Kallam Textiles Ltd Directors Report.

TO THE MEMBERS OF THE KALLAM TEXTILES LTD,

(Formerly known as Kallam Spinning Mills Ltd.,)

Your directors are pleased to present the 28th Annual Report of the Company together with the Audited Financial Statements for the financial year ended 31st March 2020.

1. FINANCIAL RESULTS :

The standalone financial results for the year ended 31st March 2020 are summarized below :

Particulars 2018-19 2019-20
(Rsin Lakhs) (Rsin Lakhs)
Net Sale / Revenue from operation 29,161.07 31,073.59
Other income 172.40 140.73
Total 29,333.48 31,214.32
Operating Expenditure 29480.46 28,450.48
Profit before Depreciation and amortization expense -146.98 2,763.84
Depreciation and amortization expense 1564.66 1,568.36
Profit before Exceptional Items and tax -1711.64 1,195.48
Exceptional items - -
Profit before tax -1,711.64 1,195.48
Provision for income tax
i) Current year Tax 32.08 261.20
ii) Deferred Tax -5,34.85 268.85
Profit after tax -1,208.87 665.42
Earnings per share ( 2/-) -2.82 1.55

Transfers & appropriations from the profit are as detailed below

Net Profit after tax -1208.87 665.42
Balance brought forward from previous year - -
Profit for appropriations - 665.42
Transfer to General Reserve - -
Proposed Equity Dividend - 85.63
Tax on Proposed Equity Dividend - 17.60
Balance carried forward - -

2. FINANCIAL PERFORMANCE, STATE OF COMPANYS AFFAIRS AND FUTURE OUTLOOK

For the period under review (FY 2019-20), the turnover of the company was Rs 293.33 Crores as against Rs 312.14 Crores in the previous Financial Year .The profit after tax was -12.08 Crore as against 6.65 Crores in the previous financial year

The demand for cotton yam remain sluggish throughout the year due to trade war between US & China on the other hand the International market price of yarn product reduced by 10 to 20 rupees per KG while the input cost remain the same as against FY 2018-19, which impacted our margin and sales

More details are available in Management Discussion & analysis report placed at Annexure -I to this report

MANAGEMENT DISCUSSION AND ANALYSIS:

Management Discussion & Analysis Report in line with Regulation 34(3) read with Schedule-V of the SEB! (LODR) Regulations, 2015 is placed at Annexure-I to this report

3. AMOUNTS TRANSFERRED TO RESERVES

There is no transfer of amount to the reserves for the period under review

4. EXTRACT OF THE ANNUAL RETURN:

Extract of Annual Return of the Company pursuant to Section 92(3) of the Companies Act, 2013 read with Companies (Management and Administration) Rules, 2014, in the prescribed Form MGT-9 is annexed as Annexure II to this Report.

5. NUMBER OF MEETINGS HELD OF THE BOARD:

The Board of Directors met 4 (Four) times during the year 2019-20. The gap between two consecutive meetings was not exceeded the period of 120 days as prescribed under the Act.

The details of the Board and Committee Meetings and the attendance of the Directors are provided in the Report on Corporate Governance

6. DIRECTORS AND KEY MANAGERIAL PERSONNEL

(i) Directors seeking re-appointment under Retirement by rotation:

Mr. P Venkateswara Reddy (DIN- 00018677), Managing Director who is liable to retire by rotation at the ensuing AGM pursuant to the provisions of Section 152 of the Companies Act, 2013 read with the Companies (Appointment and Qualification of Directors) Rules, 2014 and the Articles of Association of your Company and being eligible has offered himself for reappointment. Appropriate resolution for his re-appointment is being placed for your approval at the ensuing AGM.

(ii) Appointment of Directors/ KMP

Mr Suryanarayan Murty was appointed as independent director w.e.f 21-09-2019

(iii) Resignation of Directors/KMP

Mr1 Ajeya Kallam, the Independent Director of the Company has resigned from the Board w.e.f 28-08- 2019

Mr S Pulla Rao.the Independent Director of the Company has Retired from the Board w.e.f 26-09- 2019

(vi) Statement on Declaration by the Independent Directors of the Company.

