Directors Report of Surat Trade and Mercantile Ltd.

Mar 31, 2025

The Directors hereby present their 79^th Annual Report on the performance of Surat Trade and Mercantile Limited (''the Company'') together with the Audited Financial Statements for the Financial Year (FY) ended 31^st March 2025. The Management''s Discussion and Analysis Report as required under the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 forms part of this report.

FINANCIAL HIGHLIGHTS

The summarised financial highlights are depicted below:

(Rs. in Lakhs)
Particulars	Year ended 31^s* March, 2025	Year ended 31^s* March, 2024
Revenue from Operations	6863.70	6056.37
Other income	1482.44	1945.99
Total Income	8346.14	8002.36
Operating Profit/(Loss) / EBITDA (including other income)	996.35	1384.71
Less: Finance Costs	16.11	5.00
Profit before Depreciation & Amortisation Expenses	980.24	1379.71
Less: Depreciation & Amortisation Expenses	51.65	32.44
Profit before tax	928.59	1347.27

review of operations

The Company is engaged in commodity trading activities as part of its core business operations. During the year under review, the Company actively participated in the trading of various metals, in particular silver and copper.

Your Company during FY 25, increased the volume of business activities of trading in commodities and deployed additional funds in the related segment in a phased manner after proper evaluation of potential external risk factors, and the overall business scenario.

Commodity trading involves buying and selling goods such as metals, energy, and agricultural products. It can be done through futures contracts on exchanges, allowing traders to speculate on price movements or hedge against them.

The global and domestic commodity markets were subject to significant fluctuations during the year, influenced by factors such as geopolitical events, weather conditions, central bank activities, market sentiments, supply chain disruptions, etc. Owing to its hedging policy, the Company''s performance in commodity trading was minimally impacted by these volatile market conditions.

Despite the prevailing adverse scenario, your Company achieved Income from Operations of Rs. 68.64 Crore during FY 25, from the Commodity trading business as compared to Rs. 60.56 Crore in FY 24, an increase of about 13.34%.

Other Income which represents earning from Investments in Mutual Funds, AIF etc., declined in FY 25 at Rs, 14.82 crore as compared to Rs. 19.46 crore earned during FY 24. This was primarily on account of lower returns in financial markets (due to geo-political and trade-related uncertainties, especially in Q4 FY 25), relative to the bull market of FY 24. To reduce volatility and probably increase returns, greater investment allocation will be made to high performance credit AIFs (alternative investment funds) whose performance has remained strong in FY 25.

Dividend

With a view to conserve the resources for future growth, the directors of the Company have decided not to recommend any dividend on equity shares of the Company for the year ended 31^st March 2025.

Transfer to Reserves

Your directors do not propose to transfer any amount to the reserves and decided to retain the entire profit for FY25 in the retained earnings.

industry structure and developments

Indian Economic Overview

India''s economy hit a four-year low of 6.5 per cent, lifted by an impressive fourth quarter growth at 7.4%. The Reserve Bank of India had projected 6.5 per cent GDP growth for the fiscal year 2024-25.

Manufacturing sector''s share in India''s economic growth remained steady in the last decade, moving to 17.3% in FY 24 from 17.2% in FY 14. This steady growth highlights the sector''s increasing role in India''s economic landscape.

The agriculture sector received a boost through several schemes and incentives, driving a gradual recovery in financial year 2024-25. Increased grassroots-level structural reforms and a focus on deregulation are expected to bolster medium-term growth and competitiveness.

The Government''s reforms aimed at boosting manufacturing, enhancing productivity and improving ease of doing business will play a crucial role in ensuring long-term sustainable growth. Within this, private consumption will play an important role.

India has displayed steady and robust economic growth while facing global challenges and geopolitical concerns and it continues to maintain its position as the fastest-growing major economy.

Industry Scenario

Global commodity prices are forecast on average to fall in 2025 and perhaps also in 2026, by many leading commodity forecasters. This applies to metals and minerals too. The reasons include a slowdown in global economic growth, and expanded supply for certain metals. If realized, these declines will end a period of elevated inflation-adjusted commodity prices in the aftermath of the COVID-19 pandemic and Russia''s invasion of Ukraine.

Global growth prospects will strengthen if trade tensions ease in a lasting manner implying a more robust outlook for commodity demand.

Opportunities, Challenges, Threats, Risks and Concerns

A 6.5% GDP growth for FY26 is feasible for India despite global headwinds like the twin shocks of geopolitical tensions and trade policy uncertainties.

The economy has been reporting softer consumption in some of the past quarters, however there are many domestic tailwinds such as strong and diversified FDI inflows, low inflation, interest rate reduction and expected further policy rate cuts, and an anticipated good monsoon. Measures in the last budget like rising capital expenditure, tax reduction may raise both rural and urban demand and increase investment, consumption and some push to exports as well. India is also poised to benefit from supply chain realignments.

These factors should increase the market for commodities in India, resulting in better opportunities for your company, irrespective whether prices increase or decrease.

Tensions between Indian and Pakistan escalated following the terrorist attack on 26 tourists in Pahalgam in Jammu and Kashmir in April. Conflict with our neighbour, in addition to unresolved wars in Russia/ Ukraine and the Middle East, pose a risk to the GDP forecast and business conditions.

On April 2, the US imposed a reciprocal tariff of 26% on imports from India. Key sectors such as pharmaceuticals, electronics, semiconductors, and energy were exempted from the duty. The US President later announced a 90 day pause on the tariff implementation until July 9, although a baseline tariff of 10% remains in place.

Initial tariff imposition deadlines, set for April, were pushed back to July after US President said negotiations had begun with various trading partners, including China. To pre-empt a growth slack, the RBI has already lowered the benchmark repo rate - the rate at which it lends to banks - by a cumulative 100 bps to 5.5% since February. Continued low inflation is expected to bring down interest rates further. In the coming times, there exists potential for the Company to expand its commodity activity and profitably trade in gold.

Commodities are inherently volatile and risky assets, however, the Company employs a robust risk management framework to mitigate potential losses arising from price volatility and other market risks during its relatively short trading horizon. This includes hedging, product diversification where possible, etc. The Company''s risk management policies and procedures are reviewed and updated periodically to adapt to changing market dynamics. The strong economy is expected to enable good returns going forward in both equity and debt related investment activities of the company.

It may be noted that acute policy uncertainty and deteriorating trade relations between major economies, and in particular involving India, are downside risks to growth and business prospects. If trade tensions escalate further, consumer and business confidence will likely continue to decline, while the tightening of financial conditions may intensify.

Business Outlook

Despite the recently lowered global growth projections, owing to tariff and policy uncertainties presented by the US, and geopolitical concerns involving sanctions, restriction of exports of sensitive goods by certain countries, and potential conflicts, India is still expected to grow around 6.5% in FY 26 by most forecasters, and is expected to remain the fastest growing major economy.

The ongoing uncertainties however are expected to lead to significant volatility in commodity prices. Increasing geopolitical and policy uncertainties, and conflicts may drive up prices of gold and silver, and vice-versa, all else equal. Central banks have been buying gold, but if conditions improve this may not continue resulting in a potential drop in gold prices. Silver still looks relatively cheap compared to gold and could do comparatively better. Citi group and Economic Survey of India forecasts a dip in the gold prices, whereas silver remains in short supply as it finds growing demand in the solar power, electronics and electrification. A Chinese economic recovery could provide additional support for industrial metals, including silver.

The price of Silver has gone up by 18-19% In the calendar year 2024, Even for this year (2025) till June, it has appreciated by 21%. Silver has faced a supply deficit for four consecutive years, driven by tight supply and robust demand. It may create attractive buying opportunities.

The Company remains optimistic about the long-term prospects of commodity trading, despite the inherent volatility, increased demand, potential price increases, or regulatory changes etc. The Company will continue to explore new markets, optimize trading strategies, etc. to enhance its performance in this sector.

India is expected to do well relative to the global economy owing to strong domestic demand, substantial infrastructure development initiatives, a spike in rural demand and effective government policy measures.

Rural consumption is picking up on the back of sustained agricultural growth of 4.6% in the last six years. Private consumption is expected to benefit from tax cuts, and the improving implementation of public investments plans should boost government investment, but export demand

may be constrained by shifts in trade policy and slowing growth.

The higher disposable incomes to the middle class, the rate cuts, the accommodative monetary policy and the enhanced liquidity in the banking system, is expected to boost growth in times of external uncertainties.

The focus of the Budget on longer term development drivers and reforms, anchored around the ambition of ''Viksit Bharat'', adds to the confidence in domestic economic resilience.

The government is putting a lot of hard work on free trade agreements (FTAs). The India - UK FTAs concluded recently is historic and we are expecting two more, one with the EU and other with the US. These are very significant as it will help us integrate with global value chains which constitute 70% of global trade.

Share Capital

As on 31^st March 2025, the paid-up share capital of the Company stood at Rs. 2220.64 Lakhs consisting of 22,20,64,440 equity shares of Rs.1 each fully paid up. Out of the above, the Promoters held 15, 20, 04,917 equity shares comprising 68.45% of the equity share capital of the Company. There was neither any change in the share capital of the Company nor was there any change in the shareholding of the Promoter of the Company during the year.

Subsidiary, Joint Venture and Associate Companies

The Company has no subsidiary / joint venture / associates for the financial year ended 31^st March 2025. Accordingly, the requirements pursuant to Section 129(3) of the Companies Act, 2013 read with Rule 5 of the Companies (Accounts) Rules, 2014 is not applicable.

The policy for determining material subsidiaries formulated by the Board of Directors is disclosed on the website of the Company and can be accessed at https://www.stml.in

Internal Control Systems & their adequacy

The Board has adopted policies and procedures for ensuring the orderly and efficient conduct of its business, including adherence to the Company''s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial disclosures.

The certification provided in the CEO and CFO certification section of the Annual Report discusses the adequacy of our Internal Control System and procedures.

Resources and Liquidity

Our principal sources of liquidity are cash and cash equivalents, investments and the cash flow that we generate from our operations. We understand that liquidity in the Balance Sheet has to balance between earning adequate returns and the need to cover financial and business requirements. We continue to be debt-free and maintain adequate liquidity to meet our operational requirements.

There was no outstanding term loan at the beginning or at the end of financial year 2024-25. No fresh Term Loan was availed by the Company during the year. The Company has not availed any working capital facility from Banks during the year.

Directors and Key Managerial Personnel Directors

Re-appointment/appointment of Directors

In accordance with the provisions of Section 152 of the Companies Act, 2013 and the rules made thereunder and the Articles of Association of your Company, Mr. Suhail P. Shah (DIN: 00719002) retires by rotation at the ensuing Annual General Meeting and being eligible, offers himself for re-appointment. Based on the recommendations of the Nomination and Remuneration Committee, the Board recommends the re-appointment of Mr. Suhail P. Shah as Director for your approval.

The Shareholders of the Company at the 76^th AGM held on 13^th September 2022 approved the appointment of Mr. Alok P. Shah (DIN: 00218180) as Managing Director of the Company for a period of 3 years with effect from 1^st July 2022.

Based on the recommendation of the Nomination and Remuneration Committee and subject to approval of the shareholders at the ensuing AGM, the board of directors of the Company at their meeting held on 27^th May 2025 approved the re-appointment of Mr. Alok P. Shah as Managing Director of the Company for a period of 5(five) years with effect from 1^st July 2025.

Cessation

During the year under review, Mr. Ketan Jariwala (DIN: 02095540) ceased to be an Independent Director of the Company on completion of his tenure with effect from 10^thAugust 2024. The Board places on record its appreciation for her invaluable contribution and guidance during his tenure as an Independent Director.

Necessary Resolutions for the appointment/re-appointment of the aforesaid Directors have been included in the notice convening the ensuing AGM. The Board recommends their appointment/re-appointment.

Brief details as required under Secretarial Standard-2 and under Regulation 36 (3) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 with respect to directors being appointed / re-appointed, are provided as an annexure to the Notice convening the 79^th AGM.

Key Managerial Personnel (KMP)

As on the date of this report, following are the Key Managerial Personnel ("KMPs") of your Company as per Sections 2(51) and 203 of the Act:

1. Mr. Alok P. Shah, Managing Director

2. Mr. Paresh V. Chothani, Wholetime Director

3. Mr. Suhail P. Shah, Wholetime Director

4. Mr. Chandresh S. Punjabi, Chief Financial Officer

5. Ms. Mahek Gaurav Jaju, Company Secretary

During the year under review, there were no changes in the KMP of the Company.

Independent Directors

In terms of Section 149 of the Act, Ms. Kruti Kothari, Mr. Deepak N. Shah and Mr. Manish J. Gandhi are the Independent Directors of the Company.

In terms of Regulation 25(8) of the Listing Regulations, all IDs have confirmed that they are not aware of any circumstances or situation which exists or may be reasonably anticipated that could impact their ability to discharge their duties. The Directors have further confirmed that they are not debarred from holding the office of the director under any SEBI Order or any other such authority. Based upon the declarations received from the IDs, the Board of Directors has confirmed that they meet the criteria of independence as mentioned under Section 149(6) of the Act and Regulation 16(1)(b) of the Listing Regulations and that they are independent of the management.

In the opinion of the Board, there has been no change in the circumstances which may affect their status as IDs of the Company and the Board is satisfied of the integrity, expertise and experience (including proficiency in terms of Section 150(1) of the Act and applicable rules thereunder) of all IDs on the Board.

During the year under review, the Non-Executive Directors of the Company had no pecuniary relationship or transactions with the Company, other than sitting fees and reimbursement of expenses incurred by them for the purpose of attending meetings of the Board/Committees of the Company.

The Appointment and Tenure of the Independent Directors, including code for Independent Directors, are available on the website of the Company, www.stml.in.

Separate Meeting of Independent Directors

In terms of requirements under Schedule IV of the Companies Act, 2013 and Regulation 25 (3) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, a separate meeting of the Independent Directors was held on 11^th February 2025.

The Independent Directors at the meeting, inter alia, reviewed the following:

â¢ Performance of Non-Independent Directors and Board as a whole.

â¢ Performance of the Chairman of the Board, taking into account the views of Executive Directors and Non-Executive Directors.

â¢ Assessed the quality, quantity and timeliness of flow of information between the Company Management and the Board that is necessary for the Board to effectively and reasonably perform their duties.

Familiarization / Orientation program for Independent Directors

In terms of Regulation 25(7) of the Regulations, the Company has adopted a familiarization programme for the Independent Directors to familiarize them with working of the Company, nature of the industry in which the Company operates, business model of the Company, their roles, rights, responsibilities and other relevant details.

These programmes aim to provide insights into the Company to enable the Independent Directors to understand its business in depth and contribute significantly to the Company.

Pursuant to Regulation 46, the details required are available on the website of your Company at ''http://www. stml.in/policies.aspx.

Number of meetings of the Board

During the financial year 2024-25, 5 (five) Board Meetings were held on the following dates 24^th May 2024, 27^thJune 2024, 8^th August 2024, 13^th November 2024 and 11^thFebruary 2025. The gap between any two meetings was not more than one hundred twenty days as mandated under the provisions of Section 173 of the Companies Act, 2013 and Regulation 17(2) of the SEBI Regulations.

Committees of the Board

As required under the Companies Act, 2013 and the SEBI Listing Regulations, your Company has constituted various Statutory Committees. As on 31^st March 2025, the Board had four committees: the audit committee, the corporate social responsibility committee, the nomination and remuneration committee and stakeholder''s relationship committee. During the year, all recommendations made by the committees were approved by the Board. A detailed note on the composition of the Board and its committees is provided in the Corporate Governance Report.

Composition of the Audit Committee

The Audit Committee comprises of Mr. Deepak N. Shah as its Chairperson, Ms. Kruti Kothari and Mr. Manish J. Gandhi all of whom are Independent Directors as members. More details on the Committee are given in the Report on Corporate Governance.

Board Evaluation

Pursuant to the provisions of the Companies Act 2013 and Regulation 17(10), the Board has devised a policy on evaluation of performance of Board of Directors, Committees and Individual directors. The policy is also in compliance to Regulation 19 read with Schedule II, Part D of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The Nomination and Remuneration Committee has defined the evaluation criteria for the Performance Evaluation of the Board, its committees and individual Directors.

The performance of the Board was evaluated by the Board after seeking inputs from all the directors on the basis of criteria such as the Board composition and structure, effectiveness of board processes, information and functioning, etc.

The performance assessment of Non-Independent Directors, Board as a whole and the Chairman were evaluated at separate meetings of Independent Directors. The same was also discussed in the meetings of NRC and the Board. Performance evaluation of Independent Directors was done by the entire Board, excluding the Independent Director being evaluated.

The Nomination and Remuneration Committee has established a framework for the evaluation process of performance of the Board, its Committees and Individual Directors and the same was adopted by the Board.

During the period under review, the Board of Directors have carried out the evaluation of the performance of Independent Directors and their independence criteria and the Independent Directors in their meeting held on 11^th February, 2025 have evaluated the performance of the Chairman and Non-Independent Directors and the Board as a whole and also assessed the quality, quantity and timeliness of flow of information between the Board and Company management.

Code of Conduct for Directors and Senior Management

All Board members and Senior Management personnel have affirmed compliance with the Code of Conduct for the year 2024-25. A declaration to this effect signed by the Managing Director of the Company is contained in this Annual Report. The Managing Director and CFO have certified to the Board with regard to the financial statements and other matters as required under regulation 17(8) of the SEBI Listing Regulations, 2015.

Code for Prevention of Insider Trading

Your Company has adopted a Code of Conduct to regulate, monitor and report trading by designated persons and their immediate relatives as per the requirements under the Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015. This Code of Conduct also includes code for practices and procedures for fair disclosure of unpublished price sensitive information which has been made available on the Company''s website at ''http://www.stml.in/policies.aspx.

Procedure for Nomination, Appointment & Remuneration of Directors

The Nomination and Remuneration Committee (NRC) has been mandated to oversee and develop competency requirements for the Board based on the industry requirements and business strategy of the Company. The NRC reviews and evaluates the profiles of potential candidates for appointment of Directors and meets them prior to making recommendations of their nomination to the Board.

Directors are appointed / re-appointed with the approval of the Members for a term in accordance with the provisions of the law and the Articles of Association. The initial appointment of Managing / Wholetime Director is generally for a period of 3-5 years. All Directors other than Independent Directors are liable to retire by rotation unless otherwise specifically provided under the Articles of Association or under any statute. One-third of the Directors who are liable to retire by rotation, retire at every Annual General Meeting and are eligible for reappointment.

Disclosures of the ratio of the remuneration of each director to the median employee''s remuneration and other details as required pursuant to Section 197(12) of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 as amended from time to time, are provided as âAnnexure C".

None of the directors or Managing Director of the Company received any remuneration or commission from Subsidiary Companies of your Company.

The detail of remuneration paid to the Directors including the Managing Director of the Company is provided in Corporate Governance Report.

Auditors

Statutory auditors

At the 76^th AGM held on 13^th September 2022, the Members approved the re-appointment of M/s Sharp and Tannan Associates, Chartered Accountants (ICAI Firm Registration Number 109983W), as the Statutory Auditors of the Company for a second term of 5 years commencing from the conclusion of the 76^th AGM till the conclusion of the 81^st AGM to be held in the year 2027.

As required under the SEBI Listing Regulations, the Statutory Auditors have also confirmed that they hold a valid certificate issued by the Peer Review Board of the Institute of Chartered Accountants of India. Further, pursuant to Section 139 of the Companies Act, 2013, the Company has obtained certificate from them to the effect that their continued appointment would be in accordance with the conditions prescribed under the Act and the Rules made thereunder, as may be applicable.

The Statutory Auditor''s Report does not contain any qualifications, reservations, adverse remarks or disclaimers. The Statutory Auditors of the Company have not reported any fraud to the Audit Committee of Directors as specified under Section 143(12) of the Act, during the year under review.

The Statutory Auditors were present in the last AGM.

Cost records and cost audit

Annual Secretarial Compliance Report

The Company has undertaken an audit for the Financial Year 2024-25 for all applicable compliances as per Securities and Exchange Board of India Regulations and Circulars/Guidelines issued thereunder. The Annual Secretarial Compliance Report duly signed by Mr. Jigar Vyas Practicing Company Secretary (ICSI Membership No. FCS 8019) has been submitted to the Stock Exchanges within the stipulated time, in compliance with the provisions of the Regulation 24A of SEBI (LODR) Regulations, 2015.

Secretarial Audit

In terms of Section 204 of the Act and Rules made thereunder, Jigar Vyas & Associates, Practicing Company Secretaries (Firm Registration No. S2015GJ307200) were appointed as Secretarial Auditors of the Company to carry out the Secretarial Audit for FY 2024-25. The Secretarial Audit Report of the Company for the Financial Year ended 31 March 2025 in the prescribed form MR-3 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is enclosed as Annexure - "D" to this report. There has been no qualification, reservation, adverse remark or disclaimer given by the Secretarial Auditors in their Report.

Further, in terms of Section 204 of the Act and Regulation 24A of the SEBI Listing Regulations, the Board of Directors has, on the recommendation of the Audit Committee, approved the appointment of Jigar Vyas & Associates, as the Secretarial Auditors of the Company, to hold office for a term of five (5) consecutive years with effect from financial year 2025-26 to financial year 2029-30, subject to approval of the Members of the Company at the ensuing AGM. Accordingly, a resolution seeking Members'' approval for appointment of Secretarial Auditors of the Company forms part of the Notice of the 79^th AGM forming part of this Annual Report.

Secretarial Standards

During the year under review, your Company has complied with all the applicable provisions of Secretarial Standard - 1 and Secretarial Standard - 2 issued by the Institute of Company Secretaries of India (as amended).

Internal Auditor

Pursuant to the provisions of Section 138 of the Companies Act, 2013 and Rules made thereunder the Board of Directors of the Company have appointed M/s M/s K. S. Jagirdar & Co., (ICAI Membership No.036904), Chartered Accountants as Internal Auditors of the Company, for the financial year 2024-25.

The Internal Audit department carries out risk-focused audits across all locations, enabling identification of areas where risk management processes may need to be strengthened. Significant audit observations and corrective action plans are presented to the Audit Committee.

The audit committee in consultation with the Internal Auditor formulates the scope, functioning, periodicity and methodology for conducting the internal audit.

Directors'' Responsibility Statement

Pursuant to the requirements of Section 134(1)(c) read with Section 134(5) of the Companies Act, 2013 and on the basis of explanation and compliance certificate given by the executives of the Company, and subject to disclosures in the Annual Accounts and also on the basis of discussions with the Statutory Auditors of the Company from time to time, the Board is of the opinion that the Company''s internal financial controls were adequate and effective during Financial Year 2024-25.

Accordingly, pursuant to Sections 134(5) of the Act, the Board of Directors, to the best of its knowledge and ability, confirm that:

(a) in the preparation of the annual accounts for the financial year ended 31st March 2025, the applicable accounting standards read with requirements set out under Schedule III to the Act, have been followed and there are no material departures from the same;

(b) 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 loss of the Company for that period;

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

(d) they have prepared the Annual Accounts for the Financial Year ended 31st March 2025 on a going concern basis;

(e) they have laid down internal financial controls to be followed by the Company and such internal financial controls are adequate and operating effectively;

(f) they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.

Corporate Governance Report

Your Company is in compliance with all the applicable provisions of Corporate Governance as stipulated under Chapter IV of the Listing Regulations. The Report on Corporate Governance as stipulated under Schedule V(C) of the Regulations is provided in a separate section as ''Annexure G'' and forms part of this Report. The required certificate from a Practicing Company Secretary confirming compliance with the conditions of Corporate Governance as stipulated in the Regulation 34 of the Listing Regulations, is annexed to this Annual Report.

Corporate Social Responsibility (CSR)

In terms of the provisions of Section 135 of the Companies Act, 2013, the Corporate Social Responsibility Committee ("CSR Committee") is in existence to monitor the Corporate Social Responsibility Policy of the Company as approved by the Board and the said policy is available on the official website of the Company i.e., http://www.stml.in/ under the link: http://www.stml.in/policies.aspx.

Consequent to the retirement of Mr. Ketan A. Jariwala as member of the the CSR Committee, Mr. Manish J. Gandhi was inducted as member of the Committee with effect from 8^th August 2024. The present members of the CSR Committee comprise of Mr. Deepak N. Shah as the Chairman, Mr. Paresh V. Chothani and Mr. Manish J. Gandhi as Members. The CSR Committee met on 28^th March 2025 to review the Corporate Social Responsibility Policy.

The Company works primarily towards supporting projects in the areas of protection of national heritage, restoration of historical sites, and promotion of art and culture; environmental sustainability and ecological balance; promoting education etc.

During the year under review, your Company spent Rs. 10.60 Lakhs on CSR activities. The average net profit for the past three financial years was Rs 529.75 Lakhs.

Annual Report on mandatory CSR activities as required under the Companies (Corporate Social Responsibility Policy) Rules, 2014, as amended, is given in ''Annexure A'' forms integral part of this Report.

Related Party Transactions

The Company has formulated a policy on the materiality of Related Party Transactions and dealing with Related Party Transactions which has been uploaded on the Company''s website which can be accessed at following link ''http://www.stml.in/policies.aspx.

All Related Party Transactions that were entered into during the Financial Year under review were on an arm''s length basis and in the ordinary course of business and are in compliance with the applicable provisions of the Act and the Listing Regulations.

The statement giving details of all Related Party Transactions are placed before the audit committee / the Board for review and approval on a quarterly basis

In terms of Regulation 23 of the SEBI Listing Regulations, the Company submits details of related party transactions on a consolidated basis as per the format specified in the relevant accounting standards to the stock exchanges on a half-yearly basis.

