Directors Report of Supreme Tex Mart Ltd.

Mar 31, 2016

DIRECTORS'' REPORT

Dear Members,

The Directors hereby present their 28^th Annual Report on the business and operations of the Company together with the audited Financial Accounts for the year ended March 31, 2016. The Management Discussion and Analysis has also been incorporated into this report.

1. HIGHLIGHTS OF PERFORMANCE

- The net sale for the year is Rs, 362.35 Crores as compared to Rs, 429.92 Crores of previous year.

- The Net Loss for the year ended 31.03.2016 is Rs, 178.84 Crore as compare to Net Loss of Rs, 208.34 Crores for the previous year.

2. FINANCIAL RESULTS

_Amount in Crores

Particulars	Year ending 31.03.2016	Year ending 31.03.2015
Net Turnover	362.35	429.92
Profit before Depreciation	(108.42)	(61.34)
Profit / Loss(-) before Tax	(178.84)	(208.34)
Less Provision for Tax (including deferred and fringe benefit tax)	0	0
Profit / Loss(-) after Taxes	(178.84)	(208.34)

3. RESERVE

Due to losses in the current year, the company has not transferred any amount in any reserve.

4. DIVIDEND

In view of heavy losses company has decided not to declare any dividend.

5. SHARE CAPITAL

The paid up Equity Share Capital as on 31^st March, 2016 is Rs, 34.11 Crores. During the year under review, the Company has not issued shares with differential voting rights or granted stock options or issued sweat equity or purchased its own shares.

Company® accumulated losses have exceeded its entire net worth as on 31.03.2016 and has become Sick Industrial Company in accordance with the provisions of Sick Industrial Companies (Special Provisions) Act, 1985.

6. FINANCE

Cash and Cash equivalent as at 31^st March, 2016 is Rs, 12.65 Crore. The Company continues to focus on judicious management of working capital. Working Capital parameters are kept under strict check through continuous monitoring.

6.1 DEPOSITS

During the year, Company has not accepted any deposit from the public falling within the ambit of Section 73 of Companies Act, 2013 and the Companies (Acceptance of Deposits) Rules, 2014.

6.2 PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

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

7. INDUSTRY AND ECONOMIC SCENARIO & OUTLOOK

As regards Indian economy, after years of diminutive growth the reform momentum has picked up in India..The Indian economy grew at 7.6 per cent in 2015-16 due to improvement in the performance of both services as well as manufacturing sectors. The government expects it to expand at above 8% in 2016-17. India''s overall textile exports had remained almost flat at $40 billion in 2015-16 from $41.6 billion in the previous financial year, a result of sluggish economic conditions Globally. It also fell short of the year''s target of $47.5 billion set by the government. With a host of incentives and a Rs 6,000 crore package announced in the recent to boost textile and apparel exports, the government has set a higher target for year 2016-17.

8. FINANCIAL / OPERATIONAL PERFORMANCE

Supreme is manufacturer and exporter of cotton yarn, synthetic yarn, blended yarn, knitted fabric (both grey and processed) and knitted garments. During the year under review, the Company''s exports (FOB value) were to the tune of Rs,65.69 crore and accounts for about 18.13% of company® revenues. The company has identified two segments yarn segment and garments segment. The yarn segment comprises production of various types of yarn (from cotton, manmade fibers and blend thereof) and yarn processing activities. Garment segment comprises of knitted garments.

9. CORPORATE SOCIAL RESPONSIBILITY (CSR) INITIATIVES

As part of its initiatives under "Corporate Social Responsibility (CSR), the Company has formed requisite CSR Committee and CSR policy was also approved by the Board, as per the requirement of Companies Act, 2013. The details of the CSR Committee and CSR Policy is explained in the Corporate Governance Report and also posted on the website of the Company. The Report of the Corporate Social Responsibility (CSR) Activities is annexed herewith as "Annexure AD

10. HUMAN RESOURCES

The Company recognizes people as its most valuable asset and it has built an open, transparent and meritocratic culture to nurture this asset. Talent Management is a key people planning tool that provides an integrated means of identifying, selecting, developing and retaining top talent within our organization. STML has kept a sharp focus on Employee Engagement.

11. BUSINESS RISK MANAGEMENT

Pursuant to the requirement of clause 49 of listing agreement/SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company has constituted a Business Risk Management Committee. The details of Committee and its terms of reference are set out in the Corporate Governance Report forming part of the Boards Report. The Company has a robust Business Risk Management (BRM) framework to identify, evaluate business risks and opportunities. This framework seeks to create transparency, minimize adverse impact on the business objectives and enhance the Company® competitive advantage. The business risk framework defines the risk management approach across the enterprise at various levels including documentation and reporting.

The key business risks identified by the Company and its mitigation plans are as under.

Foreign Exchange Risks:-

Around 20% of the Total Revenue of the Company is generated through Export sales. In this way the Company has to deal with foreign currency from time to time. The Company uses various types of foreign currency forward & option contracts to hedge the risks associated with fluctuations in the foreign currency.

Risk related to Personnel:-

Our business is increasingly dependent on the skills and competencies of our employees and management team. The general war for talent in our growing economy has created a substantial risk related to the retention of key personnel both in manufacturing and managerial levels. This risk is mitigated through effective HR policies relating to recruitment and retention and a proactive remuneration and rewards policy that is periodically reviewed at the highest management level.

With excellent performance track as well as best HR practices we are able to attract and retain people for growth of our business.

Risk related to Safety:-

The company has taken adequate insurance covers to indemnify the risks associated with the safety of personnel, building, stock and other infrastructure of the Company. These include:

1. Fire Insurance Policies.

2. Marine/ Transit Insurance Policies.

3. Theft Insurance Policies.

4. Other Miscellaneous Policies.

The company has also taken steps to strengthen IT security system as well as physical security system at all our locations

Compliance Related Risks:-

The Company is committed to being a responsible corporate citizen and respects the laws and regulations of the country. All the compliances under various laws applicable to the Company, including under Companies Act 1956/2013, Factories Act 1948, Income Tax Act 1961 etc., are followed in Letter & Spirit.

12. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has designed and implemented a process driven framework for Internal Financial Controls . For the year ended on March 31, 2016, the Board is of the opinion that the Company has sound Internal Financial Controls commensurate with the size, scale and complexity of its business operations. During the year, such controls were testedand no material weakness in their operating effectiveness was observed. The Company has a process in place to continuously monitor the same and identify gaps, if any, and implement new and/ or improved controls whenever the effect of such gaps would have a material effect on the Company® operations.

13. VIGIL MECHANISM / WHISTLE BLOWER POLICY

The Company has a vigil mechanism named Fraud Risk Management Policy (FRM) to deal with instance of fraud and mismanagement, if any. The details of the FRM Policy is explained in the Corporate Governance Report and also posted on the website of the Company.

14. SUBSIDIARY COMPANIES

Company does not have any Subsidiary Company.

15. EXPANSION PLAN

No expansion was done during the Financial Year 2015-16.

16. DIRECTORS/KMP

During the year, Mr. Bhupinder Singh Mann (DIN No 01211549) was appointed on 12.08.2015 as an additional Independent Director and his appointment as Independent director was being regularized by shareholder in their Extra Ordinary General meeting dated 21.09.2015. Punjab State Industrial & Development Corporation Ltd. (PSIDC) withdrew the nomination of Mr. Lalit Kumar Singla (DIN No 03591398) w.e.f. 10.02.2016, from the Board of the Company,

Mr. Daljit Singh Sandhu (DIN 06750304) and Ms. Shivali Gupta (DIN 07014359), Independent Director also resigned from the Directorship of the Company as on 17.07.2015 and 31.10.2015 respectively. Mr. Sanjay Kumar Aggarwal (DIN 00085082) was appointed as additional Independent Director of the Board of the Company as on 14.11.2015 and had also resigned on 16.02.2016 from the Directorship of the Company.