All the Independent Directors of the Company have given declarations under Section 149(7) of the Companies Act, 2013 that they meet the criteria of ndependence as laid down under Section 149(6) of the Companies Act, 2013 and Regulation 25 of SEBI(Listing Obligations and Disclosure Requirements) Regulations, 2015. The terms and conditions of appointment of the Independent Directors are posted on the website of the Company www.ksml.in.

(vii) Key Managerial Personnel (KMP):

The following managerial personnel are Key Managerial Personnel (KMP)

I Mr P Venkateswara Reddy as Managing Director

> Mr. GV Krishna Reddy,(Joint Managing Director ) as Chief Executive Officer (CEO)

I Mr. MV Subba Reddy (Whole Time Director) as as Chief Financial Officer (CFO); and

> Mr. Nandan Bisoi, as Company Secretary w.e.f 29.09.2018

(viii) Performance Evaluation of the Board, its Committees and Separate meeting of Independent Directors:

In compliance with the provisions of the Companies Act, 2013 and Regulation 17(10) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the performance evaluation of the Board was carried out during the year under review. More details are available in the Corporate Governance Report which forms part of this report

(ix) Companys policy on directors appointment and remuneration including criteria for determining qualifications, positive attributes, independence of a director and other matters provided under sub-section (3) of section 178;

Your Company has formulated the Nomination and Remuneration Committee in accordance with Section 178 of the Companies Act, 2013 and Regulation 19 of the LODR Regulations, 2015. The salient aspects covered in the Nomination and Remuneration Policy has been outlined in the Corporate Governance Report

(x) Managerial Remuneration

The information required under Section 197 of the Companies Act, 2013 read with Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of Directors/ employees of your Company is set out in Annexure -III to this report.

7. TRANSFER TO INVESTOR EDUCATION AND PROTECTION FUND :

Pursuant to the provisions of section 124 of the companies Act, 2013, the declared dividends which remained un paid or unclaimed for a period of seven years, have been transferred by the Company to the Investor Education and Protection Fund (IEPF) established by the Central Government.

The details of dividends paid by the Company and respective due dates for transfer of unclaimed dividend to lEPF.is available in Corporate Governance report which forms part of this report.

Disclosure with respect to Demat Suspense Account / unclaimed suspense account:

Your Company does not have any Unclaimed Shares

8. COMMITTEES OF THE BOARD:

The Board of Directors has the following Committees:

A. Audit Committee

The Company has an Audit Committee in accordance with the provisions of section 177 of the Companies Act, 2013 and in accordance with Regulation 18 of SEBI (LODR) Regulations, 2015 and as per other applicable laws. All members of the Committee are financially literate.

B. Nomination and Remuneration Committee

C. Stakeholders Relationship Committee

D. Corporate Social Responsibility Committee.

E. Share Transfer 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.

9. RISK MANAGEMENT :

The Company has implemented an integrated risk management framework, through which the Board and Audit Committee periodically reviews and assesses significant risks on a regular basis to ensure that there is a robust system of internal controls in place. Your Company believes that managing risks helps in maximizing returns. The Companys approach to addressing business risks is comprehensive and includes periodic review of such risks and a framework for mitigating controls and reporting mechanism of such risks. More details on the same are given in the Report on Corporate Governance.

10. DETAILS OF ADEQUACY INTERNAL FINANCIAL CONTROLS RELATED TO FINANCIAL STATEMENTS

Your Company has put in place adequate internal financial controls with reference to the financial statements and the Company has effective risk- mitigation system keeping in view the size and nature of the business. Your company has adopted accounting policies which are in line with the Accounting Standards prescribed in the Companies (Accounting Standards) Rules, 2006 and other applicable provisions, if any, of the Companies Act, 2013 read with Rule 7 of the Companies (Accounts) Rules, 2014. These are in accordance with generally accepted accounting principles in India. Changes in policies, if any, are timely approved by the Audit Committee in consultation with the Statutory Auditors

The main objective of internal control system and process is to test and review controls, appraisal of risks in business processes, and benchmarking controls with best practices in the industry. The Internal Audit function is entrusted to M/s Mastanaiah & Co., Chartered Accountants, Guntur, who submit their reports to the Joint Managing Director & CEO and has direct access to the Audit Committee and they participated in the meetings of the Audit Committee of the Board of Directors of your Company.

