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Directors Report of Suryalakshmi Cotton Mills Ltd.

Mar 31, 2016

To

The Members

TheDirectors are pleased to present their Fifty Third Annual Report on the business and operations of the Company and the financial results for the year ended 31st March, 2016.

Financial Results

(Figures in RS, Lakhs)

Particulars 2015- 2016 2014-2015

Gross Profit before Interest & Depreciation

11,051.98

8,389.98

Less : Interest 3,431.36

3,367.15

: Depreciation &Amortization expense 3,132.07

6,563.43 3,179.59

6,546.74

Profit/(Loss) before prior year Adjustment

4,488.55

1,843.24

Exceptional Items *

(44.40)

(12.07)

Profit before tax for the year

4,444.15

1,831.17

LESS : Provision for Income Tax for the year

949.00

382.00

LESS : Deferred tax liability

490.00

232.36

Profit/(Loss) after tax

3,005.15

1,216.81

ADD : Profit brought forward from last year

9,055.62

8,595.67

LESS : Carrying value of Assets whose useful life achieved

--

366.77

TOTAL

12,060.77

9,445.71

Dividend on Preference Share Capital

60.00

40.96

Dividend on Equity Share Capital

300.10

200.07

Corporate Dividend Tax

73.31

49.06

Transferred to General Reserve

350.00

100.00

Profit transferred to Balance Sheet

11,277.36

9,055.62

TOTAL

12,060.77

9,445.71

¦ Exceptional item of the current year includes Workers Agreement Arrears (Expenses) of RS, (7.80) Lakhs & Gram Panchayat Tax of RS, (36.60) Lakhs.

Operations

The year 2015-16 was another year of significant achievements for the Company. The Company showcased its operational excellence, with strong bottom line performance. The net sales for the year ended 31st March, 2016 stood at RS,760 Crores registering a growth of 8% over the previous year. However, the net profit after tax surged by more than 146% as compared to previous year. This was primarily due to two reasons: 1) Higher per unit realizations and 2) Enhanced operational efficiencies.

During the year the Company''s new spinning unit at Amravati got commercialized towards end of the first half. The production of value-added fancy yarns from this unit is already under captive consumption for production of denim fabric at our Denim division. Our production of denim fabric also increased by 11%. The operations of the power division are also satisfactory, with the Amravati unit also drawing power from the Company''s captive power plant.

While our fabric and garment divisions posted higher realizations, the realization from the yarn division has been subdued (both in domestic and export markets) by around 9%. The sales of Denim division increased by 11% and our per meter Denim fabric realization improved to H153.06 from H142.34 achieved in the previous year. Our focus on expanding the quantum of exports had started yielding results as our fabric exports nearly doubled from RS,64 crs. to RS,125 crs in 2015-16. The garment realization in both domestic and exports market have been higher increasing by around 14%. Our external (third party) power sales have also improved despite the rate per unit being lower.

On the input costs side, the raw material prices have been favorable except in Viscose Staple Fibre. Cotton prices have been cheaper by around 9%, while coal was available at base price, but at slightly better prices than last year.

Dividend

The Directors are pleased to recommend a Dividend of 18% i.e. H1.80 per share (previous year H1.20 per share).

Capital Expenditure

During the year under review the Company incurred capital expenditure of RS,108.28 Crores.

Exports

Exports registered a healthy growth of 68% to RS,139 Crores up from RS,83 Crores in previous year. Denim Exports have shown handsome gains in volume terms.

Continuing our focus on the export markets, we efficiently retained our existing business & at the same time diligently worked towards entering new markets and acquiring new customers.

This year, we have successfully ventured into new markets like Iran,

China, Hong Kong, etc. and have also managed to get business from new key customers like One Jeans, Next, Sainsbury and Matalan.

For us, product development & innovation has been a key driver to boost export business. We have increased the strength of our product development team and brought in experienced as well as new talented people. This product development team is now led by an Italian Designer. We have introduced host of new fabrics, finishes & concepts in this year. Some of the new products developed are prints, recycle yarn, peach finishes, water repellent finishes, fleece denim etc. We have launched a complete range of Invista dual fx & Lycra beauty fabrics, which has been well accepted by our customers.

In order to reach out to different customers, we have been showcasing our collections at various international exhibitions and trade fairs likeKingpins Show (New York, USA), ColombiaTex, Colombia, Iran Tex (Tehran, Iran) and Denim and Jeans show Bangladesh, Dhaka.

Future Outlook

As per market reports and current trends, denim industry is expected to grow at a very healthy pace in the near future. Understanding the core competencies that the Company possesses, it has plans to expand its capacities in denim and garment facilities in the immediate future. This shall be complimented by strategic investments in R&D, enabling it to understand the latest fast fashion trends in collaboration with leading designers from Europe and Asia. This would help the Company climb-up the value-chain, ensure a better customer experience and strengthen its market leadership. The Company intends to further penetrate into niche products segment and increase its exports. With higher operating efficiencies and further up gradation of Amanagallu and Ramtek units, the company looks forward to another stellar performance in the coming fiscal.

Directors

Smt. Padmini Agarwal (DIN:01652449) will retire at the ensuing Annual General Meeting and being eligible, offers herself for reappointment.

During the year, Sri A. Mallikarjun (DIN : 02599532) has been appointed as Nominee Director by IDBI in the place of Smt. Sharada Sundaram (DIN: 07067040). The Board wishes to place on record its appreciation for the valuable services rendered by Smt. Sharada Sundaram.

The tenure of Sri H.L.Ralhan (DIN : 00018362) as Director & Chief Executive (Denim Division) comes to an end on 29th, January 2016 and has been reappointed as Director & Chief Executive (Denim Division) liable to retire by rotation for a period of five years by the Board, subject to the approval of the members in the ensuing General Meeting

In accordance with the provisions of the Companies Act, 2013 and SEBI guidelines, Sri Dhruv Vijai Singh (DIN : 07180749) and Dr.G.Vivekanand (DIN: 00011684) who retire by rotation in this meeting are being appointed as Independent Directors for a term of 5 years, who shall not be liable to retire by rotation under the provisions of the Companies Act, 2013 and the relevant rules there under.

The above Independent Directors have submitted the Declaration of Independence, as required pursuant to section 149 (7) of the Companies Act, 2013, stating that they meet the criteria of independence as provided in sub-section (6). The profile of the Independent Directors forms part of the Corporate Governance Report.

Further details about the above Directors are given in the Corporate Governance Report as well as in the Notice of the ensuing Annual General Meeting being sent to the shareholders along with the Annual Report.

Evaluation Of The Board''s Performance

In compliance with the Companies Act, 2013, and as per the latest Listing Regulations, the performance evaluation of the Board and of its Committees was carried out during the year under review. More details on the same are given in the Corporate Governance Report.

Familiarization Program For Independent Directors

The Company has formulated a familiarization program for the Independent Directors to provide insights into the Company to enable the Independent Directors to understand its business in depth and contribute significantly to the Company. The details of such program are available in the Company''s website www. suryalakshmi.com

Nomination & Remuneration Policy

The company follows a policy on remuneration of Directors and Senior Management Employees. The policy is approved by the Nomination & Remuneration Committee and the Board. More details on the same is given in the Corporate Governance Report.

