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Directors Report of Sambandam Spinning Mills Ltd.

Mar 31, 2017

The directors have pleasure in presenting the 43rd Annual Report together with the Audited Accounts for the year ended March 31, 2017 (the year).

1 Performance highlights

2016 - 17

2015 - 16

Revenue from Operations

(Rupees in Lakhs)

Direct exports

381

316

Merchandise exports

580

3713

Domestic Sales

19736

16383

Total Yarn and Process Waste Sales

20697

20412

Wind Turbine Generator Power sold to third party

159

97

Other Revenue

40

33

Total Revenue from Operations

20896

20542

Profit

Gross profit [Profit before interest, depreciation & Tax]

3459

2331

Cash profit [Profit before depreciation & Tax]

2348

1194

Profit before tax [PBT]

1290

126

Less : Provision for Current Tax

438

45

Provision for Deferred Tax

38

39

Profit after tax [PAT]

814

42

Profit carried from previous year

12

107

Profit available for appropriation

826

149

APPROPRIATION OF PROFIT :

Transfer to General Reserve

465

35

Proposed Dividend on Equity Shares

170

85

Tax on proposed equity dividend

35

17

Surplus profit carried to Balance Sheet

156

12

826

149

2 DIVIDEND

With a view to maintain the dividend payment track record of the Company, your directors decided to recommend payment of Dividend at 40% for the year, subject to the approval of the bankers of the Company.

3 AUDITORS

As per companies act of 2013, there is requirement for rotation of statutory auditors firm after completion of three years from the expiry of two term of five years each (which expired with audit of FY 13-14 accounts)for the existing statutory auditors firm M.S. Krishnaswami & Rajan. Accordingly a new auditor has to be appointed for the company for audit of accounts for the year FY 17-18 .The new audit firm,M/s.R.Sundarrajan & associates, Chartered Accountants, (firm Reg No 008282S) have confirmed their eligibility and willingness to accept office, if appointed. On the recommendation of the Audit Committee, your Company’s Board is placing the Resolution u/s 139(2) of the Company’s Act 2013 for appointing him as the Statutory Auditors of the Company for the current financial year - 2017-18.

4 CAUTIONARY NOTE

Statements in the Board’s report and the management discussion and analysis describing the Company’s objectives, expectations or predictions may be forward looking within the meaning of applicable securities laws and regulations. Actual results might differ materially from those expressed in the statement. Important factors that could influence the Company’s operations include global and domestic demand and supply conditions affecting selling prices of finished goods, input availability and prices, changes in government regulations, tax laws, economic developments within the country and other related factors such as litigation and industrial relations.

5 VIGIL MECHANISM / WHISTLE BLOWER POLICY

The Company has an established vigil mechanism for Directors / Employees to report concerns about unethical behaviour, actual or suspected fraud, or violation of the code of conduct or ethics policy. It also provides for adequate safeguards against victimization of directors/ employees who avail of the mechanism. The Company affirms that no personnel have been denied access to the audit committee. The Company has formulated a Policy on Vigil Mechanism and has established a mechanism that any personnel may raise Reportable Matter after becoming aware of the same. All suspected violations and Reportable Matters are reported to an Independent Director and member of the Audit Committee at his e-mail id ksg_comsec@yahoo.com. The key directions/actions are informed to the Managing Director of the Company.

The Company has adopted Whistle Blower Policy in line with the provisions of Section 177(9) of the Companies Act 2013 which can be accessed on the Company’s Website under the web link http://www.corporate@sambandam.com

6 AUDIT COMMITTEE:

Details of Composition of Audit committee are covered under corporate governance report annexed with this report and forms part of this report. Further, during this year all the recommendations of the Audit committee have been accepted by the Board.

7 REPORTS OF STATUTORY AUDITORS AND SECRETARIAL AUDITORS

Reports of the Statutory Auditors and the Secretarial Auditors for the year under review are free from any qualification, reservation or adverse remark or disclaimer. Secretarial Audit Report in Form MR-3 is attached, which forms part of this report - refer Annexure VI.

8 EXTRACT OF ANNUAL RETURN

Extract of Annual Return in Form MGT-9 pursuant to Section 92(3) of the Companies Act 2013 is also attached, which forms part of this report - refer Annexure VII.

9 TRANSFER OF UNPAID AND UNCLAIMED DIVIDEND AMOUNT TO INVESTOR EDUCATION AND PROTECTION FUND ACCOUNT :

Pursuant to the provisions of section 124 of the Companies Act, 2013, which came in to effect from 07.09.2016 ,the declared dividends which remained unpaid or unclaimed for a period of seven years, has to be transferred by the company to the Investor Education and Protection Fund (IEPF) established by the Central Government. During the year 2016-17, transfer of Unclaimed Dividend of the year 2009-10 was not applicable since the dividend was not declared for the year 09-10.

However shareholders are requested to take note that as per IEPF rules, the company is required to transfer unpaid dividend and underlying shares also in respect of which dividend was not claimed /paid for the year 10-11, to IEPF authority. Shareholders who have not claimed their dividend for the year 10-11 can write to the Company or Registrar and transfer agent M/s Cameo Corporate Services Limited, at ‘Subramanian Building’, No.1, Club House Road, Chennai - 600 002 who are the Registrars and Share Transfer Agents (RTA) of the Company for further details and for claiming unclaimed dividend lying unpaid. In case no valid claim is received ,the shares in respect of which the dividend are lying unpaid /unclaimed will be transferred to IEPF authority on the due date Further in terms of rule 6(3) of the IEPF rules ,statement containing the details of shareholders who have not claimed dividend for previous years ,and his folio number /DP-ID /client ID is made available on company’s website www.sambandam.comfor information and necessary action by shareholder .In case , the concerned shareholder wish to claim the shares after transfer to IEPF , an application has to be made to the IEPF authority in form IEPF- 5 online and submit the hard copy of such form IEPF -5 along with necessary documents to the company as prescribed under the rules and the same is available at IEPF website (ie) www.iepf .gov.in.

Dividend year

Date of declaration of dividend

Due date for transfer to IEPF

10-11

Interim dividend dt 05.02.2011

05.03..2018

10-11

Final dividend dt 12.08.2011

12.09.2018

11-12

Dividend not declared

Not applicable

12-13

Dividend not declared

Not applicable

13-14

28.09.2014

27.10.2021

14-15

27.09.2015

26.10.2022

15-16

06.08.2016

05.09.2023

10 ACKNOWLEDGEMENT

Your directors thank the Company’s customers, vendors and investors for their continued support during the year. Your directors place on record their appreciation for the contribution made by the employees at all levels. Your Company’s consistent growth has been made possible by the hard work, solidarity, cooperation and support of the management team.

Your directors thank State Bank of India, Karnataka Bank Limited, Canara Bank, Axis Bank Limited and IDBI Bank Limited and the State and Central Government departments for their support, and look forward to their continued support in future.

Salem S. Devarajan

May 6, 2017 Chairman & Managing Director


Mar 31, 2016

The directors have pleasure in presenting the 42nd Annual Report together with the Audited Accounts for the year ended March 31, 2016 (the year).

1 Performance highlights

2015 - 16

2014 - 15

(Rupees in Lakhs)

Revenue from Operations

Direct exports .. ..

316

530

Merchandise exports .. ..

3713

5227

Domestic Sales .. ..

16383

18304

Total Yarn and Process Waste Sales

20412

24061

Wind Turbine Generator Power sold to third party

97

120

Other Revenue .. ..

33

52

Total Revenue from Operations

20542

24233

Profit

Gross profit [Profit before interest, depreciation & Tax]

2331

2767

Cash profit [Profit before depreciation & Tax]

1194

1593

Profit before tax [PBT] .. ..

126

508

Less : Provision for Current Tax .. ..

45

0

Provision for Deferred Tax .. ..

39

163

Profit after tax [PAT] .. ..

42

345

Profit carried from previous year .. ..

107

85

Profit available for appropriation .. ..

149

430

APPROPRIATION OF PROFIT :

Transfer to General Reserve .. ..

35

195

Adjustment relating to Fixed Assets .. ..

-

26

Proposed Dividend on Equity Shares .. ..

85

85

Tax on proposed equity dividend .. ..

17

17

Surplus profit carried to Balance Sheet .. ..

12

107

149

430

2 DIVIDEND

With a view to maintain the dividend payment track record of the Company, your directors decided to recommend payment of Dividend at 20% for the year, same as the previous year, subject to the approval of the bankers of the Company.

3 MANAGEMENT DISCUSSION AND ANALYSIS

Core business of the company is manufacture and sale of cotton yarn. The management discussion and analysis given below discusses the key issues of the Industry with specific reference to the cotton yarn spinning sector.

a) INDUSTRY PERFORMANCE

The year 2015-16 has been a year of major challenges faced by the spinning industry, which faced almost year long downtrend in Selling prices, coupled with wide fluctuations in cotton prices. The power situation was also bad in the first few months but got stabilized in the subsequent period. Market demand for yarn was also continuously subdued which forced many units to reduce the working days and lower their production for export orders from global retail giants. On the other hand, the marketing challenges are forcing established players to move away from traditional market to develop new markets where the quality, efficiency and productivity play a major part. In addition, those with latest sophisticated machinery have an edge, as they could shift between various products within a short production cycle time. The major challenge for the leading players is to be prepared for adapting to changes in the market and cater to smaller market lots and shorter cycle time of order to cash. This required rearrangement of their existing production facilities to adapt to market dynamics and improve their capability to cater to wider variety of markets.