The Audit Committee of the Board of Directors actively reviews the adequacy and effectiveness of the internal control systems and suggests improvements to strengthen the same. The Audit Committee of the Board of Directors and Statutory Auditors are periodically apprised of the internal audit findings and corrective actions taken. The Internal Audit plays a key role in providing assurance to the Board of Directors. Significant audit observations and corrective actions taken by the management are presented to the Audit Committee of the Board. To maintain its objectivity and independence of the Internal Audit functions.

11. VIGIL MECHANISM/WHISTLE BLOWER POLICY:

In accordance with the provisions of Section 177(9) of the Companies Act, 2013 and the Rules made there under and also SEBI (LODR) Regulations, 2015, your Company has in place a vigil mechanism termed as Whistle Blower Policy, for directors and employees to report concerns about unethical behavior, actual or suspected fraud or violation of the Companys Code of Conduct or Ethics Policy, which also provides for adequate safeguards against victimization of director(s)/employee(s) who avail the mechanism and also provide for direct access to the Corporate Governance Officer/Chairman of the Audit Committee.

The Whistle Blower Policy is also available on your Companys weblink (http://ksml.in/wp-content/ uploads/2016/10/ksml-whistle-blower-policy.pdf)

12. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS BY THE COMPANY

The Company has duly complied with the provision of Section 186 of the Companies Act, 2013 and Rules made there under. Details on loans or investment are provided in financial statements section of this Annual Report. The Company has not given any guarantees to any body corporate on behalf of a third party.

13. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES

During the year under review, no transaction of material nature has been entered into by the Company with its Promoters, the Directors or or relatives, etc., that may have a potential conflict of interests with the Company. All related party transactions are placed before the Audit Committee and also for approval of Board on quarterly basis. Prior omnibus approval of the Audit Committee is obtained on a yearly basis for the transactions which are of repetitive nature and entered in the ordinary course of business and are on arms length basis.

A Statement giving details of the transactions entered into with the related parties, pursuant to the omnibus approval so granted, is placed before the Audit Committee and the Board of Directors for their approval/ratification on a quarterly basis.

The Register of Contracts containing transactions, in which directors are interested, if any, is placed before the Audit Committee/Board regularly. The Board of Directors of the Company, on the recommendation of the Audit Committee, adopted a policy on Related Party Transactions, to regulate the transactions between the Company and its Related Parties, in compliance with the applicable provisions of the Companies Act, 2013 and the SEBI (LODR) Regulations, 2015.

The Policy as approved by the Board is uploaded on the Companys weblink at http://ksml.in/wp-content/ uploads/2016/10/ksml-related-party-transaction- policy.pdf

The details of the related party transactions as per Accounting Standard- 18 are set out in Notes to Accounts (Note No: - 35) of the Financial Statements, forming part of this report

The details of the Related Party Transactions in prescribed Form AOC-2 pursuant to Section 134(3)(h) of the Companies Act, 2013 read with Rule 8(2) of the Companies (Accounts) Rules, 2014 are annexed as Annexure -IV to this Report.

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

The information on conservation of energy, technology absorption and foreign exchange earnings and outgo as stipulated under Section 134 of the Companies Act, 2013 read with Rule 8 (3) of the Companies (Accounts) Rules, 2014, is set out herewith as Annexure -V to this report.

15. CORPORATE SOCIAL RESPONSIBILITY (CSR)

As per the provisions of Section 135 of the Companies Act, 2013 and the Rules made there under, your Company has put in place a Corporate Social Responsibility Committee which comprises of Mr. G.V.Krishna Reddy as Chairman and Mr. Varanasi Ramagopal, Mr M.V.Subba Reddy as members. The Corporate Social Responsibility (CSR) Policy enumerating the CSR activities to be undertaken by the Company, in accordance with Schedule VII to the Companies Act, 2013 as adopted by the Board is available on the website of the Company weblink:http:// ksml.in/wp-content/uploads/2016/10/ksml-csr-policy.pdf

The Annual Report under CSR Activities is annexed to this report as Annexure -VI to this Report.

The details relating to the meetings convened, etc. are furnished in the Report on Corporate Governance.