Your Directors draw attention of the members to Note No. 35 to the notes to accounts forming part of the financial statements which sets out related party transaction disclosures.

During the year, the Company had not entered into any contract/ arrangement/ transaction with related parties which could be considered material in accordance with the Policy on Materiality of Related Party Transactions.

Details of transactions with Related Parties as required under Section 134(3)(h) of the Act read with Rule 8(2) of the Companies (Accounts) Rules, 2014 are given in ''Annexure E'' in Form AOC - 2 forms integral part of this Report.

Internal Control Systems & their adequacy

The certification provided in the CEO and CFO certification section of the Annual Report discusses the adequacy of our Internal Control System and procedures.

Internal Financial Control System and their Adequacy

Internal Financial Control systems of the Company are commensurate with its size and the nature of its operations. The controls are adequate for ensuring the orderly and efficient conduct of the business, including adherence to the Company''s policies, the safeguarding of assets, the prevention and detection of frauds and errors, the accuracy and completeness of accounting records and timely preparation of reliable financial information. The internal audit report is discussed with the Management and members of the Audit Committee to keep a check on the existing systems and take corrective action to further enhance the control measures.

The internal auditors of the Company have in compliance with provisions of Section 177 (4) of the Companies Act, 2013 confirmed to the Audit Committee that the Company has adequate Internal Financial Controls, and the systems of risk management are robust and defensible.

Statutory Auditors of the Company have in their Report dated 27^th May 2025 opined that the Company has, in all material respects adequate internal financial controls over financial reporting and such internal financial controls over financial reporting were operating effectively as at 31^st March 2025.

Material changes and commitments

Except as disclosed elsewhere in the Annual Report, there have been no material changes and commitments which can affect the financial position of the Company that have occurred between the end of the financial year to which the Financial Statements relate and the date of this Report.

Board policies

The details of the policies approved and adopted by the Board as required under the Companies Act, 2013 and Securities and Exchange Board of India (SEBI) regulations are provided in Corporate Governance Report.

Policy on Directors'' Appointment and Remuneration

In terms of the provisions of Section 178 of the Companies Act, 2013 read with Regulation 19 of the Regulations, Nomination and Remuneration Committee (''NRC'') has formulated a policy relating to appointment and determination of the remuneration for the Directors, Key Managerial Personnel and Senior Management Personnel which has been adopted by the Board of Directors of the Company. The NRC has also developed the criteria for determining the qualifications, positive attributes and independence of Directors and for making payments to the Executive and Non-Executive Directors of the Company.

Your directors affirm that the remuneration paid to the Directors, Key Managerial Personnel, Senior Management Personnel and other employees is as per the Nomination and Remuneration Policy of your Company. The said policy is available on the official website of the Company i.e. ''http://www.stml.in/policies.aspx.

Policy on Prevention, Prohibition and Redressal of Sexual Harassment at Workplace

The Company has adopted a Policy on Prevention, Prohibition and Redressal of Sexual Harassment at workplace in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 (POSH) and the rules made thereunder. The Company has zero tolerance for sexual harassment at workplace.

The Policy aims to provide protection to employees at workplace and prevent and redress complaints of sexual harassment and for matters connected or incidental thereto, with the objective of providing a safe working environment, where employees feel secure.

Pursuant to Section 21 of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 read with Rule 14 of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Rules, 2013, the Company has constituted Internal Complaints Committee (ICC) where any grievance of sexual harassment at workplace can be reported.

During the year under review, your Directors have not received any complaint of sexual harassment from the IC. Moreover, there were neither any complaint pending at the beginning of the year nor were there any complaints that remained pending as at the end of the year.

The Policy of the "Prevention of Sexual Harassment of Women at Workplace" of the Company is available on the website of the Company at http://www.stml.in/policies.aspx.

Disclosure for compliance with other statutory laws

(a) In compliance with Rule 8(5)(xiii) of the Companies (Accounts) Second Amendment Rules, 2025, the Board hereby confirms that the Company has complied with the provisions relating to the constitution of Internal Complaints Committee (ICC) under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013

Details of the Sexual Harassment complaints during the financial year ended 31^st March 2025 are as under:

Particulars	Number of Complaints
Number of Sexual Harassment	NIL
Complaints received
Number of Sexual Harassment	NIL
Complaints disposed off
Number of Sexual Harassment	NIL
Complaints pending beyond 90 days

(b) The Board hereby confirms that the Company has complied with the applicable provisions of Maternity Benefit Act.

Indian Accounting Standard (Ind AS)/Financial Statements

Your Company follows Indian Accounting Standards (Ind AS) issued by the Ministry of Corporate Affairs in the preparation of its financial statements. Your Company has consistently applied applicable accounting policies during the year under review. Management evaluates all recently issued or revised accounting standards on an ongoing basis. The Company discloses its financial results on a quarterly basis which are subjected to limited review and publishes audited financial results on an annual basis.

The financial statements for the year ended 31 March 2025 have been prepared in accordance with the Indian Accounting Standards ("Ind AS") as required under the provisions of Section 133 of the Companies Act, 2013 read with rules made there under, as amended.

Particulars of Employees and Related Disclosures

Information regarding employees in accordance with the provisions of Rule 5(2) and Rule 5(3) of the companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is given in Annexure- "B" to this Report.

Whistle Blower Policy / Vigil Mechanism

In terms of the provisions of Section 177 of the Companies Act, 2013 and the Regulations, the Company has established an effective mechanism called Vigil Mechanism (Whistle Blower Mechanism). The purpose of this policy is to provide a framework to promote responsible whistle blowing by employees or by any other person who avails such mechanism. It protects employees or any other person who avails such mechanism wishing to raise a concern about serious irregularities, unethical behaviour, actual or suspected fraud within the Company by reporting the same to the Audit Committee.

The functioning of the Whistle Blower Mechanism/Vigil Mechanism existing in the Company is reviewed by the Audit Committee on Annual basis. During the year under review, no compliant has been received and no employee was denied access to the Audit Committee. The Whistle Blower Policy has been posted on the Website of the Company at ''http://www.stml.in.

Reporting of Fraud

During the year under review, the Statutory Auditors, Cost Auditors and Secretarial Auditors have not reported any instance of fraud committed in the Company by its officers or employees to the Audit Committee under Section 143(12) of the Act, details of which need to be mentioned in this Report.

Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and outgo

Your Company during April 2022, disposed of all its assets of its manufacturing division located at Village Jolwa, Taluka Palsana, Dist, Surat and discontinued its business of manufacturing of Polyester Chips and Yarns. The management after considering various options for possible alternate business commenced the new activities of Trading in Commodities and other Commodity related business from 3^rd quarter of FY 23. Therefore, there are no reportable details relating to conservation of energy or technology absorption. There were no foreign exchange earnings or outgo during the year under review.

CEO and CFO certification.

Pursuant to Regulation 17(8) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, Managing Director and CFO Certification forms part of the Annual Report. Managing Director and CFO also provide quarterly certification on financial results, while placing the financial results before the Board in terms of the Listing Regulations.

Health, safety and environment

Your Company believe that organisations'' sustainability is directly proportional to the safety, health and environment management. We endeavour to demonstrate environmental and social responsibility at every step.

We are devoted to benefit communities - workforce, public and environment. Our safety, health and environment objectives include complying with all applicable laws relevant to the industry. The Management believes in sharing responsibility throughout the hierarchy in conforming to the existing laws.

Industrial Relations / Human Resources

During the year under review, the Company continued to have cordial and peaceful. There were total 26 employees (including Managing / Wholetime Directors) which comprises of 2 Female and 24 Male members as at 31^st March 2025.

Green Initiatives

In commitment to keep in line with the Green Initiatives and going beyond it, the Notice of 78^th Annual General Meeting of the Company including the Annual Report for FY 2024-25 are being sent to all Members whose e-mail addresses are registered with the Company / Depository Participant(s).

Code on Social Security

The Indian Parliament has approved the Code on Social Security, 2020 which would impact the contributions by the company towards Provident Fund and Gratuity. The Ministry of Labour and Employment had released draft rules for the Code on Social Security, 2020 on November 13, 2020, and invited suggestions from stakeholders which are under consideration by the Ministry. The Company will assess the impact and its evaluation once the subject rules are notified.

Risk Management

Your Company periodically assesses the risks in the internal and external environment along with treating the risks and incorporates risk management plans in its strategy, business and operational plans. Your Company recognizes that the risk is an integral part of business and is committed to managing the risks in proactive and efficient manner.

The business plan for the future is devised and approved by the Board, keeping in mind the risk factors which can significantly impact the performance of the particular business. All major financial commitments are subject to scrutiny by the Board and investments are permitted only on being satisfied about its returns or utility to the Company. There are no risks which in the opinion of the Board threaten the existence of the Company.

Insurance

The Company has taken all the necessary steps to insure its properties and insurable interests, as deemed appropriate and also as required under the various legislative enactments.

Public Deposits

There were no outstanding deposits within the meaning of Section 73 and 74 of the Act read with rules made thereunder at the end of FY25 or the previous financial year. Your Company did not accept any deposit during the year under review.

Particulars of Loans, Guarantees and Investments

During the period under review, the Company has not made any loan, guarantee or investment in terms of the provisions of Section 186 of the Companies Act, 2013.

Annual Return

Pursuant to Section 92(3) and 134(3)(a) of the Act and the Companies (Management and Administration) Rules, 2014, the Annual Return for FY 2024-25 will be made available on the website of the Company at https://www. stml.in/pdf/investorrelations/Annual-Return- MGT-24-25. pdf

Agreement(s) binding the Company

As required under Regulation 30A of Listing Regulations, the Company has to report that it has not been informed by any shareholders, promoters, promoter group entities, related parties, directors, KMPs or employees of the Company, who are purported to be parties to any agreements specified in Clause 5A of Paragraph A of Part A of Schedule III of the SEBI Listing Regulations, of having entered into any agreement or have signed any agreement to enter into such agreement to which the Company is not a party as at the end of the financial year. The Company further reports that there are no such agreement of the nature mentioned above that subsists on the date of coming into effect of the SEBI (LODR) (Second Amendment) Regulations, 2023.

Business Responsibility Report

The Business Responsibility Reporting as required by Regulation 34(2) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, is not applicable to your Company for the financial year ended 31^st March 2025.

Key financial ratios

In accordance with the SEBI (Listing Obligations and Disclosure Requirements) (Amendment) Regulations, 2018, the Company is required to give details of significant changes in key sector-specific financial ratios.

Note:

1. Debt-Equity Ratio, Trade Receivable Turnover Ratio, Trade Payable Turnover Ratio, Net Capital Turnover Ratio does not apply to the Company in absence of any Debt, Trade Receivable and Trade Payable.

General Disclosures

Your directors state that during the year under review:

1. Your Company did not issue any equity shares with differential rights as to dividend, voting or otherwise.

2. Your Company did not issue shares (Including sweat equity shares) to employees of your Company under any scheme.

3. No significant or material orders were passed by the Regulators or Courts or Tribunals which impact the going concern status and your Company''s operation in future.

4. No application was made, and no proceeding was pending under the Insolvency and Bankruptcy Code, 2016.

5. There has been no change in the nature of business of the Company as on the date of this report.

6. No one time settlement of loan was obtained from the Banks or Financial Institutions.

7. There were no revisions made in the financial statements and Directors'' Report of your Company

Forward Looking Statement

Certain statements made in the Directors Report relating to the Company''s objectives, projections, outlook, expectations, estimates and others may constitute ''forward looking statements'' within the meaning of applicable laws and regulations. Actual results may differ from such expectations, whether expressed or implied. Several factors could make significant difference to the Company''s Operations. These include climatic and economic conditions affecting demand and supply, government regulations and taxation, any epidemic or pandemic, natural calamities over which the Company may not have any direct / indirect control.

Acknowledgement

Your directors place on records their appreciation of the valuable co-operation extended to the Company by its Bankers and various authorities of the State and Central Government State & Central Government agencies.

Your directors also acknowledge with gratitude the support of customers, agents, suppliers, shareholders and all other stakeholders for their continued faith and support during these challenging times.

Your Board also take this opportunity to place on record its appreciation of the contribution made by the employees of the Company at all levels and last but not least, of the continued confidence reposed by you in the Management.

The Company has identified the following ratios as key financial ratios:
\|sr. No.	Particulars	FY 2024-25	FY 2023-24
1	Current Ratio (times)	92.75	103.62
2	Debt Service Coverage Ratio (times)	23.31	59.87
3	Return on Equity Ratio (%)	5.53	4.52
4	Net Profit Ratio (%)	16.99	14.98
5	Return on Capital employed (%)	4.33	6.64
6	Return on Investment (%)	10.63	15.47
7	Inventory Turnover (times)	4.26	2.03

Mar 31, 2024

Your directors are pleased to present the 78^th Annual Report along with the Audited Financial Statements of your Company for the Financial Year ended 31^st March, 2024. The Management''s Discussion and Analysis Report as required under the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 forms part of this report.

Summarised Financial Highlights

The financial performance of business operations of the Company for the financial year ended 31^st March, 2024 is summarised as below:

(Rs. in Lakhs)

Particulars	Year ended 31^st March, 2024	Year ended 31^st March, 2023
Revenue from Operations	6056.37	2497.68
Other income	1945.99	965.19
Total Income	8002.36	3462.87
Operating Profit/(Loss) / EBITDA (including other income)	1384.71	418.98
Add/Less: Finance Costs	5.00	3.46
Profit/(Loss) before Depreciation & Amortisation Expenses	1379.71	415.52
Add/Less: Depreciation & Amortisation Expenses	32.44	41.34
Profit/(Loss) before tax	1347.27	374.18

Review of Operations

FY 2023-24 was the first full financial year of operations of your Company with new business activities of trading in commodities and other commodity related activities, which commenced from third quarter of FY 2022-23.

Earlier in April 2022, the Company disposed of all the assets together with land, buildings and plant and machineries in relation to its manufacturing unit located at Village Jolwa, Taluka Palsana, District Surat. The funds realized on sale of these assets were also deployed prudently in a phased manner in diversified financial instruments for the remaining period ended on 31^st March, 2023.

During FY 24, your Company achieved Income from Operations of Rs. 60.56 Crore from the Commodity trading business as compared to Rs. 24.98 Crore in FY 23. Your Company earned higher Other Income of Rs. 19.46 Crore during FY 24 as compared to Rs. 9.65 crore in FY 23 which represents earnings from investments in Mutual Funds and other financial instruments.

Increase in Other Income was primarily on account of additional funds deployed as well as increased returns in the financial market during FY 24. Every category of debt and equity have done well.

Commodities demonstrated robust performance for the third consecutive year, The CRB Index delivered positive returns, overcoming a turbulent period.

War-like situations in many countries put the world on edge. Despite that, with improved consumer spending and the announcement of interest rate cuts in 2024, the financial world delivered some exceptional returns, including commodities.

We propose to deploy additional funds in the commodities business in a calibrated manner in FY25, after proper evaluation of related external risk factors, if any, and the overall business scenario.

Dividend

With a view to conserve the resources for future growth, the directors of the Company have decided not to recommend any dividend on equity shares of the Company for the year ended 31 March, 2024.

Transfer to Reserves

The Board of Directors has decided to retain the entire amount of profits for FY24 in Profit and Loss Account.

Change of name of the Company

As the members are aware, consequent to sale/transfer of the assets its manufacturing division at village Jolwa, Talika Palsana, Dist. Surat April, 2022, your Company commenced the new activities of trading in commodities and other commodity related business from third quarter of FY23. Accordingly, it was considered appropriate to align its name as per the newly added business commenced by the Company.

The Board of Directors of the Company at its meeting held on 11^th August, 2023 approved the proposal for change of name of the Company from "Surat Textile Mills Limited" to "Surat Trade and Mercantile Limited" along with the consequential amendments required to be made in the Memorandum of Association and Articles of Association, subject to the approval of ROC, CRC, MCA and the Members of the Company.

Further in accordance with the provisions of Section 13 and 14 of the Companies Act, 2013 ("the Act") and pursuant to Regulation 45 of SEBI (Listing Obligations and Disclosure) Requirements, 2015 ("Listing Regulation"), to the extent applicable, the Company obtained shareholder''s approval by way of a Special Resolution through Postal Ballot Process vide Notice dated 14^th August, 2023, to effect the change in the Company''s name and make necessary consequential alterations to the Memorandum and Articles of Association.

A fresh Certificate of Incorporation pursuant to change of name was issued by the Office of the Registrar of Companies, Ahmedabad, Gujarat on 18^th September, 2023.

Industry Structure and Development

Indian Economy

The Indian economy has witnessed an average of more than 8% annual growth since the covid-induced output contraction in FY21. The growth propelled the Indian economy to $3.5 trillion and set the stage for achieving the $5-trillion government target in the next few years.

India''s gross domestic product (GDP) growth for Fiscal 2024 has been upgraded to 8.2%, driven by strong growth in investments, services and manufacturing. This was despite agriculture growth of only 1.4%.

The Government''s strengthened thrust on capex will augur well for the economy in the mid to long term with the creation of employment opportunities, improved infrastructure and elevated ease of doing business in the country. RBI has recently upgraded estimated growth at 7.2% in FY 25 owing to expected recovery in agriculture and private consumption in addition to the government''s capex initiatives.

With continuity of the government post-elections, reforms momentum is expected to continue which should spur growth and ensure macro-economic stability, presenting an "optimistic economic outlook" for the coming year. Company results have been strong supporting growth and tax revenues. S&P has upgraded India''s outlook to positive from stable.

As per International Monetary Fund (IMF) estimates India will be the third largest economy before 2030 with its GDP projected to surpass both Japan and Germany. Both private consumption and investment are projected to rise steadily, contributing to GDP expansion.

Inflation in India has remained within the Reserve Bank''s target range of 2-6 per cent since September 2023, contributing to a stable economic environment, the report added.

While weather remains a risk, there is a forecast of above normal rains in the current year which may lead to better agriculture production.

Opportunities, Challenges, Threats, Risks and Concerns

In 2023, agricultural markets grappled with notable volatility, especially in spices, rice, cotton etc. El Nino and other extreme weather events heightened concerns about the supply of several agricultural commodities. However, food inflation came down with improved availability.

Several Indian commodities are fluctuating in price. Gold prices rose 1.5% this month to a 6- month high, while crude oil prices fell 5% to a 4-month low owing to sluggish global demand. Silver has been out primary commodity segment last fiscal. Silver prices have been very volatile. These changes are caused by supply and demand, production costs, economic development, geopolitical events, natural catastrophes, speculative trading, and government policies. But its volatility has also presented opportunities for higher returns.

The variables cited above impact commodity prices and the global economy, influencing consumer products, stock markets, and other industries. These swings have major effects on India''s economy.

Trade disruptions may hurt commodity-dependent economies. Even as prices fall, commodities market volatility is expected to provide economic concerns. Commodity pricing, global trade dynamics, and changing rules and standards may impact actual economic activity, inflation, and economic development in India.

With a 7% -plus growth rate for the third consecutive year in FY 24, India sits on the cusp of advancement while facing several challenges. Geopolitical tensions, climate change and economic growth are factors that will support longer term value for commodities.

Your company mitigates price risk by hedging its entire commodity exposure. However, a threat is that opportunities with good returns might get limited.

Business Outlook

As FY 25 begins, the focus shifts to the outlook. Positive underlying fundamentals in India, persistent geopolitical uncertainties, and anticipated easing by the Federal Reserve and the RBI indicate that the bullion complex is poised to experience an upward trend in the coming year.

Expectation of increase in investment demand and ongoing Central Bank purchases are expected to fuel bullish momentum for gold further, potentially pushing it to new record highs alongside silver.

Commodity prices are projected to experience a slight downturn in 2024 and 2025 but are expected to remain above pre-pandemic levels.

After three years of extreme volatility, commodities prices are set to broadly stabilise in 2024. However, adverse weather conditions, escalating geopolitical tensions and soaring shipping costs are among the risks to watch to commodity price forecasts.

In a statement by RBI Governor stated that during 202425 so far, domestic economic activity has maintained resilience while manufacturing activity continues to gain ground on the back of strengthening domestic demand. Private consumption, the mainstay of aggregate demand, is recovering with steady discretionary spending in urban areas.

The healthy balance sheets of banks and corporates, the government''s continued thrust on capex, high-capacity utilisation, and business optimism augur well for investment activity.

Share Capital

As on March 31, 2024, the paid-up share capital of the Company stood at Rs. 2220.64 Lakhs consisting of 222064440 equity shares of Rs.1 each fully paid up.

Out of the above, the Promoters held 152004917 equity shares comprising 68.45% of the equity share capital of the Company. There was neither any change in the share capital of the Company nor was there any change in the shareholding of the Promoter of the Company during the year.

Subsidiary, Joint Venture and Associate Companies

The Company has no subsidiary / joint venture / associates for the financial year ended 31^st March, 2024. Accordingly, the requirements pursuant to Section 129(3) of the Companies Act, 2013 read with Rule 5 of the Companies (Accounts) Rules, 2014 is not applicable.

The policy for determining material subsidiaries formulated by the Board of Directors is disclosed on the website of the Company and can be accessed at https://www.stml.in.

Resources and Liquidity

There was no outstanding term loan at the beginning or at the end of financial year 2023-24. No fresh Term Loan was availed by the Company during the year. The Company has not availed any working capital facility from Banks during the year.

Directors and Key Managerial Personnel

The composition of the Board of Directors of the Company is in accordance with the provisions of Section 149 of the Companies Act 2013 and Regulation 17 of the SEBI Listing Regulations, with an appropriate combination of Executive Director, Non-Executive Directors and Independent Directors. The complete list of Directors of the Company has been provided as part of the Corporate Governance Report.

Re-appointment /appointment of Directors

In accordance with the provisions of Section 152 of the Companies Act, 2013 and the rules made thereunder and the Articles of Association of your Company, Mr. Paresh V. Chothani (DIN: 00218632) is liable to retire by rotation at the ensuing Annual General Meeting and being eligible, offers himself for re-appointment. Based on performance evaluation and the recommendations of the Nomination and Remuneration Committee, the Board recommends the re-appointment of Mr. Paresh V. Chothani for your approval.

Based on the recommendation of the Nomination and Remuneration Committee("NRC") and Board of Directors, members by way of Postal Ballot through Special Resolution approved the Appointment of Mr. Suhail P. Shah as the Wholetime Director designated as Executive Director of the Company for a period of 3 (Three) years with effect from 1^st September 2023 and remuneration thereof.

Based on recommendation of NRC and in accordance with provisions of the Act and Listing Regulations, Mr. Manish Gandhi (DIN: 10671306) was appointed as an Additional Director (Independent) of the Company by the Board of Directors on 27^th June 2024, for a term of 5 years commencing from 27^th June, 2024 upto 26^th June, 2029, subject to the approval of Members.

Based on recommendation of NRC and in accordance with provisions of the Act and Listing Regulations, the Board of Directors on 27^th June 2024, approved the re-appointment of Ms. Kruti Kothari (DIN: 08502921) as an Independent Director of the Company for a second term of 5 (Five) consecutive years commencing from 9^th July, 2024 upto 8^thJuly, 2029, subject to the approval of Members.

Based on the recommendation of the Nomination & Remuneration Committee (''NRC''), the Board of Directors on 27^th June 2024, approved the re-appointment of Mr. Paresh V. Chothani (DIN: 00218632) as the Wholetime Director of the Company, for a further period of 5(five) years with effect from 26^th November, 2024 and remuneration thereof.

Necessary Resolutions for the re-appointment/ appointment of the aforesaid Directors have been included in the notice convening the ensuing AGM and requisite details have been provided in the explanatory statement of the Notice. The Board recommends their appointment/ re-appointment.

Brief details as required under Secretarial Standard-2 and under Regulation 36 (3) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 with respect to directors being appointed / reappointed, are provided as an annexure to the Notice convening the 78^th AGM.

Cessation of Directors

During the year under review, Mr. Harishchandra B. Bharucha has retired from the office of directorship of the Company on expiry of his second term of 5 (five) years on 31^st March, 2024 and therefore ceased to be a Director of the Company with effect from close of business hours on 31^st March, 2024.

The Company places on record its sincere appreciation of the contribution during his tenure on the Board of the Company.

Key Managerial Personnel (KMP)

As on 31^st March, 2024 the following persons were the Ke Managerial Personnel ("KMP") of the Company pursuant to Section 2(51) and Section 203 of the Companies Act, 2013 read with the Rules framed thereunder:

1. Mr. Alok P. Shah, Managing Director

2. Mr. Paresh V. Chothani, Wholetime Director

3. Mr. Suhail P. Shah, Wholetime Director

4. Mr. Chandresh S. Punjabi, Chief Financial Officer

5. Ms. Mahek Gaurav Jaju, Company Secretary

Independent Directors

The Board is of the opinion that the Independent Directors appointed/re-appointed during the year under review are person(s) of integrity and possess core skills/expertise/ competencies (including the proficiency) as identified by the Board of Directors as required in the context of Company''s business(es) and sector(s) for the Company to function effectively.

In terms of the provisions of Section 149(7) of the Companies Act, 2013 read with Regulation 25(8) of the Regulations, all the Independent Directors of the Company have furnished a declaration to the Compliance Officer of the Company at the meeting of the Board of Directors held on 24^th May, 2024 stating that they fulfil the criteria of Independent Director as prescribed under Section 149(6) of the Companies Act, 2013 read with Regulation 16(1)(b) of the Regulations, and are not being disqualified to act as an Independent Director. Further, they have declared that they are not aware of any circumstance or situation, which exist or may be reasonably anticipated, that could impair or impact their ability to discharge their duties with an objective independent judgment and without any external influence.