Directors'' Responsibility Statement

Your Directors state that:

(a) in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

(b) the directors had 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 of the profit and loss of the Company for that period;

(c) the Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(d) the Directors had prepared the annual accounts on a going concern basis; and

(e) the Directors had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and are operating effectively.

(f) 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.

Disclosures Under The Companies Act, 2013

i) Extract of Annual Return:

The details forming part of the extract of the annual return is enclosed in Annexure - 1.

ii) Number of Board Meetings:

The Board of Directors met four times during the year 20152016. The details of the board meetings and the attendance of the Directors are provided in the Corporate Governance Report.

iii) Changes in Share Capital:

There is no change in the share capital.

iv) Composition of Audit Committee:

The Board has constituted the Audit Committee which comprises of Sri R.Surender Reddy, as the Chairman and Sri R.S.Agarwal, Sri Navrang Lal Tibrewal and Sri A.Mallikarjun as the members. More details on the committee are given in the Corporate Governance Report.

v) Related Party Transactions:

All the related party transactions are entered on arm''s length basis and are in compliance with the applicable provisions of the Act and the Listing Regulations.

There are no materially significant related party transactions made by the company with Promoters, Directors or Key Managerial Personnel etc. which may have potential conflict with the interest of the company at large. Thus disclosure in Form AOC-2 is not required.

All Related Party Transactions are presented to the Audit Committee and the Board. Omnibus approval is obtained for the transactions which are foreseeable and repetitive in nature. A statement of all related party transactions is presented before the Audit Committee on a quarterly basis, specifying the nature, value and terms and conditions of the transactions. The Related Party Transactions Policy as approved by the Board is uploaded on the company''s website at the web link:

http://www.suryalakshmi.com/policyonrelated.html

vi) No Loans/Guarantees / Investments under Section 186 of the Companies Act, 2013 have been made during the year.

Corporate Governance

As per the latest Listing Regulations on Corporate Governance, Management Discussion and Analysis Report forms part of the Annual Report (Annexure - 6).

The company has complied with the corporate governance requirements under the Companies Act, 2013 and as stipulated under the Listing Regulations. A separate section on corporate governance under the Listing Regulations, along with a certificate from the auditors confirming the compliance, is annexed and forms part of the Annual Report (Annexure - 2).

Corporate Social Responsibility Policy

At Suryalakshmi a major concern has been, the sincere effort by the Company to recognize the role played by the Society at large, the environment and its human resources in its sustainability and growth and to strive to discharge its social responsility as a corporate citizen. To this end, the Company has always tried to strike a fine balance of economic, environmental and social commitments.

The sustainable stewardship mantra is not limited to philanthropy, but encompasses holistic community development and other initiatives to strengthen business sustainability.

The core areas for Suryalakshmi''s Corporate Social Responsibility (CSR) Programmes for this year have been health care, environment and education. Details of the projects / activities implemented by the Company are furnished in a separate Annexure-3 to this report.

The Company constituted a Committee of CSR consisting of Sri L.N.Agarwal, Sri Paritosh K. Agarwal and Sri R.Surender Reddy, with Sri L.N.Agarwal as Chairman.

The Company could not spend the planned amounts on the CSR activities in view of certain pending approvals from the local authorities. Steps are being taken to obtain the same at the earliest and complete the commitments.

Risk Management

The Company has instituted a proper mechanism for identifying and establishing controls to effectively manage different kinds of risks viz., Trend Related Risks, Raw Material Risks, Brand

Technology Risks, Operational Quality Risks, Quality Risks, Human Resources Risks, Regulatory Risks and Financial Risks.

A Committee headed by Sri Paritosh Agarwal, Managing Director periodically reviews the risks and take steps to mitigate identified risks.

Whistle Blower Policy

The Company has in place a Whistle Blower policy for vigil mechanism for Directors and employees to report to the management about unethical behavior, fraud, violation of Company''s Code of Conduct. None of the Personnel has been denied access to the audit committee.

Declaration About Compliance With The Code Of Conduct By Members Of The Board And Sr. Management Personnel.

The Company has complied with the requirements about Code of Conduct for Board members and Sr. Management Personnel.

Disclosure Under The Sexual Harassment Of Woman At Workplace (Prevention, Prohibition And Redressal) Act, 2013.

The Company has in place an Anti Sexual Harrasment Policy in line with the requirements of the Sexual Harrassment of Woman at Workplace (Prevention, Prohibition and Redressal) Act, 2013. Internal Complaints Committee has been set up to redress complaints received regarding sexual harassment. All employees (permanent, contractual, temporary and trained) are covered under the Policy.

The following is a summary of sexual harassment complaints received and disposed off during each Calender year:

a) No. of Complaints received - NIL

b) No. of Complaints disposed off - NIL

Auditors

The Auditors M/s. Brahmayya & Co, retire at the ensuing Annual General Meeting and are eligible for reappointment.

I. Auditors And Their Report:-

M/s.Brahmayya & Co., Chartered Accountants (ICAI Firm Registration No.000513S), the Statutory Auditors of the company, will hold office until the conclusion of the ensuing Annual General Meeting and are eligible for re-appointment as per Section 139 of the Companies Act, 2013.

M/s.Brahmayya & Co., have expressed their willingness to get reappointed as the Statutory Auditors of the company and furnished the certificate of their eligibility and consent for the same under Section 141 of the Companies Act, 2013, and the rules framed there under. In terms of the Listing Regulations, the Auditors have confirmed, that they hold a valid certificate issued by the Peer Review Board of the ICAI. The Board, based on the recommendation of the Audit Committee, recommends the appointment of M/s. Brahmayya & Company as the Statutory Auditors of the company.

The Auditors'' Report to the Shareholders for the year under review does not contain any qualification.

II. Cost Auditor And Cost Audit Report

Pursuant to section 148 of the Companies Act 2013, the Board of Directors on the recommendation of the Audit Committee appointed Ms.Aruna Prasad, Cost Accountant (M.No. 11816) as the Cost Auditors of the Company for the FY 16-17 and has recommended her remuneration to the Shareholders for their ratification at the ensuing Annual General Meeting. Ms.Aruna Prasad has confirmed that her appointment is within the prescribed limits, and also certified that they are free from any disqualifications.

III. Secretarial Auditor And Secretarial Audit Report

The Board had appointed Mr.K.V.Chalama Reddy, Company Secretary (M.No. 13951), in Whole-time Practice, to carry out Secretarial Audit under the provisions of Section 204 of the Companies Act, 2013 for the financial year 2016-17. The report of the Secretarial Auditor is annexed to this report as Annexure -4.

Conservation Of Energy, Technology Absorption, Foreign Exchange Earnings And Outgo

Information on conservation of energy, technology absorption, foreign exchange earnings and out go, is required to be given pursuant to provision of Section 134 of the Companies Act, 2013 read with the Companies (Accounts) Rules, 2014 is annexed here to marked Annexure 5 and forms part of this report.

Deposits

The Company has not accepted any deposits from the public during the year under review.

Employees

Periodic Training programmes for developing a skilled workforce, personality development programmes, yoga camps, etc., encouragement of employee participation in district / state level sports events are regularly undertaken.