During the year, Mr. Robin Vijan resigned from the Company Secretary post as well as from KMP of the Company as on 30.05.2015 and Ms. Manpreet Kaur appointed as Company Secretary and KMP w.e.f. June 01, 2015 Mr. Kuldip Singh (DIN No 05327381) and Mr. Ajay Gupta (DIN No 00842248) - Directors are liable to retire by rotation at the ensuing Annual General Meeting of the Company.

In accordance with the provisions of Section 149 of the Companies Act, 2013 and the Rules made there under, which came into effect from April 1, 2014, approval of the Members will be sought at the ensuing Annual General Meeting of the Company for formalizing the appointment of Ms. Kajal Rai (DIN 07366983) Director as an Independent Director of the Company not liable to retire by rotation, for a term of five years.

Board Evaluation

The Board has carried out an annual evaluation of its own performance, the directors and also committees of the Board based on the guideline formulated by the Nomination & Remuneration Committee. Board composition, quality and timely flow of information, frequency of meetings, and level of participation in discussions were some of the parameters considered during the evaluation process. A note on the familiarizing programme adopted by the Company for the orientation and training of the Directors and the Board evaluation process undertaken in compliance with the provisions of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 is provided in the Corporate Governance Report which forms part of this Report.

Further, a Separate Meeting of the Independent Directors of the Company was held once during the year on

14.11.2015 which also reviewed the performance of the Non-executive directors, Chairman of the Company and performance of the Board as a whole.

Declarations by Independent Directors

All Independent Directors have given declarations that they meet the criteria of independence as laid down under section 149(6) of the Companies Act, 2013 and Regulation 16(1) (b) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015,

Remuneration Policy

The Board has, on the recommendation of the Nomination & Remuneration Committee framed a policy for selection and appointment of Directors, Senior Management and their remuneration. The Remuneration Policy is stated in the Corporate Governance Report.

Meetings

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

During the year Six (6) Board Meetings and Four (4) Audit Committee Meetings were convened and held. The details of which are given in the Corporate Governance Report. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013.

Key Managerial Personnel

During the year 2015-16, the Company had three Key Managerial Personnel viz. Mr. Ajay Gupta, Managing Director & Mr. Inder Pal Singh, Chief Financial Officer and Mr. Robin Vijan, Company Secretary (upto 30.05.2015). On 30^th May, 2015, Mr. Robin Vijan resigned and Ms. Manpreet Kaur was appointed as Company Secretary of the Company in place.

In compliance with Regulation 36(3) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, brief resume of all the Directors proposed to be appointed / re-appointed are attached along with the Notice to the ensuing Annual General Meeting.

17. DIRECTORSCRESPONSIBILITY STATEMENT

To the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors make the following statements in terms of Section 134(3)(c) of the Companies Act, 2013.

i) that in the preparation of the annual accounts, the applicable Accounting Standards have been followed and that there are no material departures;

ii) that they have, in the selection of the Accounting Policies, consulted the Statutory Auditors and have 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 viz. 31.03.2016 and of the profit of the Company for that period;

iii) that 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 Companies Act, 1956/ Companies Act, 2013, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

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

v) that proper internal financial controls were in place and that the financial controls were adequate and were operating effectively.

vi) that systems to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively.

18. RELATED PARTY TRANSACTIONS

All related party transactions that were entered into during the financial year were on an arms length basis and were in the ordinary course of business. There are no materially significant related party transactions made by the Company with Promoters, Directors, Key Managerial Personnel or other designated persons which may have a potential conflict with the interest of the Company at large. Hence the Company is not required to disclose details of the related party transactions in Form AOC ? 2 pursuant to clause (h) of sub-section (3) of Section 134 of the Act and Rule 8(2) of the Companies (Accounts) Rules, 2014.

All Related Party Transactions are placed before the Audit Committee as also the Board for approval. Prior omnibus approval of the Audit Committee is obtained on a quarterly basis for the transactions which are of a foreseen and repetitive nature. The transactions entered into pursuant to the omnibus approval so granted are audited and a statement giving details of all related party transactions is placed before the Audit Committee and the Board of Directors for their approval on a quarterly basis. The statement is supported by a Certificate from MD and CFO. The Company has developed a Related Party Transactions Manual, Standard Operating Procedures for purpose of identification and monitoring of such transactions.

The policy on Related Party Transactions as approved by the Board is uploaded on the Company® website.

None of the Independent Directors has any pecuniary relationships or transactions vis-C-vis the Company.

19. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS

During the year under review, there are not any significant and material orders passed by the Regulators or Courts to the Company.

20. AUDITORS

a. Statutory Auditors:-

M/s. Nanda & Bhatia, (FRN : 004342N), Chartered Accountants, Ludhiana, had been appointed as Statutory Auditors of the Company period in Extra Ordinary general meeting held on 21.09.2015 till the conculsion of next Annual Genral Meeting. Now, the auditors submitted their resignation as on 26th August, 2016 as they are unable to continue with the company and not offer themselves as Statutory Auditor of the company.

The Board recommended the appointment M/s Datta Singla & Co., Chartered Accountants, Mandi Gobindgarh, (Firm Reg. No S06185N) be appointed as the Statutory Auditors of the Company for a period of 5 years, subject to ratification of their appointment by the members at every annual general meeting. The shareholders at the ensuing annual general meeting will consider the appointment of the Statutory Auditors. The Auditors have confirmed that they hold a valid certificate issued by the Peer Review Board of the Institute of Chartered Accountants of India.

M/s. Datta Singla & Co., Chartered Accountants, Mandi Gobindgarh, have conveyed their consent to be appointed as the Statutory Auditors of the Company along with a confirmation that, their appointment, if made by the members, would be within the limits prescribed under the Companies Act, 2013.

Membersattention is invited to the observation made by the Auditors under "Emphasis of matterDappearing in Auditors Reports. The observation made by auditors in their report alongwith the management replies on it are as follows:

1. Remark of company in reference of auditorDQualification in their report in Point No. 5 (i) is that as the banks classified the accounts of the company as Non-performing Assets, so the Company has not provided for the interest on borrowings.

2. Remark of company in reference of auditor Qualification in their report in Point No. 5 (ii) is that the Company has not provided interest of Rs, 3535.28 lacs on borrowings as the lenders have categorized the account as NPA. In case the Company, would book this expenses of Rs, 3535.28 lacs, the Earning per share (EPS) would have been Rs,(31.38).

3. Remark of company in reference of auditor Qualification in their report in Point No. 5 (iii) is that in the absence of valuation by Actuarial Company has made the Valuation of Gratuity on estimated basis on the same guidelines which the Actuarial would have followed.

4. Remark of the company in reference of Auditors Qualification regarding verification of Fixed Assets under Annexure to Auditors Report in Clause (i) is that the fixed assets of the company are being physically verified regularly. The machinery of the company is consisting of big machines which are very easy to verify and company does not need any specialist to physically verify.

5. The company does not have adequate internal control system commensurate with the size of the company and the nature of its business, for the purchase of inventory and fixed assets and for the sale of goods and services under Clause (i) & (ii) of the Annexure to Auditors Report.

Company''s Remarks: Company has adequate internal control system commensurate with the size of the company and the nature of its business, for the purchase of inventory and fixed assets and for the sale of goods and services. These systems are in place since the inception of the company.

It is pertinent to note that all the inadequacy of systems referred by the Statutory Auditors were perfect till the last financial year as per their Report of the previous years.

b. Cost Auditors:-

The Board of Directors has on the recommendation of Audit Committee, approved the appointment of M/s S.K. Verma and Associates, Cost Accountants, Khanna (Firm Registration No. 101072), as the Cost Auditors of the company for the year 2016-2017 at a remuneration of '' 60000/- plus out of pocket expenses. The proposed remuneration of the Cost Auditors would be approved by the members in the ensuing AGM.