In the opinion of the Board, all the Independent Directors fulfil the conditions specified in the Companies Act, 2013 read with the Rules made thereunder and the Regulations, and are independent of the management.

During the year under review, the Company did not have any pecuniary relationship or transactions with any of its directors, other than payment of remuneration to the Executive Directors and payment of sitting fees to Non-executive Directors and reimbursement of expenses incurred by them for the purpose of attending meetings of the Board / Committees of the Company.

The Independent Directors have also given declaration of compliance with Rules 6(1) and 6(2) of the Companies (Appointment and Qualification of Directors) Rules, 2014, with respect to their name appearing in the data bank of Independent Directors maintained by the Indian Institute of Corporate Affairs.

The Appointment and Tenure of the Independent Directors, including code for Independent Directors are available on the website of the Company, www.stml.in.

Separate Meeting of Independent Directors

The Independent Directors at the meeting, inter alia, reviewed the following:

â¢ Performance of Non-Independent Directors and Board as a whole.

â¢ Performance of the Chairman of the Board, taking into account the views of Executive Directors and Non-Executive Directors.

Number of meetings of the Board

During the year under review, 5 (five) Board Meetings were held on the following dates 24^th May, 2023, 06^th July, 2023, 11^th August, 2023, 07^th November, 2023 and 13^thFebruary,2024. The gap between any two meetings was not more than one hundred twenty days as mandated under the provisions of Section 173 of the Companies Act, 2013 and Regulation 17(2) of the Regulations.

Committees of the Board

The Committees of the Board focus on certain specific areas and make informed decisions in line with the delegated authority.

The following statutory Committees constituted by the Board function according to their respective roles and defined scope:

â¢ Audit Committee of Directors

â¢ Nomination and Remuneration Committee

â¢ Corporate Social Responsibility and Sustainability Committee

â¢ Stakeholders Relationship Committee

Details of composition, terms of reference and number of meetings held for respective Committees are given in the Report on Corporate Governance, which forms a part of this Annual Report. During the year, all recommendations made by the committees were approved by the Board.

Familiarization / Orientation program for Independent Directors

These programmes aim to provide insights into the Company to enable the Independent Directors to understand its business in depth and contribute significantly to the Company.

Pursuant to Regulation 46, the details required are available on the website of your Company at ''http://www. stml.in/policies.aspx.

Composition of the Audit Committee

The Audit Committee comprises Mr. Deepak N. Shah as its Chairperson, Mr. Ketan A. Jariwala and Ms. Kruti Kothari, all of whom are Independent Directors as members. More details on the Committee are given in the Report on Corporate Governance.

Board Evaluation

Pursuant to the provisions of the Companies Act, 2013 and Regulation 17(10), the Board has devised a policy on evaluation of performance of Board of Directors, Committees and Individual directors. The policy is also in compliance to Regulation 19 read with Schedule II, Part D of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.The Nomination and Remuneration Committee has defined the evaluation criteria for the Performance Evaluation of the Board, its committees and individual Directors.

During the period under review, the Board of Directors have carried out the evaluation of the performance of Independent Directors and their independence criteria and the Independent Directors in their meeting held on 13^th February, 2024 have evaluated the performance of the Chairman and Non-Independent Directors and the Board as a whole and also assessed the quality, quantity and timeliness of flow of information between the Board and Company management.

Code of Conduct for Directors and Senior Management

All Board members and Senior Management personnel have affirmed compliance with the Code of Conduct for the year 2023-24. A declaration to this effect signed by the Managing Director of the Company is contained in this Annual Report. The Managing Director and CFO have certified to the Board with regard to the financial statements and other matters as required under regulation 17(8) of the SEBI Listing Regulations, 2015.

Code for Prevention of Insider Trading

Procedure for Nomination, Appointment & Remuneration of Directors

The Nomination and Remuneration Committee (NRC) has been mandated to oversee and develop competency requirements for the Board based on the industry requirements and business strategy of the Company.

The NRC reviews and evaluates the profiles of potential candidates for appointment of Directors and meets them prior to making recommendations of their nomination to the Board.

None of the directors or Managing Director of the Company received any remuneration or commission from Subsidiary Companies of your Company.

The detail of remuneration paid to the Directors including the Managing Director of the Company is provided in Corporate Governance Report.

Directors'' Responsibility Statement

Accordingly, pursuant to Sections 134(5) of the Act, the Board of Directors, to the best of its knowledge and ability, confirm that:

(a) in the preparation of the annual accounts for the financial year ended 31st March, 2024, the applicable accounting standards read with requirements set out under Schedule III to the Act, have been followed and there are no material departures from the same;

(d) they have prepared the Annual Accounts for the Financial Year ended 31st March, 2024 on a going concern basis;

(e) they have laid down internal financial controls to be followed by the Company and such internal financial controls are adequate and operating effectively;

(f) they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.

Corporate Governance Report

Your Company is in compliance with all the applicable provisions of Corporate Governance as stipulated under Chapter IV of the Listing Regulations. The Report on Corporate Governance as stipulated under Schedule V(C) of the Regulations is provided in a separate section as ''Annexure F'' and forms part of this Report. The required certificate from a Practicing Company Secretary confirming compliance with the conditions of Corporate Governance as stipulated in the Regulation 34 of the Listing Regulations is annexed to this Annual Report.

Corporate Social Responsibility (CSR)

Consequent to the retirement of Mr. Harishchandra B. Bharucha as member of the the CSR Committee, Mr. Deepak N. Shah was inducted as member of the Committee with the consent of Board of Directors obtained through circular resolution.

The present members of the CSR Committee comprise of Mr. Ketan Jariwala as the Chairman, Mr. Paresh V. Chothani and Deepak N. Shah as Members. The CSR Committee met on 13^th February, 2024 to review the Corporate Social Responsibility Policy.

For the F.Y. 2023-24, the provisions of Section 135 (1) of the Companies Act, 2013 is not applicable since the Company is not falling under the criteria as prescribed with respect to net worth or turnover or net profit during the immediately preceding financial year.

Further, pursuant to Rule 3(2) of the Companies (Corporate Social Responsibility Policy) Amendment Rules, 2022 ("the Amendment Rules") issued by MCA notification dated 20 September ,2022, the company is exempted from compliance from CSR compliance / spending for the FY. 2023-24, however, the disclosure with respect to constitution of CSR Committee and the report of the committee has been made forming part of the ''Annexure A''.

Related Party Transactions

The statement giving details of all Related Party Transactions are placed before the audit committee / the Board for review and approval on a quarterly basis. Prior omnibus approval of the Audit Committee is obtained for the transactions which are repetitive in nature or when the need for these transactions cannot be foreseen in advance.

Pursuant to Regulation 23(9) of the Listing Regulations your company has filed half yearly report on Related Party Transactions with the stock exchanges.

The Company has formulated a policy on materiality of Related Party Transactions and dealing with Related Party Transactions which has been uploaded on the Company''s website which can be accessed at following link http:// www.stml.in/policies.aspx.

The details of the transactions with related parties are provided in the accompanying Financial Statements.

Auditors

Statutory auditors

In line with the requirements of the Companies Act, 2013, Statutory Auditor M/s Sharp and Tannan Associates, Chartered Accountants (ICAI Firm Registration Number 109983W) were appointed as Statutory Auditor of the Company at the 76^th AGM held on 13^th September, 2022 to hold office from the conclusion of the said meeting till the conclusion of the 81^st AGM to be held in the year 2027.

As required under the SEBI Listing Regulations, the Statutory Auditors have also confirmed that they hold a valid certificate issued by the Peer Review Board of the Institute of Chartered Accountants of India. Further, pursuant to Section 139 of the Companies Act, 2013, the Company has obtained certificate from them to the effect that their continued appointment, would be in accordance with the conditions prescribed under the Act and the Rules made thereunder, as may be applicable.

Representatives of M/s Sharp and Tannan Associates, Statutory Auditors of your Company attended the previous AGM of the Company held on 11^th August, 2023.

Report on Financial Statements

The report of M/s Sharp & Tannan Associates, Chartered Accountants (ICAI Registration No. 109983W), the Statutory Auditors of the Company on the financial statements of the Company for the year ended 31 March, 2024 is annexed to the financial statements in terms of the provisions of Section 134(2) of the Companies Act, 2013. The observations of the Auditors in their report are self-explanatory and/or explained suitably in the Notes forming part of the Financial Statements. The report of the Statutory Auditors does not contain any qualification, reservation or adverse remark which needs any explanation or comment of the Board.

Cost records and cost audit

Consequent to the sale / transfer of assets of Jolwa Manufacturing division in April 2022 and no other manufacturing activity in operation, maintenance of cost records and requirement of cost audit as prescribed under the provisions of Section 148(1) of the Companies Act, 2013 are not applicable for the business activities carried out by the Company for the FY 2023-24. The Company had intimated to the Ministry of Corporate Affairs, Cost Audit Department updating them on the decision of the management with intimation to the outgoing cost auditors.

Secretarial Audit

The Board has appointed M/s Jigar Vyas & Associates, Practicing Company Secretaries as Secretarial Auditor for the Financial Year 2023-24 in terms of the provisions of Section 204 of the Companies Act, 2013. The Secretarial Audit Report of the Company for the Financial Year ended 31 March, 2024 in the prescribed form MR-3 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is enclosed as ''Annexure D'' to this report. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark which needs any explanation or comment of the Board.

Annual Secretarial Compliance Report

The Company has undertaken an audit for the Financial Year 2023-24 for all applicable compliances as per Securities and Exchange Board of India Regulations and Circulars/Guidelines issued thereunder. The Annual Secretarial Compliance Report duly signed by Mr. Jigar Vyas Practicing Company Secretary (ICSI Membership No.FCS 8019) has been submitted to the Stock Exchanges within the stipulated time, in compliance with the provisions of the Regulation 24A of SEBI (LODR) Regulations, 2015.

Compliance with Secretarial Standards

The Company has generally complied with all the applicable provisions of Secretarial Standard on Meetings of Board of Directors (SS-1) and Secretarial Standard on General Meetings (SS-2), respectively issued by Institute of Company Secretaries of India.

Internal Auditor

Pursuant to the provisions of Section 138 of the Companies Act, 2013 and Rules made thereunder the Board of Directors of the Company have appointed M/s Aadil Aibada & Associates (ICAI Membership No.045310), Chartered Accountants as Internal Auditors of the Company, for the financial year 2023-24.

Consequent to the resignation of M/s Aadil Aibada & Associates (ICAI Membership No.045310), Chartered Accountants as Internal Auditors of the Company, the Board of Directors of the Company at its meeting held on 24^th May, 2024 approved the appointment of M/s K. S. Jagirdar & Co., Chartered Accountants as Internal Auditor for the year 2024-25 in accordance with the provisions of Section 138 of the Companies Act, 2013.

The audit committee in consultation with the Internal Auditor formulates the scope, functioning, periodicity and methodology for conducting the internal audit.

Internal Control Systems & their adequacy

The certification provided in the CEO and CFO certification section of the Annual Report discusses the adequacy of our Internal Control System and procedures.

Internal Financial Control System and their Adequacy

The Company has internal financial controls which are adequate and were operating effectively. The controls are adequate for ensuring the orderly and efficient conduct of the business, including adherence to the Company''s policies, the safeguarding of assets, the prevention and detection of frauds and errors, the accuracy and completeness of accounting records and timely preparation of reliable financial information.

Your Company has in placed adequate Internal Financial Controls with reference to the Financial Statements commensurate with the size, scale and complexity of its operations. The internal audit report is discussed with the Management and members of the Audit Committee to keep a check on the existing systems and take corrective action to further enhance the control measures.

The internal auditors of the Company have in compliance with provisions of Section 177 (4) of the Companies Act, 2013 confirmed to the Audit Committee that the Company has adequate Internal Financial Controls and the systems of risk management are robust and defensible.

Statutory Auditors of the Company have in their Report dated 24^th May, 2024, opined that the Company has, in all material respects adequate internal financial controls over financial reporting and such internal financial controls over financial reporting were operating effectively as at 31^st March, 2024.

Material changes and commitments

Significant and Material Orders passed by the Regulators/ Proceedings

There are no significant and material orders passed by the regulators or courts or tribunals which would impact the going concern status of the Company and its future operations.

Board policies

Policy on Directors'' Appointment and Remuneration

Your directors affirm that the remuneration paid to the Directors, Key Managerial Personnel, Senior Management Personnel and other employees is as per the Nomination and Remuneration Policy of your Company. The said policy is annexed herewith as ''Annexure C'' forming part of this report and available on the website of the Company i.e. http://www.stml.in/policies.aspx.

Policy on Prevention, Prohibition and Redressal of Sexual Harassment at Workplace

The Policy of the "Prevention of Sexual Harassment of Women at Workplace" of the Company is available on the web link of the Company at http://www.stml.in/policies. aspx.

Indian Accounting Standard (Ind AS)/Financial Statements

The financial statements for the year ended 31 March, 2024 have been prepared in accordance with the Indian Accounting Standards ("Ind AS") as required under the provisions of Section 133 of the Companies Act, 2013 read with rules made there under, as amended.

Particulars of Employees and Related Disclosures

Whistle Blower Policy / Vigil Mechanism

It protects employees or any other person who avails such mechanism wishing to raise a concern about serious irregularities, unethical behaviour, actual or suspected fraud within the Company by reporting the same to the Audit Committee.

Reporting of frauds by auditors

During the year under review, neither the statutory auditors nor the secretarial auditor has reported to the Audit Committee, under Section 143(12) of the Companies Act, 2013, any instances of fraud committed against the Company by its officers or employees, the details of which would need to be mentioned in the Board''s report.

Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and outgo

CEO and CFO certification.

Health, safety and environment

Our safety, health and environment objectives include complying with all applicable laws relevant to the Company and its business activities. The Management believes in sharing responsibility throughout the hierarchy in conforming to the existing laws.

The Company has obtained necessary approvals from concerned Government Department / safety clearances as applicable to the Company.

Industrial Relations / Human Resources

During the year under review, industrial relations in the Company continued to be cordial and peaceful.

Green Initiatives

In commitment to keep in line with the Green Initiatives and going beyond it, the Notice of 78^th Annual General Meeting of the Company including the Annual Report for FY 2023-24 are being sent to all Members whose e-mail addresses are registered with the Company / Depository Participant(s).

Risk Management

The business plan for the future is devised and approved by the Board keeping in mind the risk factors which can significantly impact the performance of the particular business. All major financial commitments are subject to scrutiny by the Board and investments are permitted only on being satisfied about its returns or utility to the Company. There are no risks which in the opinion of the Board threaten the existence of the Company.

Insurance

The Company has taken all the necessary steps to insure its properties and insurable interests, as deemed appropriate and also as required under the various legislative enactments.

Public Deposits

There were no outstanding deposits within the meaning of Section 73 and 74 of the Companies Act, 2013 read with rules made thereunder at the end of FY24 or the previous financial years.

Your Company did not accept any deposit during the year under review.

Particulars of Loans, Guarantees and Investments

During the period under review, the Company has not made any loan, guarantee or investment in terms of the provisions of Section 186 of the Companies Act, 2013.

Extract of the Annual Return

Pursuant to Section 134(3)(a) of the Companies Act, 2013 the Annual Return in Form MGT 7 as at the financial year ended 31^st March, 2023 prepared in accordance with Section 92(3) of the Act is made available on the website of your Company and link for the same is given in Annexure-1 of this report.

Further, he Annual Return in Form MGT 7 as at the financial year ended 31^st March, 2024 will be hosted on website of the Company at http://www.stml.in under web link: http://www.stml.in/AnnualReturn.aspx after necessary certification and filing the same with the authority.

Agreement(s) binding the Company

As required under Regulation 30A of Listing Regulations, the Company has to report that it has not been informed by any shareholders, promoters, promoter group entities, related parties, directors, KMPs or employees of the Company, who are purported to be parties to any agreements specified in Clause 5A of Paragraph A of Part A of Schedule III of the SEBI Listing Regulations, of having entered into any agreement or have signed any agreement to enter into such agreement to which the Company is not a party as at the end of the financial year. The Company further reports that there is no such agreement of the nature mentioned above that subsists on the date of coming into effect of the SEBI (LODR) (Second Amendment) Regulations, 2023.

Business Responsibility Report

Key financial ratios

The Company has identified the following ratios as key financial ratios:

Sr. No.	Particulars	FY 2023-24	FY 2022-23
1	Current Ratio (times)	98.71	128.38
2	Debt Service Coverage Ratio (times)	31.19	11.65
3	Return on Equity Ratio (%)	4.52	2.20
4	Net Profit Ratio (%)	14.98	12.16
5	Return on Capital employed (%)	6.64	2.12
6	Return on Investment (%)	15.47	6.64
7	Inventory Turnover (times)	8.60	0.00

Note:

1. Debt-Equity Ratio, Inventory Turnover Ratio, Trade Receivable Turnover Ratio, Trade Payable Turnover Ratio, Net Capital Turnover Ratio does not apply to the Company in absence of any Debt, Trade Receivable and Trade Payable.

General Disclosures

Your directors state that no disclosure or reporting is required in respect to the following items, as there were no transactions/events on these matters during the year under review:

1. Issue of equity shares with differential rights as to dividend, voting or otherwise.

2. Issue of shares (including sweat equity shares) to employees of the Company under any scheme or ESOPs.

3. Voting rights which are not directly exercised by the employees in respect of shares for the subscription/ purchase of which loan was given by the Company (as there is no scheme pursuant to which such persons can beneficially hold shares as envisaged under Section 67(3) (c) of the Companies Act, 2013).

4. Application made or any proceeding pending under the Insolvency and Bankruptcy Code, 2016.

5. One time settlement of loan obtained from the Banks or Financial Institutions.

6. Revision of financial statements and Directors'' Report of your Company

7. There has been no change in the nature of business of the Company during the year under review.

Forward Looking Statement

Actual results may differ from such expectations, whether expressed or implied. Several factors could make significant difference to the Company''s Operations. These include climatic and economic conditions affecting demand and supply, government regulations and taxation, any epidemic or pandemic, natural calamities over which the Company may not have any direct / indirect control.

Acknowledgement

Your directors place on records their appreciation of the valuable co-operation extended to the Company by its Bankers and various authorities of the State and Central Government agencies.

Your directors also acknowledge with gratitude the support of customers, agents, suppliers and all other stakeholders for their continued faith and support, during these challenging times.

For and on behalf of the Board of Directors

Alok P.Shah Managing Director

Surat, 27^th June,2024 DIN: 00218180

Mar 31, 2018

Dear Members,

The Directors present the 72nd Annual Report together with the Audited Financial Statements of the Company for the financial year ended 31st March, 2018.

The Managementâs Discussion and Analysis Report as required under the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 is forming a part of this report.

Financial Results

The Companyâs performance during the financial year ended 31st March, 2018 as compared to the previous financial year, is summarised below:

Summarised Financial Results

(Rs. in Crore)

	2017-18	2016-17
Gross Revenue from Operations	205.99	156.82
Earnings Before Interest, Tax and Depreciation	16.44	16.56
Less: Finance Costs	0.98	0.39
Less: Depreciation	0.50	0.79
Profit before tax	14.96	15.38
Less: Tax Expense /(Credit)	6.78	(1.31)
Profit after tax	8.18	16.69

Review of Operations

Gross revenue from operations of the Company for the financial year 2017-18 increased by about 31% to Rs.205.99 Crore as compared to Rs.156.82 Crore in the previous year. During the year, your Company re-started manufacturing operations of its polyester spinning division which contributed further to the gross revenue for FY18. Capacity utilization however, remained low due to poor demand growth. Higher sales volume and improved net sales realisation in chips segment also contributed to top-line growth.

Despite challenging and competitive business environment, your Company achieved Operating EBITDA (earnings before interest, tax and depreciation) at Rs.16.44 Crore as compared to Rs. 16.56 Crore in the previous year.

Total sale of chips in volume was higher at 20803 MT for the year 201718 as compared to 18817 MT in the previous year. In value terms also your Company achieved higher sale of chips for FY18 at Rs.168.07 Crore as compared to Rs.156.14 Crore in the previous year.

We achieved higher production of Chips, during 2017-18 at 22028 MT as compared to 18577 MT in the previous year. Despite a highly competitive environment, the Company was able to run its plants at good utilisation rates. Good efficiency levels were maintained.

Raw material consumption for FY18 was higher on account of chips component on production of Polyester Yarn. High energy costs continued to be matter of concern. Rising global prices of MEG and PTA during the year put pressure on operating margins. The overall manufacturing expenses for FY 17-18 increased primarily on account of higher conversion cost and the start up cost of polyester spinning division.

Under the present scenario, your Company is focusing on optimum allocation of its resources through cost reduction at manufacturing level. The operating margins however remained under pressure.

Increase in Finance costs during FY18 was on account of higher working capital utilisation, higher purchase of raw materials through usance L.C. route and other incremental financial charges.

In view of the higher input costs coupled with lower demand growth in POY segment, the management considered it appropriate to suspend its manafacturing operations of polyster spinning division in March, 2018.

Dividend

In order to strengthen the reserves of the year, your directors consider it prudent to plough back the profits and not to recommend any dividend for the financial year 2017-18.

Transfer to Reserves

The Company does not propose to transfer amount to the general reserve out of the amount available for appropriation and considered it appropriate to retain the same in the profit and loss account.

Nature of Business

The Company is engaged in the business of manufacturing polyester chips and differentiated partially oriented yarn (POY). During the year under review, there was no change in the nature of business of the Company.

Share Capital

The Paid-up Equity Share Capital of the Company as at 31st March, 2018 stood at Rs.2220.64 Lacs. There was no public issue, rights issue, bonus issue or preferential issue etc. during the year. The Company has not issued shares with differential voting rights, sweat equity shares, nor has it granted stock options. As on 31st March, 2018, none of the directors of the Company hold instruments convertible into equity shares of the Company.

Disclosures in respect of voting rights not directly exercised by employees

No disclosure is required under Section 67(3)(c) of the Companies Act, 2013, read with Rule 16(4) of Companies (Share Capital and Debentures) Rules, 2014, in respect of voting rights not exercised directly by the employees of the Company as the provisions of the said section are not applicable.

Indian Accounting Standard (Ind AS)

As mandated by the Ministry of Corporate Affairs, the Company has adopted Indian Accounting Standards (âInd ASâ) from 1st April, 2017 with a transition date of 1st April, 2016. The financial results for the year 2017-18 have been prepared in accordance with Ind AS, prescribed under Section 133 of the Companies Act, 2013 read with the relevant rules issued thereunder and the other recognized accounting practices and policies to the extent applicable. The Financial Results for all the periods of 2017-18 presented have been prepared in accordance with Ind AS.

Secretarial Standards

Pursuant to the approval given on 10th April, 2015 by the Central Government to the Secretarial Standards specified by the Institute of Company Secretaries of India, the Secretarial Standards on Meetings of the Board of Directors (SS-1) and General Meetings (SS-2) came into effect from 1st July, 2015. The said standards were further amended w.e.f. 1st October, 2017. The Company is in compliance with the same.

Material changes and commitments

There have been no material changes and commitments affecting the financial position of the Company, which have occurred between the end of the financial year and the date of this Report.

Subsidiaries and associates

The Company has no subsidiary / joint venture / associates for the financial year ended 31st March, 2018. Accordingly, the requirements pursuant to Section 129(3) of the Companies Act, 2013 read with Rule 5 of the Companies (Accounts) Rules, 2014 is not applicable. Business Responsibility Report

Finance

Your Company has repaid Secured Rupee Term Loan from banks to the tune of Rs.29.58 Lacs during the financial year 2017-18. No fresh Term Loan was availed by the Company during the year. The Company availed working capital facility from Bank of Baroda during the year. Information Technology

Information Technology is the driving force of the business. The Company is continuously adopting and utilizing various information technology tools and is in process to implement new age technologies like Internet of Things (IOT), among other, to improve business process efficiency. As a part of Digital Transformation journey, your Company has implemented production planning and execution system, which was otherwise manual process.

The system for adopting GST in Oracle EBS12 has been successfully implemented by the Company. This project has been carried out entirely in house.

Directors and Key Managerial Personnel

The Board of Directors consists of five members, of which three are Independent Directors. The Board also comprises of one woman Director.

As per the provisions of Section 152(6) of the Companies Act, 2013 and the Companyâs Articles of Association, Shri Manikant R. Momaya (DIN: 00023993) shall retire by rotation at the ensuing Annual General Meeting and being eligible, has offered himself for re-appointment as a Director of the Company.

The term of office of Shri Harishchandra Bharucha, as an Independent Director, will expire on 31st March, 2019. The Board of Directors, on recommendation of the Nomination and Remuneration Committee has recommended re-appointment of Shri Harishchandra Bharucha, as an Independent Director of the Company for a second term of 5 (five) consecutive years on the expiry of his current term of office. The Company has received declarations from all the Independent Directors of the Company confirming that they meet the criteria of independence prescribed under the Act and the Listing Regulation. As per the provisions of Section 203 of the Companies Act, 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 Shri Manikant R. Momaya, Managing Director, Shri Yogesh C. Papaiya, Wholetime Director and CFO and Ms. Hanisha Arora, Company Secretary are the key managerial personnel of the Company.

Disclosure Relating to Remuneration of Directors and Key Managerial Personnel

The remuneration paid to the Directors is in accordance with the Remuneration Policy formulated in accordance with Section 178 of the Companies Act, 2013.