Since Spinning is feeder industry to weaving and knitting sectors, its fortunes mainly depend upon the dynamics of those sectors. The weakest link in the Indian Industry has been weaving, knitting and finishing as compared to global leaders such as China, Italy, Germany and Turkey. Even the developing countries like Indonesia, Vietnam and Philippines have become our competitors due to lot of subsidies available in their respective countries. To strengthen the spinning, weaving and knitting sectors, a major thrust has been exerted by the consolidated efforts of the Indian Textile Machinery Manufactures Association, end users and the Government to undertake a moons hot and come up with alternative technologies suited to Indian textile environment affordable to these sector. This should be feasible in the coming years, if dedicated efforts are undertaken with the financial support for R & D by the Government through its various schemes, such as Textile Modernization Fund and ''Make-In-India'' campaigns. This will naturally have a cascading effect on the spinning sector, which feed the weaving and knitting sectors.

b) COMPANY''S PERFORMANCE

(i) During the year under review, your Company''s turnover reduced to Rs.205.92 crores as against Rs.243.20 crores recorded in the previous year mainly due to subdued market conditions. Your Company''s performance was adversely affected due to steep fall in the price of yarn both in the export market and domestic market. Export orders were much lower coupled with uneconomic price due to competition from other developing countries like Indonesia, Vietnam, Bangladesh and Philippines. In order to cope-up with the market conditions, production was reduced and several cost reduction measures were adopted by the Company such as tie-up with Private Power Producers to get the required power at a price lesser than the TANGEDCO Power, securing dedicated power supply from EB Substation to all the three units of the Company and minimum use of diesel Gensets, supported by your Company''s Wind Turbine generated power. These measures helped to achieve improved level of plant utilization to maintain production and quality of the product and achieve reasonable profit after tax of Rs.42 lakhs as against Rs.345 lakhs recorded in the previous year.

(ii) Your Company''s Wind Turbine Generators (WTGs) recorded generation of electric power of the value of Rs.860 lakhs during the year (Rs.920 lakhs in 2014-15). Loss of Rs.595 lakhs in wind power generation during the year under review (as against Rs.1455 lakhs recorded during the year 201213) was on account of TANGEDCO imposing back-outing (not allowing full generation and not accounting fully the Wind Turbine generated power) during the high wind season which resulted in loss of possible generation of about 110 lakh units during the year.

(iii) Even though Bank interest rates remained high during the year, Management''s conscious decision to exercise strict control on inventory levels helped to reduce the working capital requirement resulting in considerable saving up to Rs.37.31 lakhs in the finance cost during the year.

c) OUTLOOK FOR 2016-17

Industry expects improvement during the current financial year as cotton prices are stabilizing and yarn prices have started improving from the first quarter of the financial year 2016-17. Considering the present market demand for products like Viscose, Modal, Linen Fiber and value added products like Gassed and Mercerized Yarn, your Company has planned to produce these new products in addition to the existing products Viz., Combed, Carded and Compact Yarn. The Company also started converting its yarn into fabric as a measure of value addition.

During the year 2016-17, power generated by the Company''s Wind Turbine Generators are expected to be fully fed through its Grid by TANGEDCO (without back-out) which would result in securing full benefit of the Company''s Wind Turbine Generators. In order to gain maximum benefit from the Wind Turbine generated power and the group captive power purchased from private power producers even during the power cut and load shedding period, dedicated feeder line connection from the E.B substation to all the three units of your Company has been secured. This will ensure uninterrupted power supply to the spinning mills of your company which will reduce the dependence on diesel generated power and also maximize production throughout the day. Further, life of the electrical components could be enhanced due to avoidance of down time during frequent power cuts and thereby quality of the product could be maintained / improved further. As part of future plans, the deferred expansion project at Unit III will be taken up for implementation, at the appropriate time.

d) RISKS AND CONCERNS

Your Company has devised risk management policy which involves identification of the risks associated with the business risks as well as the financial risks, its evaluation, monitoring, reporting and mitigation measures. Audit Committee and the Board of Directors of the Company periodically review the risk management policy of the Company so that the management controls the risk through properly defined network. Heads of departments are responsible for implementation of the risk management system as may be applicable to their respective areas of functioning and report to the Board and the Audit Committee. Details of the risk management mechanism and key risks faced by the Company are enumerated in the risk management policy.

Risk Management Policy adopted pursuant to the provisions of Section 134 (3) (n) of the Companies Act 2013 is hosted on the website of the Company under the web link http://www.corporate@sambandam.com

e) ENVIRONMENT PROTECTION, HEALTH AND SAFETY (EHS)

EHS continues to receive the highest priority in all operational and functional areas at all locations of your Company. Systematic process safety analysis, audits, periodic safety inspections are carried out by expert agencies and suitable control measures adopted for ensuring safe operations at the site. Various processes as required for Pollution Control and Environmental Protection are strictly adhered to.

f) INTERNAL CONTROL AND SYSTEMS

Your company has in place well established internal control procedures covering various areas such as procurement of raw materials, production planning, quality control, maintenance planning, marketing, cost control and debt servicing. Steps are taken without loss of time, whenever any weakness is observed, to correct the same.

Your Company is certified ISO 9001, ISO14001 and OHSAS18001 for the systems. Further, your Company''s laboratory is also certified by NABL.

g) HUMAN RESOURCES MANAGEMENT

Employees are your Company''s most valuable resource. Your Company continues to create a favourable environment at work place. Your Company has formulated and implemented various welfare measures for the employees. The Company also recognizes the importance of training and consequently deputes its work force in various work related courses/seminars including important issues like Total Quality Management (TQM), behavioral skills, soft skills, etc. Because of these labour welfare and improvement measures, your Company is able to attract and retain well trained and dedicated workforce.

The fact that relationship with the employees continues to be cordial is testimony to the Company''s ability to retain high quality workforce. In view of the aforesaid relationship no man days were lost during the year under report.

h) DISCLOSURE AS PER THE SEXUAL HARASSMENT OF WOMEN AT WORK PLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT 2013

The Company has in place an Anti Sexual Harassment Policy in line with the requirements of the Sexual Harassment of Women at Work place (Prevention, Prohibition and Redressal) Act 2013. Management of the Company has set up an Internal Complaints Committee (ICC) to redress any complaint received regarding sexual harassment. All the employees of the Company are covered under this policy. Out of 773 permanent employees on the rolls of the Company, 146 are women and 627 are men. No complaint on sexual harassment has been received from any employee during the year and no complaint is pending at the end of the year.

.i.) COST AUDIT

In accordance with the provisions of the Companies Act 2013 and the Rules framed there under, Cost Audit for the Company was not applicable for the year 2014-15. However, it is applicable for the financial year commencing from 1st April 2015. On the recommendation of the Audit Committee, Board of Directors of the Company approved the appointment of M/s. S.MAHADEVAN & CO., Cost Accountants, Chennai, for audit of Cost Accounts of the Company for the years 2015-16 and 2016-17and the resolution for ratification of the remuneration payable to the Cost Auditor for the year 201617 will be placed before the members for their ratification at the 42nd Annual General Meeting of the Company scheduled to be held on 6.8.2016.

In view of the Company maintaining the cost records continuously and in order to provide the comparable audited figures for the year 2014-15 in the Cost Audit Report for the year 2015-16, your directors decided to continue the Cost Audit for the year 2014-15 on a voluntary basis. The Cost Auditor will submit to the Board of Directors his report for the year 2015-16 after duly certifying the cost records. Cost Audit Report for the year 2015-16 will be submitted in XBRL format well before the due date.

j) BOARD MEETINGS :

During the year under review five board meetings were held and the intervening gap between any two board meetings did not exceed 120 days. Dates of the board meetings and details of directors'' attendance at the meetings are furnished in the Corporate Governance report at Annexure - VI.

k) DIRECTORS

At the 40th Annual General Meeting of the Company held on 28.9.2014 members had appointed Sri P.S.Ananthanarayanan, Dr.V.Gopalan, Sri N.Asoka, Sri S.Gnanasekharan and Sri Kameshwar M Bhat, as Independent Directors of the Company for a term of five consecutive years from the date of that AGM till the conclusion of the 45th AGM of the Company. Since all the five Independent Directors are not liable to retire by rotation, out of the remaining five non-independent directors, Sri S.Dinakaran opted to retire by rotation at the ensuing 42nd Annual General Meeting. However, he is eligible for reappointment by members at the 42nd AGM of the Company.

The Chairman and Managing Director (CMD) and the two Joint Managing Directors (JMDs) were appointed by members at the 41st AGM of the Company held on 27.9.2015 for a term of 3 years from 1.10.2015 to 30.09.2018 in accordance with the recommendation of the Nomination and Remuneration Committee and the Board of Directors of the Company and the revised (increased) remuneration payable to them during that period was also approved by members by passing Special Resolution at the 41st AGM. However, the CMD and the two JMDs have not availed the increased remuneration till 31.3.2016 in view of the Company''s sub-due performance.

l) DIRECTORS'' RESPONSIBILITY STATEMENT AS PER SECTION 134(5) OF THE COMPANIES ACT, 2013

Pursuant to the requirement of Section 134(5) of the Act, and based on the representations received from the management, the directors hereby confirm that:

i. in the preparation of the annual accounts for the financial year 2015-16, the applicable accounting standards have been followed and there are no material departures;

ii. they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for the financial year;

iii. they have taken proper and sufficient care to the best of their knowledge and ability for the maintenance of adequate accounting records in accordance with the provisions of the Act. They confirm that there are adequate systems and controls for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

iv. they have prepared the annual accounts on a going concern basis;

v. they have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and operating properly; and

vi. they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

m) SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS

During the year under view no significant material orders were passed by the Regulators or Courts or Tribunals impacting the going concern status and the operations of the Company.

n) PARTICULARS OF EMPLOYEES - information pursuant to Rule 5 (2) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014

None of the employees or directors of the Company has drawn remuneration exceeding Rs.5 lakhs per month or Rs.60 lakhs per annum during the year.

o) BOARD EVALUATION

Board of Directors carried out annual evaluation of its own performance and that of the Committees and the individual directors pursuant to the provisions of Section 134(3)(p) of the Companies Act 2013, and the corporate Governance requirements prescribed in the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations 2015. Performance of the Board was evaluated after seeking input from the Directors on the basis of the criteria such as the Board Composition, effectiveness of board process, information flow and functioning of the Board. Performance of the Committees was evaluated by the Board after seeking inputs from the Committee Members on the basis of the criteria such as composition of the Committees, effectiveness of the Committee meetings, etc. and it was observed that the performance of the Board as well as the Committees was adequate.