For the year 2015-16, the Cost Audit report shall be duly filed within prescribed time.

c. Secretarial Audit:-

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed Mr. Rajeev Bhambri & Associates, (Membership No 4327) a firm of Company Secretaries in Practice to undertake the Secretarial Audit of the Company for Financial year 2015-16. The Report of the Secretarial Audit Report is annexed herewith as "Annexure BD The Board on the recommendation of Audit Committee, appointed M/s. Rajeev Bhambri & Associates as Secretarial Auditors for the Financial Year 2016-17.

21. MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY WHICH HAVE OCCURRED BETWEEN MARCH 31, 2015 AND DATE OF THE REPORT

There were no material changes and commitments affecting the financial position of the Company between the end of financial year (March 31, 2015) and the date of the Report.

22. CORPORATE GOVERNANCE

The report on Corporate Governance as stipulated under the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 forms an integral part of this Report.. The requisite certificate from the Practicing Company Secretary of the Company confirming compliance with the conditions of corporate governance is attached to the report on Corporate Governance.

23. DISCLOSURE UNDER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL), ACT, 2013

Your Directors further state that during the year under review, there were no cases filed pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

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

The information on conservation of energy, technology absorption and foreign exchange earnings and outgo stipulated under Section 134(3) (m) of the Companies Act, 2013 read with Rule 8 of The Companies (Accounts) Rules, 2014, is annexed herewith as [Annexure CD

25. EXTRACT OF ANNUAL RETURN

The details forming part of the extract of the Annual Return in form MGT 9 is annexed herewith as [Annexure DD

26. LISTING

Shares of the company are listed on National Stock Exchange of India Limited (NSE) and Bombay Stock Exchange Limited (BSE).

27. PARTICULARS OF EMPLOYEES

The table containing the names and other particulars of employees in accordance with the provisions of Section 197(12) of the Companies Act, 2013, read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is annexed to the Board''s report.

Since there is no employee receiving remuneration of Rs, 1.20 Crore or more, or employed for part of the year and in receipt of Rs, 5 lakh or more a month, there is no information requires to be given under Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014,

28. APPRECIATION AND ACKNOWLEDGEMENTS

Your Directors take this opportunity to express gratitude for valuable assistance and co-operation extended to the Company by Financial Institutions, Employees, Commercial Banks and other authorities.

29. CAUTIONARY STATEMENT

Statement in this [Management Discussion and AnalysisDdescribing the Company® objectives, projections, estimates, expectations or predictions may be [forward looking statementsDwithin the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to the Company® operations include global and Indian demand supply conditions, finished goods prices, feedstock availability and prices, cyclical demand and pricing in the Company® principal markets, changes in Government regulations, tax regimes, economic developments within India and the countries within which the Company conducts businesses and other factors such as litigation and labour negotiations. The Company assumes no responsibility to publicly amend, modify or revise any forward looking statements, on the basis of any subsequent development, information or events or otherwise.

For and on behalf of the Board

Sd/- Sd/-

Place: Ludhiana (AJAY GUPTA) (GAUTAM GUPTA)

Dated: 31.08.2016 Managing Director Jt. Managing Director

00842248 02642545

---

Mar 31, 2015

Dear Members,

The Directors hereby present their 27th Annual Report on the business and operations of the Company together with the audited Financial Accounts for the year ended March 31, 2015. The Management Discussion and Analysis has also been incorporated into this report.

1. HIGHLIGHTS OF PERFORMANCE

- The net sale for the year is Rs.429.92 as compared to Rs. 830.66 Crore of previous year.

- The Net Loss for the year ended 31.03.2015 is Rs. 208.34 Crore as compare to Net Profit of Rs. 1.15 Crores for the previous year.

2. FINANCIAL RESULTS Amount (Rs. In Crore) Particulars Year ending Year ending 31.03.2015 31.03.2014

Net Turnover 429.92 830.66

Profit before Depreciation (61.34) 26.91

Profit / Loss( -) before Tax (208.34) 0.31

Less Provision for Tax (including deferred and fringe benefit 0 (0.84) tax)

Profit / Loss( -) after Taxes (208.34) 1.15

3. RESERVE

Due to losses in the current year, the company has not transferred any amount in any reserve.

4. DIVIDEND

In view of heavy losses company has decided not to declare any dividend.

5. SHARE CAPITAL

The paid up Equity Share Capital as on 31st March, 2015 is Rs.34.11 Crores. During the year under review, the Company has not issued shares with differential voting rights or not granted stock options or not issued sweat equity or not purchased its own shares.

Company's accumulated losses have exceeded its entire net worth as on 31.03.2015 and has become Sick Industrial Company in accordance with the provisions of Sick Industrial Companies (Special Provisions) Act, 1985.

6. FINANCE

Cash and Cash equivalent as at 31st March, 2015 is Rs. 12.69 Crore. The Company continues to focus on judicious management of working capital. Working Capital parameters are kept under strict check through continuous monitoring.

6.1 DEPOSITS

During the year, Company has not accepted deposit from the public falling within the ambit of Section 73 of Companies Act, 2013 and the Companies (Acceptance of Deposits) Rules, 2014.

6.2 PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

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

7. INDUSTRY AND ECONOMIC SCENARIO & OUTLOOK

Indian economic growth in 2014 rose to 5.2% from 4.7% last year as a result of the improving macro-economic situation. The wholesale and consumer price inflation has fallen to 4.2% and 7.4% from last year's 6.3% and 10.1% on the back of a strong base effect. However, the slow pace of reforms, lack of impetus for infrastructure projects, high interest rates and tightening of fiscal policies adversely impacted the capital goods sector. Industrial production / output was also sluggish. The low economic growth appears to have bottomed out and a gradual increase in economic activity is expected in 2015. With the coming of new Govt. in the Centre it is expected that the economy should grow in the coming years and the demand for and prices of textile products should improve which will enable the Company to regain steady or better performance.

8. FINANCIAL / OPERATIONAL PERFORMANCE

Supreme is manufacturer and exporter of cotton yarn, synthetic yarn, blended yarn, knitted fabric (both grey and processed) and knitted garments. During the year under review, the Company's exports (FOB value) were to the tune of Rs.104.28 crore and accounts for about 24.26% of company's revenues. The company has identified two segment yarn segment and garments segment. The yarn segment comprises production of various types of yarn (from cotton, manmade fibers and blend thereof) and yarn processing activities. Garment segment comprises of knitted garments.

9. CORPORATE SOCIAL RESPONSIBILITY (CSR) INITIATIVES

As part of its initiatives under "Corporate Social Responsibility (CSR), the Company has formed requisite CSR Committee and CSR policy was also approved by the Board during the year, as per the requirement of Companies Act, 2013. The details of the CSR Committee and CSR Policy is explained in the Corporate Governance Report and also posted on the website of the Company. The Report of the Corporate Social Responsibility (CSR) Activities is annexed herewith as "Annexure A".

10. HUMAN RESOURCES

The Company recognizes people as its most valuable asset and it has built an open, transparent and meritocratic culture to nurture this asset. Talent Management is a key people planning tool that provides an integrated means of identifying, selecting, developing and retaining top talent within our organization. STML has kept a sharp focus on Employee Engagement.

11. BUSINESS RISK MANAGEMENT

Pursuant to the requirement of Clause 49 of the Listing Agreement, the Company has constituted a Business Risk Management Committee. The details of Committee and its terms of reference are set out in the Corporate Governance Report forming part of the Board's Report.