Disclosures of the ratio of the remuneration of each director to the median employeeâs remuneration and other details as required pursuant to Section 197(12) of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are provided in Annexure C attached to this Report.

The details of remuneration paid to the Directors including Executive Directors of the Company are given in Form MGT-9 forming part of the Directors Report.

Corporate Governance

As per Regulation 34(3) read with Schedule V(c) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, a report on Corporate Governance, in accordance with Listing Regulations, along with a certificate from M/s Sharp and Tannan, Chartered Accountants, Statutory Auditors of the Company, are annexed hereto and forms part of the Report. The auditorâs certificate for the year 2017-18 does not contain any qualification, reservation, adverse remark or disclaimer.

All Board members and Senior Management personnel have affirmed compliance with the Code of Conduct for the year 2017-18. A declaration to this effect signed by the Managing Director of the Company is contained in this Annual Report. The Managing Director and CFO have certified to the Board with regard to the financial statements and other matters as required under regulation 17(8) of the SEBI Listing Regulations, 2015.

Corporate Social Responsibility Committee

As required under Section 135 of the Companies Act, 2013 the CSR committee comprising Shri Ketan Jariwala, Independent Director as the Chairman of the Committee, Shri Harishchandra Bharucha, Independent Director and Shri Yogesh C. Papaiya, Whole-time Director as its members.

The CSR committee has formulated and recommended to the Board, a Corporate Social Responsibility Policy (CSR) indicating the activities to be undertaken by the Company, which has been approved by the Board. The CSR Policy may be accessed on the Companyâs website www.surattextilemillsltd.com.

The CSR Committee will further identify the project which can be covered under the CSR guidelines in compliance with the CSR objectives and policy of the Company.

The report as per Section 135 of the Companies Act, 2013 read with Companies (Corporate Social Responsibility Policy) Rules, 2014 is attached as Annexure B to this Report.

Audit Committee

The Audit Committee comprises of Directors namely Shri Harishchandra Bharucha (Chairman), Shri Ketan Jariwala and Shri Yogesh C. Papaiya as other member. All the recommendations made by the Audit Committee during the year were accepted by the Board. Vigil Mechanism / Whistle Blower Policy

Your Company believes in promoting a fair, transparent, ethical and professional work environment. The Company pursuant to the provisions of Section 177 of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, has established a vigil mechanism for Directors and employees and the same has been communicated to the Directors and employees of the Company and the same is also posted on the website of the Company.

Prevention of Sexual Harassment of women at workplace

The Company has formulated a policy in respect of Sexual Harassment of women at workplace as per the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013. There was no complaint received by the Company during the financial year 2017-18 under the aforesaid Act.

Risk Management

Your Company recognizes that the risk is an integral part of business and is committed to managing the risks in proactive and efficient manner. Your Company periodically assesses the risks in the internal and external environment along with treating the risks and incorporates risk management plans in its strategy, business and operational plans.

The business plan for the future are devised and approved by the Board keeping in mind the risk factors which can significantly impact the performance of the particular business. All major capital expenditures commitments are subject to scrutiny by the Board and investments are permitted only on being satisfied about its returns or utility to the Company. There are no risks which in the opinion of the Board threaten the existence of the Company.

Insurance

The Company has taken all the necessary steps to insure its properties and insurable interests, as deemed appropriate and also as required under the various legislative enactments.

Auditors and Auditorsâ Report

Pursuant to the provisions of section 139 of the Companies Act, 2013, the members of the Company at the 71st Annual General Meeting held on 2nd August, 2017 appointed M/s. Sharp & Tannan Associates, Chartered Accountants (Firm Registration No.109983W) as statutory auditors of the Company from the conclusion of 71st Annual General Meeting till the conclusion of 76th Annual General Meeting, covering one term of five consecutive years, subject to ratification by the members at each intervening Annual General Meeting.

In view of the amendment to the said section 139 through the Companies (Amendment) Act, 2017 notified on 7th May 2018, ratification of auditorâs appointment is no longer required. However, as required under section 142 of the Companies Act, 2013, resolution at item No.3 of the Notice of AGM is proposed for approval of members for authorising the Board of Directors of the Company to fix Auditorsâ remuneration for the year 2018-19 and thereafter. The members are requested to approve the same.

The Notes on financial statement referred to in the Auditorsâ Report are self-explanatory and do not call for any further comments. The Statutory Auditorsâ Report for the year 2017-18 does not contain any qualification, reservation, adverse remark or disclaimer made by Statutory Auditor. There is no incident of fraud requiring reporting by the auditors under Section 143(12) of the Companies Act, 2013.

Cost Auditor and Cost Audit Report

M/s P. M. Nanabhoy & Co., Cost Accountants, (Firm Registration Number 000012), were appointed as the Cost Auditor for the financial year 2017-18 to conduct the audit of the cost records of the Company. M/s P. M. Nanabhoy & Co., Cost Accountants, have been reappointed as the Cost Auditor for the financial year 2018-19.

In terms of the provisions of Section 148(3) of the Companies Act, 2013, read with the Companies (Cost Records and Audit) Rules, 2014, as amended, the remuneration payable to the Cost Auditors has to be ratified by the Members of the Company. Accordingly, the Board seeks ratification at the ensuing AGM of the remuneration payable to the Cost Auditors for the financial year 2018-19.

Secretarial Auditor and Secretarial Audit Report

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board of Directors of the Company have re-appointed, Jigar Vyas of Jigar Vyas & Associates, Practicing Company Secretaries, (CP No.8019), Surat to conduct the Secretarial Audit for the financial year 2017-18. The Secretarial Audit Report for the year 2017-18 issued by him in the prescribed form MR-3 is attached as Annexure D to this Report. The said Secretarial Audit Report does not contain any qualification, reservation, adverse remark or disclaimer made by the Secretarial Auditor.

Internal Auditors

Pursuant to the provisions of Section 138 of the Companies Act, 2013, the Board of Directors of the Company have appointed M/s Aadil Aibada & Associates, Chartered Accountant as Internal Auditors of the Company, for the financial year 2017-18.

The audit committee of the Board of Directors in consultation with the Internal Auditor formulates the scope, functioning, periodicity and methodology for conducting the internal audit.

Directorsâ Responsibility Statement

a) that in the preparation of the annual accounts for the year ended 31st March, 2018, the applicable accounting standards read with requirements set out under Schedule III to the Act, have been followed and there are no material departures from the same;

b) that the directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31st March, 2018 and of the profit of the Company for the year ended on that date;

c) that the directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d) that the directors have prepared the annual accounts on a going concern basis;

e) that the Board has laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and are operating effectively; and

f) that the directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.

Number of meetings of the Board

Five meetings of the Board of Directors of the Company were held during the year. The Directors actively participated in the meetings and contributed valuable inputs on the matters brought before the Board from time to time. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013. Detailed information is given in the Corporate Governance Report.

Performance evaluation

The Nomination and Remuneration Committee has defined the evaluation criteria for the Performance Evaluation of the Board, its Committees and individual Directors.

Pursuant to the provisions of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Board has carried out a formal annual evaluation of its performance and that of its Committees and individual Directors. The evaluation of each of the directors was done, inter-alia, on the basis of their advisory role and contribution in the decision making. Further, the evaluation of the Board as a whole and all the Committees of the Directors was done, inter-alia, on the basis of the overall directions and guidance provided to the senior executives and supervision over their performance. The result of the evaluation is satisfactory and adequate and meets the requirements of the Company.

Independent Directorsâ Meeting

In compliance with the requirements of Schedule IV of the Companies Act, 2013, a meeting of the Independent Directors was held on 28th March, 2018, without the participation of the Executive Directors or Management personnel.

The Independent Directors carried out performance evaluation of Non-Independent Directors and the Board of Directors as a whole, performance of Chairman of the Company, the quality, contents and timelines of flow of information between the Management and Board, based on the performance evaluation framework of the Company.

Declaration of 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 and there is no change in their status of independence. As required under Section 149(7) of the Companies Act, 2013, the said declaration was placed in the Board Meeting held on 8th May, 2018.

Familiarisation Programme

The Company has put in place an induction and familiarisation programme for all its Directors including the Independent Directors so as to associate themselves with the nature of the industry in which the Company operates. Directors are periodically advised about the changes effected in the Corporate Laws, Listing Regulations with regard to their roles, rights and responsibilities as Director of the Company. The familiarisation programme for Independent Directors in terms of the provisions of Regulation 46(2)(i) of Listing Regulations, is uploaded on the website of the Company.

Internal Control System and their Adequacy

The Company has an adequate internal control system commensurate with the size and scale of its business operations. The Company has appointed Internal Auditors who periodically audit the adequacy and effectiveness of the internal controls laid down by the management and suggest improvements. The Audit Committee of the Board of Directors approves the annual internal audit plan, periodically reviews the progress of audits as per approved audit plans, critical internal audit findings presented by internal auditors, status of implementation of audit recommendations, if any, and adequacy of internal controls.

The Audit Committee takes due cognizance of the observations made by the auditors and gives their suggestions for improvement. The suggestions of the Audit Committee are also taken into account for further strengthening of the control systems.

Contracts or Arrangement with Related Parties All contracts / arrangements / transactions entered by the Company during the financial year with Related Parties were in its Ordinary Course of Business and on armsâ length basis.

Pursuant to section 177 of the Companies Act, 2013 and regulation 23 of SEBI Listing Regulations, 2015, all Related Party Transactions were placed before the Audit Committee for its approval.

There were no materially significant related party transactions which could have potential conflict with interest of the Company at large. The policy on related party transactions as approved by the Board is uploaded on the Companyâs website. The Companyâs management ensures total adherence to the approved Policy on Related Party Transactions to establish Armâs Length Basis without any compromise. Pursuant to section 134 of the Companies Act, 2013 and Rules made thereunder, particulars of transactions with related parties as required under section 188(1) of the Companies Act, 2013, read with Rule 8(2) of Companies (Accounts) Rules, 2014 is annexed with this Report in Form AOC-2 as Annexure E.

Your Directors draw attention of the members to Note No. 32 to the financial statements which sets out related party disclosures. Particulars of Employees and Related Disclosures

During the financial year 2017-18, none of the employee of the Company was in receipt of remuneration prescribed in terms of the provision of Section 197(12) of the Companies Act, 2013 read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rule, 2014.

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

Particulars in respect of conservation of energy, technology absorption, foreign exchange earnings and outgo, as required under Section 134(3)(m) of the Companies Act, 2013 read with Companies (Accounts) Rules, 2014 are set out in a separate statement attached hereto and forming part of the report as Annexure A.

Nomination and Remuneration Policy

The key objectives of the Policy are to lay down the criteria for appointment and remuneration of Directors, Key Managerial Personnel and Executives at Senior Management level and recommend to the Board their appointment, and also to formulate criteria for evaluation of performance of Independent Directors and the Board and to devise a policy on Board diversity.

The Policy, inter-alia, includes criteria for determining qualifications, positive attributes, independence of a director, and expertise and experience required for appointment of Directors, KMP and Senior Management.

As per the Policy, the remuneration / compensation to the Wholetime Directors shall be recommended by the Nomination and Remuneration Committee to the Board for its approval. However, the remuneration compensation to Whole-time Directors shall be subject to the approval of the shareholders of the Company and Central Government, wherever required. Further, the Non-Executive

Directors shall be entitled to the fees for attending meetings of Board and Committees within the limits prescribed in the Companies Act, 2013. The Nomination and Remuneration Policy is available on the Companyâs website.

Fixed Deposits

During the year under review, your Company has not accepted or renewed any Deposit, within the meaning of Section 73 of the Companies Act, 2013, read with the Companies (Acceptance of Deposits) Rules, 2014 and as such, there are no outstanding deposits in terms of the Companies (Acceptance of Deposits) Rules, 2014. Hence, the requirement of furnishing details of deposits which are not in compliance of Chapter V of the Act, is not applicable.

Annual Return

Pursuant to Section 134(3)(s) of the Companies Act, 2013 read with Rule 12(1) of the Companies (Management and Administration) Rules, 2014, an extract of the Annual Return is annexed herewith and forming part of the report as Annexure F.

Loans, Investments and Guarantees by the Company

There are no loans given, investments made, guarantees given or securities provided by the Company to any entity, under Section 186 of the Companies Act, 2013.

Green Initiative

Electronic copy of the Annual Report 2017-18 and the Notice of the 72nd Annual General Meeting are sent to all members whose email addresses are registered with the Company / depository participant(s). For members who have not registered their email addresses, physical copies are sent in the permitted mode.

To support this green initiative, we hereby once again appeal to all those members who have not registered their e-mail addresses so far are requested to register their e-mail address in respect of electronic holding with their concerned Depository Participants and/or with the Company.

Financial Performance

Discussion on financial performance with preference to operational performance has been dealt with in this Report in the relevant para which should be treated as forming part of the Management Discussion and Analysis Report.

Health, safety and environment

The Company gives foremost importance to Safety, Health and Environment and strives relentlessly on cultivating and improving safe work culture, health awareness and environment protection.

Your Company recognizes protection and management o f environment as one of its highest priority and every effort is made to conserve and protect the environment.

During the year, your Company continued its focus in creating an aesthetic, environment-friendly industrial habitat in its factory units, mobilizing support and generating interest among staff and labour for maintaining hygienic and green surrounding.

Periodical health check-up are conducted for the employees at the work place. More emphasis is given to cleanliness, workplace hygiene and good house-keeping.

The Company is continuously working on possibility of using appropriate technology to reduce the hazardous waste generation. The Company obtained necessary approvals from concerned Government Department / Pollution Control Board and all required environment clearances / safety clearances / stipulations are complied with at Plant facilities of the Company. The Company continues to focus on maintenance and performance improvement of related pollution control facility at its manufacturing locations.

Industrial Relations / Human Resources

Your Company maintained healthy, cordial and harmonious industrial relations at all levels during the year under review.

The Company continuously works to nurture this environment to keep its employees highly motivated, result oriented and adaptable to changing business environment. Your Companyâs value proposition is based on providing value to our customer, through innovation and by consistently improving efficiency at all levels.

Your Directors wish to place on record their appreciation for the dedicated and commendable services rendered by the employees of the Company. The strength of permanent employees as on 31st March, 2018 was 88 Nos.

CAUTONARY STATEMENTS

Statements in this Directorsâ Report and Management Discussion and Analysis describing the Companyâs objectives, projections, estimates, expectations, or predictions may be âforward-looking statementsâ within the meaning of applicable securities laws and regulations. Actual results could differ materially from those express or implied. Important factors that could make difference to the Companyâs operations include raw material availability and its prices, cyclical demand and pricing in the Companyâs principle markets, changes in Government regulations, Tax regimes, economic developments, within India and the countries in which the Company conducts business and other ancillary factors. The Company assumes no responsibility to publicly amend, modify or revise any such statements on the basis of subsequent developments, information or events. The Company disclaims any obligation to update these forward-looking statements, except as may be required by law.

Appreciation

Your Directors wish to acknowledge the co-operation and assistance extended to the Company by the Companyâs Bankers and State & Central Government agencies. Your Directors also wish to place on record their appreciation of the contribution made by employees at all levels.

Your Directors also acknowledge with gratitude the support of the shareholders, other investors, customers, dealers, agents and suppliers for their continued faith and support which has helped the Company to sustain its growth even during these challenging times.

For and on behalf of the Board

Manikant R. Momaya

Managing Director

Surat, 8th May, 2018 DIN: 00023993

Mar 31, 2017

Dear Members,

The Board of Directors hereby submit the report of the business and operations of your Company along with the audited financial statements, for the year ended 31st March, 2017. The Management Discussion and Analysis is also included in this Report.

Nature of Business

The Company is engaged in the business of manufacturing Polyester Chips and Partially Oriented Yarn (POY). During the year under review, there was no change in the nature of business of the Company.

Summarized Financial Results

(Rs. in Crore)

	2016-17	2015-16
Net Sales / Income from Operations	138.72	117.22
Earnings Before Interest, Tax and Depreciation (EBITDA)	15.63	6.50
Less: Finance Costs	0.39	0.74
Depreciation	0.79	1.16
Profit before Tax	14.45	4.60
Less: Tax Expense /(Credit)	(2.17)	(1.53)
Profit after Tax	16.62	6.13

Review of Operations

At a standalone level, net revenue from operations of your Company for the year 2016-17 increased by about 18% at Rs.138.72 Crore as compared to Rs.117.22 Crore in the previous year primarily on increase in sales volume and improved net sales realization. Earnings Before Interest, Tax and Depreciation (EBITDA) was higher at Rs.15.63 Crore as compared to Rs.6.50 Crore in the previous year.

Despite challenging business environment, your Company''s total sale of chips was higher at 18817 MT for the year 2016-17 as compared to 16094 MT in the previous year. In value terms, gross sale of chips was higher at Rs.156.14 Crore as compared to Rs. 128.61 Crore in the previous year.

The overall production of Chips, during the year 2016-17 was higher at 18577 MT as compared to 16427 MT achieved in the previous year.

Our focus on operational efficiency with better working capital management and better network helped us to remain competitive and improve our bottom line.

During the year under review, your Company continued its focus on margin improvement by optimum allocation of its resources through cost reduction at manufacturing level. The operating margins however remained under pressure.

Your Company continued its efforts to reduce and optimize energy consumption at all levels.

The manufacturing activity at its polyester spinning division plant at Village Jolwa, Taluka Palsana, Dist. Surat remained suspended during the major part of the financial year 2016-17, however with the improvement in the demand for polyester yarn, the production resumed from May, 2017.

Dividend and Reserves

In order to strengthen the reserves of the, your directors consider it prudent to plough back the profits and not to recommend any dividend for the financial year 2016-17.

During the year under review, no amount from profit was transferred to General Reserve.

Going Concern Status

During the year under review, there were no significant or material orders passed by regulators or court or tribunal, which can impact the going concern status of the Company and/or its future operations.

Industry Scenario

India''s textiles sector is one of the oldest industries in Indian economy dating back several centuries. Even today, textiles sector is one of the largest contributors to India''s export. The textiles industry is also labour intensive and is one of the largest employers.

India accounts for ~14% of the world''s production of textile fibres and yarns (largest producer of jute, second largest producer of silk, cotton and polyester, and third largest in cellulosic fibre). India has the highest loom capacity (including hand looms) with 63 per cent of the world''s market share.

The Indian textiles industry, currently estimated at around US$ 108 billion, is expected to reach US$ 223 billion by 2021. The industry is the second largest employer after agriculture, providing employment to over 45 million people directly, contributes to 10 per cent of manufacturing production, 2 per cent of India''s GDP and 13 per cent of the country''s export earnings.

The domestic textile and apparel industry in India is estimated to reach US$ 141 billion by 2021 from US$ 67 billion in 2014. Increased penetration of organized retail, favourable demographics, and rising income levels are likely to drive demand for textiles. India is the world''s second largest exporter of textiles and clothing.

Overview of the economy

Economic performance across emerging market and developing economies has remained mixed. Whereas China''s growth remained strong, reflecting continued policy support, activity has slowed in India because of the impact of the demonetization, as well as in Brazil, which has been mired in a deep recession. Activity remained weak in fuel and nonfuel commodity exporters more generally, while geopolitical factors held back growth in parts of the Middle East and Turkey.

The last few years have also witnessed a slowdown in global trade and investments flows. Although, India has not been particularly affected by this slowdown, lower growth in foreign portfolio investment cannot be ruled out, partly on account of the fact that the interest rates in the United States have begun to increase.

The Economic Survey 2016-17, (January 2017) forecasts a growth rate of 6.75 to 7.5 per cent for FY 18, as compared to the expected growth rate of 6.5 per cent in FY 17. Over the medium run, the implementation of the Goods and Service Tax (GST), and enacting other structural reforms should take the economy towards its potential real GDP growth of 8%.

India remains the world''s fastest - growing major economy and looks set for further expansion over the next five years. India grew by approximately 7.5 per cent in 2016, continuing a 3 years streak of growth above 7 per cent. Some of this strength is due to a favourable external environment (for example, lower prices for imported commodities like oil), with India''s current account deficit falling to a seven - year low of $ 300 million. Indian inflation has also dropped closer to the Reserve Bank of India''s target of 4 per cent.

The timely action by the government of demonetisation resulted in pumping more money to the banking sector has resulted in appreciation of the Rupee. In spite of lot of challenges faced in international scenario in terms of trade, and the policy changes of many countries, India is still in a position to retain the stability of the currency, this shows that the Economy is becoming stronger and vibrant to take the challenges whatever may come in future.

A comprehensive tax reform would promote inclusive growth. Timely and effective implementation of the Goods and Services Tax would support competitiveness, investment and economic growth. Government''s plans to reduce the corporate income tax rate and broaden the base will serve the same objectives. These two ongoing reforms have been designed to be revenue-neutral while India needs to raise additional tax revenue to meet social and physical infrastructure needs.

Opportunities, Challenges, Threats, Risks and Concerns

An economic slowdown- both domestic and global - may have adverse effect on the growth of the PFY industry. Raw material prices fluctuate in line with international prices and will continue to have an impact on the company''s performance as raw materials constitute significant component of net sales. Increased differentiated products as well as a reduced working capital facility will help reduce risks.

Government has also passed a national goods-and-service tax (GST) that will create a common market in the country and is expected to increase economic growth in the medium term. These and other efforts to liberalize the economy and reduce burdensome taxes and regulations will likely lead to increased investment by both domestic and foreign firms and make Indian industry more competitive.

But India still faces a number of challenges that may negatively impact its growth outlook.

High incidence of taxes and duties is a matter of concern for the industry.

The Company is exposed to the risk of price fluctuation of raw materials as well as finished goods. The Company proactively manages these risks through inventory management and a proactive relationship with suppliers and customers.

Indian textile industry is a less attractive destination for investments due to the tariff barriers it faces in major international markets, high input costs, low margins etc. In order to achieve the desired growth in our textile and apparel industries, it is imperative to get large scale investment both foreign and domestic.

Business Outlook

The outlook for the domestic textile industry over the medium term is stable supported by favourable demand, both domestically and internationally.

Domestic manufacturers of polyester yarn and chips have invested significantly in recent years, in new capacities, however with uncertain inputs price trends, the industry is now looking to consolidate operations by optimally utilizing installed capacities.

The implementation of Goods and Services Tax (GST), to replace a myriad of consumption taxes, could be a game-changer over the medium-term: it will help make India a common market and promote investment, productivity and competitiveness.

The future for the Indian textile industry looks promising, buoyed by both strong domestic consumption as well as export demand.

The Goods and Service Tax (GST) and Demonetisation

The GST will replace various taxes on goods and services levied by the central government and states by a single tax on value added. It will thus reduce tax cascading, facilitate a common national market, encourage voluntary tax compliance, reduced tax collection costs, support investment and improve competitiveness.

The two largest denomination notes, Rs 500 and Rs 1000âtogether comprising 86 per cent of all the cash in circulation â were "demonetized" with immediate effect, ceasing to be legal tender except for a few specified purposes, on November 8, 2016.

Demonetisation has had short-term costs in the form of slow growth but holds the potential for long-term benefits. Long-term benefits include reduced corruption, greater digitalization of the economy, increased flows of financial savings, and greater formalization of the economy, all of which could eventually lead to higher GDP growth, better tax compliance and greater tax revenues.

Share Capital

The Paid-up Equity Share Capital of the Company as at 31st March, 2017 stood at Rs.2220.64 Lacs. There was no public issue, rights issue, bonus issue or preferential issue etc. during the year. The Company has not issued shares with differential voting rights, sweat equity shares, nor has it granted stock options. As on 31st March, 2017, none of the directors of the Company hold instruments convertible into equity shares of the Company.

Disclosures in respect of voting rights not directly exercised by employees

There are no shares held by trustees for the benefit of employees and hence no disclosure under Rule 16(4) of the Companies (Share Capital and Debentures) Rules, 2014 has been furnished.

Material changes and commitments

There have been no material changes and commitments affecting the financial position of the Company, which have occurred between the end of the financial year and the date of this Report.

Indian Accounting Standards (IND AS) IFRS Converged Standards

The Ministry of Corporate Affairs (MCA), vide its notification in the Official Gazette dated 16th February, 2015, notified the Indian Accounting Standards (Ind AS) applicable to certain classes of Companies. Ind AS has replaced the existing Indian GAAP prescribed under Section 133 of the Companies Act, 2013, read with Rule 7 of the Companies (Accounts) Rules, 2014. For your Company, Ind AS is applicable from 1st April, 2017, with a transition date of 1st April, 2016.

Subsidiaries and associates

During the year, the Board of Directors reviewed the affairs of its associate, Isha Enterprises, a partnership firm. In accordance with Section 129(3) of the Companies Act, 2013, we have prepared the Consolidated Financial Statement of the Company, which forms part of this Annual Report.

Pursuant to Section 129(3) of the Companies Act, 2013 read with Rule 5 of the Companies (Accounts) Rules, 2014, a statement containing salient features of the financial statements of Subsidiaries / associates is given in Form AOC-1 and forms an integral part of this Report marked as Annexure E.

Consolidated Financial Statements

The Company has prepared Consolidated Financial Statements (CFS) in accordance with the applicable Accounting Standards as prescribed under the Companies (Accounts) Rules, 2014, of the Companies Act, 2013. The Consolidated Financial Results reflects the results of the Company and its associate. As required under Regulation 34 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Audited CFS together with the Independent Auditors'' Report thereon are annexed and forms part of this Report.

Finance

Your Company has repaid Secured Rupee Term Loan from banks to the tune of Rs.39.06 Lacs during the financial year 2016-17. No fresh Term Loan was availed by the Company during the year. The Company availed working capital facility from Bank of Baroda during the yea r.

