Rajapalayam Mills Ltd Directors Report.

TO THE MEMBERS

Your Directors have pleasure in presenting their 86th Annual Report and the Audited Accounts of the Company for the year ended 31st March, 2022.

1. FINANCIAL RESULTS

The financial results for the year ended 31st March, 2022 after charging all expenses but before deducting finance cost and depreciation have resulted in operating profit (EBITDA) of $ 14,423.04 Lakhs against $ 5,652.54 Lakhs for the previous financial year 2020-21. Summary of Separate Financial Results of the Company is furnished below:

($ in Lakhs)
Financial Results Separate Year ended 31-03-2022 Financials Year ended 31-03-2021
Revenue 70,525.97 42,912.19
Operating Profit : Profit before Interest, Depreciation and Tax (EBIDTA) 14,423.04 5,652.54
Less: Interest 4,295.82 4,448.33
Profit before Depreciation and Tax (PBDT) 10,127.22 1,204.21
Less: Depreciation 5,048.43 4,759.90
Profit before Exceptional Items 5,078.79 (3,555.69)
Exceptional Items 2,586.77 (276.15)
Profit Before Tax 7,665.56 (3,831.84)
Less: Tax Expenses
Current Tax 15.20
Withdrawal of MAT Credit relating to earlier years 3,273.11
Deferred Tax Expenses / (Savings) 549.33 (1,168.48)
Profit after Tax 3,827.92 (2,663.36)
Other Comprehensive Income for the Year (Net of Tax) 16.36 72.69
Total Comprehensive Income for the Year (TCI) 3,844.28 (2,590.67)

2. SHARE CAPITAL

The Paid-up Capital of the Company is $ 860.55 Lakhs (PY: $ 737.62 Lakhs) consisting of 86,05,520 Shares of $ 10/- each.

3. RIGHTS ISSUE

The Company, in order to fund various capex proposals, had raised Equity Shares for an amount of $ 69.95 Crores by way of Rights Issue in the ratio of 1:6 (1 Rights Share for every 6 Equity Shares held by Shareholders). The issue was opened on 15-03-2021 and closed on 30-03-2021 with 115% subscription. The Company had made allotment of Equity Shares raised through Rights Issue on 9th April, 2021 and the Shares have been approved for trading by BSE Limited with effect from 15-04-2021. There is no deviation or variation in the use of proceeds of the Rights Issue from the objects stated in the Letter of Offer dated 27-02-2021 and the proceeds have been fully utilized for the objects as stated in the Offer Document.

4. DIVIDEND

Your Directors have pleasure in recommending a Dividend of $ 1 per share (PY: $ 0.50 per share). The total amount of Dividend outgo for the year will be $ 86.06 Lakhs. As per Income Tax, 1961, the dividend will be taxable in the hands of the Shareholders and the Company will make the payment of dividend after deducting applicable TDS. The distribution of dividend works out to 2% of Net Profit after tax for the financial year 2021-22.

As per the "Dividend Distribution Policy" of the Company, it shall strive to distribute atleast 5% of the post-tax profit as Dividend in each financial year. The Company proposes a Dividend payout at 2% of the Net Profit after tax in order to conserve cash for meeting margin money for its ongoing projects and to fund the incremental working capital requirements caused by wide fluctuation in the cotton and yarn prices. The Dividend Distribution Policy is available on the website of the Company under web link http://www.rajapalayammills.co.in/wp-content/themes/ramco/pdf/dividend-distribution-policy.pdf

5. TRANSFER TO GENERAL RESERVE

After appropriations, a sum of $ 631.79 Lakhs (PY: NIL) has been transferred to General Reserve for the financial year 2021-22. As on 31-03-2022, the General Reserve stands at $ 25,000.00 Lakhs.

6. TAXATION

The Company has opted to pay tax under Section 115BAA of the Income Tax Act (New Tax Regime) with effect from the Assessment Year 2021-22 (effective last FY 2020-21). The Company has provided an amount of $ 15.20 Lakhs (PY: NIL) towards Current Tax under Section 115BAA and Deferred Tax of $ 549.33 Lakhs (PY: withdrawal of $ 1,168.48 Lakhs) has been provided for the financial year 2021-22.

The Company is having an amount of $ 3,273.11 Lakhs as MAT credit entitlement in its books as on 31-03-2021. Since the Company has opted to pay tax under the New Tax Regime, the Company is not eligible to carry forward the MAT credit available as per Section 115JAA of the Income Tax Act. Hence the MAT credit of $ 3,273.11 Lakhs has been written off and debited to Statement of Profit and Loss during the financial year 2021-22.

7. MANAGEMENT DISCUSSION AND ANALYSIS

TRADE CONDITIONS

COTTON

In India, the opening stock of cotton for the current cotton season 2021-22 (October to September) was at 75 Lakhs Bales, which is lower by 37% as compared to last year opening stock of 120 Lakhs Bales. The Cotton Association of India has estimated the Indian Cotton Crop for the cotton season 2021-22 at 335 Lakhs Bales as compared to 360 Lakhs Bales of last cotton season, which is lower by 7%. The lower opening stock, coupled with lower production estimate of cotton during the current cotton crop season has pushed-up the cotton prices in upward trend. The cotton price has increased from $ 60,000/- to more than $ 1,00,000/- per candy within a period of 6 months from the beginning of the cotton season. The Government of India has imposed duty on all varieties of imported cotton during February, 2021 and this made imported cotton dearer by 11% for Indian Spinning Mills; however, the Government of India has withdrawn the import duty effective 14th April, 2022 till 30th September, 2022.