The Company has a robust Business Risk Management (BRM) framework to identify, evaluate business risks and opportunities. This framework seeks to create transparency, minimize adverse impact on the business objectives and enhance the Company's competitive advantage. The business risk framework defines the risk management approach across the enterprise at various levels including documentation and reporting.

The key business risks identified by the Company and its mitigation plans are as under.

Foreign Exchange Risks:-

Around 20% of the Total Revenue of the Company is generated through Export sales. In this way the Company has to deal with foreign currency from time to time. The Company uses various types of foreign currency forward & option contracts to hedge the risks associated with fluctuations in the foreign currency.

Risk related to Personnel:

Our business is increasingly dependent on the skills and competencies of our employees and management team. The general war for talent in our growing economy has created a substantial risk related to the retention of key personnel both in manufacturing and managerial levels. This risk is mitigated through effective HR policies relating to recruitment and retention and a proactive remuneration and rewards policy that is periodically reviewed at the highest management level.

With excellent performance track as well as best HR practices we are able to attract and retain people for growth of our business.

Risk related to Safety:-

The company has taken adequate insurance covers to indemnify the risks associated with the safety of personnel, building, stock and other infrastructure of the Company. These include:

1. Fire Insurance Policies.

2. Marine/ Transit Insurance Policies.

3. Theft Insurance Policies.

4. Other Miscellaneous Policies.

The company has also taken steps to strengthen IT security system as well as physical security system at all our locations

Compliance Related Risks:-

The Company is committed to being a responsible corporate citizen and respects the laws and regulations of the country. All the compliances under various laws applicable to the Company, including under Companies Act 1956/2013, Factories Act, Income Tax Act 1961 etc., are followed in Letter & Spirit.

12.INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company's internal control system is designed to ensure operational efficiency, protection and conservation of resources, accuracy and promptness in financial reporting and compliance with laws and regulations. The internal control system is supported by an internal audit process for reviewing the adequacy and efficacy of the Company's internal controls, including its systems and processes and compliance with regulations and procedures. The Audit Committee of the Board of Directors reviews the adequacy and effectiveness of internal control systems and suggests improvements for strengthening them from time to time.

13. VIGIL MECHANISM / WHISTLE BLOWER POLICY

The Company has a vigil mechanism named Fraud Risk Management Policy (FRM) to deal with instance of fraud and mismanagement, if any. The details of the FRM Policy is explained in the Corporate Governance Report and also posted on the website of the Company.

14. SUBSIDIARY COMPANIES

Company does not have any Subsidiary Company.

15. EXPANSION PLAN

No expansion was done during the Financial Year 2014-15.

16. DIRECTORS/KMP

Mr. Ashok Kumar Singla (DIN No 00285760) and Ms. Simpal Kumari (DIN No 07130429) were appointed on 01.05.2014 and 31.03.2015 respectively as an additional Director during the year to hold the office up to the conclusion of the ensuing Annual general Meeting. Punjab State Industrial & Development Corporation Ltd. (PSIDC) withdrew the nomination of Mr. Ajay Mahajan (DIN No 00648889) w.e.f 30.06.2014, from the Board of the Company, Mr. S.K Ahuja (DIN No 00399501) existing Nominee Director of PSIDC was appointed as a new Chairman of the Company in place of Mr. Ajay Mahajan and Mr. L K Singla (DIN No 03591398) was appointed as a new Nominee Director by PSIDC w.e.f. 03.03.2015. Mr. Inderpal Singh- was appointed as CFO (Key Managerial Personnel as per the requirement of Section 203 of the Companies Act, 2013) of the Company. The appointment of Mr. Ajay Gupta- DIN No 00842248 (Managing Director) and Mr. Robin Vijan (Company Secretary) was approved as KMP.

In the month of May, 2015 Mr. Robin Vijan resigned from the Company Secretary post as well as from KMP of the Company and Ms. Manpreet Kaur appointed as Company Secretary and KMP w.e.f. June 01,2015. In June, 2015 Mr. Ashok Kumar Singla, Independent Director also resigned from the Directorship of the Company and Ms. Shivali Gupta (DIN 07014359) was appointed as additional Director of the Board of the Company.

Mr. Gautam Gupta (DIN No 02642545) and Mr. A. P. Gupta (DIN No 00421536) - Directors are liable to retire by rotation at the ensuing Annual General Meeting of the Company. In accordance with the provisions of Section 149 of the Companies Act, 2013 and the Rules made there under, approval of the Members will be sought at the ensuing Annual General Meeting of the Company for the appointment of Ms. Simpal Kumari and Ms. Shivali Gupta - Director as an Independent Director of the Company not liable to retire by rotation, for a term of five years.

Board Evaluation

Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement, the Board has carried out an annual performance evaluation of its own performance, the directors individually as well as the evaluation of the working of its Audit, Nomination & Remuneration. The manner in which the evaluation has been carried out has been explained in the Corporate Governance Report.

Declarations by Independent Directors

All Independent Directors have given declarations that they meet the criteria of independence as laid down under section 146(6) of the companies Act 2013 and clause 49 of the listing Agreement.

Remuneration Policy

The Board has, on the recommendation of the Nomination & Remuneration Committee framed a policy for selection and appointment of Directors, Senior Management and their remuneration. The Remuneration Policy is stated in the Corporate Governance Report.

Meetings

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

During the year Five (5) Board Meetings and Four (4) Audit Committee Meetings were convened and held. The details of which are given in the Corporate Governance Report. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013.

17. DIRECTORS' RESPONSIBILITY STATEMENT

To the best of their knowledge and belief and according to the informations and explanations obtained by them, your Directors make the following statements in terms of Section 134(3)(c) of the Companies Act, 2013:

i) that in the preparation of the annual accounts, the applicable Accounting Standards have been followed and that there are no material departure;

ii) that they have, in the selection of the Accounting Policies, consulted the Statutory Auditors and have 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 viz. 31.03.2015 and of the profit of the Company for that period;

iii) that 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 Companies Act, 1956/ Companies Act, 2013, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

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

v) that proper internal financial controls were in place and that the financial controls were adequate and were operating effectively;

vi) that systems to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively.

18. RELATED PARTY TRANSACTIONS

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

All Related Party Transactions are placed before the Audit Committee as also the Board for approval. Prior omnibus approval of the Audit Committee is obtained on a quarterly basis for the transactions which are of a foreseen and repetitive nature. The transactions entered into pursuant to the omnibus approval so granted are audited and a statement giving details of all related party transactions is placed before the Audit Committee and the Board of Directors for their approval on a quarterly basis. The statement is supported by a Certificate from MD and CFO. The Company has developed a Related Party Transactions Manual, Standard Operating Procedures for purpose of identification and monitoring of such transactions.

The policy on Related Party Transactions as approved by the Board is uploaded on the Company's website.

None of the Independent Directors has any pecuniary relationships or transactions vis-a-vis the Company.

19. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS

During the year under review, there are not any significant and material orders passed by the Regulators or Courts to the Company.

20. AUDITORS

a. STATUTORY AUDITORS:-

The Company's Auditors, M/s. Ashish Agarwal & Co., (FRN:010788N) Chartered Accountants, Ludhiana are retiring at the ensuing Annual General Meeting of the Company.

M/s Sanjeev Jethi & Associates (FRN : 023587N), Chartered Accountant, Ludhiana is appointed as Statutory Auditors subject to the approval of the shareholders for the Financial year 2015-16 in place of M/s. Ashish Agarwal & Co., (FRN: 010788N), Chartered Accountant, Ludhiana. They have confirmed their eligibility under Section 141 of the Companies Act, 2013 and the Rules framed thereunder for reappointment as Auditors of the Company. Members' attention is invited to the observation made by the Auditors under "Emphasis of matter" appearing in Auditors Reports. The observation made by auditor's in their report alongwith the management replies on it are as follows:

1. Remark of company in reference of auditor' Qualification in their report in Point No. 5 (i) is that the Company has the practice to confirm balances from the periodical Statements of Account received from all the parties; however, Auditors have not recognized it as an alternative procedure with regard to verification of the balances.