Directors and Key Managerial Personnel

In accordance with the provisions of Section 152 of the Companies Act, 2013 and the Company''s Articles of Association, Shri Yogesh C. Papaiya (DIN: 00023985), Director retires by rotation at the forthcoming Annual General Meeting and, being eligible offers himself for re-appointment. The Board recommends his re-appointment for the consideration of the Members of the Company at the ensuing Annual General Meeting.

Shri Sanjay S. Shah, Director of the Company submitted his resignation as member of the Board with effect from 1st July, 2016. While accepting Shri Sanjay S. Shah''s resignation, the Members of the Board placed on record their sincere appreciation of the valuable services rendered by him during his tenure as a Director of the Company.

Shri M. R. Momaya, Managing Director, Shri Yogesh C. Papaiya, Wholetime Director and CFO and Ms. Hanisha Arora, Company Secretary and Compliance Officer were designated as "Key Managerial Personnel" of the Company pursuant to Section 2(51) and Section 203 of the Companies Act, 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014. During the year under review, there was no change in key managerial personnel of the Company.

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(b) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

Managerial Remuneration

The details of remuneration paid to the Directors including Executive Directors of the Company are given in Form MGT-9 forming part of this Report.

Report on Corporate Governance

All Board members and Senior Management personnel have affirmed compliance with the Code of Conduct for the year 2016-17. A declaration to this effect signed by the Managing Director (CEO) of the Company is contained in this Annual Report. The Managing Director and CFO have certified to the Board with regard to the financial statements and other matters as required under regulation 17(8) of the SEBI Listing Regulations, 2015.

As per Regulation 34(3) read with Schedule V(c) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, a separate section on corporate governance practice followed by the Company, together with a certificate from the Company''s Auditors confirming compliance forms an integral part of this Report as Annexure H. The auditors certificate for the year 2016-17 does not contain any qualification, reservation or adverse remark.

Audit Committee

The Audit Committee of Directors comprises of Shri Harishchandra Bharucha (Chairman of the Committee), Shri Ketan Jariwala and Shri Yogesh Papaiya as member of the Committee. All the recommendations made by the Audit Committee during the year were accepted by the Board of Directors of the Company. The terms of reference and other details of the Audit Committee are available in the Corporate Governance Report forming part of this annual report.

Risk Management

Insurance

The Company has taken all the necessary steps to insure its properties and insurable interests, as deemed appropriate and also as required under the various legislative enactments.

Statutory Auditors & Audit Report

Messrs. Natvarlal Vepari & Co., Chartered Accountants, were appointed Auditors for a period of 3 (three) years from the conclusion of the 68th Annual General Meeting (AGM) till the conclusion of the 71st AGM. As such, Messrs Natvarlal Vepari & Co. retire at the conclusion of the 71st AGM.

Under Section 139 of the Companies Act, 2013 and the Rules made there under, it is mandatory to rotate the statutory auditors on completion of the maximum term permitted under the said Section. The audit committee of the Company has proposed, and on 29th May, 2017, the Board of Directors of the Company has recommended the appointment of Sharp & Tannan Associates, Chartered Accountants, (Firm registration number 109983W) as the statutory auditors of the Company. Sharp & Tannan Associates will hold office for a period of 5 (five) consecutive years from the conclusion of the 71st Annual General Meeting of the Company scheduled to be held on 2nd August, 2017, till the conclusion of the 76th Annual General Meeting to be held in the year 2022, subject to the approval of the shareholders of the Company.

The auditors'' report for the year ended 31st March, 2017 does not contain any qualification, reservation or adverse remark. The Auditors'' Report is enclosed with the financial statements in this Annual Report.

Cost Auditors

Pursuant to the provisions of Section 148 of the Companies Act, 2013 read with the Companies (Cost Records and Audit) Rules, 2014, as amended by notifications / circulars issued by the Ministry of Corporate Affairs from time to time and on recommendation of the Audit Committee, the Board of Directors appointed M/s P. M. Nanabhoy & Co., Cost Accountants, (Firm Registration Number 000012) as Cost Auditors to audit the cost accounts of the Company for the Financial Year 2017-18.

The Cost Auditor have given a Certificate to the effect that the appointment, if made, will be within the prescribed limits specified under Section 141 of the Companies Act, 2013. The Audit Committee has obtained a certificate from the Cost Auditor certifying their independence and arm''s length relationship with the Company.

As required under the Companies Act, 2013, the remuneration payable to the Cost Auditor is required to be placed before the members in a general meeting for their ratification. Accordingly, a resolution seeking member''s approval for the remuneration payable to the Cost Auditor forming part of the Notice convening the Annual General Meeting for their ratification.

Secretarial Auditor & Secretarial Audit Report

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board has appointed Jigar Vyas of Jigar Vyas & Associates, Practicing Company Secretaries, (CP No.8019), Surat as secretarial auditor of the Company for the year 2017-18.

The Secretarial Auditors'' Report for the year 2016-17 does not contain any qualification, reservation or adverse remark. The Secretarial Auditors'' Report is enclosed as Annexure D to the Board''s report in this Annual Report.

Internal Auditors

The audit committee of the Board of Directors in consultation with the Internal Auditor formulates the scope, functioning, periodicity and methodology for conducting the internal audit.

Committees of the Board

The Board of Directors has the following Committees:

1. Audit Committee

2. Remuneration and Nomination Committee

3. Stakeholders'' Relationship Committee

4. Corporate Social Responsibility Committee

The details of the committees along with their composition, number of meetings and attendance at the meetings are provided in the Corporate Governance Report.

Directors'' Responsibility Statement

The Board of Directors acknowledge the responsibility for ensuring compliance with the provisions of Section 134(3)(c) read with Section 134(5) of the Companies Act, 2013 in the preparation of the annual accounts for the year ended on 31st March, 2017 and state that:

a) in the preparation of the annual accounts, applicable accounting standards read with requirements set out under Schedule III to the Act, have been followed along with proper explanation relating to material departures;

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

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

d) the directors have prepared the annual accounts on a going concern basis;

e) the directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and are operating effectively; and

f) the directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.

Number of meetings of the Board

During the year, 6 Board Meetings were convened and held. The details thereof are given in the Corporate Governance Report. The Directors actively participated in the meetings and contributed valuable inputs on the matters brought before the Board of Directors from time to time. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013.

Board evaluation

Pursuant to the provisions of the Companies Act, 2013, the Board has devised a policy on evasluation of performance of Board of Directors, Committees and Individual directors. The policy is also in compliance to Regulation 19 read with Schedule II, Part D of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

The Nomination and Remuneration Committee has defined the evaluation criteria for the Performance Evaluation of the Board, its Committees and individual Directors.

Independent Directors'' Meeting

In compliance with the requirements of Schedule IV of the Companies Act, 2013, a meeting of the Independent Directors was held on 8th February, 2017, without the participation of the Executive Directors or management personnel.

The criteria for performance evaluation have been detailed in the Corporate Governance Report forming part of this report.

Declaration of Independent Directors

Familiarization Programme to Independent Directors

The Company provides suitable familiarization programme to Independent Directors so as to associate themselves with the nature of the industry in which the Company operates. Directors are periodically advised about the changes effected in the Corporate Laws, Listing Regulations with regard to their roles, rights and responsibilities as Director of the Company. The details of the familiarization programme have been disclosed and updated from time to time on the Company''s website.

Corporate Social Responsibility (CSR) Initiatives

The CSR committee has laid down the policy which includes the activities covered under the Companies (Corporate Social Responsibility Policy) Rules, 2014.

The Company has been contributing in the development of the surrounding areas of its plant and office. The Company supports and contributes in activities relating to promotion of education, sports, medical and healthcare, vocational skill development and livelihood enhancement and programmes and activities relating to environment sustainability etc. The details of amount spent on CSR activity undertaken during the year by the Company are given in the Annexure B to this Report. The CSR policy of the Company is also hosted on the website of the Company, www.surattextilemillsltd.com.

Adequacy of Internal Financial Control

The Company has in place adequate internal financial controls with reference to financial statements. Periodic audits are undertaken on continuous basis covering all the major operations. Reports of internal auditors are reviewed by management from time to time and desired actions are initiated to strengthen the control and effectiveness of the system. During the year, such controls were tested and no reportable material weaknesses in the design or operation were observed.

The Internal Financial Control with reference to financial statements as designed and implemented by the Company are adequate. During the year under review, no material or serious observation has been received from the Internal Auditors of the Company for inefficiency of such controls.

Related Party Transactions

All transactions entered by the Company with Related Parties were in the Ordinary Course of Business and at Arm''s Length pricing basis. 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 conflict with the interest of the Company at large. During the year 2016-17, pursuant to section 177 of the Companies At, 2013 and regulation 23 of SEBI Listing Regulations, 2015, all Related Party Transactions were placed before the Audit Committee for its approval.

Pursuant to section 134 of the Companies Act, 2013 and Rules made thereunder, particulars of transactions with related parties as required under section 188(1) of the Companies Act, 2013, read with Rule 8(2) of Companies (Accounts) Rules, 2014 is annexed with this Report in Form AOC-2 as Annexure F.

The policy on related party transactions as approved by the Board is uploaded on the Company''s website. The Company''s management ensures total adherence to the approved Policy on Related Party Transactions to establish Arm''s Length Basis without any compromise.

Suitable disclosures as required under AS-18 have been made in Note 29 of the Notes to the financial statements.

Particulars of Employees and Related disclosure

During the financial year 2016-17, none of the employee of the Company was in receipt of remuneration prescribed in terms of the provision of Section 197(12) of the Companies Act, 2013 read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rule, 2014. There were 67 permanent employees as on 31st March, 2017.

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

Information required pursuant to the provisions of Section 134(3)(m) of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014 in respect of Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo are set out in the Annexure A forming part of this Report.

Vigil Mechanism / Whistle Blower Policy

Your Company believes in promoting a fair, transparent, ethical and professional work environment. The Board of Directors of the Company pursuant to the provisions of Section 177 of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, has framed ''Whistle Blower Policy'' for Directors and employees of the Company for reporting the genuine concerns or grievances or cases of actual or suspected, fraud or violation of the Company''s code of conduct and ethics policy. The Whistle Blower Policy of the Company has been posted on the website of the Company.

Nomination and Remuneration Policy

As per the Policy, the remuneration / compensation to the Whole-time Directors shall be recommended by the Nomination and Remuneration Committee to the Board for its approval. However, the remuneration compensation to Whole-time Directors shall be subject to the approval of the shareholders of the Company and Central Government, wherever required. Further, the Non-Executive Directors shall be entitled to the fees for attending meetings of Board and Committees within the limits prescribed in the Companies Act, 2013. The Nomination and Remuneration Policy is available on the company''s website.

Deposits

During the year, the Company has not accepted any deposits, within the meaning of Section 73 of the Companies Act, 2013, read with the Companies (Acceptance of Deposits) Rules, 2014 and as such, there are no outstanding deposits in terms of the Companies (Acceptance of Deposits) Rules, 2014.

Extract of Annual Return and other disclosures

Pursuant to the provisions of Section 134(3)(a) of the Companies Act, 2013 read with Rule 8 of Companies (Accounts) Rules, 2014 and Rule 12 of Companies (Management and Administration) Rules, 2014, Extract of Annual Return in Form MGT-9, for the financial year ended 31st March, 2017 made under the provisions of Section 92(3) of the Act is attached as Annexure G which forms part of this Report.

Particulars of Loans, Guarantees and Investments

During the year under review, your Company has not directly or indirectly -

a) Given any loan to any person or other body corporate other than usual advances envisaged in a contract of supply of materials, if any;

b) Given any guarantee or provided security in connection with a loan to any other body corporate or person; and

c) Acquired by way of subscription, purchase or otherwise, the securities of any other body corporate.

Anti-Sexual Harassment Policy

The Company has in place an Anti Sexual Harassment Policy in line with the requirements of The Sexual Harassment of Women at the Workplace (Prevention, Prohibition & Redressal) Act, 2013.

The Company has zero tolerance on Sexual Harassment at workplace. No complaint was received from any employee during the financial year 2016-17 and hence no complaint is outstanding as on 31st March, 2017 for redressal. Your Company has laid down Anti Sexual Harassment policy and it is made available on the website of the Company.

Green Initiative

Your Directors would like to draw your attention to Section 20 of the Companies Act, 2013 read with the Companies (Management and Administration) Rules, 2014, as may be amended from time to time which permits paperless compliances and also service of notice / documents (including annual report) through electronic mode to its members. To support this green initiative, we hereby once again appeal to all those members who have not registered their e-mail addresses so far are requested to register their e-mail address in respect of electronic holding with their concerned Depository Participants and/or with the Company.

Internal Control System and their Adequacy

The Internal Control System provides for well documented policies / guidelines, authorizations and approval procedures. Considering the nature of its business and size of operations, your Company through its Internal Auditors carries out periodic audit based on the plan approved by the Audit Committee.

The summary of the Internal Audit observations and status of implementation are submitted to the Audit Committee. The status of implementation of the recommendations is reviewed by the Audit Committee on a regular basis and desired actions are initiated to strengthen the control and effectiveness of the system. Concerns, if any, are reported to the Board.

Financial Performance

Discussion on financial performance with preference to operational performance has been dealt with in this Report in the relevant para which may be treated as forming part of the Management Discussion and Analysis Report.

Health, safety and environment

Your Company recognizes protection and manage m en t o f environment as one of its highest priority and every effort is made to conserve and protect the environment. During the year, your Company continued its focus in creating an aesthetic, environment-friendly industrial habitat in its factory units, mobilizing support and generating interest among staff and labour for maintaining hygienic and green surrounding.

The Company obtained necessary approvals from concerned Government Department / Pollution Control Board and all required environment clearances / safety clearances / stipulations are complied with at Plant facilities of the Company. The Company continues to focus on maintenance and performance improvement of related pollution control facility at its manufacturing locations.

Industrial Relations / Human Resources

Your Company maintained healthy, cordial and harmonious industrial relations at all levels during the year under review.

The Company continuously works to nurture this environment to keep its employees highly motivated, result oriented and adaptable to changing business environment. Your Company''s value proposition is based on providing value to our customer, through innovation and by consistently improving efficiency at all levels.

Your Directors wish to place on record their appreciation for the dedicated and commendable services rendered by the employees of the Company.

CAUTONARY STATEMENTS

Statements in this Directors'' Report and 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 express or implied. Important factors that could make difference to the Company''s operations include raw material availability and its prices, cyclical demand and pricing in the Company''s principle markets, changes in Government regulations, Tax regimes, economic developments, within India and the countries in which the Company conducts business and other ancillary factors.

Appreciation

Your Directors wish to acknowledge the co-operation and assistance extended to the Company by the Company''s Bankers and State & Central Government agencies. Your Directors also acknowledge with gratitude the support of the shareholders, other investors, customers, dealers, agents and suppliers for their continued faith and support in the Company and its management.

For and on behalf of the Board

M. R. Momaya

Surat, 29th May, 2017 Managing Director

Mar 31, 2016

Dear Members,

The Directors have pleasure of presenting the Seventieth Annual Report on the business and operations of the Company, together with the Audited Statements of Accounts for the year ended 31st March, 2016.

Summarized Financial Results

The Company''s performance during the financial year ended 31st March, 2016 as compared to the previous financial year, is summarized below.

(Rs. in crores)

	2015-16	2014-15
Total Revenue from Operations (Net)	118.99	129.84
Earning Before Interest, Depreciation and Tax (EBIDTA)	6.50	5.54
Less: Finance Costs	0.74	0.70
Depreciation	1.16	1.26
Profit before Tax	4.60	3.58
Less: Tax Expense /(Credit)	(1.53)	1.02
Profit after Tax	6.13	2.56

Transfer to Reserve

It is not proposed to transfer any amount to reserves out of the profits earned during the financial year 2015-16.

Dividend

In order to strengthen the reserves of the Company and with a view to ensure sufficient liquidity to take advantage of the growth potential, your directors consider it prudent to plough back the profits and not to recommend any dividend for the financial year 2015-16.

Share Capital

The Issued, Subscribed and Paid-up equity share capital as on 31st March, 2016 was Rs.2220.64 Lacs. There was no public issue, rights issue, bonus issue or preferential issue etc. during the year. The Company has not issued shares with differential voting rights, sweat equity shares, nor has it granted stock options. As on 31st March, 2016, none of the Directors of the Company hold instruments convertible into equity shares of the Company.

Disclosures in respect of voting rights not directly exercised by employees

There are no shares held by trustees for the benefit of employees and hence no disclosure under Rule 16(4) of the Companies (Share Capital and Debentures) Rules, 2014 has been furnished.

Review of Operations

FY 2016 was extremely a challenging year for your Company. Poor demand-supply conditions in polyester industries continued during the year due to large capacities of Chips and Yarns manufacturers became operational from FY 12 to FY 14, coupled with delayed revival of the economy, poor monsoon affecting rural consumption etc. The dumping of Chinese fabric imports into Indian markets also affected the demand for locally produced fabric and therefore Yarn and Chips as well. Under the circumstances Chips and Yarn manufacturers have been compelled to price their products at very low margins to protect utilization level of production.

The total revenue from operations for the year 2015-16 declined at Rs.118.99 crore as compared to Rs.129.84 crore in the previous year. The decline in revenue was primarily due to fall in Selling Prices in tandem with fall in crude oil prices

Our focus on operational efficiency with better working capital management and better network helped us to remain competitive and improve our Earnings Before Interest, Depreciation and Tax (EBIDTA).

EBIDTA for FY 16 was higher at Rs.6.50 crore as compared to Rs.5.54 crore in the previous year, registering a growth of about 17%. The profit after tax for the FY 2016 also increased to Rs.6.13 crore as compared to Rs.2.56 crore in the previous year.

Despite challenging business environment your Company''s total sales of chips in volume was higher at 16094 MT for the year 2015-16 as compared to 9034 MT in the previous year. In value terms sale of chips for FY 16 was higher at Rs.12861.15 Lacs as compared to Rs.8755.56 Lacs in the previous year. The overall production of Chips was higher at 16427 MT during the year 2015-16 as compared to 10062 MT achieved in the previous year.

Your Company continued its focus on margin improvement by optimum allocation of its resources through cost reduction at manufacturing level. The operating margins however remained under pressure.

The manufacturing activity at its POY plant at Village Jolwa, Taluka Palsana, Dist. Surat remained suspended during the major part of the financial year 2015-16 as the operations of the division had become unviable due to competitive market conditions.

Apart from investing surplus funds in business, the Company is also pursuing related business opportunities by building up its stock in trade of art and artifacts during the year.

Nature of Business

Material changes and commitments

There have been no material changes and commitments affecting the financial position of the Company, which have occurred between the end of the financial year and the date of this Report.

Presentation of financial statements

Your Company prepares its financial statements in compliance with the requirements of the Companies Act, 2013 and the Generally Accepted Accounting Principles (GAAP) in India. The financial statements have been prepared on historical cost basis.

The estimates and judgments relating to the financial statements are made on a prudent basis, so as to reflect in a true and fair manner, the form and substance of transactions and reasonably present the Company''s state of affairs, profits and cash flows for the year ended 31st March, 2016. The financial statements of the Company have been disclosed as per Schedule III of the Companies Act, 2013. The Business Responsibility Reporting as required by Regulation 34(2) of the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015, is not applicable to your Company for the financial year ending 31st March, 2016.

Finance

Your Company has repaid Secured Rupee Term Loan from banks to the tune of Rs.51.16 Lacs during the financial year 2015-16. No fresh Term Loan was availed by the Company during the year. The Company availed working capital facility from Bank of Baroda during the year.

Directors and Key Managerial Personnel

In accordance with the provisions of Section 152 of the Companies Act, 2013 and the Company''s Articles of Association, Shri M. R. Momaya (DIN: 00023993), Director retires by rotation at the forthcoming Annual General Meeting and, being eligible offers himself for re-appointment. The Board recommends his re-appointment for the consideration of the Members of the Company at the ensuing Annual General Meeting.

Shri M. R. Momaya, Managing Director, Shri Yogesh C. Papaiya, Whole time Director and CFO and Ms. Hanisha Arora, Company Secretary and Compliance Officer were designated as "Key Managerial Personnel" of the Company pursuant to Section 2(51) and 203 of the Companies Act, 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014. During the year under review, there was no change in key managerial personnel of the Company.

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

Information required pursuant to the provisions of Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014 in respect of Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo are set out in the Annexure A forming part of this Report.

Corporate Social Responsibility (CSR) Initiatives

The CSR committee has laid down the policy which includes the activities covered under the Companies (Corporate Social Responsibility Policy) Rules, 2014.

The Company has been contributing in the development of the surrounding areas of its plant. The Company supports and contributes in activities relating to promotion of education, sports, medical and health care, vocational skill development and livelihood enhancement and programmes and activities relating to environment sustainability etc. The details of amount spent on CSR activity undertaken during the year by the Company are given in the Annexure B to this Report. The CSR policy of the Company is also hosted on the website of the Company, www.surattextilemillsltd.com.

Managerial Remuneration

The details of remuneration paid to the Directors including Executive Directors of the Company are given in Form MGT-9 forming part of the Directors Report.

Audit Committee

The Audit Committee of Directors comprises of Mr. Harishchandra Bharucha (Chairman of the Committee), Mr. Sanjay S. Shah and Mr. Ketan Jariwala. All the recommendations made by the Audit Committee during the year were accepted by the Board of Directors of the Company. The terms of reference and other details of the Audit Committee are available in the Corporate Governance Report forming part of this annual report.

Statutory Auditors & Audit Report

M/s Natvarlal Vepari & Co., Chartered Accountants (Firm Registration No.123626W) the auditors of your Company, hold office up to the conclusion of the forthcoming Annual General Meeting (AGM) of the Company. Pursuant to provisions of Section 139(2) of the Companies Act, 2013 read with Companies (Audit and Auditors) Rules, 2014, M/s Natvarlal Vepari & Co. are eligible for appointment as Auditors. Your Company has received a written confirmation from M/s Natvarlal Vepari & Co., Chartered Accountants to the effect that their appointment, if made, would satisfy the criteria provided in Section 141 of the Companies Act, 2013 for their appointment. The Board recommends the appointment of M/s Natvarlal Vepari & Co., Chartered Accountants as the Auditors of the Company from the conclusion of the ensuing AGM to the conclusion of the next AGM.

As regards the comments in the Auditors'' Report, the relevant notes to the Accounts are self explanatory and may be treated as information / explanation submitted by the Board as contemplated under provisions of the Companies Act, 2013.

The report of the Statutory Auditor does not contain any adverse observation or qualification requiring explanation or comments from the Board under Section 134(3) of the Companies Act, 2013.

Cost Auditors

Pursuant to the provisions of Section 148 of the Companies Act, 2013 read with the Companies (Cost Records and Audit) Rules, 2014, as amended by notifications / circulars issued by the Ministry of Corporate Affairs from time to time and on recommendation of the Audit Committee, the Board of Directors appointed M/s P. M. Nanabhoy & Co., Cost Accountants, (Firm Registration Number 7464) as Cost Auditors to audit the cost accounts of the Company for the Financial Year 2016-17.

As required under the Companies Act, 2013, the remuneration payable to the Cost Auditor is required to be placed before the Members in a general meeting for their ratification. Accordingly, a resolution seeking member''s approval for the remuneration payable to the Cost Auditor forming part of the Notice convening the Annual General Meeting for their ratification.

Secretarial Auditor & Secretarial Audit Report

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. Jigar Vyas, proprietor of Jigar Vyas & Associates, Practicing Company Secretary (CP No.8019), Surat to undertake the Secretarial Audit of the Company for the Financial Year 2015-16. The Secretarial Audit Report is annexed as ''Annexure D'' and forms an integral part of this Report. The report of the Secretarial Auditor does not contain any adverse observation or qualification requiring explanation or comments from the Board under Section 134(3) of the Companies Act, 2013.

Internal Auditors

Directors'' Responsibility Statement

As required under Clause (c) of sub-section (3) of Section 134 of the Companies Act, 2013, the directors to the best of their knowledge and belief state that:

i. in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanations relating to material departures, if any;

ii. they have, in the selection of the accounting policies, consulted the Statutory Auditors and these have been applied consistently and, reasonable and prudent judgments and estimates have been made so as to give a true and fair view of the state of affairs of the Company as at 31st March, 2016 and of the profit of the Company for the year ended on that date;

iii. proper and sufficient care had been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

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

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

vi. the proper systems to ensure compliance with the provisions of all applicable laws are in place and are adequate and operating effectively.

Number of meetings of the Board

During the year, 4 Board Meetings and 4 Audit Committee Meetings were convened and held. The details thereof are given in the Corporate Governance Report. The Directors actively participated in the meetings and contributed valuable inputs on the matters brought before the Board of Directors from time to time. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013.

Board evaluation

Pursuant to the provisions of the Companies Act, 2013, the Board has devised a policy on evaluation of performance of Board of Directors, Committees and Individual directors. The policy is also in compliance to Regulation 19 read with Schedule II, Part D of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

The Nomination and Remuneration Committee has defined the evaluation criteria for the Performance Evaluation of the Board, its Committees and individual Directors.

Independent Directors'' Meeting

In compliance with the requirements of Schedule IV of the Companies Act, 2013, a meeting of the Independent Directors was held on 3rd February, 2016, without the participation of the Executive Directors or management personnel.

The criteria for performance evaluation have been detailed in the Corporate Governance Report forming part of this report.

Declaration of Independent Directors

As required under Section 149(7) of the Companies Act, 2013, the Independent Directors have placed the necessary declaration in terms of the conditions laid down under Section 149(6) of the Companies Act, 2013 in the Board Meeting held on 25th May, 2016.