16. AUDITORS

(i) Statutory Auditors And Their Report:

M/s. Chevuturi Associates, Chartered Accountants (Firm Reg No : 000632S), were appointed as the statutory auditors at the Annual General Meeting held on September 29, 2017 for a term of five (5) years from the conclusion of the 25th annual general meeting til the conclusion of 30th annual general meeting

(ii) Cost Auditor:

As per the requirement of Central Government and pursuant to Section 148 of the Companies Act, 2013 read with the Companies (Cost Records and Audit) Rules, 2014 as amended from time to time, your Company has been carrying out audit of cost records relating to Textile and Power Divisions every year.

The Board of Directors of your Company, on the recommendations made by the Audit Committee at its meeting held on 14th August, 2019 had appointed M/s Sairam & Associates, Cost Accountant, (Membership No. 41948) as the Cost Auditor of your Company to carry out audit of cost records relating to Textile and Power Divisions as required under the Companies Act, 2013 for the financial year 2019-20.

For the financial Year 2020-21, on the recommendation

of the Audit Committee, The Board has approved the appointment of M/s. SAIRAM & ASSOCIATES, Cost Accountants (Membership No-41948) as Cost Auditor of the Company, to carry out audit of cost records relating to Textile and Power Divisions As required under the Companies Act, 2013, at a remuneration of Rs 20,000/-, plus applicable taxes and out of pocket expenses, if any

Your Company has received consent from M/s. SAIRAM & ASSOCIATES, Cost Accountant, to act as the Cost Auditor to carry out the audit of the cost records for the financial year 2020-21.,a resolution seeking members approval for the remuneration payable to the Cost Auditor forms part of the Notice convening the Annual General Meeting for their ratification.

MAINTENANCE OF COST RECORDS:

Cost Audit is applicable to the Company. The Company is required to maintain cost records as specified by the Central Government under subsection (1) of Section 148 of the Act and the rules framed there under, and accordingly, the Company has made and maintained such cost accounts and records.

EXPLANATIONS OR COMMENTS BY THE BOARD ON EVERY QUALIFICATION, RESERVATION OR ADVERSE REMARK OR DISCLAIMER MADE BY THE COST AUDITOR IN HIS RE-PORT:

The Cost Auditors report for the year ended 31.03.2020 does not contain any qualification, reservation or adverse remark or disclaimer in his report

(iii) Secretarial Auditors:

In terms of Section 204 of the Companies Act, 2013, read with Rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014, the Board of Directors had appointed M/s. K. Srinivasa Rao & Co, practicing company secretaries to carry out secretarial audit for FY 2019-20.

The Board of Directors of your Company at its meeting held on 31.07.2020, has appointed M/s. K. Srinivasa Rao & Co, a firm of Company Secretaries in Practice, Guntur (C.P. No: 5178) as Secretarial Auditors to carry out an audit of the secretarial records, for the financial year 2020-21.Your Company has received consent from M/s.K. Srinivasa Rao & Co, to act as the auditor for conducting audit of the Secretarial records for the financial year ending 31st March, 2021

The Secretarial Audit Report furnished by M/s. K. Srinivasa Rao & Co, for the financial year ended March 31, 2020 is annexed to this report as "Annexure-VN".

BOARDS REPLY ON QUALIFICATIONS OF SECRETARIAL AUDITOR

(iv) Reporting ol Frauds by Auditorsb>

During the year under review, the Statutory Auditors, Cost Auditors and Secretarial Auditors have not reported any instances of frauds committed in the Company by its Officers or Employees, to the Audit Committee under Section 143(12) of the Companies Act, 2013.

17. MATERIAL EVENT RECORDED SUBSEQUENT TO THE DATE OF FINANCIAL STATEMENTS

During the year under review, the Statutory Auditors Cost Auditors and Secretarial Auditors have not reported any instances of frauds committed by the Company or by its Officers or Employees, to the Audit Committee under Section 143(12) of the Companies Act, 2013.

18. CHANGES IN SHARE CAPITAL

During the current year, there has been no change occurred in the capital Structure of the company.