2. Remark of company in reference of auditor' Qualification in their report in Point No. 5 (ii) is that amount in question is outstanding export proceeds which are overdue for more than one year and in spite of a lot of efforts by Company, the amount is still outstanding. Although company is trying its best to recover the amount, but for the prudent accounting, degree of risk involved, better transparency and for depicting true and fair picture, it was considered sensible to book the provision.

3. Remark of company in reference of auditor' Qualification in their report in Point No. 5 (iii) is that he negative net worth and business loss is temporary phenomena arising due to sub-optimum capacity utilization and unsustainable debt burden. The recoverable amount of assets is more than the carrying value; therefore there is no need to recognize any loss on account of impairment of assets.

4. Remark of company in reference of auditor' Qualification in their report in Point No. 5 (iv and (v) is that Some of the Banks have categorized the account as NPA and are not booking interest in our Account, hence on the same lines; company is also not booking the same. In case company would have booked this Expenses of Rs. 1241.78 Lacs, our EPS would have been Rs. (32.36).

5. Remark of company in reference of auditor' Qualification in their report in Point No. 5 (vi) is that in the absence of valuation by Actuarial Company has made the Valuation of Gratuity on estimated basis on the same guidelines which the Actuarial would have followed.

6. Remark of the company in reference of Auditor's Qualification regarding verification of Fixed Assets under Annexure to Auditor's Report in Clause (i) is that the fixed assets of the company are being physically verified regularly. The machinery of the company is consisting of big machines which are very easy o verify and company does not need any specialist to physically verify.

7. Remark of the company in reference of Auditor's

Qualification regarding verification of Fixed Assets under Annexure to Auditor's Report in Clause (ii) is that Company has been doing physical verification as an ongoing process and its scope and coverage is 100% of stocks. Moreover, company is also getting physical verification of all of its stocks from independent Stock Auditors, duly empanelled with SBI, once or twice every year.

8. The company does not have adequate internal control system commensurate with the size of the company and the nature of its business, for the purchase of inventory and fixed assets and for the sale of goods and services under Clause (iv) of the Annexure to Auditor's Report.

Company's Remarks: Company has adequate internal control system commensurate with the size of the company and the nature of its business, for the purchase of inventory and fixed assets and for the sale of goods and services. These systems are in place since the inception of the company.

It is pertinent to note that all the inadequacy of systems referred by the Statutory Auditors were perfect till the last financial year as per their Report of the previous years.

9. In reference of qualification given under Clause (vii) to Annexure to Auditor's Report, the Management clarifies that due to substantial losses, company has not been able to meet its liabilities on their respective due dates.

b. COST AUDITORS:-

For the Financial Year 2014-15, Company wasn't required to appoint Cost Auditors, as per the requirement of Companies act, 2013. With the new Costing Rules, now the Company again will be required to appoint Cost Auditor for the Financial Year 2015-16. The Board on the recommendation of Audit Committee, appointed M/s. S.K Verma and Associates (FRN 101072 ) as Cost Auditors for the Financial Year 2015-16 and the remuneration of the Cost Auditor decided by the Board need to be ratified by the Members in the AGM.

c. SECRETARIAL AUDIT:-

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed Mr. Rajeev Bhambri & Associates, (Membership No 4327) a firm of Company Secretaries in Practice to undertake the Secretarial Audit of the Company for Financial year 2014-15. The Report of the Secretarial Audit Report is annexed herewith as "Annexure B".

The Board on the recommendation of Audit Committee, appointed M/s. Rajeev Bhambri & Associates as Secretarial Auditors for the Financial Year 2015-16.

21. CORPORATE GOVERNANCE

As per Clause 49 of the Listing Agreement with the Stock Exchanges, a separate section on corporate governance practices followed by the Company, together with a certificate from Practicing Company Secretary confirming compliance forms an integral part of this Report.

22. DISCLOSURE UNDER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL), ACT, 2013

Your Directors further state that during the year under review, there were no cases filed pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

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

The information on conservation of energy, technology absorption and foreign exchange earnings and outgo stipulated under Section 134(3) (m) of the Companies Act, 2013 read with Rule, 8 of The Companies (Accounts) Rules, 2014, is annexed herewith as 'Annexure C".

24. EXTRACT OF ANNUAL RETURN

The details forming part of the extract of the Annual Return in form MGT 9 is annexed herewith as "Annexure D".

25. LISTING

Shares of the company are listed on National Stock Exchange of India Limited (NSE) and Bombay Stock Exchange Limited (BSE).

26. PARTICULARS OF EMPLOYEES

The table containing the names and other particulars of employees in accordance with the provisions of Section197(12)ofthe Companies Act, 2013,readwith Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 i s annexed to the Board's report.

Since there is no employee receiving remuneration of Rs.60 lakh or more, or employed for part of the year and in receipt of Rs.5 lakh or more a month, there is no information requires to be given under Rule 5(2) of the Companies (Appointment and Remunerationof Managerial Personnel)Rules,2014

27. APPRECIATION AND ACKNOWLEDGEMENTS

Your Directors take this opportunity to express gratitude for valuable assistance and co-operation extended to the Company by Financial Institutions, Employees, Commercial Banks and other authorities.

28. CAUTIONARY STATEMENT

Statement in this "Management Discussion and Analysis" describing the Company's objectives, projections, estimates, expectations or predictions may be "forward looking statements" within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to the Company's operations include global and Indian demand supply conditions, finished goods prices, feedstock availability and prices, cyclical demand and pricing in the Company's principal markets, changes in Government regulations, tax regimes, economic developments within India and the countries within which the Company conducts businesses and other factors such as litigation and labour negotiations. The Company assumes no responsibility to publicly amend, modify or revise any forward looking statements, on the basis of any subsequent development, information or events or otherwise.

For and on behalf of the Board

sd/- sd/- Place: Ludhiana Ajay Gupta Gautam Gupta Date : 23.06.2015 Managing Director Jt. Managing Director DIN: 00842248 DIN : 02642545

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Mar 31, 2014

Dear Members,

The Directors hereby present their Twenty-sixth Annual Report on the business and operations of the Company together with the audited Financial Accounts for the year ended March 31, 2014.

Financial Performance

Amount in Crores

Particulars Year ending Year ending 31.03.2014 31.03.2013

Net Turnover 830.66 894.19

Profit before Depreciation 26.91 42.14

Profit / Loss(-) before Tax 0.31 25.10

Less Provision for Tax (including deferred and fringe benefit tax) (0.84) 9.05

Profit / Loss(-) after Taxes 1.15 16.05

Operations Detail

Production in both the spinning units was 239.85 lacs kgs. as compared to the figure of 334.05 lacs kgs. In the garment unit, 5.96 lacs pieces of garments & 678.96MT Fabric were produced as compared to the figure of previous year of 9.46 lacs pieces of garments and 749.95MT of fabric. Net Turnover during the year under review has shown decrease of 7.11%. There is net profit of Rs.1.15 Crores as compared to net profit of 16.05 Crores in the previous year. Cash profit during the current year ending on 31.03.2014 decreased to Rs.26.50 Crores from the figure of Rs. 41.39 Crores in the previous year ending on 31.03.2013.

DIVIDEND

In view of low profits company has decided not to declare any dividend

EXPANSION PLAN

No expansion was done during the Financial Year 2013-14.