Familiarization Programme to Independent Directors

Related Party Transactions

All transactions entered by the Company with Related Parties were in the Ordinary Course of Business and at Arm''s Length pricing basis. 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 conflict with the interest of the Company at large. During the year 2015-16, pursuant to section 177 of the Companies At, 2013 and regulation 23 of SEBI Listing Regulations, 2015, all Related Party Transactions were placed before the Audit Committee for its approval.

Pursuant to section 134 of the Companies Act, 2013 and Rules made there under, particulars of transactions with related parties as required under section 188(1) of the Companies Act, 2013, read with Rule 8(2) of Companies (Accounts) Rules, 2014 is annexed with this Report in Form AOC-2 as ''Annexure E''.

During the year under review, the Board of Directors have revised the existing Related Party Transaction policy in line with the recently introduced SEBI (LODR) Regulations, 2015 and Companies (Meetings of Board and its Powers) Second Amendment Rules, 2015.

Your Directors draw attention to the members to Note No.29 to the financial statement which sets out related party disclosures.

Suitable disclosures as required under AS-18 have been made in Note 29 of the Notes to the financial statements.

Risk Management

Pursuant to the provisions of Section 134(3)(m) of the Companies Act, 2013 and Regulation 21 of SEBI (LODR) Regulations, 2015, your Company has voluntarily constituted a Risk Management Committee to formulate a policy for risk management for implementing and monitoring the risk management plan of the Company. This framework seeks to create transparency, minimize adverse impact on the business objectives and enhance the Company''s competitive advantage.

Particulars of Employees and Related disclosure

During the financial year 2015-16, none of the employees of the Company are in receipt of remuneration prescribed in terms of the provision of Section 197(12) of the Companies Act, 2013 read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rule, 2014. There were 69 permanent employees as on 31st March, 2016.

Personnel

The relations, during the year, between the employees and the management of your Company continued to be cordial.

Your Directors wish to thank all the employees for their continued support and co-operation during the year under review.

Adequacy of Internal Financial Control

Insurance

The Company has taken all the necessary steps to insure its properties and insurable interests, as deemed appropriate and also as required under the various legislative enactments.

Vigil Mechanism / Whistle Blower Policy

Nomination and Remuneration Policy

On recommendation of Nomination and Remuneration Committee, the Board of Directors have approved a Nomination and Remuneration Policy for the appointment and remuneration of the director, key managerial personnel (KMP) and other employees. The key objectives of the Policy are to lay down the criteria for appointment and remuneration of Directors, Key Managerial Personnel and Executives at Senior Management level and recommend to the Board their appointment, and also to formulate criteria for evaluation of performance of Independent Directors and the Board and to devise a policy on Board diversity. The Policy, inter-alia, includes criteria for determining qualifications, positive attributes, independence of a director, and expertise and experience required for appointment of Directors, KMP and Senior Management.

As per the Policy, the remuneration / compensation to the Whole-ti me Director is recommended by the Nomination and Remuneration Committee to the Board for its approval. However, the remuneration compensation to Whole-time Directors is subject to the approval of the shareholders of the Company and Central Government, wherever required. Further, the Non-Executive Directors are entitled to the fees for attending meetings of Board and Committees within the limits prescribed in the Companies Act, 2013. The Nomination and Remuneration Policy is available on the company''s website.

Deposits

During the year, the Company has not accepted any deposits, within the meaning of Secti on 73 of the Companies Act, 2013, read with the Companies (Acceptance of Deposits) Rules, 2014 and as such, there are no outstanding deposits in terms of the Companies (Acceptance of Deposits) Rules, 2014.

Extract of Annual Return and other disclosures

Pursuant to the provisions of Section 134(3)(a) of the Companies Act, 2013 read with Rule 8 of Companies (Accounts) Rules, 2014 and Rule 12 of Companies (Management and Administration) Rules, 2014, Extract of Annual Return in Form MGT-9, for the financial year ended 31st March, 2016 made under the provisions of Section 92(3) of the Act is attached as ''Annexure F'' which forms part of this Report.

Report on Corporate Governance

Pursuant to SEBI Listing Regulations, 2015, a separate chapter titled ''Corporate Governance'' has been included in this Annual Report, along with the general shareholders information annexed as ''Annexure G''. All Board members and Senior Management personnel have affirmed compliance with the Code of Conduct for the year 2015-16. A declaration to this effect signed by the Managing Director (CEO) of the Company is contained in this Annual Report. The Managing Director and CFO have certified to the Board with regard to the financial statements and other matters as required under regulation 17(8) of the SEBI Listing Regulations, 2015.

Significant and material orders passed by the regulators or courts

During the year under review, there were no significant and material orders passed by the Regulators or Court or Tribunal, which can impact the going concern status of the Company and its operations in future.

Particulars of Loans, Guarantees and Investments

During the year under review, your Company has not directly or indirectly -

a) Given any loan to any person or other body corporate other than usual advances envisaged in a contract of supply of materials, if any;

b) Given any guarantee or provided security in connection with a loan to any other body corporate or person; and

c) Acquired by way of subscription, purchase or otherwise, the securities of any other body corporate.

Anti-Sexual Harassment Policy

The Company has in place an Anti Sexual Harassment Policy in line with the requirements of The Sexual Harassment of Women at the Workplace (Prevention, Prohibition & Redressal) Act, 2013. The Company has zero tolerance on Sexual Harassment at workplace. No complaint was received from any employee during the financial year 2015-16 and hence no complaint is outstanding as on 31st March, 2016 for redressal. Your Company has laid down Anti Sexual Harassment policy and it is made available on the website of the Company.

Indian Accounting Standards (IND AS) IFRS Converged Standards

The Ministry of Corporate Affairs vide its notification dated 16/02/2015 has notified the Companies (Indian Accounting Standard) Rules, 2015. In pursuance of this notification, the Company is required to adopt IND AS with effect from 1st April, 2017 with the comparatives for the year ended 31st March, 2017.

Green Initiative

Indian Economy & Industry Scenario

The Indian economy exhibited significant resilience during the year in contrast to most other countries, China in particular. According to most forecasts, India''s GDP growth is expected to be in the region of 7.5% for the year 2015-16. Your Company expects a better opportunity to grow its volume and improve its capacity utilization during the current year 2016-17.

Textile industry has experienced widespread oversupply in the face of weak demand over last 5 years. Economy slow down, poor monsoon, high interest rates have hurt demand just as large new capacities came on-stream. The demand for both cotton and synthetic fabrics remained sluggish throughout the year. The problem has been aggravated due to unprecedented fluctuations in Raw Materials prices, consequent to fluctuations in international crude oil prices.

The Indian textile sector is a major contributor to the Indian economy in terms of gross domestic products (GDP), industrial production and the country''s total export earnings. The Indian textile industry is currently passing through a turbulent phase. With the global downturn ravaging economies, the textile sector is one of the worst hit.

The prospects of synthetic yarn industry in short term is linked with the movement of crude oil prices in international market however the long term prospects seems good with the growing Indian economy and demand growth in end-use products.

In polyester chips, the domestic supply has increased and outstrips demand largely. This has put considerable pressure on sale and margins. The raw material prices are expected to go up and likely to put further pressure on margins. The Company hopes to counter this effect by improved product mix

Prices of Polyester products declined during the year as buyers turned cautious given the slow downstream demand and opted to cut losses by controlling inventory.

Opportunities and Challenges

There are several challenges ahead for the textile industry for enhancing its competitive strength and global positioning in terms of inflexible labour laws, poor infrastructure, competition from low cost neighboring countries which will have to be addressed to sustain the growth momentum of the industry.

In the medium term, volatility in prices of key raw materials is a major concern. The industry is dependent on the international price of crude oil, which directly impacts the price of both our key raw materials PTA and MEG. Any crude supply shock could have an adverse impact on the performance of the Company.

Slowing down of Indian economy in general and the lower demand growth may further reduce the growth of the industry. Price realization of PFY is partly dependent on cotton yarn prices. If demand of finished products stagnates, margins in the Company''s product i.e. chips and PFY will be affected, given the large capacities in place. A substantial increase in the cotton crop and the consequent reduction in cotton yarn prices would curtail growth in the industry.

The Company is facing challenge in terms of higher production cost due to high power cost and other inputs. It is expected that with the better working capital management, the Company would be able to generate better cash flows. The Company perceives threat from imports and consequent pressure on domestic prices.

The substantial expansion in production capacity of PFY by the major producers and with the rationalization of import duty structure, the PFY prices are expected to remain under pressure.

Business Outlook:

We expect the business conditions to remain stable for your Company with a moderate growth in volume in the year 2016-17. However, the world markets are uncertain at present and majority countries are facing economic issues affecting their growth in the year 2016-17.

The key drivers to growth in today''s scenario would be higher operating efficiency, sustainability, customer satisfaction, improving capabilities, expanding product mix and exploring newer markets. Your Company is making efforts to capture the potential for growth in the coming years.

While there are near-term concerns around slowing market growth and inflationary pressures on consumers, we are confident of the medium-to-long term growth prospects of textile sector and remain focused on delivering consistent and competitive growth with sustainable operating margin improvement.

In our opinion in the absence of a severe slowdown in the economy, the sluggishness would be temporary, especially for the POY industry, for which the global economic forecast for the next couple of years is healthy.

Your Company is pursuing cost control measures, increased productivity, improving efficiencies in manufacturing areas and a thrust in sales and better price realization with better product mix. However, the performance of the Company would be largely dependent on the overall industrial scenario.

Internal Control System and their Adequacy

On a periodical basis, the Board also engages the services of professional experts in the said field in order to ensure that adequate financial controls and systems are in place.

Health, safety and environment

Your Company continued its focus in creating an aesthetic, environment-friendly industrial habitat in its factory units, mobilizing support and generating interest among staff and labour for maintaining hygienic and green surrounding.

The Company continues to focus on maintenance and performance improvement of related pollution control facility at its manufacturing locations. Your Company recognizes protection and management of environment as one of its highest priority and every effort is made to conserve and protect the environment.

Industrial Relation / Human Resources

Your Company maintained healthy, cordial and harmonious industrial relations at all levels during the year under review.

The Company continuously works to nurture this environment to keep its employees highly motivated, result oriented and adaptable to changing business environment. Your Company''s value proposition is based on providing value to our customer, through innovation and by consistently improving efficiency at all levels.

Your Directors wish to place on record their appreciation for the dedicated and commendable services rendered by the employees of the Company. There were 69 permanent employees as on 31st March, 2016.

CAUTIONARY STATEMENTS

Appreciation

Your Directors wish to acknowledge the co-operation and assistance extended to the Company by the Company''s Bankers and State & Central Government agencies. Your Directors also wish to place on record their appreciation of the contribution made by employees at all levels towards the growth of the Company.

For and on behalf of the Board of Directors

M. R. Momaya

Managing Director

Surat, 25th May, 2016 DIN : 00023993

Mar 31, 2015

Dear Members,

The Directors have the pleasure of presenting the Sixty-ninth Annual Report on the business and operations of the Company, together with the Audited Statements of Accounts for the year ended 31st March, 2015.

Financial Results

The Company's performance during the financial year ended 31st March, 2015 as compared to the previous financial year, is summarized below.

(Rs. in crores)

2014-15 2013-14

Total Revenue from Operations 129.84 182.70 (Net)

Earning Before Interest, 5.54 4.36 Depreciation and Tax (EBIDTA)

Less: FinanceCosts 0.70 1.35

Depreciation 1.26 1.31

Profit before Tax 3.58 1.70

Less: Tax Expense 1.02 0.54

Profit after Tax 2.56 1.16

Review of Operations

Your Company achieved turnover of Rs.127.55 crore as compared to Rs.181.51 crore in the previous year. The decline in turnover was primarily on account of lower capacity utilization, over supply situation in the domestic market and lower demand growth.

Our focus on operational efficiency with better working capital management and better network helped us to remain competitive and improve our EBIDTA.

Profit before interest, depreciation and tax was higher at Rs.5.54 crore as compared to Rs.4.36 crore thereby registering a growth of about 27%. The profit after tax was also higher at Rs.2.56 crore as compared to the profit of Rs.1.16 crore in the previous year.

During the FY 2014-15, your Company faced several challenges. Crude prices saw a sharp decline which triggered reduction in prices of PTA and MEG prices. This resulted in inventory losses. Moreover, demand for polyester was subdued in the domestic as well as global markets. The operating margins were adversely affected owing to oversupply of finished product, more particularly in polyester chips and yarn segments resulting in lower margins and capacity utilization.

The sale of chips was lower at 9034 MT for the year 2014-15 as compared to 13064 MT in the previous year. The total sale of polyester filament yarn (PFY) was lower at 1861 MT as compared to 3429 MT in the previous year.

The overall production of Chips was at 10062 MT during the year 2014-15 as compared to 15363 MT achieved in the previous year. Whereas the production of PFY during the year remained lower at 1682 MT as compared to 3314 MT in the previous year. The Company had to curtail the production during the year due to volatility of raw material prices and to reduce the inventory loss.

Your Company also focused on margin improvement by optimum allocation of its resources through cost reduction at manufacturing level. The operating margins, however, remained under pressure.

The Company during the last quarter of the FY 2014-15 discontinued the manufacturing activity at its Synthetic Fibre Spinning (SFS) plant at Village Vareli, Taluka Palsana, Dist. Surat, which had become unviable due to competitive market conditions.

Dividend

In order to strengthen the reserves of the Company, your directors consider it prudent to plough back the profits and not to recommend any dividend for the financial year 2014-15.

Transfer to Reserve

It is not proposed to transfer any amount to reserves out of the profits earned during the financial year 2014-15.

Nature of Business

The Company is engaged in the business of manufacturing polyester chips and differentiated partially oriented yarn (POY). The Company is a regular supplier of bright, cationic, micro denier, and fine denier yarns in the market.

During the year under review, there was no change in the nature of business of the Company.

Share Capital

The Issued, Subscribed and Paid-up equity share capital as on 31st March, 2015 was Rs.2220.64 Lacs. During the year under review, the Company has not issued shares with differential voting rights, nor granted stock options nor sweat equity. As on 31st March, 2015, none of the Directors of the Company holds equity shares in the Company.

Disclosures in respect of voting rights not directly exercised by employees

There are no shares held by trustees for the benefit of employees and hence no disclosure under Rule 16(4) of the Companies (Share Capital and Debentures) Rules, 2014 has been furnished.

Directors and Key Managerial Personnel

Pursuant to the provisions of Section 149 of the Companies Act, 2013, which came into effect from 1st April, 2014, Shri Harishchandra Bharucha was appointed as an independent director at the 68th Annual General Meeting of the Company on 23rd July, 2014. The terms and conditions of appointment of Shri Bharucha as an independent director are as per Schedule IV of the Companies Act, 2013. Shri Bharucha has submitted a declaration that he meets the criteria of independence as provided in Section 149(6) of the Companies Act, 2013 and there has been no change in the circumstances which may affect his status as independent director during the year.

Shri Yogesh C. Papaiya was appointed as the Whole-time Director designated as Executive Director & Chief Financial Officer (CFO) of the Company for a period of 5 (five) years with effect from 11th August, 2014, subject to the approval ofthe members.

Shri Ketan Jariwala and Smt. Anita Mandrekar were appointed as Additional Directors (Independent) on the Board with effect from 11th August, 2014 and 28th May, 2015 respectively.

The Company has received notice under Section 160 of the Companies Act, 2013 along with the requisite deposit proposing the appointment of Shri Ketan Jariwala and Shri Anita Mandrekar.

The resolutions seeking approval of the Members for the appointment of Shri Yogesh C. Papaiya, Shri Ketan Jariwala and Smt. Anita Mandrekar have been incorporated in the Notice of the ensuing Annual General Meeting ofthe Company along with brief details about them.

Pursuant to the provisions of Section 152 ofthe Companies Act, 2013, Shri Yogesh C. Papaiya (DIN: 00023985), Director, retires by rotation at the forthcoming Annual General Meeting, and being eligible offers himself for re-appointment.

During the year, the non-executive directors ofthe Company have no pecuniary relationship of transactions with the Company.

Shri M. R. Momaya, Managing Director, Shri Yogesh C. Papaiya, Wholetime Director and CFO and Ms. Hanisha Arora, Company Secretary and Compliance Officer were designated as "Key Managerial Personnel" of the Company pursuant to Section 2(51) and 203 of the Companies Act, 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.

Familiarisation programme for Independent Directors

Pursuant to the provisions of Clause 49 of the Listing Agreement, the Company has formulated a programme for familiarizing the Independent Directors with the Company, their roles, rights, responsibilities in the Company, nature of the industry in which the Company operates, business model of the Company etc. through various initiatives. The details of the aforementioned programme is available on the Company's website www.surattextilemillsltd.com.

Declaration by Independent Directors

Declaration given by Independent Directors meeting the criteria of independence as provided in sub-section (6) of Section 149 of the Companies Act, 2013 is received and taken on record.

Finance

Your Company has repaid Secured Rupee Term Loan from banks to the tune of Rs.47.05 Lacs during the year. No fresh Term Loan was availed by the Company during the year.

Corporate Governance

Your Company is fully compliant with the Corporate Governance guidelines, as laid out in Clause 49 of the Listing Agreement. All the Directors (and also the members ofthe Senior Management) have affirmed in writing their compliance with and adherence to the Code of Conduct adopted by the Company. The details of the Code of Conduct are furnished in the Corporate Governance Report attached as Annexure G to this Report.

The statutory auditors of the Company have examined the requirements of Corporate Governance with reference to Clause 49 of the Listing Agreement and have certified the compliance, as required under Clause 49 of the Listing Agreement. The Certificate in this regard is attached to this Report.

Directors' Responsibility Statement

Pursuant to Section 134(5) ofthe Companies Act, 2013, the Board of Directors of the Company, to the best of their knowledge and ability, confirm that:

i. in the preparation of the annual accounts, the applicable accounting standards have been followed and there 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 as at the end of the financial year and of the profit of the Company for that period;

iii. they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

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 such internal financial controls are adequate and operating effectively;

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.

Policy on directors' appointment and remuneration

The Board has, on the recommendation of the Nomination and Remuneration Committee framed a policy for selection and appointment of Director, Senior Management and their remuneration.

The Company does not pay any remuneration to the Non-Executive / Independent Directors of the Company other then siffing fees for attending the meetings of the Board and Committees of the Board. Remuneration to the Whole-time Director is governed by the relevant provisions of the Act and approvals.

The details pertaining to criteria for determining qualifications, positive attributes, independence of a Director, remuneration policy and other related matters have been provided in the Corporate Governance Report. The Company has displayed the remuneration policy on its website www.surattextilemillsltd.com in terms of Clause 49(VIII)(C)(3) of the Listing Agreement.

The Disclosures pursuant to sub-rule (1) of Rule 5 of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are set out in Annexure C and forms part ofthe Board's Report.

Nomination and Remuneration Committee

A nomination and Remuneration Committee is in existence in accordance with the provisions of sub-section (3) of Section 178 Kindly refer section on Corporate Governance, under the head,

'Nomination and Remuneration Committee' for matters relating to constitution, meeting, functions of the Committee and the remuneration policy formulated by this Committee.

Audit Committee

An Audit Committee is in existence in accordance with the provisions of Section 177 of the Companies Act, 2013. Kindly refer to the section on Corporate Governance, under the head, 'Audit Committee' for matters relating to constitution, meetings and functions of the Committee. During the year there were no instances where the Board had not accepted the recommendation of the Audit Committee.

Internal Auditors

Pursuant to the provisions of Section 138 of the Companies Act,

2013, the Board of Directors of the Company has appointed M/s Aadil Aibada & Associates, Chartered Accountant as Internal Auditors of the Company, for the financial year 2015-16.

Statutory Auditors

Pursuant to the provisions of Section 139 of the Companies Act, 2013 and the Companies (Audit and Auditors) Rules, 2014, M/s Natvarlal Vepari & Co., Chartered Accountants, were appointed as the statutory auditors of the Company from the conclusion of the 68th annual general meeting of the Company held on 23rd July, 2014 till the conclusion of the Seventy-one annual general meeting to be held in the year 2017, subject to ratification of their appointment at every annual general meeting.

The appointment of M/s Natvarlal Vepari & Co. Chartered Accountants will be placed before the members at this Annual General Meeting for ratification.

Secretarial Audit

Pursuant to provisions of Section 204 of the Companies Act, 2013 read with Rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed Shri Kunjal Dalal, Proprietor K. Dalal & Co., Practicing Company Secretaries, Surat to conduct the Secretarial Audit of the Company for the financial year ended 31st March, 2015.

The Secretarial Audit Report (in Form MR-3) is attached as Annexure-D to this Report.

Auditors Report

As regards the comments in the Auditors' Report, the relevant notes to the Accounts are self explanatory and may be treated as information / explanation submitted by the Board as contemplated under provisions of the Companies Act, 2013.

The report of the Statutory Auditor and Secretarial Auditor does not contain any adverse observation or qualification requiring explanation or comments from the Board under Section 134(3) of the Companies Act, 2013.

Cost Auditors

Pursuant to the provisions of Section 148 of the Companies Act, 2013 read with the Companies (Cost Records and Audit) Rules, 2014, as amended by notifications / circulars issued by the Ministry of Corporate Affairs from time to time and as per the recommendation of the Audit Committee, the Board of Directors at their meeting dated 31st May, 2014, appointed M/s P. M. Nanabhoy & Co., Cost Accountants, as the Cost Auditors of the Company for the Financial Year 2014-15.

In respect of Financial Year 2015-16, the Board, based on the recommendation of the Audit Committee, has approved the appointment of M/s P. M. Nanabhoy & Co., Cost Accountants, as the Cost Auditors of the Company on a remuneration of Rs.60,000. As required under the Companies Act, 2013, the remuneration payable to the Cost Auditor is required to be placed before the Members in a general meeting for their ratification. Accordingly, a Resolution seeking Member's ratification for the remuneration payable to M/s P. M. Nanabhoy & Co., Cost Auditors is included at item No.7 of the Notice convening the Annual General Meeting.

Particulars of Employees and Related disclosure

During the financial year 2014-15, none of the employees of the Company are in receipt of remuneration prescribed in terms of the provision of Section 197(12) of the Companies Act, 2013 read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rule, 2014. There were 81 permanent employees as on 31st March, 2015.

Public Deposits

During the year under review, your Company did not accept any deposits in terms of Section 73 of the Companies Act, 2013 read with the Companies (Acceptance of Deposit) Rules, 2014. As on April 1, 2014, no amounts were outstanding which were classified 'Deposits' under the applicable provisions of Companies Act, 1956 and hence the requirement for furnishing of details of deposits which are not in compliance with the Chapter V of the Companies Act, 2013 is not applicable.

Conversation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo

The Company continued its efforts towards effective utilization of energy for reduction in power consumption. The Company is constantly exploring the use of alternate sources of energy that are commensurate with the scale of present operation and the type of product being manufactured. During the year under review, there was no major capital investment on energy conservation equipment.

Information required pursuant to the provisions of Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014 in respect of Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo are set out in the Annexure A forming part ofthis Report.

Adequacy of Internal Financial Control

The Company has in place adequate internal financial controls with reference to financial statements. Periodic audits are undertaken on continuous basis covering all the major operations. Reports of internal auditors are reviewed by management from time to time and desired actions are initiated to strengthen the control and effectiveness of the system. During the year, such controls were tested and no reportable material weaknesses in the design or operation were observed.

The Internal Financial Control with reference to financial statements as designed and implemented by the Company are adequate. During the year under review, no material or serious observation has been received from the Internal Auditors of the Company for inefficiency of such controls.

Risk Management Policy

The Board of Directors of the Company has formed a risk management policy to frame, implement and monitor the risk management plan for the Company. The Committee is responsible for reviewing the risk management plan and ensuring its effectiveness. It regularly analyses and takes corrective actions for managing / mitigating the same. The audit committee has additional oversight in the area of financial risks and controls. Your Company's risk management framework ensures compliance with the provisions of Clause 49 of the Listing Agreement. The details of Risk Management as practiced by the Company forms part of this Report.

Corporate Social Responsibility (CSR) Initiatives

As required under Section 135 of the Companies Act, 2013 the CSR committee comprising Shri Ketan Jariwala, Independent Director as the Chairman of the Committee, Shri Harishchandra Bharucha, Independent Director and Shri Yogesh C. Papaiya, Whole-time Director as its members.

The CSR committee has laid down the policy which includes the activities covered under the Companies (Corporate Social Responsibility Policy) Rules, 2014.

The main focus areas covered in the policy includes Education, Health care, social welfare and environment safety etc. The details of amount spent on CSR activity undertaken during the year by the Company are given in the Annexure B to this Report. The CSR policy of the Company is also hosted on the website of the Company, www.surattextilemillsltd.com.

Particulars of contracts or arrangements with related parties

All transactions entered by the Company with Related Parties during the financial year 2014-15 were in the Ordinary Course of Business and at Arm's Length pricing basis. 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 conflict with the interest of the Company at large. All Related Party Transactions are placed on a quarterly basis before the Audit Committee for approval and before the board for consideration and noting. None of the Directors has any pecuniary relationships or transactions vis-a-vis the Company.

Pursuant to section 134 of the Companies Act, 2013 and Rules made thereunder, particulars of transactions with related parties as required under section 188(1) of the Companies Act, 2013, read with Rule 8(2) of Companies (Accounts) Rules, 2014 is annexed with this Report in Form AOC-2 as Annexure E Suitable disclosures as required under AS-18 have been made in Note 28 of the Notes to the financial statements.