Due to lower production of long stable imported cotton, the prices of some of the imported cotton varieties had also increased very steeply. The price of medium stable fibres has increased by more than 40% and in case of long stable fibre, it has increased by more than 70%.

Since the Company is focusing to produce more value added counts and in order to meet the quality requirement of value added counts, more volume high quality imported cotton has been procured when the prices were at reasonable level. The imported cotton consumption for the financial year 2021-22 has been increased by 56% as compared to last financial year. This strategy has helped the Company to procure diversified varieties of cotton across the globe and to quote competitive prices for our yarn, which helped to improve the operating margin in the financial year 2021-22.

YARN PRODUCTION

The production volume of yarn has increased to 136.36 Lakhs Kgs during the financial year 2021-22 as against 110.52 Lakhs Kgs of last year, registering a growth of 23%. The increase in production was due to full utilization of machineries made during the financial year 2021-22.

SALE OF YARN

The Companys focus on new product development, innovation and cost-effective production has started yielding results. The sale volume for the FY 2021-22 stood at 133.75 Lakh Kgs as compared to 121.99 Lakh Kgs of last year, registering a growth of 10%. The Company was able to achieve growth in sale volume mainly due to full utilization of machineries and good demand for yarn both in domestic and export markets. The sale value of yarn has increased to $ 550.09 Crores during the FY 2021-22 as compared to $ 362.95 Crores of last year, registering a growth of 52%. The yarn market in India has bounced back after witnessing a slowdown in the last 2 years. Due to geopolitical factors like banning of imports from China by United States and disruption in supply of textiles and apparel products to countries across the world by China due to shortage of electricity in their country, boosted the demand for textile products including yarn manufactured in India.

The Companys quality of yarn in value added segment has been well appreciated by the customers and the Company is receiving good volume of orders for value added counts. The sale volume of value added yarn viz., Elitwist, Gassing, High twist, Melange, Core yarn and Mercerized yarn has increased to 2,217 Tonnes during the FY 2021-22 (PY: 1,159 Tonnes), registering a growth of 91%. The Company is taking various steps to expand its market presence both in domestic and international markets and hope to achieve higher volume of sales in value added yarns in the forthcoming years.

EXPORTS

The Company has made export of Cotton Yarn (including merchant exports) for a value of

$ 187.04 Crores as against $ 106.75 Crores of the previous year, registering a growth of 61%.

In addition to growth of export in our regular International Markets, the sales volume has grown considerably in new markets viz. Turkey, Portugal etc.

Your Directors are thankful to M/s. Asahi Kasei Advance Corporation, M/s. Doko Spinning Co. Ltd., and M/s. Unitika Ltd., Japan for their continued support and efforts for promotion of exports to Japan.

FABRIC DIVISION

Fabric Unit commissioned during FY 2020-21 is successfully running with the capacity of 146 Looms. The division was able to maintain optimum utilization level throughout the Financial Year 2021-22.

The Fabric Unit is producing special value added fabric especially from its Jacquard Looms and the quality is well appreciated by the customers in Export Market. The Fabric unit has produced

79 Lakhs Meters of Fabric (PY: 39 Lakhs Meters) and sold 91 Lakhs Meters of Fabrics (PY: 41 Lakhs Meters), registering a growth of 122%. Total Revenue generated by Fabric unit for the financial year 2021-22 was $ 121.95 Crores (PY: $ 38.67 Crores), registering a growth of 215%. Export Turnover of Fabric for the financial year 2021-22 was $ 30.72 Crores (PY: $ 11.47 Crores), registering a growth of 168%.

POWER COST

During the financial year 2021-22, the Company was able to consume power from its own wind farms to the extent of 58% (PY: 65%) of total power requirement. The power cost has increased during the financial year 2021-22 to $ 39.79 Crores as compared to $ 26.91 Crores incurred during previous year, due to increased level of utilization of machineries.

FINANCE COST

The Finance cost has decreased to $ 42.96 Crores during the financial year 2021-22 from

$ 44.48 Crores of previous financial year, inspite of additional borrowings for our modernization and expansion projects. Various measures announced by RBI to reduce the interest cost in order to support the economic growth of the Country has helped the Company to minimize the cost of borrowing.

DIVIDEND INCOME

During the financial year 2021-22, the Company has received dividend income of

$ 2.25 Crores (PY: $ 13.01 Crores) and the particulars of dividend received are provided under Note No.51 (a) (viii).