An integrated woman focused program trains unskilled women to undertake skilled jobs at its units.

The information required pursuant to Section 197 read with Rule, 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of the employees of the Company, will be provided upon request. In terms of Section 136 of the Act, the Report and Accounts are being sent to the members and others entitled thereto, excluding the information on employees'' particulars which is available for inspection by the members at the Registered Office of the Company during business hours on working days of the Company upto the date of the ensuing Annual General Meeting. If any member is interested in obtaining a copy thereof, such member may write to the Company Secretary in this regard.

Acknowledgements

The Board of Directors are pleased to place on record their appreciation of the cooperation and support extended by All India Financial Institutions, Banks and various State and Central Government Agencies.

The Board also wishes to place on record its appreciation of the valuable services rendered by the employees of the Company.

for and on behalf of the Board

Date : 25th May, 2016 L.N.Agarwal

Place : Secunderabad Chairman & Managing Director


Mar 31, 2015

The Directors are pleased to present their Fifty Second Annual Report on the business and operations of the Company and the financial results for the year ended 31st March, 2015.

Financial results

(Rs. In Lakhs)

2014- 2015 2013-2014

Gross Profit before Interest & Depreciation 8389.98 8077.42

Less : Interest 3367.15 3694.16

: Depreciation & Amortisation expense 3179.59 6546.74 3209.13 6903.29

Profit/(Loss) before prior year Adjustment 1843.24 1174.13

Exceptional Items * (12.07) 515.51

Profit before tax for the year 1831.17 1689.64

LESS : Provision for Income Tax for the year 382.00 343.00

LESS : Deferred tax liability 232.36 175.44

Profit / Loss after tax 1216.81 1171.20

ADD : Profit brought forward from last year 8595.67 8019.98

LESS : Loss of Suryakiran International Limited - 279.93 pursuant to Scheme of amalgamation.

LESS : Carrying value of Assets whose useful life 366.77 - achieved

9445.71 8911.25

Dividend on Preference Share Capital 40.96 10.00

Dividend on Equity Share Capital 200.07 174.27

Corporate Dividend Tax 49.06 31.31

Transferred to General Reserve 100.00 100.00

Profit transferred to Balance Sheet 9055.62 8595.67

9445.71 8911.25

* Exceptional item of the current year, includes Sales Tax subsidy for the previous year Rs. 121.72 Lacs & Workers Agreement Arrears (Expenses) of Rs. (133.79) lacs.

Operations

The net sales for the year ended 31st March, 2015 at Rs. 705 Crores is nearly same as that in the last year. However, the profit before tax at Rs. 18.31 Crores shows a small increase of 8% over that of the last year, while net profit after tax increased by 3.9%.

The operations of our Denim division at Ramtek were affected for nearly two months on account of strike by the workers. This resulted in a loss of sales of and resultant profits. Agreements on wages have since been entered into with the workers and the denim division resumed normal operations from 2nd week of March, 2015. The overall turnover of the Company and the profit would have been significantly higher but for this strike.

Production in Spinning, Denim and Garment Divisions matched last year levels. During the year, the Polyster Yarn segment's performance was subdued on account of fall in international crude prices. Garments Division, however, did better.

The profitability of power plant was adversely affected for some months by the high cross subsidy charged by MSDCL for permitting open access to third party sales which resulted in unworkable rates for such sales. Coal at base price was available only from the second half of the year.. As a result during the year the profitability remained subdued from power plant. However, now the situation has improved significantly both in terms of availability of coal linkage at the base price and also the improved open access for third party sales. There will be further improvement with the commissioning of Amravati Unit for which the power will be supplied captively by the Company's own power plant at Ramtek.

Dividend

The Directors are pleased to recommend a Dividend of 12% i.e. Rs. 1.20 per share (previous year Rs. 1.20 per share), keeping in mind, the heavy repayments during the year 2015 - 16 and also the need to conserve resources for the ongoing expansions.

Capital Expenditure

During the year under review the Company incurred capital expenditure of Rs. 24.83 Crores.

Exports

The Exports at Rs. 82.94 crores is marginally higher than Rs. 80.64 Crores last year.

The international textile markets continue to be under stress. The major retail markets like USA & Europe are still reeling under the effects of recession. Fortunately, the cotton & oil prices have remained steady & this was a big relief to the textile industry.

Your Company could weather these international market conditions by a two pronged strategy of consolidation of the existing business & widening the customer base by upgrading the product mix.

The Company increased its exposure to key clients - Wrangler, Lee, JC Penney, UFO etc., in US & Canada markets.

In the Company's endeavour to upgrade the product mix, it has its own designer based in Italy handling the product development activity. The Company has introduced an array of unique shades & interesting performance oriented new fabrics like, Cool Max, Dual Core, Bamboo, Tencel Rayon Viscose etc; which has been well received by the markets. In addition our new dobby design has been a great success with the international customers.

Last year, we also ventured into new markets like, Korea, South Africa (Madagascar, Durban, Mauritius, and Lesotho) South America (Peru, Colombia, and Chile), and Turkey etc.

As part of these exercises, we have participated in important exhibitions like, Munich Fair in Germany, Bangladesh EXPO & Colombia Tex. This has given us the required exposures across the globe.

Due to the subdued market conditions & fall in cotton prices, there was an enormous pressure to reduce the prices. But due to the above strategies, we were able to balance our prices & volumes at reasonably good level.

New Spinning Division - Amravati

The erection work on the new Spinning Unit is progressing well and is expected to be completed by July/August, 2015. The Commercial production is expected to be commenced from 1st October, 2015.

Future Outlook

The Company's efforts in development of new products and strengthening ties with high end buyers who have added the Company as a preferred supplier have started yielding results.

The company is excited with its new state of the art spinning plant of 26016 spindles of Rs. 131 crores coming up at Amravati. The new plant is equipped with latest technology which will help company achieve backward integration for its new range of denim fabrics and will also result in significant cost savings by utilisation of the captive power.

The Company has further plans to modernise its operations in Amanagallu and also the Denim Plant at Ramtek. With garment production enhanced to 5000 garments per day and now expected to increase to 16000 garments per day in the near future, the coming years look very good for the Company.

Directors

Sri H L Ralhan (DIN : 00018362) retires by rotation and offers himself for re-appointment.

In accordance with the provisions of the Companies Act, 2013 and SEBI guidelines, Sri R.S.Agarwal (DIN : 00012594) and Sri Navrang Lal Tibrewal (DIN: 00030151) who retire by rotation in this meeting are being appointed as Independent Directors for a term of 5 years, who shall not be liable to retire by rotation under the provisions of the Companies Act, 2013 and the relevant rules thereunder.

The above Independent Directors have submitted the Declaration of Independence, as required pursuant to section 149 (7) of the Companies Act, 2013, stating that they meet the criteria of independence as provided in sub-section (6). The profile of the Independent Directors forms part of the Corporate Governance Report.

During the year, Smt. Sharada Sundaram (DIN : 7067040) has been appointed as Nominee Director by IDBI in the place Sri K.N.Lohit (DIN: 06504417). The Board wishes to place on record its appreciation for the valuable services rendered by Mr. K.N.Lohit.