AUDITORS

The Auditors, M/s. Ashish Agarwal & Co., Chartered Accountants, Ludhiana will retire at the conclusion of the forthcoming Annual General Meeting and being eligible, offer themselves for re-appointment.

AUDITORS'' REPORT

The Statutory Auditors of the company in their Report have made an observation that undisputed income tax payable of Rs. 4,80,12,000/- for previous year ended on 31.03.2013 has not been deposited with Income Tax Authorities & has been outstanding for more than six months.

The Management of the Company in this regard has explained that due to cash crunch the amount of Income Tax could not be paid the same will be paid in the current Financial Year. The other points of Auditors'' report on the Accounts are self-explanatory and needs no comments.

DIRECTORS

Mr. Sanjay Gupta, Whole time Director, Mr. B.B Goel and Mr. R. C Singal - Independent Directors resigned during the year. Office of Director of Mr. Marcel Menda was also vacated pursuant to the provisions of Section 283 of the Companies Act, 1956. Your Directors on behalf of the Company convey their thanks to the outgoing Directors for the services rendered by them. Mr. Daljeet Singh Sandhu and Mr. Rajeev Bhambri was appointed as an additional Director during the year to hold the office up to the conclusion of the ensuing Annual general Meeting. In the month of May Mr. Rajeev Bhambri also resigned from the office of Director and Mr. Ashok Kumar Singla was appointed as additional director on the Board of the Company.

Mr. Ajay Gupta and Mr. Kuldeep Singh- Directors are liable to retire by rotation at the ensuing Annual General Meeting of the Company. In accordance with the provisions of Section 149 of the Companies Act, 2013 and the Rules made there under, which came into effect from April 1, 2014, approval of the Members will be sought at the ensuing Annual General Meeting of the Company for formalizing the appointment of Mr. Daljeet Singh Sandhu, and Mr. Ashok Kumar Singla- Director as an Independent Director of the Company not liable to retire by rotation, for a term of five years.

PERSONNEL

Since there is no employee receiving salary Rs.60 Lacs or more P.A. or Rs.5.00 Lacs or more P.M., there is no information requires to be given pursuant to the provisions of Section 217(2A) of the Companies Act, 1956.

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

Particular with respect to conservation of energy and other areas as per Section 217(1) (e) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 are annexed hereto and form part of this report.

CORPORATE GOVERNANCE

Company is required to comply with the provision of Clause 49 of the Listing Agreements with Stock Exchanges and Company has accordingly complied all the required provisions as detailed in annexure of Annual Report.

LISTING

Shares of the company are listed on National Stock Exchange of India Limited (NSE) and Bombay Stock Exchange Limited (BSE).

DIRECTORS'' RESPONSIBILITY STATEMENT

Pursuant to Section 217 (2AA) of the Companies Act, 1956, the Directors, confirm that -

i) in the preparation of the annual accounts, the applicable accounting standards have been followed and that there are no material departures;

ii) they have, in the selection of the Accounting Policies, consulted the Statutory Auditors and have 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 viz. 31.03.2014 and of the profit of the Company for that period;

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 Companies Act, 1956, 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.

APPRECIATION AND ACKNOWLEDGEMENTS

Your Directors take this opportunity to express gratitude for valuable assistance and co-operation extended to the Company by Financial Institutions, Employees, Commercial Banks and other authorities.

For and on behalf of the Board

S/d- S/d- Place: Ludhiana (AJAY GUPTA) (GAUTAM GUPTA) Dated: 30.05.2014 Managing Director Jt. Managing Director

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Mar 31, 2013

Dear Members,

The Directors hereby present their Twenty-fifth Annual Report on the business and operations of the Company together with the audited Financial Accounts for the year ended March 31,2013.

Financial Performance

Amount in Crores Year ending Year ending Pramruiars 31-03-13 31-03-12

Net Turnover 894.19 846.56

Profit before Depreciation 42.14 41.09

Profit / Loss (-) before Tax 25.10 23.76

Less Provision for Tax (including deferred and fringe benefit tax) 9.05 7.92

Profit/Loss(-) after Taxes 16.05 15.84

Operations Detail

Production in both the spinning units was 334.05 lacs kgs. as compared to the figure of 222.51 lacs kgs. In the garment unit, 9.46 lacs pieces of garments & 749.95 MT Fabric were produced as compared to the figure of previous year of 17.24 lacs pieces of garments and 2393 MT of fabric. Net Turnover during the year under review has shown an increase of 5.84%. There is net profit of Rs.16.05 Crores as compared to net profit of Rs.15.84 Crores in the previous year. Cash profit during the current year ending on 31.03.2013 increased to Rs. 41.39 Crores from the figure of Rs.41.05 Crores in the previous year ending on 31.03.2012.

DIVIDEND

In view of ensuing expansions, Company has decided not to declare any dividend.

EXPANSION PLAN

The Projects related to Knitted Garments, 66 KVAand expansion in Spinning Unit are fully installed.

AUDITORS

The Auditors, M/s. Ashish Agarwal & Co., Chartered Accountants, Ludhiana will retire at the conclusion of the forthcoming Annual General Meeting and being eligible, offer themselves for re-appointment.

AUDITORS'' REPORT

The Statutory Auditors of the Company in their Report have made an observation that the Company has not provided for doubtful debts in respect of debtors outstanding for over 2 years as indicated in Note No. 17 and they have relied on the representations received from the management with respect to the recoverability of these debtors.

The Management of the Company is confident about the recover ability of the said Debtors amounting to Rs.1.57 crore as a result they haven''t shown these debtors in doubtful debts. The other points of Auditors'' report on the Accounts are self-explanatory and needs no comments.

DIRECTORS

Mr. S.K Ahuja, Mr. Ajay Mahajan & Mr. R. C Singal - Directors of the Company retire by rotation at the conclusion of the forthcoming Annual General Meeting. They all are eligible for reappointment.

PERSONNEL

Since there is no employee receiving salary Rs. 60 Lacs or more P.A. or Rs. 5.00 Lacs or more P.M., there is no information requires to be given pursuant to the provisions of Section 217(2A) of the Companies Act, 1956.

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

Particulars with respect to conservation of energy and other areas as per Section 217(1) (e) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 are annexed hereto and form part of this report.

CORPORATE GOVERNANCE

Company is required to comply with the provision of Clause 49 of the Listing Agreements with Stock Exchanges and Company has accordingly complied all the required provisions as detailed in annexure of Annual Report.

LISTING

Shares of the Company are listed on National Stock Exchange of India Limited (NSE) and Bombay Stock Exchange Limited (BSE).

DIRECTORS'' RESPONSIBILITY STATEMENT

Pursuant to Section 217 (2AA) of the Companies Act, 1956, the Directors, confirm that -

i) in the preparation of the annual accounts, the applicable accounting standards have been followed and that there are no material departures;

ii) they have, in the selection of the Accounting Policies, consulted the Statutory Auditors and have 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 viz. 31.03.2013 and of the profit of the Company for that period;

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 Companies Act, 1956, 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.

APPRECIATION AND ACKNOWLEDGMENTS

Your Directors take this opportunity to express gratitude for valuable assistance and co-operation extended to the Company by Financial Institutions, Employees, Commercial Banks and other authorities.

For and on behalf of the Board

sd/- Sd/-

LUDHIANA (AJAY GUPTA) (GAUTAM GUPTA)

May 30, 2013 Managing Director Jt. Managing Director

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Mar 31, 2012

The Directors hereby present their Twenty-forth Annual Report on the business and operations of the Company together with the audited Financial Accounts for the year ended March 31, 2012.