19. DISCLOSURE UNDER SECTION 62 OF THE COMPANIES ACT, 2013 AND RULE 14 OF SECURITIES EXCHANGE BOARD OF INDIA (SHARE BASED EMPLOYEE BENEFITS) REGULATIONS,2014

lin order to create a sense of ownership and participation amongst the employees of spinning weaving & dyeing divisions, to reward long term employee loyalty towards the Company, to motivate the employees with incentives, inspire loyalty and reward opportunities, to provide means to enable the Company to attract and retain appropriate human talent in the employment of the Company and to achieve sustained growth of the Company the Board of Directors in its meeting held on 28th May, 2018 had Approved Kallam Textiles Limited, Employee Stock Option Plan- l and ll 2018. The shareholders of the Company at their Annual General Meeting held on 22nd September 2018, approved the said plan .as per the approved plan an employees, who comply with certain eligibility criteria, would be granted stock options to subscribe a specified number of equity shares of the Company offered to them at a price to be determined. The proposed plan would be subject to and in conformity with the SEBl Guidelines.

During the year under review, there the company has not issued any grants under the scheme and there have been no changes in the scheme as approved by the Shareholders

A description of each ESOP that existed at any time during the year, including the general terms and conditions of each ESOP

Particulars Employee Stock Option Plan -12018 Employee Stock Option Plan - II2018
1. Date of shareholders approval 22-09-2018 22-09-2018
2. Total number of options approved under ESOS (i) The maximum aggregate number of shares that may be granted under the proposed plan is 1 % of the total issued capital i.e 4,28,194 equity shares of the face value of Rs. 2 / -each (i) The maximum aggregate number of shares that may be granted under the proposed plan is 1 % of the total issued capital i.e 4,28,194 equity shares of the face value of Rs. 2 / -each.
. (ii) One option entitles the holder of the options to apply for one equity share of the company subject to corporate action (ii) One option entitles the holder of the options to apply for one equity share of the company subject to corporate action
3. Maximum number of options to be issued per employee and in aggregate (i) The maximum number of options to be granted to each employee will depend upon the rank/designation of the employee as on the date of grant of options. However no employee shall be entitled to more than such number of options exceeding the limit fixed by the SEBI or any other relevant regulation as is applicable to such options. (i) The maximum number of options to be granted to each employee will depend upon the rank/designation of the employee as on the date of grant of options. However no employee shall be entitled to more than such number of options exceeding the limit fixed by the SEBI or any other relevant regulation as is applicable to such options.
(ii) The maximum aggregate number of shares that may be granted under the proposed plan is 1 % of the total issued Share Capital i.e 4,28,194 shares. (ii) The maximum aggregate number of shares that may be granted under the proposed plan is 1 % of the total issued Share Capital i.e 4,28,194 shares.
(iii) The Nomination & Remuneration Committee shall decide upon the number of options to be granted to each employee within this limit (iii) The Nomination & Remuneration Committee shall decide upon the number of options to be granted to each employee within this limit
4. Eligibility criteria for the employees to participate The following are eligible to participate in the proposed plan of the Company : (i) a permanent employee of the company who has been working in India or outside India; or (ii) a director of the company whether a whole time director or not but excluding an independent director; or (iii) an employee as defined in clauses (i) The following are eligible to participate in the proposed plan of the Company : (i) a permanent employee of the company who has been working in India or outside India; or (ii) a director of the company whether a whole time director or not but excluding an independent director; or (iii) an employee as defined in clauses (i) or (ii) of a subsidiary, in India or outside India, or of a holding company of the company but does not include— (a) an employee who is a promoter or a person belonging to tine promoter group; or (b) a director who either himself or through his relative or through any body corporate, directly or indirectly, holds more than ten percent of the outstanding equity shares of the company
or (ii) of a subsidiary, in India or outside India, or of a holding company of the company but does not include— (a) an employee who is a promoter or a person belonging to the promoter group; or (b) a director who either himself or through his relative or through any body corporate, directly or indirectly, holds more than ten percent of the outstanding equity shares of the company
(i) Employees would be granted stock options based on their tenure in the Company or such other parameters as may be decided by the Nomination & Remuneration Committee from time to time. (i) Employees would be granted stock options based on their tenure in the Company or such other parameters as may be decided by the Nomination & Remuneration Committee from time to time.
5. Parameters/Process for deter mining the eligibility of employees to the ESOP Scheme (ii) The Nomination & Remuneration Committee may at its discretion extend the benefits of the proposed plan to a new entrant or any existing employee on such other basis as it may deem fit. (ii) The Nomination & Remuneration Committee may at its discretion extend the benefits of the proposed plan to a new entrant or any existing employee on such other basis as it may deem fit.