The tenure of Sri Paritosh Agarwal (DIN : 00008738) as Managing Director comes to an end on 20/06/2015 and has been reappointed as Managing Director for a period of five years by the Board, subject to the approval of the members in the ensuing General Meeting

DR. VIVEKANAND & SRI DHRUV VIJAI SINGH

Dr. Vivekanand (DIN:00011684) and Mr. Dhruv Vijai Singh (DIN:07180749) who were appointed as Additional Directors in May, 2015, retire at the ensuing Annual General Meeting. It is proposed to appoint them as Directors liable to retire by rotation in the ensuing Annual General Meeting.

Further details about the above directors are given in the Corporate Governance Report as well as in the Notice of the ensuing Annual General Meeting being sent to the shareholders along with the Annual Report.

Evaluation of the Board's Performance

In compliance with the Companies Act, 2013, and Clause 49 of the Listing Agreement, the performance evaluation of the Board and of its Committees was carried out during the year under review. More details on the same is given in the Corporate Governance Report.

Familiarisation Program for Independent Directors

The Company has formulated a familiarisation program for the Independent Directors to provide insights into the Company to enable the Independent Directors to understand its business in depth and contribute significantly to the Company. The details of such program are available in the Company's website www. suryalakshmi.com

Nomination & Remuneration Policy

The company follows a policy on remuneration of Directors and Senior Management Employees. The policy is approved by the Nomination & Remuneration Committee and the Board. More details on the same is given in the Corporate Governance Report.

Directors' Responsibility Statement

Your Directors state that:

(a) in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

(b) the directors had 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 at the end of the financial year and of the profit and loss of the Company for the period;

(c) the Directors had taken proper and sufficient care for the maintenance of 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;

(d) the Directors had prepared the annual accounts on a going concern basis; and

(e) 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.

(f) 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.

Disclosures Under The Companies Act, 2013

i) Extract of Annual Return:

The details forming part of the extract of the annual return is enclosed in Annexure - I.

ii) Number of Board Meetings:

The Board of Directors met 6 (six) times during the year 2014-2015. The details of the board meetings and the attendance of the Directors are provided in the Corporate Governance Report.

iii) Changes in Share Capital:

During the year under review, your company made a Preferential Issue of 21,50,000 equity shares of the face value of Rs.10/- each to part finance the 26016 spindle spinning unit at Amravati, Maharashtra. Consequently the equity share capital has increased from Rs.14,52,22,900/- divided into 1,45,22,290 equity shares of 10/- each to Rs. 16,67,22,900/- divided into 1,66,72,290 equity shares of 10/- each. A Preferential Issue of 5,00,000 10% Cumulative Redeemable Preference Shares of Rs. 100/- each were also issued to part finance the new Spinning Unit. Consequently the preferential capital has increased from Rs. 2 Crores to Rs. 7 Crores.

iv) Composition of Audit Committee:

The Board has constituted the Audit Committee which comprises of Sri R.Surender Reddy, as the Chairman and Sri R.S.Agarwal, Sri Navrang Lal Tibrewal and Smt. Sharada Sundaram as the members. More details on the committee are given in the Corporate Governance Report.

v) Related Party Transactions:

All the related party transactions are entered on arm's length basis and are in compliance with the applicable provisions of the Act and the Listing Agreement.

There are no materially significant related party transactions made by the company with Promoters, Directors or Key Managerial Personnel etc. which may have potential conflict with the interest of the company at large. Thus disclosure in Form AOC-2 is not required.

All Related Party Transactions are presented to the Audit Committee and the Board. Omnibus approval is obtained for the transactions which are foreseeable and repetitive in nature. A statement of all related party transactions is presented before the Audit Committee on a quarterly basis, specifying the nature, value and terms and conditions of the transactions. The Related Party Transactions Policy as approved by the Board is uploaded on the company's website at the web link:

http://www.suryalakshmi.com/policyonrelated.html

vi) No Loans/Guarantees / Investments under Section 186 of the Companies Act, 2013 have been made during the year.

Corporate Governance

As per the revised Clause 49 of the Listing Agreement on Corporate Governance, Management Discussion and Analysis Report forms part of the Annual Report (Annexure - 6). The company has complied with the corporate governance requirements under the Companies Act, 2013, and as stipulated under the listing agreement with the stock exchanges. A separate section on corporate governance under the Listing Agreement, along with a certificate from the auditors confirming the compliance, is annexed and forms part of the Annual Report (Annexure - 2).

Corporate Social Responsibility Policy

At Suryalakshmi a major concern has been, the sincere effort by the Company to recognise the role played by the Society at large, the environment and its human resources in its sustainability and growth and to strive to discharge its social responsility as a corporate citizen. To this end, the Company has always tried to strike a fine balance of economic, environmental and social commitments.

The sustainable stewardship mantra is not limited to philanthropy, but encompasses holistic community development and other initiatives to strengthen business sustainability.

The core areas for Suryalakshmi's Corporate Social Responsibility (CSR) Programmes for this year have been health care, environment and education. Details of the projects / activities implemented by the Company are furnished in a separate Annexure -3 to this report.

The Company constituted a Committee of CSR consisting of Sri L.N.Agarwal, Sri Paritosh K. Agarwal and Sri R.Surender Reddy, with Sri L.N.Agarwal as Chairman.

The Company could not spend the planned amounts on the CSR activities in view of certain pending approvals from the local authorities. Steps are being taken to obtain the same at the earliest and complete the commitments.

Risk Management Policy

The Company has instituted a proper mechanism for identifying and establishing controls to effectively manage different kinds of risks viz., Trend Related Risks, Raw Material Risks, Brand Technology Risks, Operational Quality Risks, Quality Risks, Human Resources Risks, Regulatory Risks and Financial Risks. A Committee headed by Sri Paritosh Agarwal, Managing Director periodically reviews the risks and take steps to mitigate identified risks.

Whistle Blower Policy

The Company has in place a Whistle Blower policy for vigil mechanism for Directors and employees to report to the management about unethical behavior, fraud, violation of Company's Code of Conduct. None of the Personnel has been denied access to the audit committee.

Declaration about Compliance with the Code of Conduct by Members of the Board and Sr. Management Personnel.

The Company has complied with the requirements about Code of Conduct for Board members and Sr. Management Personnel.

Disclosure under the sexual harassment of woman at workplace (prevention, prohibition and redressal) act, 2013.

The Company has in place an Anti Sexual Harrasment Policy in line with the requirements of the Sexual Harrassment of Woman at Workplace (Prevention, Prohibition and Redressal) Act, 2013. Internal Complaints Committee has been set up to redress complaints received regarding sexual harassment. All employees (permanent, contractual, temporary and trained) are covered under the Policy.

The following is a summary of sexual harassment complaints received and disposed off during each Calender year:

a) No. of Complaints received - NIL

b) No. of Complaints disposed off - NIL

Auditors

The Auditors M/s. Brahmayya & Co, retire at the ensuing Annual General Meeting and are eligible for reappointment.

I. Auditors and their Report:-

M/s. Brahmayya & Co., Chartered Accountants (ICAI Firm Registration No. 000513S), the Statutory Auditors of the company, will hold office until the conclusion of the ensuing Annual General Meeting and are eligible for re- appointment as per Section 139 of the Companies Act, 2013.