The policy on related party transactions as approved by the Board is uploaded on the Company's website www.surattextilemillsltd. com. The Company's management ensures total adherence to the approved Policy on Related Party Transactions to establish Arm's Length Basis without any compromise.

Board Evaluation

The Board of Directors has carried out an annual evaluation of its own performance, Board committee and individual directors pursuant to the provisions of the Companies Act, 2013 and the corporate governance requirements as prescribed by Securities and Exchange Board of India ("SEBI") under Clause 49 of the Listing Agreements ("Clause 49").

The performance of the Board was evaluated by the Board after seeking inputs from all the directors on the basis of the criteria such as the Board composition and structure, effectiveness of board processes, information and functioning etc.

The performance of the committee was evaluated by the board after seeking inputs from the committee members on the basis of the criteria such as the composition of committee, effectiveness of committee meetings, etc.

The board and the Nomination and Remuneration Committee ("NRC") reviewed the performance of the individual directors on the basis of the criteria such as the contribution of the individual directors to the Board and committee meetings. In addition, the Chairman of the Board was also evaluated on the key aspects of his role.

The details of the policy on evaluation of Board's performance is available on the Company's website www.surattextilemillsltd. com.

Meetings of the Board

During the year, 5 Board Meetings and 4 Audit Committee Meetings were convened and held. Directors actively participated in the meetings and contributed valuable inputs on the matters brought before the Board of Directors from time to time.

The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013 and as per Clause 49 of the Listing Agreement. The details of the meetings are furnished in the Corporate Governance Report.

Independent Directors' Meeting

In compliance with the requirements of Schedule IV of the Companies Act, 2013 and Clause 49(II)(B)(6) of the Listing Agreement a meeting of the Independent Directors was held on 23rd March, 2015, without the participation of the Executive Directors or management personnel. The independent Directors carried out performance evaluation of Non-Independent Directors and the Board of Directors as a whole, performance of Chairman of the Board, the quality, content and timelines of flow of information between the Management and Board, based on the performance Evaluation framework ofthe Company.

The criteria for performance evaluation have been detailed in the Corporate Governance Report forming part of this report.

Vigil Mechanism / Whistle Blower Policy

Pursuant to Section 177(9) of the Companies Act, 2013 read with Rule 7 of the Companies (Meetings of Board and its Powers) Rules, 2014 and Clause 49 ofthe Listing Agreement, the Board of Directors has adopted vigil mechanism in the form of Whistle Blower Policy through which its Directors, Employees and Stakeholders can report their genuine concerns about unethical behaviours, actual or suspected fraud or violation of the Company's code of conduct or ethics policy. The said Policy provides for adequate safeguards against victimization and also direct access to the higher levels of supervisors.

Your Company hereby affirms that no Director / employee has been denied access to the Chairman ofthe Audit Committee and that no complaints were received during the year. Brief details about the policy are provided in the Corporate Governance Report, forming part to this Report.

Extract of Annual Return

Pursuant to the provisions of Section 134(3)(a) of the Companies Act, 2013, Extract of the Annual Return in Form MGT-9, for the financial year ended 31st March, 2015 made under the provisions of Section 92(3) ofthe Act is attached as Annexure F which forms part ofthis Report.

DisclosuresunderSection 134(3)(l) ofthe Companies Act, 2013

There were no material changes and commitment which could affect the Company's financial position has occurred between the end of financial year ofthe Company and the date of this Report.

Disclosure of orders passed by the regulators or courts or tribunal

No significant and material orders have been passed by any Regulators or Court or Tribunal which can have an impact on the going concern status and the Company's operations in future.

Particulars of loans, guarantees or investments under Section 186 of the Companies Act, 2013

The Company has not granted any loans, guarantees and investments in the financial year ended 31st March, 2015.

Material Subsidiary

During the year ended 31st March, 2015, the Company does not have any material listed / unlisted subsidiary companies as defined in Clause 49 of the Listing Agreement. The details of the policy on determining material unlisted subsidiary of the Company is available on the Company's website www. surattextilemillsltd.com.

Disclosure under the Sexual Harassment of Women at Workplace (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 the Workplace (Prevention, Prohibition & Redressal) Act, 2013. Internal Complaints Committee (ICC) has been set up to redress complaints received regarding sexual harassment. All employees (permanent, contractual, temporary, trainees) are covered under this policy.

The Company has constituted an Internal Complaint Committee ('ICC') as required by the said Act with 3 members including 1 member representing Non Governmental Organisation (NGO). The Company is strongly opposed to sexual harassment and employees are made aware about the consequences of such acts and about the constitution of ICC. During the year under review, no complaints were filed with the Committee under the provisions ofthe said Act.

Service of documents through electronic means

All documents, including the Notice and Annual Report shall be sent through electronic transmission in respect of members whose email IDs are registered in their demat account or are otherwise provided by the members. A member shall be entitled to request for physical copy of any such documents.

Indian Economy & Industry Scenario

According to the latest world economic outlook of IMF, India will surpass China in terms of growth to become the fastest growing large economy in the world.

The Mid-year update of the UN World Economic Situation and Prospects (WESP), related recently said, India's economy is projected to grow by 7.6 per cent this year and 7.7 per cent in 2016, overtaking China. China is projected to grow by 7 per cent in 2015 and 6.8 per cent next year.

India's growth is expected to be at least 8 per cent in the current financial year on account of initiative taken by the government to boost investment and growth. With India's economy mostly domestic driven, internal risks far outweigh external risks.

The Indian economy is showing signs of turnaround. The Indian economy is coming out of some tough times in recent years with a steep decline in growth, stubbornly high inflation and a wide current account deficit, but the situation is now improving.

Key reforms in the business environment, to labour market and to infrastructure will bring economic growth back to the higher levels seen in the recent past, create good jobs and improve well-being for all Indians.

While lower crude oil prices would ensure saving on input cost like MEG and PTA, which are the derivatives of crude oil, the poor demand is likely to restrict revenue growth.

Stronger rupee against most other currencies over the previous year will negatively impact the international operations like export of goods / import of raw materials.

Polyester markets faced challenges during the year because of raw material price volatility and over-capacity situation in the industry. Steep decline in raw material prices during the third quarter, put pressure on the margins.

The outlook for the industry for the coming year looks positive as the demand growth is expected to slowly catch-up with the supply.

Risk and concerns

The PFY industry is very competitive with players ranging from large vertically integrated players with very low variable costs to small flexible players who can rapidly respond to market changes in terms of both price and product mix.

An economic slow down- both domestic and global - may have adverse effect on the growth of the PFY industry. Raw material prices fluctuate in line with international prices and will continue to have an impact on the company's performance as raw materials constitute about 75 percent ofthe Company's net sales. Increased differentiated products as well as a reduced working capital facility will help reduce risks.

Large capacity addition by new and existing players may out-pace demand growth which will lead to price instability and pressure on profit margins. Yet, as demand growth resumes its historical trajectory it is a matter of time before healthy margins are restored.

Your company, like any other enterprise, is exposed to business risk which can be an internal as well as external risk. One of the key risks faced by the company in present scenario is the wide and frequent fluctuations in the prices of its raw materials. Major raw materials i.e. PTA and MEG are the derivative of crude and Crude Oil remain highly volatile whole year on account of various international political and economical reasons which are beyond our control.

Inflationary tendency in the economy and deterioration of macro economic indicators, coupled with below normal rain can impact the spending power of the consumer which can affect the volume of business as well as the operating performance of the Company.

Business Outlook:

The growth in demand is expected in the medium term to rely on high consumption in the domestic market. Your Company is committed to build business with long term goal based on your Company's intrinsic strength in terms of product quality and customer network.

Large additions to PTA capacity are expected this financial year that should result in more competitive PTA costs that will improve both domestic and export sales and margins, other things being same.

The introduction of GST should see a level playing field between your Company and other companies which are tax exempt. This should further improve margins for your Company in the long run, other things being same.

The Company will continue to focus on specialty and differentiated products in yarn and chips segment.

Internal Control System and their Adequacy

The Internal Control System provides for well documented policies / guidelines, authorizations and approval procedures. Considering the nature of its business and size of operations, your Company through its Internal Auditors carries out periodic audit based on the plan approved by the Audit Committee. The summary of the Internal Audit observations and status of implementation are submitted to the Audit Committee. The status of implementation of the recommendations is reviewed by the Audit Committee on a regular basis and desired actions are initiated to strengthen the control and effectiveness of the system. Concerns, if any, are reported to the Board.

Health, safety and environment

Your Company continued its focus in creating an aesthetic, environment-friendly industrial habitat in its factory units, mobilizing support and generating interest among staff and labour for maintaining hygienic and green surrounding. The Company continues to focus on maintenance and performance improvement of related pollution control facility at its manufacturing locations. Your Company recognizes protection and management of environment as one of its highest priority and every effort is made to conserve and protect the environment.

Industrial Relation / Human Resources

The Company continuously works to nurture this environment to keep its employees highly motivated, result oriented and adaptable to changing business environment. Your Company's value proposition is based on providing value to our customer, through innovation and by consistently improving efficiency at all levels.

Your Company maintained healthy, cordial and harmonious industrial relations at all levels during the year under review. Your Directors wish to place on record their appreciation for the dedicated and commendable services rendered by the employees of the Company. There were 81 permanent employees as on 31st March, 2015.

CAUTIONARY STATEMENTS

Statements made in this report forming part of the disclosure related to Management, Discussion and Analysis describing the Company's objectives, projections, estimates and expectations 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 influence the Company's operations include economic developments within the country, demand and supply conditions in the industry, input prices, changes in government regulations, tax laws, and other factors such as litigation and industrial relations.

Acknowledgement

The Directors of the Company wish to express their appreciation for the continued co-operation of the Central and State Governments, bankers, financial institutions, customers, dealers and suppliers and all the valuable assistance received from the shareholders. The Directors also wish to thank all the employees of the Company for their contribution, support and continued co-operation through out the year.

For and on behalf of the Board

M. R. Momaya Surat, 28th May, 2015 Managing Director

Mar 31, 2013

Dear Shareholders,

The Directors present the Sixty-seventh Annual Report together with the audited accounts of the Company for the year ended 31st March 2013.

Financial Results

(Rs.in Lacs) 2012-13 2011-12

Revenue from Operations (Net) 21776.61 18841.79

Other Income 416.59 2896.21

Profit before interest, depreciation and tax 1511.57 3190.92

Finance Costs 22.86 285.36

Profit before Depreciation and Tax 1488.71 2905.56

Depreciation 148.60 154.54

Profit before Tax 1340.11 2751.02

Provision for Tax 582.89 772.99

Profit for the year 757.22 1978.03

Dividend

In order to strengthen the reserves of the Company, your directors consider it prudent to plough back the profits and not to recommend any dividend for the financial year 2012-13

Overview and Review of Operations

Overall, the year was extremely challenging for your Company. In a challenging environment your Company has delivered broad-based competitive growth and margin improvement

Your Company achieved a gross turnover of Rs.242.57 crores as compared to Rs.207.62 crores in the previous year, an increase of about 17%. The sale of Polyester Chips increased by 28% at Rs.156.76 Crore as compared to Rs.122.59 Crore during the previous year. The sale of Yarn (including spun yarn) for the year 2012-13 was lower at Rs.72.57 Crore as compared to Rs.83.81 Crore in the previous year, primarily due to lower demand growth and competitive pressure. Earnings before interest tax and depreciation (excluding other income) was higher at Rs.10.95 crore as against 2.95 crore in the previous year.

In quantity terms, the sale of chips was higher at 15159 MT as compared to 13227 MT in the previous year. The total sale of yarn was lower at 4434 MT as compared to 5906 MT in the previous year

Your Company achieved higher production of chips during the year at 18304 MT as compared to 15653 MT achieved in the previous year. The production of PFY during the year was lower at 4322 MT as compared to 5884 MT achieved in the previous year. The lower production was primarily on account of subdued market conditions, demand recession and price fluctuations in raw materials during the year

During the year under review your Company discontinued the manufacturing activity at its Silvassa plant which had become unviable due to competitive market conditions and the prevailing circumstances Consequent to the closure of business operations at the said location, the Company has disposed off the fixed assets of the said division

Your Company also sold part of its property under development held under stock in trade which contributed to the Operating Income of the Company.

Apart from investing surplus funds in business the Company continued to pursue related business opportunities during the year, by building up its stock in trade of art and artifacts and actively pursuing its construction business activity.

Overview of Economy

The growth in GDP during 2012-13 is estimated at 5% as compared to a growth rate of 6.25% in 2011-12. According to Central Statistical Organization (CSO). In 2002-03, the GDP had grown at 4% since then the Indian Economy has been expanding at over 6%, the highest rate being 9.6% in 2006-07.

Manufacturing growth in 2012-13 is also expected to drop to 1.9% in this fiscal, from 2.7% last year.

The Indian economy is expected to rebound in 2014, boosted by lower inflation and interest rate cuts from the Reserve Bank of India. Some temporary factors like easing commodity prices are helping inflation to decline.

The Indian economy is approaching an inflation point, with GDP growth having bottomed out and corporate earnings having stabilized, it is expected that economic momentum and earnings will improve from current levels.

Industry Scenario

The year was characterized by global slowdown, weak retail demand at home, rising input cost coupled with lower growth in industrial production continuing high rate of inflation and depreciation of the rupee.

The growth in sales / earning was primarily driven by higher volume and price realization during the year. Margins came under pressure due to excess supply and slower domestic demand growth.

There was an overall drop in PTA and MEG prices declined by 9% and 10% respectively. The global textile industry faced subdued demand during the past year due to volatile economic situations in the US and Europe and geo-political disturbances in Africa and the Middle East regions.

Prices of Polyester products declined during the year as buyers turned cautious given the slow downstream demand and opted to cut losses by controlling inventory.

During FY 2012-13, the downstream polyester demand remained depressed, amidst subdued global markets due to high polyester inventories, lower margins and steep decline in the feed stock prices

The prices of MEG and PTA went down in first quarter. Despite of capacity additions in fibre and filament and no new PTA and MEG capacities, prices did not show much improvement. The average price of PTA and MEG were of US$ 1098 and US$ 1043 due to lower demand

Opportunities, Threats and Challenges

Large fluctuations in crude oil prices and the consequent impact on raw material and polyester prices hurt growth. Large volatility in the international markets especially on the downside will have adverse temporary effects on the polyester industry

Capacity additions by new and existing players may have a temporary effect on your Company''s margins.

The substantial expansion in production capacity of PFY by the major producers and with the rationalization of import duty structure, the PFY prices are expected to remain under pressure.

The Company perceives threat from imports and consequent pressure on domestic prices, apart from the increase in cost of raw materials and other inputs due to spurt in crude oil prices

The Company is facing challenge in terms of higher production cost due to high power cost and other inputs. It is expected that with the better working capital management, the Company would be able to generate better cash flows.

A sluggish downstream demand could impact the Company''s business

Inconsistent raw material supply and price volatility could impact production.

Business Outlook

We expect your company will outperform the industry in terms ot sales and profit growth over the medium term. In our opinion in the absence of a severe slowdown in the economy, the sluggishness would be temporary, especially for the POY industry, for which the global economic forecast for the next couple of years is healthy.

Witnessing the increased consumer need for polyester a number of players are expanding / increasing polyester polymer and yarn capacity market. While utilization rates in the industry may temporarily fall as a consequence, your Company is confident of maintaining healthy operating rates owing to its special position in the market.

The introduction of GST should see a level playing field between your Company and other companies who are tax-exempt. This should further improve margins for your Company other things being same

While there are near-term concerns around slowing market growth and inflationary pressures on consumers, we are confident of the medium- to-long term growth prospects of textile sector and remain focused on delivering consistent and competitive growth with sustainable operating margin improvement.

At the operating level, despite competitive business environment and sluggish demand growth, your Company posted better performance The pricing and demand scenario is expected to remain muted in the near term and may result in pressure on the margins

Internal Control

Your Company has adequate internal control procedures commensurate with the size of operations and the nature of the business. These controls ensure efficient use and protection of Company''s financial and non-financial resources. Regular internal audit 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 improvement for strengthening them, from time to time.

Risk Management

Your Company is exposed to the risk of price fluctuation on major raw materials - PTA and MEG. While in regular course of business price fluctuations are passed on to the customers, sudden price reductions can result in freezing up of sales and consequent inventory losses

The Company mitigates the impact of price risk on finished goods with Company''s strong reputation for quality, product differentiation and service to the customers with better marketing network. Capacity additions by new and existing players may have a temporary effect on your Company''s margins.

The Company is exposed to risks from market fluctuations of foreign exchange, interest rates, commodity prices, business risk, compliance risks and people risks.

The Company is exposed to risks attached to various statutes and regulations including the Competition Act, 2002. The Company is mitigating these risks through regular reviews of legal compliances, through internal as well as external compliance audits.

Health, Safety and Environmental Measures

The Company continues to focus on maintenance and performance improvement of related pollution control facilities like effluent treatment plant and waste disposal facility at its manufacturing locations. The Company recognizes protection and management of environment as one of its highest priorities and every effort is made to conserve and protect the environment.

Cautionary Statement

Statements in this report on Management''s Discussion and Analysis describing the Company''s objectives, projections, estimates and expectations may be "forward looking statement" within the meaning of applicable laws and regulations. These statements are based on certain assumptions and expectation of future events. Actual results might differ materially from those either expressed or implied

Directorate

In accordance with the provisions of the Companies Act, 1956 and the Company''s Articles of Association, Shri M. R. Momaya, Director, retire by rotation and being eligible, offers himself for re-appointment at the ensuing Annual General Meeting.

Fixed Deposits

The Company has not accepted or renewed any deposits during the year. There are no outstanding and overdue deposits as at 31st March, 2013.

Energy, Technology and Foreign Exchange

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

Human Resources and Industrial Relations

Your Company recognizes human resources as the backbone of its long term success. Your Company maintains a cordial relationship with its employees. It emphasis on safe work practices and productivity improvement is unrelenting.

Your Company also associates itself with several social causes and empowers its employees to contribute to the society and carries out regular CSR activities reaching out to the less privileged

Particulars of Employees

None of the employees of the Company are in receipt of remuneration prescribed under Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975

Insurance

The properties and insurable assets and interests of your Company, like building, plant and machinery and stocks, among others, are adequately insured.

Auditors

Messrs Natvarlal Vepari & Co., Chartered Accountants, the Statutory Auditors of the Company shall retire at the conclusion of forthcoming Annual General Meeting, and have confirmed their eligibility for re- appointment in accordance with Section 224(1 B) of the Companies Act, 1956. The Board proposes the re-appointment of Messrs Natvarlal Vepari & Co., Chartered Accountants, Surat, as Statutory Auditors of your Company based on the recommendation of the Audit Committee, to hold office from the conclusion of the ensuing Annual General Meeting until the conclusion of the next Annual General Meeting

Resolution seeking your approval on the item is included in the Notice convening the Annual General Meeting

The observation made in the Auditors'' Report are self-explanatory and therefore, do not call for any further comments under Section 217(3) of the Companies Act, 1956.

Cost Auditors

n terms of the provisions of Section 233B of the Companies Act, 1956, the Board of Directors of your Company have on the recommendation of the Audit Committee, appointed M/s P.M. Nanabhoy & Co., Cost Accountant as Cost Auditors, Mumbai to conduct the cost audit of your Company for the financial year ending 31st March, 2014, subject the approval of the Central Government.

The Audit Committee has received a certificate from the cost auditors, certifying their independence and arm''s length relationship with your Company. In accordance with the Cost Audit (Report) Rules, 2001, the report was filed on 31.12.2012 vide SRN No. S19715051 with Ministry of Corporate Affairs, New Delhi.

Cash Flow Analysis

The Cash Flow Statement for the year under reference in terms of clause 32 of the Listing Agreement with the stock exchanges forms part of the Annual Report.

Directors'' responsibility statement:

Pursuant to the requirements under Section 217(2AA) of the Companies Act, 1956 with respect to Directors'' Responsibility Statement, it is hereby confirmed that:

(i) in the preparation of the annual accounts for the year ended 31st March, 2013, the applicable accounting standards have been followed along with proper explanations relating to material departures, if any;

(ii) such accounting policies have been selected and applied consistently and such judgments and estimates have been made as 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 ended on 31 st March, 2013 and of the profits of the Company for that period;

(iii) proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding of the assets of the Company and for preventing and detecting fraud and other irregularities; and

(iv) the statement of accounts for the year ended on 31st March, 2013 have been prepared on a going concern basis.

Corporate Governance

Your Company has taken adequate steps to ensure that the requirements of Corporate Governance as laid down in Clause 49 of the Listing Agreement are complied with

A separate report on Corporate Governance along with the Auditors'' Certificate on compliance with the Corporate Governance as stipulated in Clause 49 is set out in this Annual Report and forms part of this report.

The Auditors of the Company have certified that conditions of Corporate Governance as stipulated under Clause 49 of the Listing Agreement are complied by the Company and their Certificate is annexed to the Report on Corporate Governance

Appreciation

Your Directors take this opportunity to offer their sincere thanks to various departments of the Central and State Governments, government agencies, banks, shareholders, customers, employees and other related organizations, who through their continued support and co-operation, have helped your Company''s progress.

By Order of the Board of Directors

Sanjay S. Shah

Surat, 3rd May, 2013 Managing Director

Mar 31, 2012

To the Members of Surat Textile Mills Limited

The Directors are pleased to present their 67th report on the business and operations of your Company together with the Audited Statement of Accounts for the year ended 31st March 2012.

Summarised Financial Results

(Rs in Lacs)

2011-12 2010-11

Revenue from Operations

(Net of excise duty) 18841.79 27162.09

Other Income 2896.21 115.67

Profit before interest, depreciation and tax 3190.92 1639.08

Interest and Finance Charges 285.36 385.35

Profit before Depreciation and Tax 2905.56 1253.73

Depreciation 154.54 167.88

Profit before Tax 2751.02 1085.85

Provision for Tax 772.99 248.20

Profit for the year 1978.03 837.65

Dividend

In order to strengthen the reserves of the Company, your directors consider it prudent to plough back the profits and not to recommend any dividend for the financial year 2011-12.

Review of Operations

During the year under review, your Company achieved revenue from operations of Rs 188.42 Crore as compared to Rs 160.43 Crore (net of trading sales of Rs 111.19 Crore) in the previous year.

In view of the volatility in raw material prices prevailed throughout the year, your Company considered it appropriate to discontinue the trading activities in the current year and focused on its core business operations.

Your Company achieved sale of Polyester Chips of Rs 122.59 Crore as compared to Rs 97.47 Crore during the previous year, an increase of about 26%. The Company maintained its sale of Polyester Filament Yarn (PFY) at Rs 72.69 Crore for the year as compared to Rs 72.94 Crore in the previous year. The sale of Spun Yarn was adversely affected due to subdued marked conditions and competitive pressures.

The production of PFY during the year was at 5884 MT as compared to 7310 MT achieved in the previous year. The lower production was primarily on account of subdued market conditions, demand recession and price fluctuations in raw materials during the year. The production of chips during the year was also marginally lower at 15653 MT as compared to 16225 Mt achieved in the previous year.

Fluctuation in raw material prices coupled with competitive pressures continued to hamper the profitability of the Company. Moreover, the increase in the cost of major inputs could not be entirely passed on to the customers.

During the year under review, your Company disposed off some of its surplus land and building thereon. The sale proceeds were utilized towards repayment of the loan from promoters. The net surplus realized on disposal of such assets forms part of other income.

The overall volume of Company's manufacturing activity of Cotton Spun Yarn and doubling of polyester / cotton / viscose yarn at its plant located at Silvassa and the margins from such activity remained under pressure during the year. This was primarily on account of high price of cotton single yarn and other input costs coupled with poor demand growth of the product and un-remunerative price realization. Under the circumstances, the management has decided to partially shift the machineries to another location in order to put it in use and to dispose of the remaining freehold land along with building, plant and machinery and other assets of such undertaking in one or more trenches from time to time. The Company has obtained the shareholders' approval through postal ballot process to give effect to the aforesaid transaction.

Overview of Economy

India's economic growth rate slipped to 5.3 per cent in the fourth quarter of 2011-12, lowest in nearly 9 years due to poor performance of the manufacturing and farm sectors. The Gross Domestic Product (GDP) growth in January-March quarter of 2010-11 was 9.2 per cent. GDP in 2011-12 also moderated to 6.5 per cent from 8.4 per cent in the 2010-11. As per RBI's credit policy, growth is likely to improve moderately in 2012-13 while inflation has moderated; risks to inflations are still on the upside.

Growth in emerging markets, especially China and India is slowing beyond what was earlier anticipated. In spite of a deep in growth, the world economy is unlikely to lapse into another recession. The growth slowdown has been driven by a sharp fall in investment, some moderation in private consumption and a fall in next external demand. The path of inflation in 2012-13 could remain sticky around current levels due to high oil prices, large suppressed inflation, exchange rate pass through, hike in freight etc. On the macro economy level the GDP growth for 2012-13 have been estimated at 7.6% /- 0.25% and the fiscal deficit is targeted at 5.1% of GDP.

Chinese Yuan appreciated about 3.4% in the current fiscal as compared to Rupee which depreciated 24.70% making textile products more competitive in the export market, while at the same time making imports more costly. In China average wage cost is increasing over the years. Further higher ageing population is expected to cause wage inflation to rise at an even brisker pace.

Industry Scenario

The Indian textile industry is currently passing through a turbulent phase. With the global downturn ravaging economies, the textile sector is one of the worst hit. The prospect of synthetic textile industry in short term is linked with the domestic demand growth viz-a-viz the movement of crude oil prices in international markets.