Financial Performance

Amount in Crores

Particulars Year ending Year ending 31.03.2012 31.03.2011

Net Turnover 846.56 568.15

Profit before Depreciation 41.09 34.76

Profit / Loss(-) before Tax 23.76 17.63

Less Provision for Tax (including deferred and fringe benefit tax) 7.92 8.06

Profit / Loss(-) after Taxes 15.84 9.57

Operations Detail

Production in both the spinning units was 222.51 lacs kgs. as compared to the figure of 204.47 lacs kgs. In the garment unit, 17.24 lacs pieces of garments & 2393 MT Fabric were produced as compared to the figure of previous year of 23.95 lacs pieces of garments and 2611 MT of fabric. Net Turnover during the year under review has shown an increase of 48.97%. There is net profit of Rs.15.84 Crores as compared to net profit of Rs.9.57 Crores in the previous year. Cash profit during the current year ending on 31.03.2012 increased to Rs.41.05 Crores from the figure of Rs. 34.07 Crores in the previous year ending on 31.03.2011

DIVIDEND

In view of ensuing expansions, company has decided not to declare any dividend.

EXPANSION PLAN

Company is in process of implementing a project in its existing Spinning and Garment units. This project in garment section has been conceived keeping in mind the demand of high-end customers like Mark & Spencer (M&S) and is a very remunerative project. In spinning section, with a small investment in balancing machines, there will be an additional production of 8MT. Company will Install 66 KVA sub-station which will save a good amount in electricity cost. Term Loans has already been sanctioned and are eligible under TUFS

AUDITORS

The Auditors, M/s. AshishAgarwal &Co., Chartered Accountants, Ludhiana will retire at the conclusion of the forthcoming Annual General Meeting and being eligible, offer themselves for re-appointment.

AUDITORS' REPORT

The Statutory Auditors of the company in their Report have made an observation that the possible loss, if any, on valuation of open derivative options could not be determined by the company due to certain reasons as specified in Note 37 of the Notes to Accounts. The ultimate outcome of these transactions and their effect on the financial statement cannot be ascertained at this stage.

The Company hedges its foreign currency fluctuation exposure in export sales by way of foreign currency derivative options. The Company has taken one USD/INR put and call option from a bank and having a maturity period upto Dec.2012. This derivative option is proprietary product of bank which does not have a ready market and such are marked to a model, which is usually bank specific instead of being marked to market. However in the view of significant uncertainty associated with the above derivative options whose ultimate outcome depends on future events, which is not in the control of the company, the loss if any, on such open derivative options cannot be determined at this stage and accordingly not been provided in the books of account. The other points of Auditors' report on the Accounts are self- explanatory and needs no comments.

DIRECTORS

Mr. Gautam Gupta, Mr. A P Gupta & Mr. B. B Goel- Directors of the Company retire by rotation at the conclusion of the forthcoming Annual General Meeting. They all are eligible for reappointment.

PERSONNEL

Since there is no employee receiving salary of Rs.60 Lacs or more P.A. or Rs.5.00 Lacs or more P.M., there is no information requires to be given pursuant to the provisions of Section 217(2A) of the Companies Act, 1956.

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

Particular with respect to conservation of energy and other areas as per Section 217(1) (e) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 are annexed hereto and form part of this report.

CORPORATE GOVERNANCE

Company is required to comply with the provision of Clause 49 of the Listing Agreements with Stock Exchanges and Company has accordingly complied all the required provisions as detailed in annexure of Annual Report.

LISTING

Shares of the company are listed on National Stock Exchange of India Limited (NSE) and Bombay Stock Exchange Limited (BSE).

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to Section 217 (2AA) of the Companies Act, 1956, the Directors, confirm that -

i) in the preparation of the annual accounts, the applicable accounting standards have been followed and that there are no material departures;

ii) that have, in the selection of the Accounting Policies, consulted the Statutory Auditors and have 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 viz. 31.03.2012 and of the profit of the Company for that period;

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 Companies Act, 1956, 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.

APPRECIATION AND ACKNOWLEDGEMENTS

Your Directors take this opportunity to express gratitude for valuable assistance and co-operation extended to the Company by Financial Institutions, Employees, Commercial Banks and other authorities.

For and on behalf of the Board

Place: Ludhiana (SANJAY GUPTA) (AJAY GUPTA)

Dated : 30.05.2012 Managing Director Jt. Managing Director

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Mar 31, 2011

Dear Members,

The Directors hereby present their Twenty-third Annual Report on the business and operations of the Company together with the audited Financial Accounts for the year ended March 31,2011.

FINANCIAL RESULTS

(Rs. In crore)

Particulars Year ending Year ending 31.03.2011 31.03.2010

Net Turnover 568.19 367.06

Profit before Depreciation 34.76 21.27

Profit /Loss(-) before Tax 17.63 7.51

Less Provision for Tax (including deferred and fringe 8.06 3.04 benefittax)

Profit/Loss(-) after Taxes 9.57 4.47

OPERATIONS

Production in both the spinning units was 204.47 lacs kgs. as compared to the figure of 144.76 lacs kgs. In the garment unit, 23.95 lacs pieces of garments & 2611 MT Fabric were produced as compared to the figure of previous year of 21.07 lacs pieces of garments and & 961 MT of fabric. Net Turnover during the year under review has shown an increase of 54.80%. There is net profit of Rs.9.57 Crores as compared to net profit of Rs.4.47 Crores in the previous ^ear. Cash profit during the current year ending on 31.03.2011 increased to Rs.34.07 Crores from the figure of Rs. 21.25 Crores in the previous year ending on 31.03.2010.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

Industry Outlook

The performance of the global economy in 2010 has exceeded expectations considering the all round gloom that set in 2009. For India and many emerging economies, the challenge is to ensure that boom-like conditions do not yield to overheating in the coming year. Global Trade in Textiles and Clothing, depicting similar trends had recorded its sharpest decline of (-) 14.54 per cent in 2009 and as per WTO estimates is expected to achieve 14.46 per cent growth in 2010 reaching about US $ 600 billion. The Textiles Industry plays a vital role in the Indian economy as it accounts for 14% of its Industrial production and around 13% of its export earnings. At present, the contribution of the Textiles Industry to GDP is about 4% and it provides direct employment of to about 35 million jobs. India is uniquely endowed with a rich variety of resources making it a key player within the entire textile value chain from Farm to Fashion. Production of all varieties of yarns, fabrics and a wide range of home textiles and garments adorns the Indian basket of exports. The spinning sector is amongst the most vibrant and strong segments of the Indian textiles Industry. Cotton spinning Industry is the largest yarn manufacturing Industry compared to manufacturing industry of other spun yarns and man-made filament yarn.

Opportunities. Threats & Outlook

STML has established unit for manufacturing recycled fiber, which expects to provide heavy value addition. State of the art technology added in our fabric dyeing and garment unit have started showing results. World leaders in knitted T shirts like Reebok and Adidas are outsourcing their demand from us and their order are expected to increase significantly in near future. The Company has consolidated its position after capital investment in last few years. Revised TUFS schemes, which has now been extended up to 31-03-2012, has been fine tuned to give a fillip to new projects of the Company.

Recently Turkey has increased the import duties on Fabrics & Garments from present level of 8 per cent & 9.6 per cent to 28 per cent and 36.4 per cent, the level of increase is matter for concern for us.

Financial/Operational Performance

Supreme is manufacturer and exporter of cotton yarn, synthetic yarn, blended yarn, knitted fabric (both grey and processed) and knitted garments. During the year under review, the Company's exports (FOB value) were to the tune of Rs.129.21 crore and accounts for about 22.74% of company's revenues. The company has identified two segment yam segment and garments segment. The yam segment comprises production of various types of yarn (from cotton, manmade fibers and blend thereof) and yarn processing activities. Garment segment comprises of knitted garments. Detailed segment wise performance is given in Notes to the accounts attached in this Annual Report

Risk Management

Your Company has a comprehensive risk management policy. The risk management policy inter alia provides for risk identification, assessment, reporting and mitigation procedure. The risk management framework actively supports the Board in its strategic decision making. During the year, the Board, reviewed the adequacy of the risk management framework of the Company, the key risks associated with the different businesses and the measures in place to mitigate the same.