M/s.Brahmayya & Co., have expressed their willingness to get re-appointed as the Statutory Auditors of the company and furnished the certificate of their eligibility and consent for the re-appointment under Section 141 of the Companies Act, 2013, and the rules framed thereunder. In terms of the Listing Agreement, the Auditors have confirmed that they hold a valid certificate issued by the Peer Review Board of the ICAI. The Board, based on the recommendation of the Audit Committee, recommends the appointment of M/s. Brahmayya & Company as the Statutory Auditors of the company.

The Auditors' Report to the Shareholders for the year under review does not contain any qualification.

II. Cost Auditor and Cost Audit Report

Pursuant to section 148 of the Companies Act 2013, the Board of Directors on the recommendation of the Audit Committee appointed Ms. Aruna Prasad, Cost Accountant, as the Cost Auditors of the company for the Year 2015-16 and has recommended her remuneration to the

Shareholders for their ratification at the ensuing Annual General Meeting. Ms. Aruna Prasad has confirmed that her appointment is within the prescribed limits and also certified that she is free from any disqualifications.

III. Secretarial Auditor and Secretarial Audit Report

The Board had appointed Mr.K.V. Chalama Reddy, Company Secretary in Whole-time Practice, to carry out Secretarial Audit under the provisions of Section 204 of the Companies Act, 2013 for the financial year 2015-16. The report of the Secretarial Auditor is annexed to this report as Annexure - 4. With respect to the observation made in the Secretarial Audit Report regarding the inadequate number of Independent Directors, due compliance in Board composition was achieved in May, 2015 and the delay was on account of non availability of suitable persons for the post.

Conservation of Energy, Technology Absorption, Foreign Exchange Earnings And Outgo

Information on conservation of energy, technology absorption, foreign exchange earnings and out go, is required to be given pursuant to provision of Section 134 of the Companies Act, 2013 read with the Companies (Accounts) Rules, 2014 is annexed here to marked Annexure - 5 and forms part of this report.

Deposits

The Company has not accepted any deposits from the public during the year under review.

Employees

Periodic Training programmes for developing a skilled workforce, personality development programmes, yoga camps, etc., encouragement of employee participation in district / state level sports events are regularly undertaken.

An integrated woman focused program trains unskilled women to undertake skilled jobs at its units.

The information required pursuant to Section 197 of Companies Act, 2013 read with Rule, 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of the employees of the Company, will be provided upon request. In terms of Section 136 of the Act, the Report and Accounts are being sent to the members and others entitled thereto, excluding the information on employees' particulars which is available for inspection by the members at the Registered Office of the Company during business hours on working days of the Company upto the date of the ensuing Annual General Meeting. If any member is interested in obtaining a copy thereof, such member may write to the Company Secretary in this regard.

Acknowledgements

The Board of Directors are pleased to place on record their appreciation of the cooperation and support extended by All India Financial Institutions, Banks and various State and Central Government Agencies.

The Board also wishes to place on record its appreciation of the valuable services rendered by the employees of the Company.

for and on behalf of the Board

Date : 29th May, 2015 L.N. AGARWAL Place : Secunderabad Chairman & Managing Director


Mar 31, 2013

To The Members

The directors are pleased to present their Fiftieth annual report on the business and operations of the Company and the financial results for the year ended 31st March, 2013.

FINANCIAL RESULTS (Rs. In Lakh)

2012-2013 2011-2012

Gross Profit before Interest & depreciation 10783.53 9248.27

less : Interest 3348.13 2980.96

: depreciation & amortisation expense 2909.71 6257.84

2456.51 5437.47

Profit/(loss) before prior year adjustment 4525.69 3810.80

Exceptional Items * 281.92 -

Profit before tax for the year 4243.77 3810.80

lESS : Provision for Income Tax for the year 850.00 850.00

lESS : deferred tax liability 357.12 130.25

Profit / loss after tax 3036.65 2830.55

add : Profit brought forward from last year 5633.14 3525.11

8669.79 6355.66

dividend on Preference Share Capital - 0.49

dividend on Equity Share Capital 290.45 363.06

Corporate dividend Tax 49.36 58.97

Transferred to General reserve 310.00 300.00

Profit transferred to Balance Sheet 8019.98 5633.14

8669.79 6355.66



- Exceptional item includes provision for FSa charges for the year 2010-11; 2011-12 and Sales Tax subsidy received for the year 2007 - 08 to 2009 – 10.

OPERATIONS

The net sales for the year at Rs.705.44 crore shows a modest increase of 5.5% over the previous year. The profit before tax at Rs.42.44 crore has registered an increase of 11.36% over the previous year. The production in spinning and denim divisions has shown marginal increase over the previous year. The average yarn realisation in the domestic market at

Rs.153.22 per kg is marginally higher at 7%, while PV yarn has shown a higher increase of 10%. In the denim division both the domestic and the export realization have been marginally lower compared to the previous year. While the domestic market has seen a decent increase of 18% in volume, exports have been significantly lower by about 33%.

The Cotton rates have been lower in the year while PSF and VSF have been more or less steady in the spinning division. In the denim division the cotton has been cheaper by around 15%. The 25 MW Captive Power Plant has been commissioned and the denim division is drawing power from the Power Plant and the Company has entered into an agreement with MSEdCl for supply of power for three months till July 2013. The cost of power in the spinning division continues to be high on account of purchase from the 3rd parties and the production has also been affected due to power cuts. The net profit after tax at Rs.30.36 crore would have been much higher but for the high cost and also shortage of power in a.P.

DIVIDEND

The directors are pleased to recommend a dividend of 20% i.e. Rs.2.00 per share (previous year Rs.2.50 per share). The directors'' have, keeping in mind, the heavy repayments during the year 2013 – 14 and also the need to conserve resources for future expansion lined up by the Company recommended the dividend of Rs.2.00 per share.

CAPITAL EXPENDITURE

during the year under review the Company incurred capital expenditure of Rs.45.91 crore.

POWER PLANT

The Company has at present entered into an agreement for three months for supply of power to MSEdCl. The current year''s operations of the power plant has naturally resulted in some additional cost which is expected to be streamlined shortly. With the conclusion of the agreements for regular supply of power, and utilizing the corridor for supplying the Captive Power to amanagallu unit and commencement of coal supplies from Western Coal Fields, the future for the power plant is expected to be quite bright.

EXPORTS

The current year''s exports at Rs.81.80 crore is lower than the previous year on account of the economic slow down in European and american markets.

MERGER

The Company proposes to merge the Subsidiary company Suryakiran International limited with itself to effect a complete forward integration of denim into the garmenting facility and to reap several administrative advantages like simpler reporting, simplified compliance requirements etc. The Company is in the process of taking the necessary steps in this direction.

FUTURE OUTLOOK

The Textile Industry has been adversely affected by the serious economic slow down in the global markets. The industry is now on a gradual recovery phase. The uncertainity in the demand for garments still continues while there is excess supply in the denim segment. The Company has not been however very seriously affected as it is operating in the high end segment. The Company hopes to significantly increase its exports and brand business with some strong and aggressive products and also add new markets to increase volumes.