The production growth in case of PFY was low due to sluggish demand. In Polyester Chips, the domestic supply has increased with the start-up of new C.P. Plants and outstrips demand. This has put pressure on sales and margins.

In the budget 2012-13, the Central Excise Duty has been raised to 12% from the existing level of 10%. Inflation continued to play a vital role in the economic growth. The increase in raw material prices and input costs during the year has been the major cause of concern.

Raw material price of PTA and MEG were hovering around USD 1400 and USD 1200 per metric ton respectively during April, 2011. The prices started to taper down from September, 2011 and reached a low of around USD 1100 and USD 1000 per metric ton.

As per CRISIL research, demand growth for Polyester Staple Fiber (PSF) and Viscose Staple Fiber (VSF) is expected to be moderate, while consumption of Partially Oriented Yarn (POY) and Viscose Filament Yarn (VFY) is expected to decline due to overall slowdown in textile consumption in both the domestic and global markets. Feedstock [PTA (Purified Terephthalic Acid) and MEG (Mono Ethylene Glycol)] prices are expected to remain firm in 2011-12 and soften in 2012-13 following the anticipated correction in naphtha and ethylene prices.

Opportunities, Threats and Challenges

The average per capita consumption of fabrics in India is much lower than its neighbouring countries. India has the advantage of large growing domestic market and a good GDP growth.

Revised TUF scheme would motivate the players in the industry to make further investments looking to the opportunity available both in the overseas and domestic markets.

The polyester industry is dependent on the international prices of crude oil, which directly impacts the price of both our key raw materials PTA and MEG. In the domestic market uncertain supply of raw material and price volatility could have an adverse impact on the performance of the Company.

Slowing down of Indian economy in general and the lower demand growth may further reduce the growth of the industry. Price realization of PFY is partly dependent on cotton yarn prices. If demand of finished products stagnates, margins in the Company's product i.e. Chips and PFY will be affected, given the large capacities in place.

The continuing demand sluggishness and oversupply situation does not indicate an immediate upswing in the performance of Polyester industry. However, with a lot of global feedstock capacities expected to go onstream, this may result in a softening of feedstock prices and improvement in margins.

The Company is facing challenge in terms of higher production costs due to high power cost, fuel oil and other inputs etc. as compared to its peers in the neighboring states.

There is also a threat of high inflation rate as the prices of commodities have been increasing. Textile being a labour intensive industry, rising labour and skilled human resource costs can put pressure on margins. Large fluctuations in crude oil prices and the consequent impact on raw material and polyester prices hurt growth. Large volatility in the international markets especially on the down side will have adverse temporary effects on the polyester industry.

For sale of chips and yarns outside of Gujarat State, the Company has a disadvantage compared with sales tax exempted units in Silvassa and Daman. The Government intends to introduce GST to overcome this situation and provide level playing field. Untill then the disadvantage will continue.

Slowdown in India's major export market viz. USA and Europe, resulting into consolidation of sourcing; thereby affecting the small players in terms of loss of business.

Business Outlook

The growth in demand is expected in the medium term to rely on high consumption in the domestic market. Your Company is committed to build business with long term goal based on your Company's intrinsic strength in terms of product quality and customer network.

Your Company is pursuing cost control measures, increased productivity, improving efficiencies in manufacturing areas and a thrust in sale and better price realization with better product mix. However, the performance of the Company would be largely dependent on the overall industrial and economic scenario.

On account of newer capacities of POY and Chips coming into operation in the domestic market in recent times, coupled with competition arising out of cheap imports, the domestic supply position in the Polyester Yarn and Chips segment is likely to be competitive and margins will remain under pressure.

The introduction of GST in the coming years should see a level playing field between your Company and other companies which are tax- exempt. This should further improve margins for your Company in the long run, other things being same.

The demand for polyester filament yarn is growing briskly. However, the current year will see a large increase in POY capacity, well in excess of demand. This will put a pressure on POY margins, which are expected to be lower than last year.

The Company will continue to focus on specialty and differentiated products in yarn and chips segment.

Internal Control

The Company has an adequate internal audit system commensurate with its size and nature of operations. All the major business processes are currently run on the ERP system. The internal control system is supported by the internal audit process. The internal audit department review and ensures that the audit observations are acted upon. The Audit Committee of the Board reviews the internal audit report and the adequacy and effectiveness of internal control.

Risk Management

The Company is exposed to risks from market fluctuations of foreign exchange, interest rates, commodity prices, business risk, compliance risks and people risks.

The Company is exposed to the risk of price fluctuation on raw materials as well as finished goods in all of its products. The Company proactively manages these risks in inputs through forward booking, inventory management, proactive management of vendor development and relationships. The Company's strong reputation for quality, product differentiation and services, the existence of a powerful brand image and a robust marketing network mitigates the impact of price risk on finished goods.

The Company is exposed to risks attached to various statutes and regulations including the Competition Act, 2002. The Company is mitigating these risks through regular reviews of legal compliances, through internal as well as external compliance audits.

Health, Safety and Environmental Measures Your Company is conscious of the importance of environmentally clean and safe operations. Your Company's policy requires the conduct of all operations in such manner so as to ensure safety of all concerned, compliance of statutory and industrial requirements for environment protection and conservation of natural resources to the extent possible.

Cautionary Statement

Statements in this report on Management's Discussion and Analysis describing the Company's objectives, projections, estimates and expectations may be "forward looking statement" within the meaning of applicable laws and regulations. These statements are based on certain assumptions and expectation of future events. Actual results might differ materially from those either expressed or implied.

Directorate

In accordance with the provisions of the Companies Act, 1956 and the Company's Articles of Association, Shri Y. C. Papaiya, Director, retire by rotation and being eligible, offers himself for re-appointment at the ensuing Annual General Meeting.

The Board at its meeting held on 8th May, 2012, appointed Shri Sanjay S. Shah as an additional director who will hold office as Director up to the date of the forthcoming Annual General Meeting. A notice in writing has been received from a member of the Company under section 257 of the Companies Act, 1956, signifying his intention to propose Shri Sanjay S. Shah as a candidate for the office of Director of the Company.

In the subsequent Board Meeting held on 30th May, 2012, the Board had, subject to the approval of shareholders in the forthcoming General Meeting, appointed Shri Sanjay S. Shah, as Managing Director of the Company for a term of five years effective from 30th May, 2012 to 29th May, 2017. On the recommendations of Remuneration Committee the Board has fixed the remuneration of Shri Sanjay S. Shah for a period of five years. Your Directors commend the resolutions for the appointment and remuneration of Shri Sanjay S. Shah for your approval.

Shri M. R. Momaya, Wholetime Director of the Company requested the Members of the Board to relinquish him from the responsibilities of Wholetime Director and submitted his resignation to the Members of the Board. Shri M. R. Momaya will however continue to be a Member of the Board as non-executive Director.

Smt. Shilpa P. Shah, Wholetime Director of the Company submitted her resignation as Member of the Board with effect from 30th May, 2012.

While accepting Smt. Shilpa Shah's resignation, the Members of the Board placed on record their sincere appreciation of the valuable services rendered by her during her tenure as a Director of the Company.

Finance and Accounts

The observations made by the Auditors in their Report have been clarified in the relevant notes forming part of the Accounts which are self-explanatory. The Schedule VI of the Companies Act, 1956 has been revised by the Ministry of Corporate Affairs vide its notification dated February 28, 2011. The notification is in force and is applicable for all Balance Sheets and Statement of Profit and Loss to be prepared for the financial year commencing on or after April 1, 2011. Therefore, the previous period figures have been regrouped / re-cast wherever necessary.

Fixed Deposits

The Company has not accepted any public deposits within the meaning of Section 58A of the Companies Act, 1956 and, as such, no amount on account of principal or interest on public deposits was outstanding as on the date of the Balance Sheet.

Energy, Technology and Foreign Exchange

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

Human Resources and Industrial Relations

Your Company recognizes human resources as the backbone of its long term success and has tried continuously to provide a challenging work environment thereby adding value to their professional growth. Our relationship with the employees continuous to remain cordial at all units.

Particulars of Employees

Information as per section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975 forms a part of this report and will be sent on demand to the shareholders. Any shareholder interested in obtaining a copy of the said statement may write to the Company Secretary.

Insurance

The properties and insurable assets and interests of your Company, like building, plant and machinery and stocks, among others, are adequately insured.

Auditors

Messrs Natvarlal Vepari & Co., Chartered Accountants, who are Statutory Auditors of the Company hold office upto the forthcoming Annual General Meeting and are recommended for re-appointment to audit the accounts of the Company for the Financial Year 2012- 13. As required under the provisions of the Section 224(1B) of the Companies Act, 1956, the Company has obtained written confirmation from Messrs Natvarlal Vepari & Co. that their appointment if made would be in conformity with the limits specified in the Section.

The Notes on Financial Statements referred to in the Auditors' Report are self-explanatory and do not call for any further comments.

Cost Auditors

As per the requirement of the Central Government and pursuant to the provisions of Section 233B of the Companies Act, 1956, the audit of the cost accounts relating to textiles is being carried out every year. The Central Government has approved the appointment of M/s P.M. Nanabhoy & Co., Cost Accountants as Cost Auditors, Mumbai for conducting cost audit for the financial year 2011-12. The cost audit report in respect of financial year 2011-12 will be filed on or before the due date. The cost audit report for the Financial Year 2010-11 which was due to be filed with the Ministry of Corporate Affairs on 30th September, 2011 was filed on 21st September, 2011.

Cash Flow Analysis

The Cash Flow Statement for the year under reference in terms of clause 32 of the Listing Agreement with the stock exchanges forms part of the Annual Report.

Directors' responsibility statement:

Pursuant to the requirements under Section 217(2AA) of the Companies Act, 1956 with respect to Directors' Responsibility Statement, your Directors report that

(i) in the preparation of the annual accounts for the year ended 31st March, 2012, the applicable accounting standards have been followed along with proper explanations relating to material departures, if any;

(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 as at 31st March, 2012 and of the profits of the Company for the year ended on that date;

(iii) they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding of the assets of the Company and for preventing and detecting fraud and other irregularities; and

(iv) the annual accounts have been prepared on a going concern basis.

Reports on Corporate Governance

Your Company continuous to be committed to good Corporate Governance aligned with good practices. Your Company is in compliance with the standards set out by Clause 49 of the Listing Agreement with the Stock Exchanges.

A separate report on Corporate Governance along with the Auditors' Certificate on compliance with the Corporate Governance as stipulated in Clause 49 is set out in this Annual Report and forms part of this report.

Appreciation

Your Directors place on record their appreciation for the continued support and co-operation received from customers, suppliers, dealers, banks and government authorities. The Board also, expresses its appreciation for the understanding and support extended by the shareholders and employees of the Company.

By Order of the Board of Directors

Sanjay S. Shah

Surat, 30th May, 2012. Managing Director

Mar 31, 2011

Dear Members,

The Directors have pleasure in presenting the sixty-fifth Annual Report on the business and operations of the Company together with the audited accounts for the year ended 31st March, 2011.

Summarised Financial Results

(Rs in Lacs)

2010-11 2009-10

Net Sales 27162.09 24203.59

Profit before interest, depreciation and tax 1639.09 1448.82

Interest and Finance Charges 385.35 399.72

Profit before Depreciation and Tax 1253.74 1049.10

Depreciation 167.88 182.41

Profit before Tax 1085.86 866.69

Provision for Tax 248.20 146.00

Net Profit for the year 837.66 720.69

Dividend

In order to strengthen the reserves of the Company and with a view to ensure sufficient liquidity your directors consider it prudent to plough back the profits and not to recommend any dividend for the financial year 2010-11.

The Company assumes no responsibility in respect of forward looking statements herein which may undergo changes in future on the basis of subsequent developments, information or events.

Directors

In accordance with the Articles of Association of the Company Mr. M. R. Momaya retire by rotation at the 65th Annual General Meeting and, being eligible, offers himself for re-appointment.

Mr. Harish Bharuchi was appointed as an additional director by the Board with effect from 26th November, 2010 at its meeting held on 7th December, 2010 Mr. Harish Bharuchi holds office until the conclusion of the ensuing annual general meeting and is eligible for re-appointment. The Company has received notice from a member under Section 257 of the Companies Act, 1956, proposing his candidature for the office of Director, liable to retire by rotation. The Directors recommend his appointment.

Mr. S.M. Vig who was associated with the Company as a director of the Company since October, 2000 ceased to be a Director with effect from 27th November, 2010. The Board places on record its deep sense of appreciation of the invaluable contribution made by him to the growth of the Company during the tenure of his office as a director of the Company for over 10 years.

Pursuant to clause 49 of the Listing Agreement, the particulars of Directors seeking appointment/re-appointment at the forthcoming annual general meeting are provided in the notes forming part of the Notice of Annual General Meeting.

Fixed Deposits

The Company has not accepted any public deposits within the meaning of Section 58A of the Companies Act, 1956 and, as such, no amount on account of principal or interest on public deposits was outstanding as on the date of the Balance Sheet.

Energy Conversion, Technology Absorption and Foreign Exchange Earnings and Outgo

Your Company makes every effort to conserve energy required for all its operations. The information required under Section 217(1)(e) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of the Directors) Rules, 1988 are provided in the Annexure 'A' to this Report.

Transfer of amounts to Investor Education and Protection Fund

Pursuant to the provisions of Section 205A(5) of the Companies Act, 1956, dividends, interest on debentures and matured debentures which remained unpaid or unclaimed for a period of 7 years have been transferred by the Company to the Investor Education and Protection Fund.

Employee relations

Relations between the employees and the management of the Company across all the locations continued to be cordial during the year.

The information required under Section 217(2A) of the Companies Act, 1956 and the Rules made thereunder is provided in an Annexure forming part of this Report. In terms of Section 219(1)(b)(iv) of the Act, the Report and Accounts are being sent to the shareholders excluding the aforesaid Annexure. Any shareholder interested in obtaining copy of the same may write to the Company Secretary.

Auditors

Messrs Natvarlal Vepari & Co., Chartered Accountants, Statutory Auditors of the Company, hold office untill the conclusion of the ensuing Annual General Meeting and are eligible for re-appointment.

The Company has received a letter from them to the effect that their re-appointment, if made, would be within the prescribed limits under Section 224(1B) of the Companies Act, 1956 and that they are not disqualifed for re-appointment within the meaning of Section 226 of the said Act.

The Notes on Accounts referred to in the AuditorsÃ Report are self- explanatory and do not call for any further comments.

Cost Auditors

Audit of Cost Accounts of the Company relating to textiles for the year ended 31st March, 2011 will be audited by Cost Auditors, M/s. P.M. Nanabhoy & Co. Cost Accountants, Mumbai and Cost Audit Report will be submitted to the Ministry of Corporate Affairs, Government of India. The cost accounts along with the Cost Auditors Report for the year ended 31st March, 2010 has already been fled with the Ministry of Corporate Affairs within specified time limit on 29th September, 2010. The due date for the same was 30th September, 2010.

The Central Government has granted its approval for the re-appointment of M/s. P.M. Nanabhoy & Co. Cost Accountants, Mumbai as Cost Auditors of the Company for the year 2011-12.

Cash Flow Analysis

The Cash Flow Statement for the year under reference in terms of Clause 32 of the Listing Agreement with the stock exchanges forms part of the Annual Report.

DirectorsÃ responsibility statement:

As required under Section 217(2AA) of the Companies Act, 1956, with respect to Directors' Responsibility Statement, it is hereby confirmed that:

(i) in the preparation of the annual accounts for the year ended 31st March, 2011, the applicable accounting standards read with requirements set out under Schedule VI to the Companies Act, 1956, have been followed and there are no material departures from the same;

(ii) the Directors have selected such accounting policies, and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31st March, 2011 and of the profits of the Company for the year ended on that date;

(iii) the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding of the assets of the Company and for preventing and detecting fraud and other irregularities; and

(iv) the Directors have prepared the annual accounts of the Company on a 'going concern' basis.

Corporate Governance

The report on Corporate Governance as stipulated under Clause 49 of the Listing Agreement forms part of the annual report. The requisite Certificate from the Statutory Auditors of the Company confirming compliance with the conditions of Corporate Governance as stipulated under the aforesaid Clause 49, is attached to this Report.

Acknowledgement

Your Directors place on record their appreciation for the continued support and co-operation received from customers, suppliers, dealers, banks and government authorities. The Board also, expresses its appreciation for the understanding and support extended by the shareholders and employees of the Company.

By Order of the Board of Directors

M. R. Momaya Managing Director

Surat, 6th July, 2011.

Mar 31, 2010

The Directors have pleasure in presenting the Sixty-fourth Annual Report on the business and operations of the Company together with the audited accounts for the year ended 31st March 2010. Summarised Financial Results

(Rs. in Lacs) 2009-10 2008-09 Gross Sales and 26023.92 17521.73 Job Charges Income Profit before interest, 1448.81 892.83 depreciation and tax Financial Charges 399.72 7.67 Profit before Depreciation and Tax 1049.09 885.16 Depreciation 182.41 182.29 Profit before Tax 866.68 702.87 Provision for Tax 146.00 82.00 Net Profit for the year 720.68 620.87

Dividend

In order to strengthen the reserves of the Company and with a view to ensure sufficient liquidity to take advantage of the growth potential, your directors consider it prudent not to recommend a dividend.

Review of Operations

During the year under review, sales of polyester filament yarn increased to Rs. 6824.81 lacs, compared to Rs. 6556.70 lacs achieved in the previous year; however the sale of polyester chips was lower at Rs. 8130.91 lacs as compared to Rs. 9604.39 lacs for the previous year. The gross turnover was higher during the year also on account of trading activities by leveraging on the Companys in-house expertise in the import and procurement of raw materials for the polyester industry.

Despite increase in business volume, the overall contribution and margins remained under pressure due to fluctuation in raw material prices coupled with competitive pressures on the business activity.

Increase in the cost of major inputs, consequent to the rise in international crude oil prices, affected the performance of the Company, as the increase could not be entirely passed on to the customers.

During the year under review, your Company discharged its obligation towards payment of interest on soft loan availed from the promoter.

Successful implementation of Sanctioned Scheme

With the successful implementation of the sanctioned scheme, the net worth being positive and the accumulated losses of the Company completely wiped out as on 31st March, 2009, your Company ceased to be "Sick Industrial Company" under Section 3(1 )(o) of Sick Industrial Companies (Special Provisions) Act, 1985 and was discharged from the purview

of SICA by BIFR vide its Order dated 18th December, 2009. As on 31st March, 2010 the net worth of the Company further increased to Rs. 3169.63 lacs.

Overview of Economy

The countrys economy grew by 7.4% in 2009-10, compared to 6.7% expansion in the previous fiscal, when it came under the ripple effect of the global financial melt down. Growth is projected to recover to 8-9% in the next two years. The recovery of Indian GDP could be even faster than what is projected. But the rising interest rates, rupee appreciation and continued low growth in high-income nations could cause hurdles to the recovery. Indias recovery could also be impacted by volatility in capital inflows and high inflation.

Industry Scenario

In polyester chips, the domestic supply has increased and outstrips demand largely. This has put considerable pressure on sale and margins. The raw material prices are expected to go up and likely to put further pressure on margins. The Company hopes to counter this effect by improved product mix. In respect of spun yarn activity, the operating margins are likely to remain under pressure due to lower sales realisation.

Opportunities, Threats and Challenges

Low per capita consumption of polyester in India is still way behind the world average. This provides an opportunity for future growth in the Indian Polyester Industry. The Company perceives threat from imports and consequent pressure on domestic prices, apart from the increase in prices of raw materials and other inputs due to any spurt in crude oil prices.

Your Company is gearing up to meet the challenges through continuous improvement in quality, reduction in costs, better marketing arrangements for higher value added products.

Business Outlook

The recent budget proposals have withdrawn the stimulus package by roll back of excise duty earlier reduced for the overall growth of the manufacturing sector, putting further pressure on the Company.

Your Company is pursuing cost cutting measures and focusing on increased productivity, better product mix, introduction of new products and a thrust in sales and better price realisation. However, the performance of the Company in the coming months, would be largely dependent on the overall industry scenario.

Your Company continues to leverage its in-house expertise in the area of procurement and import of raw materials for polyester industry and expand that line of business activities as well.

Internal Control

Your Company has an adequate and effective internal control system to ensure that assets and interests of the Company are safeguarded and reliability of accounting data and accuracy are ensured with proper checks and balances.

The internal control system is improved and modified continuously to meet the changes in business conditions, statutory and accounting requirements. The Audit Committee of the Board of Directors, Statutory Auditors and the business heads are periodically appraised of the internal audit findings and the corrective actions taken. The Audit Committee of the Board of Directors actively reviews the adequacy and effectiveness of internal controls systems and suggests improvements for strengthening them.

Risk Management

The Company is exposed to the risk of price fluctuation on raw materials as well as finished goods in all its products. The Company proactively manages these risks in inputs through better inventory management, vendor development and relationship. The Company mitigates the impact of price risk on finished goods with Companys strong reputation for quality, products differentiation and service to the customers with better marketing network.

Environment and safety

The Company is conscious of the importance of environmentally clean and safe operations. The Companys policy requires the conduct of all operations in such manner so as to ensure safety of all concerned, compliance of statutory and industrial requirements for environment protection and conservation of natural resources to the extent possible.

Cautionary Statement

Statements in this report on Managements Discussion and Analysis describing the Companys objectives, projections, estimates, expectations or predictions may be forward looking within the meaning of applicable securities, laws and regulations. These statements are based on certain assumptions and expectation of future events. Actual results may differ materially from those expressed in the statement. important factors that could influence the Companys operations include overall global economic conditions, domestic manufacturing sector growth, foreign exchange stability and stable credit environment.

The Company assumes no responsibility in respect of forward looking statements herein which may undergo changes in future on the basis of subsequent developments, information or events.

Directors

In accordance with the Articles of Association of the Company Mr. S. M. Vig retire by rotation at the 64th Annual General Meeting and, being eligible, offers himself for re-appointment.

Mrs. Shilpa P. Shah was appointed as an additional director by the Board at its meeting held on 28th April, 2010. Mrs. Shah holds office until the conclusion of the ensuing annual general meeting and is eligible for re-appointment. The Company has received notice from a member under Section 257 of the Companies Act, 1956, proposing her candidature for the office of Director, liable to retire by rotation. The Directors recommend her appointment.

Mr. C. K. Koshy, appointed as special director by the BIFR on the Companys Board of Directors, stands discharged w.e.f. BIFR order dated 18th December, 2009. While taking note of the withdrawal of nomination of Mr. Koshy, the directors place on record their sincere appreciation of the valuable services rendered by him during his tenure as a special Director on the Board of the Company.

Pursuant to clause 49 of the Listing Agreement, the particulars of Directors seeking appointment/ re-appointment at the forthcoming annual general meeting are provided in the notes forming part of the Notice of Annual General Meeting.

Fixed Deposits

The Company has not accepted any public deposits within the meaning of Section 58A of the Companies Act, 1956 and, as such, no amount on account of principal or interest on public deposits was outstanding as on the date of the Balance Sheet.

Energy Conversion, Technology Absorption and Foreign Exchange Earnings and Outgo

Your Company makes every effort to conserve energy required for all its operations. The information required under Section 217(1)(e) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of the Directors) Rules, 1988 with respect to conversation of energy, technology absorption and foreign exchange earnings / outgo is annexed hereto as annexure A and forms part of this Report.

Employee relations

Relations between the employees and the management of the Company across all the locations continued to be cordial during the year.

None of the employees of the Company is in receipt of remuneration prescribed under Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975. Auditors

Messrs Natvarlal Vepari & Co., the Statutory Auditors retire at the forthcoming Annual General Meeting and are eligible for re-appointment. The Company has received the certificate from the retiring auditors to the effect that the appointment, if made, will be in accordance with the limits specified in Section 224(1 B) of the Companies Act, 1956.

The Notes on Accounts referred to in the Auditors Report are self-explanatory and therefore do not call for any further comments.

Cost Auditors

As per the requirement of Central Government and pursuant to Section 233B of the Companies Act, 1956 your Company carries out an audit of cost records relating to textiles every year. Subject to the approval of the Central Government, the Company has appointed Messrs P. M. Nanabhoy & Co., cost accountants, as auditors to audit the cost accounts of the Company for the financial year 2010-11.

Cash Flow Analysis

The Cash Flow Statement for the year under reference in terms of Clause 32 of the Listing Agreement with the stock exchanges forms part of the Annual Report.

Directors responsibility statement:

Pursuant to sub-section (2AA) of Section 217 of the Companies Act, 1956, in relation to financial statement for the year 2009-10, the Board of Directors of the Company hereby state and confirm that:

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

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

iii) the Directors 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; and

iv) the Directors have prepared the annual accounts on a going-concern basis.

Corporate Governance

As required by Clause 49 of the Listing Agreement, a separate report on Corporate Governance along with a certificate from the Statutory Auditors regarding compliance of the conditions of Corporate Governance is annexed and forms part of this report.

Acknowledgement

Your Directors place on record their appreciation for the continued support and co-operation received from customers, suppliers, dealers, banks, Board for Industrial & Financial Reconstruction, and government authorities. The Board also, expresses its appreciation for the understanding and support extended by the shareholders and employees of the Company.

By Order of the Board of Directors M. R. Momaya Surat, 29th May, 2010. Whole-time Director

Disclaimer: This is 3rd Party content/feed, viewers are requested to use their discretion and conduct proper diligence before investing, GoodReturns does not take any liability on the genuineness and correctness of the information in this article