Performance of the non-independent Directors were evaluated by the Independent directors at the meeting of the Independent directors on the basis of six criteria, viz. attendance and participation; Qualification, knowledge, skill and enterprise; updating of skill and knowledge; individual contribution; adherence to Company''s policies and procedures and benefits derived by the Company. On the basis of the above criteria performance of all the non-independent directors were found to be adequate. As regards the performance of the Chairman & Managing Director, after taking into consideration the views of the Executive Directors and the non-executive directors the Independent Directors were of the unanimous view that the Chairman & Managing Director is not only well informed and knowledgeable about the Industry but also has the requisite experience to execute his duties as Chairman and Chief Executive of the Company. His insight and forward looking policies have elevated the status of the Company in the eyes of the stakeholders and the wholesome performance of the Company is in his safe hands and the future of the Company is bright.

Board''s evaluation of the independent directors was recorded by the entire board excluding the director being evaluated.

p) FAMILIARIZATION PROGRAMME OF THE INDEPENDENT DIRECTORS

Periodic presentations are made by Senior Management and Internal Auditors at the Board meetings and Committee meetings on the business and performance updates of the Company, global business environment, business risks and its mitigation strategy, impact of regulatory changes on strategy etc. Updates on relevant statutory changes encompassing important laws are regularly intimated to all the Directors including the Independent Directors.

q) DEPOSITS

Following are the details of deposits covered under Chapter V of the Companies Act 2013 :

i. Deposits Accepted from shareholders during the year (2015-16) : Rs. 303.65 lakhs

ii. Deposits remaining unpaid or unclaimed as at the end of the year : NIL

iii. Any default in repayment of deposits or payment of interest thereon during the year : NIL

iv. Total Deposits outstanding at the end of the year - - : Rs. 516.70 lakhs Company has duly complied with the provisions of Section 73 of the Companies Act, 2013 read with relevant rules with respect to fixed deposits.

r) INDUSTRY ASSOCIATIONS

Sri S.Dinakaran, Joint Managing Director of the Company is a member of the Committee of Administration and Chairman of the Yarn Committee of the Cotton Textiles Export Promotion Council (TEXPROCIL), Mumbai and the Confederation of Indian Textile Industry (CITI), Delhi. By virtue of the offices he holds, Sri Dinakaran has been representing to the Industries and Finance Ministries at the appropriate time to get relief to the ailing Textile Industry.

s) REPORT ON PERFORMANCE OF THE ASSOCIATE COMPANIES :

There are two associate Companies -

SPMM Health Care Services Pvt. Ltd. - 49.75% investment in the share capital

This Company has recorded total revenue of Rs.3,18,59,942 and profit after tax (PAT) of Rs.47,29,843 during the year ended 31.3.2016 as against Rs.3,92,43,571 Revenue and Rs.43,63,920 PAT recorded in the previous year.

Salem IVF Centre Pvt. Ltd. - 34.70% investment in the share capital of that Company.

This Company incorporated on 17th November 2014 has recorded total revenue of Rs.1,81,97,704 and Loss of Rs.93,31,265 during the second year (first full year) of its operations as against the revenue of Rs.22,47,925 and loss of Rs45,00,915 recorded in the Previous Year (Period from 17.11.2014 to 31.3.2016).

t) CHANGES OR COMMITMENTS AFTER THE YEAR END ON 31.3.2016

No material change or commitment affecting the financial position of the Company has occurred between the close of the financial year on 31.3.2016 and the date of this report.

Information pursuant to section 197 (12) of the Act read with Rule 5(1) & 5(2) of the Companies (Appointment and Remuneration of Managerial personnel) Rules 2014 :

(i) Ratio of the remuneration of each Director, Company Secretary, Chief Financial Officer and Chief Technical Officer to the median remuneration of the employees of the Company; AND

(ii) Percentage increase in their remuneration in 2015-16 as compared to the previous year (2014-15): (Median Remuneration : Rs.62,260 in 2015-16)

Name of whole-time Directors and KMP

Remuneration in 2015-16 Rs. lakhs

Remuneration in 2014-15 Rs. lakhs

% increase in 2015-16 Remn.

Ratio to Median Remn.

Ratio of 2015-16 Remuneration to

Revenue

Net Profit

Mr.S.Devarajan, CMD

36.00

36.00

NIL

57.82

0.17 %

86.62 %

Mr.S.Jegarajan, JMD

30.00

30.00

NIL

48.19

0.15 %

72.18 %

Mr.S.Dinakaran, JMD

6.00

6.00

NIL

9.64

0.03 %

14.44 %

Mr.R.S.Shanmugam Company Secretary

6.60

6.50

1.54

10.60

0.03 %

15.88 %

Mr. D.Niranjan Kumar, CFO

18.00

18.00

NIL

28.91

0.09 %

43.31 %

Mr.J.Sakthivel - CTO

18.00

18.00

NIL

28.91

0.09 %

43.31 %

Name of Non-executive Directors

# Remuneration in 2015-16 Rs. lakhs

# Remuneration in 2014-15 Rs. lakhs

% increase / (% decrease) in 2015-16 Remuneration

Ratio to Median Remuneration in 2015-16

Mr.D.Sudharsan,

- 0.75

0.80

(6.25 %)

1.20

Smt.S.Abirami

- 0.75

0.151

N.A

1.20

Name of Independent Directors

# Remuneration in 2015-16 Rs. lakhs

# Remuneration in 2014-15 Rs. lakhs

% increase / (% decrease) in 2015-16 Remuneration

Ratio to Median Remuneration in 2015-16

Mr.P.S.Ananthanarayanan

2.65

2.70

(1.85%)

4.26

Dr. V.Gopalan

2.65

2.70

(1.85%)

4.26

Mr.N.Asoka

2.65

2.15

23.26%

4.26

Mr.S.Gnanasekharan

2.50

2.45

2.04%

4.02

Mr.Kameshwar M Bhat

2.50

0.55*

N.A

4.02

# Only sitting fees is payable to Non-executive and Independent Directors for the meetings of the Committee or of the Board attended by them.

(iv) Number of permanent employees on the rolls of the Company : 773

(v) Explanation on the relationship between average increase in the remuneration of the employees and Key Managerial Personnel (KMP) as against the Company performance is not applicable due to above reference (iii) (a).

(vi) No employee of the Company is in receipt of remuneration in excess of the highest paid remuneration of the director during the year.

(vii) Variations in the Market Capitalization & Price Earnings Ratio as at the close of the Financial Year on 31.3.2015 and 31.3.2016 and percentage increase or decrease in the market quotation of the shares :

Paid-up Capital : Rs.4,26,46,000 - 42,64,600 equity shares of Rs.10 each fully paid-up Equity shares of the Company are listed in the Bombay Stock Exchange (BSE)

Equity shares were listed only after the last public issue in 1995.

As such no market quotation at the time of last public issue of the Company''s shares.

Issue price of the equity share in 1995 was rupees fifty including premium of rupees forty per share

Year end date

Closing market Price per share

Earnings Per Share

Price Earnings Ratio

Market Capitalization (Rupees lakhs)

31.3.2015

Rs.59.90

Rs.8.10

7.40

2554.49

31.3.2016

Rs.66.50

Rs.0.97

68.56

2835.96

Variation %

11.02 %

(88.02%)

826 %

11.02 %

(viii) No variable component of the remuneration availed by any director.

(ix) Remuneration payable to the Directors is as per the Remuneration Policy of the Company

23 AUDITORS

Auditors, M/s. M.S. Krishnaswami & Rajan, Chartered Accountants, retire at the ensuing annual general meeting and they have confirmed their eligibility and willingness to accept office, if reappointed. On the recommendation of the Audit Committee your Company''s Board is placing the Resolution u/s 139(2) of the Company''s Act 2013 for appointing him as the Statutory Auditors of the Company for the current financial year - 2016-17.

24 CAUTIONARY NOTE

Statements in the Board''s report and the management discussion and analysis describing the Company''s objectives, expectations or predictions may be forward looking within the meaning of applicable securities laws and regulations. Actual results might differ materially from those expressed in the statement. Important factors that could influence the Company''s operations include global and domestic demand and supply conditions affecting selling prices of finished goods, input availability and prices, changes in government regulations, tax laws, economic developments within the country and other related factors such as litigation and industrial relations.