DIRECTORS

during the year Sri V S V rao, has been withdrawn by IFCI ltd as its nominee director. Sri r.S. Vidyasagar has been withdrawn by IdBI Bank ltd as its nominee director and Sri k neel lohit has been nominated as its nominee in his place.

dr. a nageswara rao and Sri r S agarwal will retire at the ensuing annual General Meeting and being eligible, offer themselves for reappointment.

CORPORATE GOVERNANCE

as per the revised Clause 49 of the listing agreement on Corporate Governance, Management discussion and analysis report forms part of the annual report. Further, a separate report on the Corporate Governance together with the Certificate from the auditors of the Company regarding compliance of the Corporate Governance also forms part of the annual report.

DIRECTORS'' RESPONSIBILITY STATEMENT

The Board of directors of the Company confirms :

1. that in the preparation of the annual accounts, the applicable accounting standards have been followed and there has been no material departure;

2. that the selected accounting policies were applied consistently and the directors 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, 2013 and of the profit of the Company for the year ended on that date.

3. that proper and sufficient care has been taken 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.

4. that the annual accounts have been prepared on a going concern basis.

AUDITORS

The auditors M/s. Brahmayya & Co, retire at the ensuing annual General Meeting and are eligible for reappointment.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO

The details as required under the Companies (disclosure of

Particulars in the report of Board of directors) rules, 1988 are given at annexure - I.

DEPOSITS

There are no overdue deposits as on March 31, 2013

EMPLOYEES

Periodic Training programmes for developing a skilled workforce, personality development programmes, yoga camps, etc., encouragement of employee participation in district / state level sports events are regularly undertaken. an integrated woman focused program trains unskilled women to undertake skilled jobs at its units.

The information required under Section 217 (2a) of the Companies act, 1956 read with the Companies (Particulars of Employees) rules, 1975 is given in annexure – II.

ACKNOWLEDGEMENTS

The Board of directors are pleased to place on record their appreciation of the cooperation and support extended by all India Financial Institutions, Banks and various State and Central Government agencies.

The Board also wishes to place on record its appreciation of the valuable services rendered by the employees of the Company.



By Order of the Board

date : 16.05.2013 L.N.AGARWAL

Place : Secunderabad Chairman & Managing Director


Mar 31, 2012

The Directors are pleased to present their Forty Ninth Annual Report on the business and operations of the Company and the financial results for the year ended 31st March 2012.

Financial results (Rs. in lacs)

2011-2012 2010-2011

Gross profit before finance costs, depreciation, amortisation expense & tax 9,248.27 9,706.56

Less : Finance costs 2,980.96 2,326.41

: Depreciation and amortisation expense 2,456.51 5,437.47 2,292.45 4,618.86

Profit before prior year adjustment 3,810.80 5,087.70

Prior year adjustment (Net) - 111.93

Profit before tax for the year 3,810.80 4,975.77

LESS : Provision for income tax for the year 850.00 1,025.00

LESS : Deferred tax liability 130.25 470.16

Profit after tax 2,830.55 3,480.61

ADD : Profit brought forward from last year 3,525.11 955.64

6.355.66 4,436.25

Interim dividend on equity share capital - 133.62

Dividend on Preference share capital 0.49 0.67

Dividend on Equity share capital 363.06 200.43

Corporate dividend tax 58.97 54.82

Transferred to general reserve 300.00 400.00

Preference capital redemption reserve - 121.60

Profit transferred to balance sheet 5,633.14 3,525.11

6.355.66 4,436.25

NOTE: Figures are regrouped based on Revised Schedule VI requirements.

Operations

The gross revenue of the Company at Rs. 678.43 crores for the year ended 31st March 2012 has registered an increase of 10.73% over the previous year. However, the profit after tax (PAT) at Rs. 28.31 crores shows a decline of around 18.70%. There is overall increase in production with the yarn production showing a growth of around 15% though denim has shown a marginal decline of 2%. The yarn production would have been higher but for the frequent power cuts and shutdowns in this spinning division at Amanagallu. The production in denim is slightly low on account of the loss of production time during installation of new looms. The profit before finance costs, depreciation, amortisation & tax at Rs. 92.48 crores is down by 4.72% compared with the previous year. The profits are lower mainly on account of reduced margins due to the increased raw material prices. The cost of cotton in the spinning division has been higher by around 23% and in denim division by around 19%. The cost of PSF has also been high at around 16%. The year has also seen a highly volatile situation in cotton prices inflicting severe losses on the industry. The sales realisation has however been marginally higher at around 4% in the spinning division and the export realisation of yarn has in fact been lower due to restrictions in yarn exports during part of the year. The sales realisation in denim has been better than last year, although during the year itself the average realisation declined towards the end of the year. In denim exports, though the average realisation is higher, volume declined steeply on account of intense competition from other countries. The power cost was higher during the year together with power cuts in the spinning division leading to higher cost of production. The industry was also badly affected by the steep increases in the cost of finance during the year.

However, you will be pleased to know that your Company's performance is better than the industry average.

Dividend

The Directors are pleased to recommend a dividend of 25% (Rs.2.50 per share) on the equity share capital of the Company. (Previous year Rs.2.50, including interim dividend Rs.1 per share).

Capital expenditure

During the year under review the Company incurred capital expenditure of Rs.116.57 crores.

Exports

The exports during the year was Rs.111.80 crores, declining by 22% from the previous year. The export of yarn registered an increase of 23% though denim exports declined by around 15%. The exports scenario was affected by a variety of factors like recession in the foreign markets, the Eurozone crisis, the intervention by the government in imposing restrictions on yarn export, intense competition from other countries, and a beneficial impact due the weakening of the rupee. However, the Company forayed into Latin American markets and began selling fashion denims thus paving the way for bigger business in the future. New brands were added to the Company's portfolio in the American markets, while strengthening relations with the existing ones. The Company is confident of registering a handsome increase both in volume and value terms during the current year on account of the new product development and its presence in the high-end denim market. Also, the Company engaged reputed Italian designers to enhance its high fashion collection.

Further issue of Capital

The Company issued 11,60,000 equity shares at a price of Rs.135 per share to the promoters by way of preferential allotment of the shares pursuant to the approvals granted by the Company in the General Meeting. The funds received against the issue of these shares of Rs.15.66 crores were utilised to set up a 25 MW captive power plant in the denim division at Ramtek.

During the year the Company has redeemed 2,71,600 Cumulative Redeemable Preference Shares issued to IFCI.

Future outlook

The government is taking various steps to stabilise the industry including measures to increase the export of textile and clothing as India's share of exports to the world markets is far behind that of the other countries.

The Company is confident of doing well despite the unfavourable industry scenario, in view of the brightening situation in the denim market and development of new products in the high-end segment of the market. The Company is planning to set up a 30,000 spindle unit in Ramtek at a cost of Rs. 100 crores to further improve the profitability of the denim unit and also avail of the capital incentives and interest subsidies in addition to TUFs benefit in Maharashtra. The unit is expected to be commissioned during the current year. The Company's 25 MW captive power plant in Ramtek is nearing completion and is expected to be commissioned soon.

Directors

During the year, Mr. B. Rama Rao has been withdrawn and Mr. R. S. Vidyasagar has been nominated by IDBI as its Nominee Director.