An analysis of the Company's key business risks and mitigation plans is as follows:

Risk of Raw Material: -

The Company is engaged in the business of manufacturing & trading of Yarns, Fabrics & Garments. The main Raw Material for the Company is Cotton & which is seasonal in nature. The risk of seasonal nature of Raw Material is covered through procurement of Raw Material for major part of the year.

Financial Risks:- ?

Financial Risks can be classified as follow:-

a. Debt

b. Liquidity

c. Credit Policy

a) Our Company enjoys the Working Capital Limits and the same is properly utilized by the Company. The Company has policy of paying loan installments as well as Interest thereon in time to avoid the penal Interest.

b. The company makes continue efforts to strengthen its liquidity through various initiatives such as accelerating receivable and shrinking inventory.

c. The company has well defined credit policy approved and reviewed by the management from time to time. Credit rating of all major customer is done in a systematic manner. In most of the case dispatch is made after adequate scrutiny and any default is not likely to have any significant effect on the company's overall financial position.

Foreign Exchange Risks:-

Around 20% of the Total Revenue of the Company is generated through Export sales. In this way the Company has to deal with foreign currency from time to time. The Company uses various types of foreign currency forward & option contracts to hedge the risks associated with fluctuations in the foreign currency.

Risk related to Personnel:-

Our business is increasingly dependent on the skills and competencies of our employees and management team. The general war for talent in our growing economy has created a substantial risk related to the retention of key personnel both in manufacturing and managerial levels. This risk is mitigated through effective HR policies relating to recruitment and retention and a proactive remuneration and rewards policy that is periodically reviewed at the highest management level.

With excellent performance track as well as best HR practices we are able to attract and retain people for growth of our business.

Risk related to Safety: -

The company has taken adequate insurance covers to indemnify the risks associated with the safety of personnel, building, stock and other infrastructure of the Company. These include:

1. Fire Insurance Policies.

2. Marine/Transit Insurance Policies.

3. Theft Insurance Policies.

4. Other Miscellaneous Policies.

The company has also taken steps to strengthen IT security system as well as physical security system at all our locations

Compliance Related Risks:-

The Company is committed to being a responsible corporate citizen and respects the laws and regulations of the country. All the compliances under various laws applicable to the Company, including under Companies Act 1956, Factories Act, Income Tax Act 1961 etc., are followed in Letters Spirit.

Internal Control Systems and their adequacy

STML has appropriate internal control systems for business processes, with regard to efficiency of operations, financial reporting and controls, compliance with applicable laws and regulations, etc. Clearly defined roles & responsibilities down the line for all managerial positions have also been institutionalized. All operating parameters are monitored and controlled. Regular internal audits and checks ensure that responsibilities are executed effectively. The Audit Committee of the Board of Directors reviews the adequacy and effectiveness of internal control systems and suggests improvements for strengthening them from time to time.

Human Resources

During the year under review, your Company continued its concern for development of its personnel through various training programmes. Besides, Management has laid special emphasis on strengthening HR activities for all levels in the Organization. Industrial relations during the yearwere cordial.

Corporate Social Responsibility

STML is fulfilling its Corporate Social Responsibility in true sprit. STML has a strong sense of Corporate Social Responsibility towards various stakeholders' viz. employees, shareholders, Government, customers, suppliers, competitors, society & environment

Cautionary Statement

Statement in this "Management - Discussion and Analysis" describing the Company's objectives, projections, estimates, expectations or predictions may be "forward looking statements" within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to the Company's operations include global and Indian demand supply conditions, finished goods prices, feedstock availability and prices, cyclical demand and pricing in the Company's principal markets, changes in Government regulations, tax regimes, economic developments within India and the countries within which the Company conducts businesses and other factors such as litigation and labour negotiations. The Company assumes no

responsibility to publicly amend, modify or revise any forward looking statements, on the basis of any subsequent development, information or events or otherwise.

DIVIDEND

In view of ensuing expansions, company has decided not to declare any dividend.

EXPANSION PLAN

The projects for 1440 Rotors and recycled fibre machines are fully installed.

AUDITORS

The Auditors, M/s.S.C.Vasudeva & Co., Chartered Accountants, New Delhi will retire at the conclusion of the forthcoming Annual General Meeting and being eligible, offer themselves for re-appointment.

AUDITORS'REPORT

The Statutory Auditors of the company in their Report have made an observation that the possible loss, if any, on valuation of open derivative options could not be determined by the company due to certain reasons as specified in Note 23 of the Notes to Accounts. The ultimate outcome of these transactions and their effect on the financial statement cannot be ascertained at this stage.

The Company hedges its foreign currency fluctuation exposure in export sales by way of foreign currency derivative options. The Company has taken one USD/INR put and call option from a bank and having a maturity period upto Dec.2012. This derivative option is proprietary product of bank which does not have a ready market and such are marked to a model, which is usually bank specific instead of being marked to market. However in the view of significant uncertainty associated with the above derivative options whose ultimate outcome depends on future events, which is not in the controlof the company, the loss if any, on such open derivative options cannot be determined at this stage and accordingly not been provided in the books of account. The other points of Auditors' report on the Accounts are self-explanatory and needs no comments.

DIRECTORS

Mr. Alok Goel resigned during the year since he was acting as an Alternate director, Mr. Marsel Menda again become the Director. Mr. S.S Chugh- Nominee Director of Punjab State Industrial Development Corporation Ltd (PSIDC) was replaced by their new Nominee Director Mr. A.P Gupta. Your Directors on the behalf of the Company convey their thanks to the outgoing Directors for the services rendered by them.

Mr. A.P Gupta (Nominee Director of PSIDC) was appointed during the year as an additional Director to hold office up to the conclusion of the ensuing Annual General Meeting. Company has received notice proposing his candidature forthe continuation of office of the Director.

Mr. R. C Singal, Mr. Sanjay Gupta & Mr. Ajay Gupta retire by rotation at the conclusion of the forthcoming Annual General Meeting. They all are eligible for reappointment.

PERSONNEL

Since there is no employee receiving salary not more than Rs.60 Lacs, PA. or Rs.5.00 Lacs P.M., there is no information requires to be given pursuant to the provisions of Section 217(2A) of the Companies Act, 1956.

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

Particular with respect to conservation of energy and other areas as per Section 217(1) (e) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 are annexed hereto and form part of this report.

CORPORATE GOVERNANCE

Company was required to comply with the provision of Clause 49 of the Listing Agreements with Stock Exchanges and Company has complied ail the required provisions as detailed in annexure of Annual Report.

LISTING

Shares of the company are listed on National Stock Exchange of India Limited (NSE) and Bombay Stock Exchange Limited (BSE).

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to Section 217 (2AA) of the Companies Act, 1956, the Directors, confirm that-

i) in the preparation of the annual accounts, the applicable accounting standards have been followed and that there are no material departures;

ii) in the selection of the Accounting Policies, consulted the Statutory Auditors and have 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 viz. 31.03.2011 and of the profit of the Company for that period;

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 Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

iv) they haveprepared the annual accounts on a going concern basis.

APPRECIATION AND ACKNOWLEDGEMENTS

Your Directors take this oppprtunity to express gratitude for valuable assistance and co-operation extended to the Company by Financial Institutions, Employees, Commercial Banks and other authorities.

For and on behalf of the Board

PLACE: LUDHIANA (SANJAY GUPTA) (AJAY GUPTA) DATED: 27.05.2011 MANAGING DIRECTOR JT. MANAGING DIRECTOR