25 VIGIL MECHANISM / WHISTLE BLOWER POLICY

The Company has an established vigil mechanism for Directors / Employees to report concerns about unethical behaviour, actual or suspected fraud, or violation of the code of conduct or ethics policy. It also provides for adequate safeguards against victimization of directors/ employees who avail of the mechanism. The Company affirms that no personnel have been denied access to the audit committee. The Company has formulated a Policy on Vigil Mechanism and has established a mechanism that any personnel may raise Reportable Matter after becoming aware of the same. All suspected violations and Reportable Matters are reported to an Independent Director and member of the Audit Committee at his e-mail id ksg_comsec@yahoo.com. The key directions/actions are informed to the Managing Director of the Company.

The Company has adopted Whistle Blower Policy in line with the provisions of Section 177(9) of the Companies Act 2013 which can be accessed on the Company''s Website under the web link http://www.corporate@sambandam.com

26 REPORTS OF STATUTORY AUDITORS AND SECRETARIAL AUDITORS

Reports of the Statutory Auditors and the Secretarial Auditors for the year under review are free from any qualification, reservation or adverse remark or disclaimer. Secretarial Audit Report in Form MR-3 is attached, which forms part of this report - refer Annexure VII.

27 EXTRACT OF ANNUAL RETURN

Extract of Annual Return in Form MGT-9 pursuant to Section 92(3) of the Companies Act 2013 is also attached, which forms part of this report - refer Annexure VIII.

28 ACKNOWLEDGEMENT

Your directors thank the Company''s customers, vendors and investors for their continued support during the year. Your directors place on record their appreciation for the contribution made by the employees at all levels. Your Company''s consistent growth has been made possible by the hard work, solidarity, cooperation and support of the management team.

Your directors thank State Bank of India, Karnataka Bank Limited, Canara Bank, Axis Bank Limited and IDBI Bank Limited and the State and Central Government departments for their support, and look forward to their continued support in future.

Salem D.Niranjan Kumar R S.Shanmugam S.Dinakaran S. Devarajan

May 21, 2016 Chief Financial Officer Company Secretary Joint Managing Director Chairman

& Managing Director


Mar 31, 2015

Dear Members,

The directors have pleasure in presenting the 41st Annual Report together with the Audited Accounts for the year ended March 31, 2015 (the year).

Performance highlights

2014-15 2013-14 (Rs. lakhs)

Revenue from Operations

Direct exports .. .. .. 530 600

Merchandise exports .. .. .. 5227 5955

Domestic Sales .. .. .. 18304 18848

Total Yarn and Process Waste Sales 24061 25403

Wind Energy Converter Power sold to third party 120 136

Other Revenue .. .. .. 52 57

Total Revenue from Operations 24233 25596

Profit

Gross profit [Profit before interest, depreciation & Tax] 2767 3878

Cash profit [Profit before depreciation & Tax] 1593 2521

Profit before Exceptional item and Tax 508 1407

Exceptional item - Provision for diminution in investment - 45

Profit before tax [PBT] .. .. .. .. 508 1362

Less: Provision for tax (deferred tax) 163 425

Profit after tax [PAT] .. .. .. .. 345 937

Profit (loss) carried from previous year .. .. 85 (452)

Profit available for appropriation 430 485

APPROPRIATION OF PROFIT :

Transfer to General Reserve .. .. .. 195 300

Adjustment relating to Fixed Assets .... 26 -

Proposed Dividend on Equity Shares .. .. 85 85

Taxon proposed equity dividend .. .. 17 15

Surplus profit carried to Balance Sheet .. .. 107 85

DIVIDEND

Your directors have recommended 20% dividend for the year ended 31.3.2015, subject to the approval of the Consortium of Bankers of the Company.

LISTING OF SHARES

Your Company's shares are listed presently in Bombay Stock Exchange Limited. During the year under review, your Company's shares had been de-listed from the Madras Stock Exchange Limited due to voluntary closure of the operations of that Exchange.

DEMATERIALISATION OF EQUITY SHARES

As on 31.03.2015, 39,00,694 Equity Shares of rupees ten each - fully paid up were held in Electronic (Demat) Form, which constituted 91.47% of total shareholding.

FIXED DEPOSITS

The Company has not invited or accepted any Deposit from the public during the year under review. All the deposits (except the deposits from the Directors of the Company) outstanding as on 1.4.2014 (Rs.361.71 lakhs from Public and Rs.Rs.225.40 lakhs from shareholders) were duly repaid by 31.3.2015 in due compliance with the provisions of Section 74(1 )(b) of the Companies Act 2013. After passing a resolution u/s 73 of the Companies Act 2013 at the last Annual General Meeting of the Company held on 28.9.2014 and after complying with all the procedural requirements for accepting deposits from Members, Company accepted fresh deposits from members amounting to Rs.169.55 lakhs in March 2015.

(a) Deposits from Members Accepted during the year - - Rs. 169.55 lakhs *

(b) Deposits remaining unpaid or unclaimed as at the end of the year NIL

(c) Whether there has been any default in repayment of deposits } or payment of interest thereon during the year and if so, } NIL number of such cases and the total amount involved: }

i. at the beginning of the year - NIL

ii. maximum during the year - NIL

iii. at the end of the year - NIL

(d) Details of deposits which are not in compliance with the NIL requirements of Chapter V of the Act

* Rs. 169.55 lakhs represents the deposits accepted from the Members of the Company in accordance with the circular Inviting deposits from members (Form DPT-1 approved at the Board Meeting held on 6.2.2015 and filed with the Registrar of Companies on 10.2.2015). The Circular can be viewed on the Company's Website under the web link

http://www.corporate@sambandam.com

LOANS, GUARANTEES AND INVESTMENTS

The Company has not given any loan or guarntee to any one. Details of Investments made are given in the notes to the financial statements ( Note No.1.13)

Particulars of employees - information pursuant to Rule 5 (2)

None of the employees or directors of the Company has drawn remuneration exceeding Rs.5 lakhs per month or Rs.60 lakhs per annum during the year.

COST AUDIT

In accordance with the provisions of the Companies Act 2013 and the Rules framed there under, Cost Audit for the Company was not applicable for the year 2014-15. However, it is applicable for the financial year commencing from 1st April 2015. On the recommendation of the Audit Committee, Board of Directors of the Company approved the appointment of M/s. S.MAHADEVAN & CO., Cost Accountants, Chennai, for audit of Cost Accounts of the Company for the year 2015-16 and the resolution for ratification of the remuneration payable to the Cost Auditor will be placed before the members for their ratification at the 41st Annual General Meeting of the Company scheduled to be held on 27.9.2015.

Cost Audit Report for the year 2013-14 was submitted on 18.9.2014 to the Ministry of Corporate Affairs (MCA's Acknowledgement vide SRN : S31245186 dated 18.9.2014). Due date for submission of that Cost Audit Report in XBRL format was 27.9.2014.

In view of the Company maintaining the cost records continuously and in order to provide the comparable audited figures for the year 2014-15 in the Cost Audit Report for the year 2015-16, your directors decided to continue the Cost Audit for the year 2014-15 on a voluntary basis. The Cost Auditor has submitted to the Board of Directors his report for the year 2014-15 after duly certifying the cost records.

Directors

At the 40th Annual General Meeting (AGM)of the Company held on 28.9.2014 members appointed Sri Kameshwar M. Bhat, Sri P.S.Ananthanarayanan, Dr.V.Gopalan, Sri N.Asoka and Sri S.Gnanasekharan as Independent Directors of the Company for a term of five consecutive years from the date of that AGM till the conclusion of the 45th AGM of the Company. At the same AGM, Smt. S.Abirami and Sri A.R.Annamalai were appointed as Non-Executive and Non-Independent Directors liable to retire by rotation and all the directors accepted their appointment as on that date. However, Sri A.R.Annamalai resigned from the Board on 19th March 2015 for personal reasons. Board of Directors of the Company while recording its appreciation for the valuable services rendered to the Company by Sri Annamalai during the tenure of his office, decided not to fill the vacancy caused by his resignation. Company's Code of Conduct applicable to the board has been adopted by the board and all the directors of the Company have confirmed compliance with the Code of Conduct.

Since all the five Independent Directors are not liable to retire by rotation, out of the remaining five non-independent directors, Sri S.Jegarajan opted to retire by rotation. However, he is eligible for reappointment by members at the 41st AGM of the Company.

The present term of the Chairman and Managing Director and the two Joint Managing Directors will conclude on 30th September 2015. On the Recommendation of the Nomination and Remuneration Committee, Board of Directors have decided to reappoint all the three whole time directors for a further term of three years from 1.10.2015, subject to the approval of the members. Requisite resolutions for reappointment of the three whole time directors are included in the Notice of the ensuing AGM of the Company.

BOARD MEETINGS :

During the year under review six board meetings were held and the intervening gap between any two board meetings did not exceed 120 days. Dates of the board meetings and details of directors' attendance at the meetings are furnished in the Corporate Governance report at Annexure -VI.

DIRECTOR'S RESPONSIBILITY STATEMENT:

In pursuance of section 134 (5) of the Companies Act, 2013, the Directors hereby confirm that:

The Financial Statements have been prepared in all material respects in conformity with the applicable Accounting Standards in a consistent manner, supported by reasonable and prudent judgments and estimates along with proper explanation relating to material departures; The directors believe that the financial statements reflect true and fair view of the financial position as on 31.3.2015 and of the result of operations for the year ended 31.3.2015.

The Financial Statements have been audited by M/s M.S.Krishnaswami & Rajan, Chartered Accountants in accordance with generally accepted auditing standards, which include an assessment of the system of internal controls and tests of transactions to the extent considered necessary by them to support their opinion. There is no qualification or adverse remarks in the Independent Auditors' Report. Similarly in the Secretarial Auditors' Report u/s 204 of the Act (Annexure IV) there is no qualification or adverse remarks.

