry of Commerce and Industry

Wholly-owned Subsidiary Company

M/S SLCL Overseas FZC, Sharjah U.A.E. a wholly-owned subsidiary recorded a turnover of AED 780.24 lacs as compared with AED 707.42 lacs in the last year, registering a growth of 10.29%.

Incorporation of Shri Lakshmi Defence Solutions Ltd

During 2008-09, Shri Lakshmi Defence Solutions Ltd. was incorporated by changing the name of Armet Armored Vehicles (India) Ltd in view of dissolving the joint venture between Armet Armored Vehicles Ltd UK and Shri Lakshmi Cotsyn Ltd, due to non-receipt of 25% shares from Armet Armored Vehicles Ltd, UK. Now Shri Lakshmi Defence

Solutions Ltd is a 100% subsidiary of Shri Lakshmi Cotsyn Ltd. The Company expects huge demand for Armored Vehicles in India as well as abroad.

Expansions

Implementation of terry towel project

During 2008-09, the financial closure of terry towel expansion project of Rs. 378 cr of your Company was completed for expanding manufacturing capacity from 3,000 tons to 15,000 tons annually and for setting up 16 mega watt captive co-generation power plant project to ensure uninterrupted power supplies at lowest cost. Both the projects are under implementation and the Company expects to complete these projects by June 2010.

Fusible interlining fabric

The Company is marketing this fabric commonly known as Buckram under the brand name "Star Track". The Company enhanced the capacity from 10 mmpa to 12.5 mmpa in the year ended June 2008. The Company is marketing through channel of distributors throughout India. Due to pressure of orders, the capacity utilisation for the year ended June 2008 was 116%. In view of the increasing demand, the Company decided to enhance the capacity from 12.5 mmpa to 25.0 mmpa.

Denim fabric expansion

The present capacity of denim fabric is 20 mmpa to produce basic denim. The Company is researching continuously to produce new designs and new qualities which is why the Company has orders for next two months capacity. The Company is planning to set up 10 mmpa more capacity to meet out enhanced demand of customers.

Wider width fabric - The sheeting fabric of 130" wide, used for making bed linen, duvets and comforters is known as wider width fabric. The present capacity of the Company is 12 mmpa and the Company wishes to increase the capacity from the current 12 mmpa to 20 mmpa.

Diversification

Setting up of comforter unit in Noida

During 2008-09, your Company acquired a unit at Noida for manufacturing comforters with the capacity of manufacturing of 3 lacs (in number) annually and the unit commenced the production at the new unit w.e.f. February 2009.

Retail

During 2008-09, your Company succeeded to place its Weaves brands terry towel and bed sheets at 950 multi- branded retail outlets (MBOs) for retail marketing and expects that the Companys products will be available at 1,500 multi-branded retail outlets (MBOs) throughout the country in next two years through distributors, dealers and franchisee.

Launching of armored vehicles with the brand name of Dhruv, Drona and Viper

During 2008-09, M/s Shri Lakshmi Defence Solutions Ltd., a wholly-owned subsidiary of your Company, introduced a new range of indigenously designed models based on advance armouring technology for armed and police forces namely Dhruv, Drona and Viper. These Vehicles are equipped to help the security forces to encounter ever increasing security threats from naxalities groups and other terrorists activities. The vehicles have been designed to meet the requirements of armed forces engaged in maintaining law and order in various parts of the country.

Ring yarn and open end yarn

For backward integration, the Company is planning to set up a spinning unit with 1,00,000 spindles.

Directors

Pursuant to the provisions of the Companies Act, 1956 and Articles of Association of the Company, Shri J S Varshney, Dr G N Mathur and Mr Dileep Bajaj are liable to retire by rotation at the ensuing Annual General Meeting of the Company and being eligible, have offered themselves for reappointment.

Shri Sunil Trikha, Chief General Manager of Export-Import Bank of India, Mumbai, was appointed as Nominee and Independent Director of Export Import Bank of India on the Companys Board of Directors on and from January 31, 2009.

Capital

During 2008-09, your Company allotted 30 lacs preferential warrants of Rs. 100 each to the promoters group out of which 7,78,500 number of warrants are already converted into equity shares of Rs. 10 each at a premium of Rs. 90 per share.

The Company also proposed to allot 25 lacs warrants at Rs. 56 per warrant, convertible into equity shares of Rs. 10 each at a premium of Rs. 46 per share to the strategic investors subject to the approval of regulatory authorities.

Dividend

Your Directors recommended a dividend of 20% (i.e., Rs. 2 per share) for the accounting year ended on June 30, 2009 and therefore, seek your approval for the same.

Auditors

M/s Pradeep & Associates, Chartered Accountants, Auditors of the Company retire at the conclusion of the ensuing Annual General Meeting and, being eligible, offer themselves for reappointment. The observations of Auditors in their report read with notes to the accounts are self-explanatory and do not call for further explanation.