6. Vesting Requirements/ Conditions There shall be a minimum period of one year between the grant of options and vesting of options. However, in case where options are granted by a company under the proposed plan in lieu of options held by the employee under an ESOP plan in another company which has merged or amalgamated with that company, the period during which the options granted by the transferor company were held by him shall be adjusted against the minimum vesting period of one year. The vesting shall hap- pen in one or more tranches as may be decided by the Nomination & Remuneration Committee and communicated to the employee at the time of grant. There shall be a minimum period of one year between the grant of options and vesting of options. However, in case where options are granted by a company under the proposed plan in lieu of options held by the employee under an ESOP plan in another company which has merged or amalgamated with that company, the period during which the options granted by the transferor company were held by him shall be adjusted against the minimum vest- ng period of one year. The vesting shall happen in one or more tranches as may be decided by the Nomination & Remuneration Committee and communicated to the employee at the time of grant.
7. Exercise price or pricing formula The exercise price for the conversion of one option into one equity share shall be as decided by the Nomination & Remuneration Committee The exercise price for the conversion of one option into one equity share shall be as decided by the Nomination & Remuneration Committee
8. Exercise Period and the Process of Exercise (i) Exercise period shall be Three years from the date of vesting of the options . (i) Exercise period shall be Three years from the date of vesting of the options.
(ii) If an eligible employees employment with the company terminates otherwise than due to "Cause", the eligible employee shall be eligible to exercise ail the vested options within 30 days of his termination of employment with the company or such extended period as decided by the Nomination & Remuneration Committee. "Cause" for the purpose of the Plan shall mean, as determined by the Nomination & Remuneration Committee and shall include. (ii) If an eligible employees employment with the company terminates otherwise than due to "Cause", the eligible employee shall be eligible to exercise all the vested options within 30 days of his termination of employment with the company or such extended period as decided by the Nomination & Remuneration Committee "Cause" for the purpose of the Plan shall mean, as determined by the Nomination & Remuneration Committee and shall include.
(a) the engaging by the eligible employee in wilful, reckless or grossly negligent conduct which is determined by Nomination and Remuneration Committee to be detrimental to the interest of the Company or any of its affiliates, monetarily or otherwise. (a) the engaging by the eligible employee in wilful, reckless or grossly negligent conduct which is determined by Nomination and Remuneration Committee to be detrimental to the interest of the Company or any of its affiliates, monetarily or otherwise. .
(b) fraud, misfeasance, breach of trust or wrongful disclosure of any secret or confidential information about the Company. (b) fraud, misfeasance, breach of trust or wrongful disclosure of any secret or confidential information about the Company.
(c) the eligible employee pleading guilty to or conviction of a felony. (c) the eligible employee pleading guilty to or conviction of a felony.
(d) violation of any terms of employment contract (d) violation of any terms of employment contract
(iii) If an eligible employees employment with the company terminates due to Death or Permanent disability, the eligible employee / nominee shall be eligible to exercise all the options within 30 days or such period as decided by the Nomination & Remuneration Committee. (in) If an eligible employees employment with the company terminates due to Death or Permanent disability, the eligible employee / nominee shall be eligible to exercise ail the options within 30 days or such period as decided by the Nomination & Remuneration Committee.
(iv) The options will be exercisable by the employees by a written application to the Nomination &Remunera- tion Committee to exercise the options, in such manner and on execution of such documents as may be prescribed by the Nomination &Remuneration Committee under the proposed plan.. (iv) The options will be exercisable by the employees by a written application to the Nomination &Remunera- tion Committee to exercise the options, in such manner and on execution of such documents as may be prescribed by the Nomination &Remuneration Committee under theproposed plan.
(v) The options will lapse if not exercised within the specified exercise period (v) The options will lapse if not exercised within the specified exercise period
9. Mode of Implementation and Administration of Scheme The scheme shall be directly implemented and administrated by the Company through the Nomination & Remuneration Committee. The scheme shall be directly implemented and administrated by the Company through the Nomination & Remuneration Committee.
10. Source of Shares (primary, secondary or combination The company shall issue fresh shares as and when application for exercise of options are received by the Company from the employees. The company shall issue fresh shares as and when application for exercise of options are received by the Company from the employees.
11. Variation in Terms of Options Not Appliacable. Not Appliacable.
12. Method used to account for ESOS The Company shall confirm to the accounting policies specified in the SEBI Guidelines and/ or such other guidelines as may be applicable from time to time. The Company shall confirm to the accounting policies specified in the SEBI Guidelines and/ or such other guidelines as may be applicable from time to time.
13. Method of Valuation of the Options The Company shall use the prescribed method for valuation of the options. The Company shall use the prescribed method for valuation of the options.
14. Options Movement During the Year (For each ESOS) Not Applicable Not Applicable