Maintenance of Accounting Records and Internal Controls

The directors had taken proper and sufficient care for maintenance of adequate accounting records as required by various Statutes. Directors have overall responsibility for the Company's internal control system, which is designed to provide a reasonable assurance for safeguarding of assets, reliability of financial records and for preventing and detecting fraud and other irregularities. Directors had laid down internal financial controls to be followed by the Company and that such controls were adequate and operating effectively.

The internal audit function encompasses the examination and evaluation of the adequacy and effectiveness of the system of internal control and quality of performance in carrying out assigned responsibilities. Internal Audit Department interacts with all levels of management and the Statutory Auditors and reports significant issues to the Audit Committee of the Board.

Audit Committee supervises the financial reporting process through review of accounting and reporting practices, financial and accounting controls and financial statements. Audit Committee also periodically interacts with internal and statutory auditors to ensure quality and veracity of the Company's accounts.

Internal Auditors, Audit Committee and Statutory Auditors have full and free access to all the information and records as considered necessary to carry out their responsibilities. All the issues raised by them have been suitably acted upon and followed up.

GOING CONCERN STATUS

The directors had prepared the annual accounts on a going concern basis. In the opinion of the Directors, Company will be in a position to carry on its existing spinning of yarn business.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS

During the year under view no significant material orders were passed by the Regulators or Courts or Tribunals impacting the going concern status and the operations of the Company.

COMPLIANCE WITH THE PROVISIONS OF APPLICABLE LAWS

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.

BOARD EVALUATION

Board of Directors carried out annual evaluation of its own performance, that of the Committees and the individual directors pursuant to the provisions of Section 134 (3) (p) of the Companies Act 2013, and the corporate Governance requirement as prescribed by the Securities and Exchange Board of India (SEBI) under clause 49 of the Listing Agreement. Performance of the Board was evaluated after seeking input from the Directors on the basis of the criteria such as the Board Composition, effectiveness of board process, information flow and functioning of the Board. Performance of the Committees was evaluated by the Board after seeking inputs from the Committee Members on the basis of the criteria such as composition of the Committees, effectiveness of the Committee meetings, etc. and it was observed that the performance of the Board as well as the Committees was adequate.

Performance of the non-independent Directors were evaluated by the Independent directors at the meeting of the Independent directors on the basis of four criteria, viz. attendance, participation, individual contribution and benefits derived by the Company.

On the basis of the above criteria performance of all the non-independent directors were found to be adequate. As regards the performance of the Chairman & Managing Director, after taking into consideration the views of the Executive Directors and the non-executive directors, the Independent Directors were of the unanimous view that the Chairman & Managing Director is not only well informed and knowledgeable about the Industry but also has the requisite experience to execute his duties as Chairman and Chief Executive of the Company. His insight and forward looking policies have elevated the status of the Company in the eyes of the stakeholders and the wholesome performance of the Company is in his safe hands and the future of the Company is bright.

Board's evaluation of the independent directors was recorded by the entire board excluding the director being evaluated and the following is the board's observation on the performance of each one of the independent directors.

Mr.P.S.ANANTHANARAYANAN

Board assessed that Mr.P.S.Ananthanarayanan has been an Independent Director of the Company from 10.10.1995. Presently he is the Chairman of the Audit Committee and also Chairman of the Nomination and Remuneration Committee and his contribution has been quite significant for the Company's growth and performance. He having served several companies in senior position with three decades of experience in the field of Cost Control and Planning has been guiding the Company in effective utilization of the Company's resources.

Dr.V.GOPALAN

Board assessed that Dr.V.Gopalan has been an Independent Director of the Company from 19.1.2004. He is a member of the Audit Committee and the Nomination and Remuneration Committee. With his experience in ICICI in Financial Appraisal of the Companies' projects for several years, coupled with his triple membership (CA, CS & CMA) he has been participating at all the Board and Committee meetings very actively.

Mr.N.ASOKA

Board assessed that Mr.N.Asoka has been an Independent Director of the Company from 30.05.2003. He is the Chairman of the Stakeholders Relationship Committee and member of the Audit Committee and the Nomination and Remuneration Committee. Being an Engineering graduate with industrial experience spanning over two decades he has been guiding the Company's future plans effectively.

Mr.S.GNANASEKHARAN

Board assessed that Mr.S.Gnanasekharan has been an Independent Director of the Company from 14.02.2014. With his experience in Accounts and Corporate Finance in India Cements for over two decades he has been participating in the Audit Committee Meetings and Board Meetings effectively.

Mr.KAMESHWAR M. BHAT

Board assessed that Mr.Kameshwar M.Bhat joined the Company as an Independent Director on 28th September 2014 and with his experience in the Banking, Financial Services and Retail Operations spanning over two decades, his participation in the Audit Committee and Board Meetings has been quite effective.

INDUSTRY ASSOCIATIONS

Sri S.Dinakaran, Joint Managing Director of the Company is a member of the Committee of Administration and Chairman of the Yarn Committee of the Cotton Textiles Export Promotion Council (TEXPROCIL), Mumbai and the Confederation of Indian Textile Industry (CITI), Delhi. By virtue of the offices he holds, Sri Dinakaran has been representing to the Industries and Finance Ministries at the appropriate time to get relief to the ailing Textile Industry.

REPORT ON PERFORMANCE OF THE ASSOCIATE COMPANIES :

There are two Associate Companies -

SPMM Health Care Services Pvt. Ltd. - 49.75% investment in the share capital of that Company.

This Company has recorded total revenue of Rs.3,92,43,571 and profit after tax (PAT) of Rs.43,63,920 during the year ended 31.3.2015 as against Rs.3,85,73,790 Revenue and Rs.9,89,354 PAT recorded in the previous year.

Salem IVF Centre Pvt. Ltd. - 21.79% investment in the share capital of that Company.

This Company incorporated on 17th November 2014 has recorded total revenue of Rs.22,47,925 and Loss of Rs.45,00,915 during the first year of its operations (Period from 17.11.2014 to 31.3.2015)

AUDITORS

Auditors, M/s. M.S. Krishnaswami & Rajan, Chartered Accountants, retire at the ensuing annual general meeting and they have confirmed their eligibility and willingness to accept office, if re- appointed. On the recommendation of the Audit Committee your Company's Board is placing the Resolution u/s 139(2) of the Company's Act 2013 for appointing them as Statutory Auditors of the Company for the current financial year.

CAUTIONARY NOTE

Statements in the Directors' report and the management discussion and analysis describing the Company's objectives, expectations or predictions may be forward looking within the meaning of applicable securities laws and regulations. Actual results might differ materially from those expressed in the statement. Important factors that could influence the Company's operations include global and domestic demand and supply conditions affecting selling prices of finished goods, input availability and prices, changes in government regulations, tax laws, economic developments within the country and other related factors such as litigation and industrial relations.

1. Names of Associates or Joint Ventures which are yet to Commence Operations : NIL

2. Names of Associates or Joint Ventures which have been liquidated or Sold during the year : NIL

3. The Company does not have any Joint Venture .

Salem D.Niranjan kumar R.S.Shanmugam S.Dinakaran S.Devarajan

May 28, 2015 C.F.O Company Secretary J.M.D C.M.D

VIGIL MECHANISM / WHISTLE BLOWER POLICY

The Company has an established vigil mechanism for Directors / Employees to report concerns about unethical behaviour, actual or suspected fraud, or violation of the code of conduct or ethics policy. It also provides for adequate safeguards against victimization of directors/ employees who avail of the mechanism. The Company has adopted Whistle Blower Policy in line with the provisions of Section 177(9) of the Companies Act 2013 which can be accessed on the Company's Website under the web link http://www.corporate@sambandam.com

RISK MANAGEMENT

Periodic assessments to identify the risk areas are carried out and management is briefed on the risks in advance to enable the Company to control risk through a properly defined plan. The risks are classified as financial risks, operational risks and market risks. The risks are taken into account while preparing the annual business plan for the year. The Board is also periodically informed of the business risks and the action taken to manage them.

Risk Management Policy adopted pursuant to the provisions of Section 134 (3) (n) of the Companies Act 2013 is hosted on the website of the Company under the web link http://www.corporate@sambandam.com

CHANGES OR COMMITMENTS AFTER THE YEAR END ON 31.3.2015

No material change or commitment affecting the financial position of the Company has occurred between the close of the financial year on 31.3.2015 and the date of this report.

REPORTS OF STATUTORY AUDITORS AND SECRETARIAL AUDITORS

Reports of the Statutory Auditors and the Secretarial Auditors for the year under review are free from any qualification or adverse remarks.

ACKNOWLEDGEMENTS

Your directors thank the Company's customers, vendors and investors for their continued support during the year. Your directors place on record their appreciation for the contribution made by the employees at all levels. Your Company's consistent growth has been made possible by the hard work, solidarity, cooperation and support of the management team.

Your directors thank State Bank of India, Karnataka Bank Limited, Canara Bank, Axis Bank Limited, Indian Overseas Bank, Central Bank of India and IDBI Bank Limited, Government of Tamil Nadu and other government agencies for their support, and look forward to their continued support in future.

For and on behalf of the Board Salem S. Devarajan August 12, 2015 Chairman and Managing Director


Mar 31, 2014

Dear Members,

The directors have pleasure in presenting the 40th Annual Report together with the Audited Accounts for the year ended March 31,2014 (the year).