Cost auditor

The Central Governments Cost Auditor order specifies an audit of cost accounting records of the textile Company every year. This is applicable to the products manufactured by the Company. The Board of Directors, subject to the approval of the Central Government, appointed A K Srivastava, Cost Accountants, Kanpur, to carry out this audit for the current year.

Internal auditor

The Company appointed a firm of Chartered Accountants M/s Ajai Shanker and Company of Kanpur as internal auditors to review the internal control systems of the Company and report thereon. The Report of the Internal Auditors is reviewed by the Audit Committee.

Environmental sustainability

Your Company also continues to pursue its mission for environmental excellence and constantly explores opportunities to improve ecology and the environment.

With an increasing concern towards ecology and global warming, consumers are favouring organic and eco-friendly textile products. Therefore, the demand of organic cotton is accelerating with brands and retailers continuing to implement long-term commitment to increase their use of organic cotton. Your Company also got the certification to produce organic bed sheets, organic towels and other products.

Research and development

Your Company is presently manufacturing various technical textile fabrics which include high altitude fabric, PU-coated nylon fabric, nuclear bio-chemical fabrics and ballistic plates, among others. Now the Company has proposed to diversify to manufacture black out fabrics, flex fabrics, carbon fabrics and IRR fabrics with estimated total capital expenditure of Rs. 250 cr.

Black out fabrics - This fabric is basically used for curtains to protect heat and sunlight coming inside the room from windows and doors. Currently there is no manufacturing in the organised sector as on date. The Company received good enquires for black out fabrics from the customers like IKEA, Walmart and other buyers like Ellery Homes.

Flex fabrics - This fabric is basically used for hoardings, banners, kiosk, disaster management, defence/military application and other such related purposes. This fabric is produced in different types called front lit, back lit and inflatable and dock seal, among others. Currently there is no manufacturer in India and all the requirements are being met by imports from China, Korea and Taiwan.

Carbon fabric - This fabric is used in producing NBC fabric for protection against chemicals, chemical gases and other nuclear bio-chemical materials. The Company is presently importing it and using it in manufacturing NBC fabric being converted to NBC uniform for army requirement. The project includes manufacturing of carbon as well as applying the carbon on fabric.

IRR fabric - This is called infra red reflectance fabric used for army operations. In battle field the soldiers, arms and ammunitions, military trucks and tents, among others, covered with this fabric can not be sensored by enemys air- crafts or other visible mediums. Almost all countries in the world use only IRR fabrics for their armies. We are carrying out necessary research work at our existing facilities for development of this fabric.

Shri Lakshmi Nano Technologies Limited - Your Company set up a unit for manufacturing smart vests by using NCT technology and smart sensors for health conscious people, hospitals and army and for that purpose the Company opened a branch at Arkansas University, USA, where the research work is being done.

Insurance

All the insurable interest of your Company including inventories, building, plant and machinery were adequately insured.

Management discussion and analysis for the year 2008-09

As required under Clause 49 of the Listing Agreement with Stock Exchanges, Management discussion and analysis for the year 2008-09 forms part of this Report and is annexed herewith.

Corporate Governance Report for the year 2008-09

Corporate Governance Report for the year 2008-09 as required by Clause 49 of the Listing Agreement together with the Report of the Auditors of the Company in this regard is annexed herewith.

Statutory information

(A) Particulars of employees

The industrial relations throughout the year under review remained cordial. As none of the employees of the Company was in receipt of remuneration in excess of the limits prescribed, Particulars of employees under Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employee) Rules, 1975 as amended were not given.

(B) Conservation of energy, technology absorption and foreign exchange earnings and outgo

Particulars with respect to conservation of energy, among others, as required under Section 217(1) (e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 are set out in the Annexure forming part of this Report.

(C) Directors responsibility statement

As required under Section 217(2AA) of the Companies Act, 1956, your Directors confirm that:

1. In the preparation of the annual accounts, the applicable accounting standards were followed and there are no material departures;

2. The Directors selected such accounting policies and applied them consistently and made judgments and estimates that were 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 of the profit or loss of the Company for the period;

3. The Directors took proper and sufficient care to maintain adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

4. The Directors prepared the annual accounts on a going concern basis.

Statutory Disclosures

None of the Directors are disqualified under the provisions of Section 274(1 )(g) of the Companies Act, 1956. The Directors have made the requisite disclosures, as required under the provisions of the Companies Act, 1956 and Clause 49 of the Listing Agreement.

Acknowledgements

We have definitely scaled greater heights and defined the path for others to follow. In this regard, your Directors wish to place on record their appreciation of the timely support provided by the Companys bankers, all the vendors and tie- up entities and the dedication and commitment of the employees at all levels. We are sure we will continue to dare and reach the pinnacle of our journey called success.

Your Directors convey their grateful thanks to all the Government authorities and shareholders for their continued and unstinted assistance, co-operation and patronage.

We also take this opportunity to thank all the valued customers who have appreciated our products and have patronised them.

Registered office: For and on behalf of the Board

19/X-1, Krishna Puram, Dr M P Agarwal

G.T Road, Kanpur Chairman and

Date: November 25, 2009 Managing Director

 
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