Mr. R. Surender Reddy and Mr. N. L. Tibrewal will retire at the ensuing Annual General Meeting and being eligible, offer themselves for reappointment.

Corporate Governance

As per the revised Clause 49 of the Listing Agreement on Corporate Governance, Management Discussion and Analysis Report forms part of the annual report. Further, a separate report on Corporate Governance together with the Certificate from the Auditors of the Company regarding compliance of Corporate Governance also forms part of the Annual Report.

Directors' Responsibility Statement

The Board of Directors of the Company confirms:

1. That in the preparation of the annual accounts, the applicable accounting standards have been followed and there has been no material departure;

2. That the selected accounting policies were applied consistently and the Directors 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 as at 31st March 2012 and of the profit of the Company for the year ended on that date.

3. That proper and sufficient care has been taken 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.

4. That the annual accounts have been prepared on a going concern basis

Subsidiary

In accordance with the general circular issued by the Ministry of Corporate Affairs, Government of India, the Balance Sheet, Profit and Loss Account and other documents of the Subsidiary Company is not being attached with the Balance Sheet of the Company. The Company will make available the Annual Accounts of the subsidiary company and the related detailed information to any member of the Company who may be interested in obtaining the same. The annual accounts of the subsidiary company will also be kept open for inspection at the Registered Office of the Company and that of the respective subsidiary company. The Consolidated Financial Statements presented by the Company include the financial results of its subsidiary company. The information required to be furnished of the subsidiary company is provided elsewhere in the Annual Report.

Auditors

The Auditors M/s. Brahmayya & Co, retire at the ensuing Annual General Meeting and are eligible for reappointment.

Conservation of energy, technology absorption, foreign exchange earnings and outgo

The details as required under the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 are given at Annexure-I.

Deposits

There are no overdue deposits as on 31st March 2012

Employees

Periodic training programmes to develop a skilled workforce are undertaken like personality development programmes, yoga camps. Employee participation in district/state level sports events, among others is also encouraged.

An integrated woman-oriented programme trains women to undertake skilled jobs at its units.

The information required under Section 217 (2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 is given in Annexure - II.

Acknowledgements

The Board of Directors are pleased to place on record their appreciation of the cooperation and support extended by All-India financial institutions, banks and various state and Central government agencies.

The Board also wishes to place on record its appreciation of the valuable services rendered by the employees of the Company.

By order of the Board

Place: Secunderabad L.N. Agarwal

Date: 17th May 2012 Chairman and Managing Director


Mar 31, 2011

The Members

The Directors are pleased to present their Forty Eighth Annual Report on the business and operations of the Company and the financial results for the year ended 31/03/2011.

Financial results (Rs. in lacs)

2010-2011 2009-2010

Gross Profit before interest and depreciation 9,618.53 5,053.00

Less : Interest 2,326.29 2,163.10

: Depreciation 2,204.54 4,530.83 2,070.41 4,233.51

Profit before prior year adjustment 5,087.70 819.49

Prior year adjustment (net) 111.93 100.14

Profit before tax for the year 4,975.77 719.35

Less : Provision for Income Tax for the year 1,025.00 150.00

Less : Deferred tax liability 470.16 134.30

Profit after tax 3,480.61 435.05

Add : Profit brought forward from last year 955.65 777.19

4,436.26 1,212.24

Interim dividend on equity share capital 133.62 –

Dividend on preference share capital 0.67 0.67

Dividend on equity share capital 200.43 133.62

Corporate dividend 54.82 22.30 tax

Transferred to General Reserve 400.00 -

Preference Capital Redemption Reserve 121.60 100.00

Profit transferred to balance sheet 3,525.12 955.65

4,436.26 1,212.24

Operations

The Indian Textile Industry has done well after coming out of the recession. The Company's operations resulted in an improved turn over of Rs.613.25 crores registering a good growth of nearly 47% over the previous year. The profit after tax at Rs.34.81 crores against the Rs.4.35 crores in the previous year reflects the overall improvement in all facets of the business

The good performance is on account of increased production in the Yarn division of around 16% and of around 7% in the Denim division together with a robust demand for the Company's products in domestic and export markets resulting in better realisations. The yarn realisations have been quiet good showing an increase of around 35%. The fabric realisations were also good with an increase of around 30%. The volume growth has also been satisfactory during the year.

The raw material prices especially cotton have gone up by 50%. The cost of inputs for synthetic yarn have also shown a significant increase. The increase in cost could be absorbed on account of favourable condition in industry and the improved production.

Dividend

The Directors are pleased to recommend a final dividend of 15% of Rs.1.50 per share on the equity share capital of the Company; this together with the interim dividend of 10% works out to a total dividend of 25%. This will absorb Rs.3.34 crores.

Capital expenditure

dURING THE YEAR UNDER REVIEW THE cOMPANY INCURRED CAPITAL expenditure of Rs.41.31 crores.

Exports

With the revival from the economic slow down in the major markets abroad, export of textiles products from the country has picked up. The Company has concentrated on high end fashion products and supplies to the International brands, resulting in continuous product development and significant quality improvement. The Company has continued to add new customers and is now focusing exclusively on high value fashion products. The increased business from the existing customers is an indication of the trust the Company enjoys in the market place. All these have resulted in the Company's exports almost doubling to Rs.143 crores from Rs.74 crores in the previous year.

Share warrants

With a view to part finance the ongoing expansion projects, during the year the Company has issued 11,60,000 warrants on preferential basis to the promoters of the Company. The warrants are convertible into equity shares of the Company on or before June 2012. The funds received against the issue of these warrants amounting to Rs.783 lacs has been utilised towards the power project.

Future outlook

The Company has already made good progress in the project for setting up a 25 MW captive thermal power plant at Ramtek. The civil work is in progress and the orders have already been placed for major plant and machinery. The power plant is expected to go on stream during the first half of 2012. Efforts are on to further increase the spinning capacity at Ramtek, so as to reduce the dependence on outside yarn. The Company is also replacing the old Nissan airjet looms by latest airjet looms to further improve productivity and quality.

The Company hopes to consolidate the growth and capitalise on the favourble economic conditions.

Directors

During the year Sri K. Sunil Kumar resigned from the Board of the Company. The Company wishes to place on record its appreciation of the services rendered by Sri K. Sunil Kumar during his tenure.

Dr. A. Nageswara Rao and Sri R. S. Agarwal will retire at the ensuing Annual General Meeting and being eligible, offer themselves for reappointment.

Corporate Governance

As per the revised Clause 49 of the Listing Agreement on Corporate Governance, Management Discussion and Analysis Report forms part of the Annual Report. Further, a separate report on the Corporate Governance together with the Certificate from the Auditors of the Company regarding compliance with the Corporate Governance also forms part of the Annual Report.

Directors' Responsibility Statement

The Board of Directors of the Company confirms:

1. That in the preparation of the annual accounts, the applicable accounting standards have been followed and there has been no material departure;

2. That the selected accounting policies were applied consistently and the Directors 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 31/03/2011 and of the profit of the Company for the year ended on that date.