Performance highlights

2013-14 2012-13

(Rs. lakhs)

Revenue from Operations

Direct exports 600 627

Merchandise exports 5955 3097

Domestic Sales 18848 17765

Total Yarn and Process Waste Sales 25403 21489

Wind Energy Converter Power sold to third party 136 202

Other Revenue 57 58

Total Revenue from Operations 25596 21749

Profit

Gross profit [Profit before interest, depreciation & Tax] 3878 3893

Cash profit/ [Profit before depreciation & Tax] 2521 2481

Profit before exceptional item and Tax 1407 1356

Exceptional item - Provision for diminution in investment 45 --

Profit before tax [PBT] 1362 1356

Profit after tax [PAT] 937 911

Dividend

Your directors have recommended 20% dividend for the year ended 31.3.2014, subject to the approval of the Consortium of Bankers of the Company.

INDUSTRY ASSOCIATIONS

Sri S.Dinakaran, Joint Managing Director of the Company is a member of the Committee of Administration and Chairman of the Yarn Committee of the Cotton Textiles Export Promotion Council (TEXPROCIL), Mumbai and the Confederation of Indian Textile Industry(CITI), Delhi. By virtue of the offices he holds, Sri Dinakaran has been representing to the Industries and Finance Ministries to get relief to the ailing Textile Industry.

COST AUDIT REPORT

As per the directions of the Cost Audit Branch of the Ministry of Corporate Affairs, M/s. S.MAHADEVAN & CO., Cost Accountants, Coimbatore, were appointed Cost Auditors for audit of Cost Accounts of the Company and their report for the year ended 31st March 2013 was submitted on 20.9.2013 to the Ministry of Corporate Affairs (VIDE SRN S22388466 dated 20.9.2013). Due date for submission of that Cost Audit Report in XBRL fomat was 27.9.2013.

M/s. S. Mahadevan & Co. were again reappointed for Audit of Cost Accounts of the Company for the year ended 31.3.2014. Their reports for the year ended 31.3.2014 will be filed before the due date.

Directors

Sri D.Sudharsan, Director, retires by rotation and he is eligible for reappointment. Sri A.R.Natarajan, Director, also retires by rotation but he desires not to get reelected. Board recorded its appreciation for the valuable services rendered by Sri Natarajan to the Company during the tenure of his office. Sri V. Mahadevan, Independent Director did not attend the meetings of the Board and the Audit Committee held during the year on account of his continued illness. He submitted his resignation which was accepted at the Board Meeting held on 14.2.2014. Board appointed Sri S. Gnanasekharan a Practising Company Secretary from Thiruchengode, as an independent director in the place of Sri V. Mahadevan. Company''s Code of Conduct applicable to the board has been adopted by the board and all the directors of the Company have confirmed compliance with the Code of Conduct.

Auditors

Auditors, M/s.M.S.Krishnaswami & Rajan, Chartered Accountants, retire at the ensuing annual general meeting and they have confirmed their eligibility and willingness to accept office, if re- appointed. On the recommendation of the Audit Committee your Company''s Board is placing the Resolution u/s 139(2) of the Company''s Act 2013 for appointing them as Statutory Auditors of the Company for the current financial year.

Annexure

Annexure to this report details statement on directors'' responsibility, conservation of energy, technology absorption, Research and Development and foreign exchange earnings and outgo. None of the employees of the Company has drawn remuneration exceeding Rs.5 lakhs per month or Rs.60 lakhs per annum during the year. As such the information required pursuant to Sec. 217(2A) of the Companies Act, 1956 is not applicable to the Company.

(i) Directors'' Responsibility Statement as per section 217(2AA) of the Companies Act, 1956. Responsibility in relation to financial statements

The financial statements have been prepared in conformity, in all material respects, with the applicable Accounting Standards in a consistent manner and supported by reasonable and prudent judgments and estimates. The Directors believe that the financial statements reflect true and fair view of the financial position as on 31.3.2014 and of the result of operations for the year ended 31.3.2014.

The financial statements have been audited by M/s.M.S.Krishnaswami & Rajan, Chartered Accountants in accordance with generally accepted auditing standards, which include an assessment of the system of internal controls and tests of transactions to the extent considered necessary by them to support their opinion.

Going Concern

In the opinion of the Directors, Company will be in a position to carry on its existing spinning of yarn business and accordingly it is considered appropriate to prepare the financial statements on the basis of going concern.

Maintenance of accounting records and Internal controls

Company has taken proper and sufficient care for maintenance of adequate accounting records as required by various Statutes.

Directors have overall responsibility for the Company''s internal control system, which is designed to provide a reasonable assurance for safeguarding of assets, reliability of financial records and for preventing and detecting fraud and other irregularities.

The internal audit function encompasses the examination and evaluation of the adequacy and effectiveness of the system of internal control and quality of performance in carrying out assigned responsibilities. Internal Audit Department interacts with all levels of management and the Statutory Auditors and reports significant issues to the Audit Committee of the Board.

Audit Committee supervises the financial reporting process through review of accounting and reporting practices, financial and accounting controls and financial statements. Audit Committee also periodically interacts with internal and statutory auditors to ensure quality and veracity of the Company''s accounts.

Internal Auditors, Audit Committee and Statutory Auditors have full and free access to all the information and records as considered necessary to carry out their responsibilities. All the issues raised by them have been suitably acted upon and followed up.

Acknowledgements

Your directors thank the Company''s customers, vendors and investors for their continued support during the year. Your directors place on record their appreciation for the contribution made by employees at all levels. Your Company''s consistent growth has been made possible by the hard work, solidarity, cooperation and support of the management team.

Your directors thank State Bank of India, Karnataka Bank Limited, Canara Bank, Axis Bank Limited, Indian Overseas Bank, Central Bank of India and IDBI Bank Limited, Government of Tamil Nadu and other government agencies for their support, and look forward to their continued support in future.

For and on behalf of the Board

Salem S. Devarajan

May 30, 2014 Chairman and Managing Director


Mar 31, 2013

The directors have pleasure in presenting the 39th Annual Report together with the Audited Accounts for the year ended March 31,2013 (the year).

Performance Highlights 2012-13 2011-12

Turnover (Rupees lakhs)

Export -Direct 627 579

Merchandise exports 3097 3048

Domestic Sales 17809 14893

Total Yarn Sales 21533 18520

Conversion charges earned 14 32

Wind Energy Converter Power sold to third party 202 127

Other income 27 44

Total turnover 21776 18723

Profit/(Loss)

Gross profit [Profit before interest and depreciations Tax] 3893 759

Cash profit/(loss) [profit/(loss) before depreciation & Tax] 2481 (1043)

Profit/(loss) before tax [PBT] 1356 (2164)

Profit/(loss)aftertax [PAT] 911 (1444)

Dividend

With a view to conserve and improve the resources of the Company, your directors have not recommended any dividend for the year ended 31.3.2013.

INDUSTRY ASSOCIATIONS

Sri S. Dinakaran, Joint Managing Director of the Company continues to be the Chairman of the Southern India Mills''Association (SIMA) for the second year in succession. He is also a member of the Committee of Administration of the Cotton Textiles Export Promotion Council(TEXPROCIL), Mumbai and the Confederation of Indian Textile Industry(CITI), Delhi. By virtue of the offices he holds, Sri Dinakaran has been representing to the Industries and Finance Ministries to get relief to the ailing Textile Industry.

COST AUDIT REPORT

As per the directions of the Cost Audit Branch of the Ministry of Corporate Affairs, M/s.S.MAHADEVAN & CO., Cost Accountants, Coimbatore, were appointed Cost Auditors for audit of Cost Accounts of the Company and their report for the year ended 31st March 2012 was submitted on 23.01.2013 to the Ministry of Corporate Affairs (VIDE SRN S 19989235 dated 23.01.2013). Due date for submission of that Cost Audit Report in XBRLfomat was 31.1.2013.

M/s.S. Mahadevan & Co. were again reappointed for Audit of Cost Accounts of the Company for the year ended 31.3.2013. Their reports for the year ended 31.3.2013 will be filed before the due date.

Directors

Sri V. Mahadevan and Dr.V.Gopalan, Directors, retire by rotation and they are eligible for reappointment. Company''s Code of Conduct applicable to the board has been adopted by the board and all the directors of the company have confirmed compliance with the Code of Conduct.

Auditors

Auditors, M/s. M.S. Krishnaswami & Rajan, Chartered Accountants, retire at the ensuing annual general meeting and they have confirmed their eligibility and willingness to accept office, if re-appointed.

Annexure

Annexure to this report details statement on directors'' responsibility, conservation of energy, technology absorption, Research and Development and foreign exchange earnings and outgo. None of the employees of the Company has drawn remuneration exceeding Rs.5 lakhs per month or Rs.60 lakhs per annum during the year. As such the information required pursuant to Sec. 217(2A) of the Companies Act, 1956 is not applicable to the Company.

Acknowledgements

Your directors thank the Company''s customers, vendors and investors for their continued support during the year. Your directors place on record their appreciation for the contribution made by employees at all levels. Your Company''s consistent growth has been made possible by the hard work, solidarity, cooperation and support of the management team.

Your directors thank State Bank of India, Karnataka Bank Limited, IDBI Bank Limited, Axis Bank Limited, Canara Bank, Indian Overseas Bank and Central Bank of India, Government of Tamil Nadu and other government agencies for their support, and look forward to their continued support in future.

For and on behalf of the Board

Salem S. Devarajan

May 27,2013 Chairman and Managing Director


Mar 31, 2012

The directors have pleasure in submitting their 38th Annual Report together with the Audited Accounts for the year ended March 31, 2012 (the year).