20. CORPORATE GOVERNANCE:

A report on Corporate Governance in line with Regulation 34 read with Schedule-V of SEBI (LODR) Regulations, 2015 is appended and annexed as a separate section to this report.

The Statutory Auditors of the Company have issued a certificate on Corporate Governance which is appended to the Corporate Governance Report.

The company has complied with all applicable secretarial standard applicable to the company for the period under review.

21. DETAILS OF SUBSIDIARY, JOINT VENTURE OR ASSOCIATES

Our Company does not have any material Subsidiary Company in terms of Regulation 16(1 )(c) of SEBI (LODR) Regulations, 2015. Accordingly, the financial statements of our Company are not required to be consolidated in accordance with the applicable Indian Accounting Standards

Company has neither any Associates nor any Joint Ventures as on March 31,2020

22. PUBLIC DEPOSITS:

During the year under review, your Company has not accepted any deposit within the meaning of Sections 73 and 74 of the Companies Act, 2013 read with the Companies (Acceptance of Deposits) Rules, 2014 (including any statutory modification(s) or re-enactment(s) for the time being in force).

During the year 2019-20 there is no change in outstanding balances of unsecured loans from Directors, as compared to previous financial year 2018-19. All the Directors were, at the time of giving the money, furnished their declaration in writing to the effect that the amount in not being given out of finds acquired by them by borrowing or accepting loans or deposits from others.

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

There is no material order passed by the regulators or courts or tribunals impacting the going concern status and Companys operations in future.

24. ENVIRONMENT AND SAFETY:

The Company is conscious of the importance of environmentally clean and safe operations. The Companys policy requires conduct of operations in such a manner, so as to ensure the compliances of environmental regulations and preservation of natural resources for future Generations.

25. OBLIGATION OF YOUR COMPANY UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013:

To prevent sexual harassment of women at work place, The central government notified "The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal ) Act, 2013". Under the said Act every Company is required to set up an Internal Complaints Committee to look into complaints relating to sexual harassment at work place of any women employee

Your Directors hereby confirm that they have adopted a policy for prevention of Sexual Harassment of Women at Workplace and have constituted Internal Complaints Committees (ICC), during the year 2019-20, there were no com plaints, received in this regards

26. DIRECTORS RESPONSIBILITY STATEMENT:

Pursuant to Section 134(3)(c) of the Companies Act, 2013 (including any statutory modification(s) or reenactments) for the time being in force), your Directors hereby confirm that:

(a) in the preparation of the annual accounts for the financial year ended 31st March, 2020, the applicable Accounting Standards and Schedule III of the Companies Act, 2013 (including any statutory modification(s) or re-enactment(s) for the time being in force), have been followed and there are no material departures from the same;

(b) for the financial year ended 31st March, 2020, 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 your Company as at 31st March, 2020 and of the profit and loss of the Company for the financial year ended 31st March, 2020;

(c) proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 (including any statutory modification(s) or re-enactment(s) for the time being in force) for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

(d) Financial statements have been prepared on a "going concern" basis;

(e) proper internal financial controls laid down by the Directors were followed by your Company and that such internal financial controls are adequate and operating effectively; and

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

27. APPRECIATIONS AND ACKNOWLEDGEMENTS:

Your Directors sincerely convey their appreciation for the unbelievable commitment, support, dedication, hard work, enthusiasm and significant contribution made by employees in ensuring sustained growth of the Company,

Date : 31-07-2020 For and on behalf of Board of Directors
Place : Chowdavaram, Guntur Sd /- Sd /-
G.V. Krishna Reddy P. Venkateswara Reddy
Joint Managing Director Managing Director
DIN: 00018713 DIN : 00018677