3. That proper and sufficient care has been taken 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.

4. That the annual accounts have been prepared on a going concern basis.

Subsidiary

In accordance with the general circular issued by the Ministry of Corporate Affairs, Government of India, the Balance Sheet, Profit and Loss Account and other documents of the Subsidiary Company is not being attached with the Balance Sheet of the Company. The Company will make available the Annual Accounts of the subsidiary company and the related detailed information to any member of the Company who may be interested in obtaining the same. The annual accounts of the subsidiary company will also be kept open for inspection at the Registered Office of the Company and that of the respective subsidiary company. The Consolidated Financial Statements presented by the Company include the financial results of its subsidiary company. The information required to be furnished of the subsidiary company is provided elsewhere in the Annual Report.

Auditors

The Auditors M/s. Brahmayya & Co, retire at the ensuing Annual General Meeting and are eligible for reappointment.

Conservation of energy, technology absorption, foreign exchange earnings and outgo

The details as required under the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 are given at Annexure-I.

Deposits

There are no overdue deposits as on 31/03/2011

Employees

Periodic training programmes for developing a skilled workforce, personality development programmes, yoga camps, etc., encouragement of employee participation in district/state level sports events are regularly undertaken.

An integrated woman focused programme trains unskilled women to undertake skilled jobs at its units.

The information required under Section 217 (2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 is given in Annexure – II.

Acknowledgements

The Board of Directors are pleased to place on record their appreciation of the cooperation and support extended by All- India financial institutions, banks and various state and central government agencies.

The Board also wishes to place on record its appreciation of the valuable services rendered by the employees of the Company.

By order of the Board

L.N. Agarwal Chairman and Managing Director

Place : Secunderabad Date : 07/05/2011


Mar 31, 2010

The Directors are pleased to present their forty seventh annual report on the business and operations of the Company and the financial results for the year ended 31st March, 2010.

Financial results (Rs. in lacs)

2009-10 2008-09

Gross profit before interest and depreciation 5,053.00 2,603.18

Less : Interest 2,163.10 2,066.42

: Depreciation 2,070.41 4,233.51 2,013.98 4,080.40

Profit/Loss before prior year adjustment 819.49 (1,477.22)

Prior year adjustment (net) 100.14 75.00

Profit /(Loss)before tax for the year 719.35 (1,552.22)

Less : Provision for income tax

for the year (MAT) 150.00 -

fringe benefit tax - 150.00 12.50 12.50

LESS : Deferred tax liability 134.30 5.23

Profit / Loss after tax 435.05 (1,569.95)

ADD : Profit brought forward from last year 777.19 2,347.92 1,212.24 777.97

Dividend on preference share capital 0.67 0.67

Dividend on equity share capital 133.62 -

Corporate dividend tax 22.30 0.11

Transferred to general reserve - -

Preference capital redemption reserve 100.00 Profit transferred to balance sheet 955.65 777.19

1,212.24 777.97

Operations

The Indian textile industry, which was badly hit by the global economic recession, has started showing signs of recovery during the year. The Companys operations have resulted in a turn over of Rs. 417.84 crores registering a handsome growth of 16% and in a profit after tax of Rs. 4.35 crores against a loss of Rs. 15.70 crores during the previous year.

The production at Denim division has shown a decent growth of 11% over the previous year. The Denim market has continued to be good showing growth over the previous year both in volumes and realisations. The export market has picked up though the realisation has remained stagnant. The rising price of cotton continues to be a source of worry.

The production in yarn division has shown a growth of 10% over the previous year. Yarn realisations has started improving both in domestic and export markets. The demand for yarn in domestic market is good. But the working of the yarn division was frequently affected by power cuts in A.P.

Dividend

The Directors are pleased to recommend a dividend of 10% (Rs. 1.00 per share) on the equity capital of the Company. This will absorb Rs. 1.34 crores.

Capital expenditure

During the year under review the Company has incurred capital expenditure of Rs. 770.64 lacs.

Exports

Exports during the year have grown by 54% to Rs. 73.96 crores. With the recovery of the US markets and improvement in the retail business, exports have picked up from the Country. The Companys efforts in the past in developing business with the leading brands has started yielding results and the share of the Companys business with such brands like C & A, Mango, Mothercare, George, Perry Ellis, VF, Levis, Walmart etc. is on the rise. Organic denim has been successfully introduced in the export market and the volumes are expected to increase. The Company continues its efforts in introducing value added and fancy denims.

Future outlook

The Company proposes to set up a captive 25-MW thermal power plant at its denim division at Ramtek. After meeting the requirement of power in denim division, it is proposed to sell the surplus power for which there is very good demand in the Country now. This is expected to reduce cost of production and significantly improve the profitability of the Company.

The Company also proposes to add another 12,624 spindles at its Amanagallu yarn division which will increase the spindleage to 60,864 and contribute to the profitability. Further additions

to spindleage are also proposed in Ramtek which will reduce dependence on outside purchases and reduce cost of production.

The Company proposes to invest around Rs. 155 crores in the next year in these projects and the turnover is expected to cross Rs. 500 crores.

The Companys efforts at developing business with reputed international brands has already started yielding results and the Company is in the process of firming up contracts for supplies of fancy designs at good rates.

The recovery in the textile industry supported by a pick up in the export demand, the recent government stimulus and the optimism due to expectations of higher growth in the economy are expected to fuel further growth in the industry. The Garment manufacturers are reported to be enjoying a comfortable order book position.

Directors

Pursuant to the Articles of Association of the Company Sri R. Surender Reddy and Sri K. Sunil Kumar will retire at the ensuing Annual General Meeting and being eligible, offer themselves for reappointment.

Corporate Governance

As per the revised Clause 49 of the Listing Agreement on Corporate Governance, Management Discussion and Analysis Report forms part of the annual report. Further, a separate report on the Corporate Governance together with the certificate from the Auditors of the Company regarding compliance of the Corporate Governance also forms part of the annual report.

Directors responsibility statement

The Board of Directors of the Company confirms:

1.that in the preparation of the annual accounts, the applicable accounting standards have been followed and there has been no material departure

2.that the selected accounting policies were applied consistently and the Directors 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 31st March, 2010 and of the profit of the Company for the year ended on that date

3.that proper and sufficient care has been taken 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

4.that the annual accounts have been prepared on a going concern basis

Auditors

The Auditors M/s. Brahmayya & Co, retire at the ensuing Annual General Meeting and are eligible for reappointment.

Conservation of energy, technology absorption, foreign exchange earnings and outgo

The details as required under the Companies (disclosure of particulars in the report of Board of Directors) Rules, 1988 are given at Annexure-I.

Place: Secunderabad Date: 15th May, 2010

Deposits

There are no overdue deposits as on 31st March, 2010.

Employees

Periodic training programmes for developing a skilled workforce, personality development programmes, yoga camps, etc., encouragement of employee participation in district / state level sports events are regularly undertaken.

An integrated woman focused program trains unskilled women to undertake skilled jobs at its units.

The information required under Section 217 (2A) of the Companies Act, 1956 read with the Companies (particulars of employees) Rules, 1975 is given in Annexure - II.

Acknowledgements

The Board of Directors is pleased to place on record their appreciation of the cooperation and support extended by all India financial institutions, banks and various state and central government agencies.

The Board also wishes to place on record its appreciation of the valuable services rendered by the employees of the Company.

By order of the Board

L.N. Agarwal

Chairman and Managing Director

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