Performance highlights 2011-12 2010-11 (Rupees lakhs)

Turnover:

Direct exports 579 134

Merchandise exports 3048 3690

Domestic Sales 14893 16731

Total Yarn Sales 18520 20555

Conversion charges earned 32 22

Wind Energy Converter Power 127 136 sold to third party

Total turnover 18679 20713

Profit/(loss) :

Profit/(loss) before, interest and depreciation) 759 4474

Cash profit/(loss) (ie. profit/(loss) before depreciation) (1044) 3035

Profit/(loss) before tax (2164) 1921

Profit/(loss) after tax (1444) 1256

Dividend

Due to the loss incurred by the Company, your directors have not recommended any dividend for the year ended 31.3.2012.

INDUSTRY ASSOCIATIONS

During the year, Sri S. Dinakaran, Joint Managing Director of your Company was elected to be the Chairman of the Southern India Mills' Association (SIMA). He is also a member of the Committee of Administration of The Cotton Textiles Export Promotion Council( TEXPROCIL), Mumbai and the Confederation of Indian Textile Industry (CITI), Delhi. By virtue of the offices he holds, Mr. Dinakaran has been representing to the Industries and Finance Ministries to get relief to the ailing Textile Industry.

COST AUDIT REPORT

As per the directions of the Cost Audit Branch of the Ministry of Corporate Affairs, M/s.S.MAHADEVAN & CO., Cost Accountants, Coimbatore, were appointed Cost Auditors for audit of Cost Accounts of the Company and their report for the year ended 31st March 2011 was submitted on 14.9.2011 to the Ministry of Corporate Affairs (VIDE SRN B 20301420 dated 14.9.2011). Due date for submission of that Cost Audit Report was 27.9.2011.

M/s. S. Mahadevan & Co. were again reappointed for Audit of Cost Accounts of the Company for the year ended 31.3.2012. Their report for the year ended 31.3.2012 will be filed before the due date, i.e. 27.9.2012.

Directors

Sri RS. Ananthanarayanan and Sri D. Sudharsan, Directors, retire by rotation and are eligible for reappointment.

Your Company's Code of Conduct applicable to the board has been adopted by the board and all the directors of the company have confirmed compliance with the Code of Conduct.

Auditors

The auditors, M/s. M.S. Krishnaswami & Rajan, Chartered Accountants, retire at the ensuing annual general meeting and have confirmed their eligibility and willingness to accept office, if appointed.

Annexure .

Annexure to this report details Statement on directors' responsibility, conservation of energy, technology absorption, Research and Development and foreign exchange earnings and outgo. None of the employees of the Company has drawn remuneration exceeding Rs.5 lakhs per month or Rs.60 lakhs per annum during the year. As such the information required pursuant to Sec. 217(2A) of the Companies Act, 1956 is not applicable to the Company.

(i) Directors' Responsibility Statement as per section 217(2AA) of the Companies Act, 1956 Responsibility in relation to financial statements

The financial statements have been prepared in conformity, in all material respects, with the applicable Accounting Standards in a consistent manner and supported by reasonable and prudent judgments and estimates. The Directors believe that the financial statements reflect true and fair view of the financial position as on 31.3.2012 and of the results of operations for the year ended 31.3.2012.

The financial statements have been audited by M/s M.S. Krishnaswami & Rajan, Chartered Accountants in accordance with generally accepted auditing standards, which include an assessment of the system of internal controls and tests of transactions to the extent considered necessary by them to support their opinion. .

Going Concern

in the opinion of the Directors, Company will be in a position to carry on its existing spinning of yarn business and accordingly it is considered appropriate to prepare the financial statements on the basis of going concern.

Maintenance of accounting records and Internal controls Company has taken proper and sufficient care for maintenance of adequate accounting records as required by various Statutes.

Directors have overall responsibility for the Company's internal control system, which is designed to provide a reasonable assurance for safeguarding of assets, reliability of financial records and for preventing and detecting fraud and other irregularities.

The internal audit function, encompasses the examination and evaluation of the adequacy and effectiveness of the system of internal control and quality of performance in carrying out assigned responsibilities. Internal Audit Department interacts with all levels of management and the Statutory Auditors, and reports significant issues to the Audit Committee of the Board.

Audit Committee supervises the financial reporting process through review of accounting and reporting practices, financial and accounting controls and financial statements. Audit Committee also periodically interacts with internal and statutory auditors to ensure quality and veracity of Company's accounts.

Internal Auditors, Audit Committee and Statutory Auditors have full and free access to all the information and records as considered necessary to carry out their responsibilities. All the issues raised by them have been suitably acted upon and followed up.

Acknowledgements

Your directors thank the Company's Customers, Vendors and Investors for their continued support during the year. Your directors place on record their appreciation for the contribution made by the employees at all levels. Your Company's consistent growth has been made possible by the hard work, solidarity, cooperation and support of the management team.

Your directors thank State Bank of India, Karnataka Bank Limited, IDBI Bank Limited, Axis Bank Limited, Canara Bank, Indian Overseas Bank and Central Bank of India, Government of Tamil Nadu and other government agencies for their support, and look forward to their continued support in future.

For and on behalf of the Board

Salem S. Devarajan

May 30,2012 Chairman and Managing Director


Mar 31, 2011

Dear Members,

The directors have pleasure in submitting their 37th Annual Report together with the Audited Accounts for the year ended March 31st,2011 (the year).

Performance highlights 2010-11 2009-10 (Rupees lakhs) Turnover - gross

Direct exports 149 82

Merchandise exports 3690 2530

Domestic Sales 17215 11742

Total Yarn Sales 21054 14354

Conversion charges earned 22 24

Wind Energy Converter Power 136 129 sold to third party

21212 14507

Less sales tax and cess recovery 521 340

Total turnover 20691 14167

Gross profit (ie. profit before interest and depreciation) 4359 2968

Cash profit (ie. profit before depreciation) 3035 1739

Profit before tax 1921 646

Profit after tax 1256 469

Earnings per share - Basic Rs. 29.45 11.00

Dividend

Board of Directors of your company declared an Interim Dividend of Rs.2/- per Equity Share (@ 20% on the paid up Capital) at the Board Meeting held on 29-01-2011 which has been paid to the Share holders in February 2011. Further, your directors are pleased to recommend a Final Dividend of Rs.2/- per Equity Share {@ 20% on the paid up Capital) of Rs.10 each. The interim and the proposed final dividend will entail a cash outflow of Rs.1,98,58,643/-

Management discussion and analysis

Core business of the Company is manufacture and sale of cotton yarn. The management discussion and analysis given below discusses the key issues of the cotton yarn spinning sector.

(a) Industry performance

Textile Industry performed well during the year and demand for textile products in the domestic market and overseas market has been quite encouraging. This robust demand has led to reasonable growth and stability for the textile Industry.

(b) Company's performance

Improvement in Industry Performance is reflected in your Company's turnover recording 47% growth over previous year's turnover of Rs. 141.73 crores, crossing the Two hundred crore' - mark.

During the year 2010, 3600 Spindles were added to the capacity in third unit, thereby increasing the total installed capacity to 89,052 spindles from 85,452 Spindles. Remaining portion of the project involving 15,600 Spindles and 24 looms would be installed at the appropriate time.

Your Company's Wind Energy Converters (WEC) generated power of the value of Rs.939 lakhs as against Rs.1011 lakhs recorded in the previous year.

(c) Outlook

Even though Cotton Price is highly volatile and speculative at present, your directors are of opinion that it would stabilize in the next few months and the industry expects to improve its performance during the year. Demand for your Company's product is very appreciable both in international market and in domestic market.

(d) Strategies and Future Plans

As part of future plans the deferred expansion project will be taken up for implementation, at the appropriate time. This will help to improve value addition as well as captive consumption of yarn produced by the Company.

(e) Internal control and systems

Your company has in place well established internal control procedures covering various areas such as procurement of raw materials, production planning, quality control, maintenance planning, marketing, cost control and debt servicing and steps are taken without loss of time, whenever any weakness is observed, to correct the same.

(f) Human Resources Management

Employees are your Company's most valuable resource. Your Company continues to create a favourable environment at work place. Your Company has various welfare measures both government sponsored and privately envisaged. The Company also recognises the importance of training and consequently deputes its work force in various work related courses/seminars including important issues like Total Quality Management (TQM). Because of these, your Company is able to. attract and retain well trained and dedicated workforce. The fact that relationship with the employees continued to be cordial is testimony to the Company's ability to retain high quality workforce. In view of the aforesaid relationship no man days were lost during the year under report.

(g) Corporate Social Responsibility

Your Company's main activity may be centered around making quality yarn but its concern reaches out beyond the above stated business, to the welfare of your Company's employees and to the society at large to which your Company owes its growth. With this avowed initiative your Company has been imparting comprehensive training to the new entrants to the Company's fold as well as part of continuing technical education to the existing staff and workforce. Your Company, along with your group's associate Company Kandagiri Spinning Mills Limited, is collaborating with two multi specialty hospitals in Salem which, apart from rendering medical service to your Company's employees and their families are also offering medical relief to the public at large at subsidized rates.

(h) Cautionary note

Statements in the Directors' report and the management discussion and analysis describing the Company's objectives, expectations or predictions may be forward looking within the meaning of applicable securities laws and regulations. Actual results might differ materially from those expressed in the statement. Important factors that could influence the Company's operations include global and domestic demand and supply conditions affecting selling prices of finished goods, input availability and prices, changes in government regulations, tax laws, economic developments within the country and other related factors such as litigation and industrial relations.

Homage to Founder Director and Former Chairman

Your Directors note with deep regret the sad demise of Sri S.R Ratnam, founder director and former Chairman of the Company, on January 21, 2011, Your Directors place on record their deep sense of appreciation for the valuable services rendered by him to the Company during the tenure of his office.

Directors

Sri N. Asoka retires by rotation and is eligible for reappointment.

Sri A. G. Venkatesan also retires by rotation but he desires not to be re-elected. Board records its appreciation for the valuable services rendered by him to the Company during the tenure of his office.

The Company's Code of Conduct applicable to the Board has been adopted by the Board and all directors of the Company have confirmed compliance with the Code of Conduct.

Auditors

The auditors, M/s. M.S. Krishnaswami & Rajan, Chartered Accountants, retire at the ensuing annual general meeting and have confirmed their eligibility and willingness to accept office, if reappointed.

Annexure

Annexure to this report details Statement on directors' responsibility, conservation of energy, technology absorption, Research and development and foreign exchange earnings and outgo. None of the employees of the Company has drawn remuneration exceeding Rs.5 lakhs per month or Rs.60 lakhs per annum during the year. As such the information pursuant to Sec. 217(2A) of the Companies Act, 1956 is not applicable to the Company.

Acknowledgements

Your directors thank the Company's customers, vendors and investors for their continued support during the year. Your directors place on record their appreciation of the contribution made by employees at all levels. Your Company's consistent growth was made possible by the hard work, solidarity, cooperation and support of the management team.

Your directors thank State Bank of India, Karnataka Bank Limited, IDBI Bank Limited, Axis Bank Limited, Canara Bank, Indian Overseas Bank, and Central Bank of India, and the Government of Tamil Nadu and other government agencies for their support, and look forward to their continued support in future.

For and on behalf of the Board S. Devarajan Chairman and Managing Director

Salem May 23, 2011


Mar 31, 2010

The directors have pleasure in submitting their 36th Annual Report together with the Audited Accounts for the year ended March 31, 2010 (the year).

Performance highlights 2009-10 2008-09

(Rs. lakhs)

Turnover - gross Direct exports 82 63

Merchandise exports 2530 2509

2612 2572

Domestic Sales 11742 9350

Conversion and testing charges earned 24 37

14378 11959 Less sales tax and cess recovery 340 266

Total turnover 14038 11693

Gross profit (ie. profit before interest and depreciation) 2968 1796

Cash profit (ie, profit before depreciation) 1739 466

Profit/floss) before tax 646 (538)

ProfiV(loss) after tax 469 (382)

Earnings per share - Basic Rs. 11.00 (8.96)

Dividend

With a view to conserving the reserves and also to meet the increase in requirements of working capital, your directors do not recommend any dividend for the year ended March 31, 2010.

Management discussion and analysis

The core business of the Company is manufacture and sale of cotton yarn. The management discussion and analysis given below discusses the key issues of the cotton yarn spinning sector.

(a) Industry performance

The initial worries associated with economic slowdown endured at the beginning of the year have been replaced with cautious optimism for the Indian market as the demand and price for yarn picked up from the middle of the year 2009. The fiscal and other initiatives taken by the Government of India have eased the pressures in the economy leading to a revival of textile industry. However the high raw material cost and the continuing power cut and restrictions on power supply during peak hour affected the performance of textile industry in Tamilnadu.

(b) Companys performance

Despite the above said adverse factors, the turnover of your Company increased to Rs. 14,038 lakhs as against Rs. 11,693 lakhs, an improvement of 20% due to buoyant yarn selling price combined with good demand for yarn in the domestic market. In spite of a record cotton crop, prices continued to rule abnormally high on account of Governments decision allowing exports of cotton. Consequently the operating profit increased to Rs.2968 lakhs from Rs.l 796 lakhs.

Your Comp jnys Wind Energy Converters (WEC) generated power of the value of Rs. 1011 lakhs as against Rs.859 lakhs in the previous year. During the year also, your Company earned an income of Rs. 107 lakhs from carbon credits as against Rs. 166 lakhs in the previous year.

(c) Outlook

The cotton price continues to be high in spite of expected record production of cotton crop and restrictions on export of cotton. Correspondingly the yarn prices are also ruling high, while the demand for yarn in the domestic market is encouraging. However the divergent interests of different sectors of the textile industry need to be property balanced and the timely intervention by the Central Government continues to oe necessary. Barring unforeseen circumstances, your directors are confident that during the current year also your Company will be able to increase its productivity and profitability significantly.

(d) Strategies and Future plans

As parr of future plans the deferred expansion will be taken up for implementation, provided the present situation continues to improve. The Company also is actively examining the entry into weaving sector. This will help to improve value addition as well as captive consumption of yarn.

(e) Risks and concerns

(1) Inaustry risk

The main twin risks in this industry, especially in the cotton yarn spinning sector, are the procurement prices for quality cotton and the fluctuation in yarn realization. Raw material prices, as is common with every industry, are conditioned by their supply position in the market. This problem invariably gets compounded by the impact of import duty on cotton which sometimes renders the prices uneconomical and unrestricted export of cotton.

In the case of marketing of yarn, the price realisation depends on the demand from garment manufacturers and power loom sector. In recent times the competition from the emerging economies in the neighbouring countries such as Sri Lanka, China and Pakistan with their comfortable status engendered by the preferential treatment in USA and EU markets pose a real challenge to the textile yarn spinning units.

The vagaries in the power situation in Tamilnadu, accentuated by the monsoon playing truant, affects the smooth flow of production resulting in higher cost without corresponding increase in the realisation.

(2) Currency risk

Your Company is taking the requisite ongoing steps to closely monitor the exchange rate movements by proper hedging against various associated risks.

(3) Quality concern

Quality of yarn manufactured is the single most important factor that will take a Company forward in its success story. Your Company has been aware of the said importance from its inception and the progress that it has made through the years was mainly because of the strict adherence to the quality of its yarn which has resulted in the Company reaping the best possible price for its yarn, both in the Internal and international markets. The award of ISO 9001:2000 accreditation to the Company and Organic cotton standards certificate of the Control Union Certifications, Netherlands and ECO certificate from Shirley Technologies Limited, UK are fitting testimony of the efforts taken by the Company in this regard.

(4) Research and development

Your Companys Research and development activities have been taken care of by a separate wing called Sambandam Research and Development Foundation. On the strength of its research and development efforts under the said foundation, the National Accreditation Board for Testing and Calibratic Laboratories, New Delhi, has granted accreditation.

(f) Internal control and systems

The Company has in place well established internal control procedures covering various areas such as procurement of raw materials, production planning, quality control, maintenance planning, marketing, cost control and debt servicing. Necessary checks and balances have been instituted for timeiy corrO. Tion.

(g) Human resources management

Employees are your Companys most valuable resource. Your Company continues to create a favourable environment at work place. Your Company has various welfare measures both government sponsored and privately envisaged. The Company also recognises the importance of training and consequently deputes its work force to various work related courses/seminars including important issues like Total Quality Management (TQM). Because of these, your Company is able to attract and retain well trained and dedicated workforce. The fact that the relationship with the employees continued to be cordial is testimony to the Companys ability to retain high quality workforce. In view of the aforesaid relationship no man days were lost during the year under report.

(h) Corporate Social Responsibility

Your Companys main activity may be centered around making quality yarn but its concerns reach out beyond the above stated business, to the welfare of your Companys employees and to the society at large to which your Company owes its growth. With this initiative, your Company has been imparting comprehensive training to the new entrants to the Companys fold, simultaneously continuing technical education to the existing staff and workforce. Your Company, along with your groups associate Company Kandagiri Spinning Mills Limited, is collaborating with two multi speciality hospitals in Salem which, apart from rendering medical service to your Companys employees and their families are also offering medical relief to the public at large at subsidized rates.

(i) Cautionary Note

Statements in the Directors report and the management discussion and analysis describing the Companys objectives, expectations or predictions may be forward looking within the meaning of applicable securities laws and regulations. Actual results might differ materially from those either expressed or implied in the statement. Important factors that could influence the Companys operations include global and domestic demand and supply conditions affecting selling prices of finished goods, input availability and prices, changes in government regulations, tax laws, economic developments within the country and other related factors such as litigation and industrial relations.

Directors

Sri V. Mahadevan and Sri V. Gopalan retire by rotation and are eligible for reappointment.

Sri D. Sudharsan, Whole time Director, whose period of appointment expired on March 31, 2010 was not willing for reappointment as Whole time Director in view of his preoccupation with other Companies. However he continues to be a Director of the Company.

The Companys Code of Conduct applicable to the board has been adopted by the board and all the directors of the Company have confirmed compliance with the Code of Conduct.

Auditors

The auditors, M.S. Krishnaswaml & Rajan, Chartered Accountants, retire at the ensuing annual general meeting and have confirmed their eligibility and willingness to accept office, if appointed.

Annexure

Annexure to this report details Statement on directors responsibility, conservation of energy, technology absorption, Research and Development and foreign exchange earnings and outgo.

Appreciation

Your directors record their sincere appreciation of the dedication and commitment of all employees in achieving and sustaining excellence in all areas of the business. Your directors thank the Shareholders, customers, suppliers and bankers and other stakeholders for their continued support during the year. Your Companys consistent growth has been made possible by the hard work, solidarity, cooperation and support of the management team.

Your directors thank State Bank of India, Karnataka Bank Limited, IDBI Bank Limited, Axis Bank Limited, Canara Bank, Indian Overseas Bank and Central Bank of India the Government of Tamil Nadu and other government agencies for their support, and look forward to their continued support in future.

For and on behalf of the Board Salem S. Devarajan

May 29, 2010 Chairman and Managing Director

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