KEY FINANCIAL RATIOS

Pursuant to Schedule V(B) of SEBI (LODR) Regulations, 2015, the Key Financial Ratios for the Financial Year 2021-22 are given below:

S.No. Particulars 31-03-2022 31-03-2021 Formula adopted
1 Debtors Turnover Ratio (Days) 48 56 365 Days / (Net Revenue / Average Trade Receivables)
2 Inventory Turnover Ratio (Days) 100 123 365 Days / (Net Revenue / Average Inventories)
3 Interest Coverage Ratio 2.66 0.14 (Profit Before Tax + Interest)/ (Interest + Interest Capitalised)
4 Current Ratio 1.08 0.94 Current Assets / (Total Current Liabilities - Other Financial Liabilities
- Current maturities of Long Term Debt)
5 Debt - Equity Ratio 1.96 2.28 Total Debt / Total Equity
6 Operating Profit Margin 20% 13% EBITDA / Net Revenue
7 Net Profit Margin 5% (-) 6% Net Profit / Net Revenue
8 Return on Net worth 12% (-) 9% Total Comprehensive Income /
Average Net worth
9 Total Debt / EBITDA 4.86 11.50 Total Debt / EBITDA
10 Return on Capital Employed 8% 2% (TCI + Interest)/ (Average of Equity plus Total Debt)
11 Price Earnings Ratio 21 (-) 23 Market Price per share as at 31st March / Earning per share

Notes: a) For serial no. 3,6,7,8,9,10 and 11, there have been significant change (ie., 25% or more) in the ratios as compared to the previous financial year. The favourable change in the ratio during the current year is due to increase in Profit on account of good demand for yarn and increased production of value added counts.

b) EBITDA denotes Profit Before Tax + Interest + Depreciation

8. MODERNISATION / EXPANSION

As a part of continuous thrust on modernization programme, the Company has replaced all the old Open End Spinning Machines with most modern fully automatic OE Machines at a cost of $ 45 Crores. The installation of all machines has been completed on 30-04-2021 and full benefit of this modernization has helped the Company to achieve better results in FY 2021-22. In addition to this, the Company has also invested an amount of $ 20.69 Crores (PY: $ 13 Crores) in modernizing other textile machinery & equipment.

The Company has also installed second line of yarn mercerizing machineries and the same was commissioned during September, 2021.

In order to take advantage of the current higher demand for yarn, the Company has implemented the expansion of spinning capacity by adding 18,144 spindles in Rajapalayam by utilizing the existing building space and this project was commissioned during March, 2022.

The Company has also added 24 Airjet Jacquard Looms, which increased the existing looms capacity from 122 Looms to 146 Looms in the existing loom-shed without incurring any additional construction cost. All the new 24 Jacquard Looms were commissioned during March, 2022. Another

8 Nos. of Jacquard looms will be received and installed during June, 2022.

Total capital expenditure spent by the Company during the FY 2021-22 including the above projects was $ 155.14 Crores, which has been funded from proceeds of Rights Issue, internal accruals and term loan from Banks.

9. EXPANSION OF FABRIC DIVISION

The quality of fabric produced by the Company has been well accepted both in domestic and export markets and the Company receives lot of enquiries from leading brands across the globe for supply of processed fabric. Since the demand for our quality fabric is very much encouraging, the Company has decided to further expand its Fabric division by adding 166 Looms and also decided to establish a new Fabric processing unit with a capacity to process 50,000 meters of fabric per day at Rajapalayam. In order to strengthen the electrical infrastructure, the Company has decided to install 110 KVA /

11 KVA own substation inside our Mills premises at Rajapalayam.

Total outlay for all the above capex proposals is $ 400 Crores, which will be funded from internal accruals / equity instruments and term loan from Banks.

10. PROSPECTS FOR THE CURRENT YEAR

The prices of all varieties of cotton are ruling at all-time high. Since the prices are going up, farmers are bringing the cotton crop at a very slow pace into the market. The multinational companies, which are holding cotton stock are also selling the ginned cotton bales very slowly. Because of the high prices of cotton, the demand for alternate fibres viz., polyster and viscose is showing an increasing trend. There may be correction in the cotton prices, if the demand and consumption of cotton comes down due to increased consumption of manmade fibres by spinning mills and fabric manufacturers. In addition to cotton, all other commodity prices are also going up including fuel, metal etc., which will have an inflationary effect on cost of production of yarn.

Retail sales of textile products across the globe is witnessing a robust trend. Due to the effects of pent up demand and increased spending by the consumers, the global demand for cotton yarn, fabric and garments are on the rising trend. India is becoming a strong alternative sourcing base to China for textile products. The recent trade agreements entered into between India and other countries like UAE and Australia will further boost the demand for Indian textile products in the export market in the forthcoming years.

The Company has reshaped itself to a better position by strengthening its product lines with more value added customized yarn counts viz. Mercerized Yarn, Melange Yarn, Core Yarn etc., to take full advantage of the current market trend. The Company is continuously monitoring various process parameters and also implementing various system controls to deliver consistent quality of yarn and fabric to the end customers and leading brands. The Company has also strengthened the product lines with more automation like fully automatic contamination removal system at blow room stage, 100% ring spindle monitoring system, installation of linkconers etc. which has resulted in overall improvement in the operating efficiency of the Company. Efforts are being taken continuously to scale up the production & sale of value added counts like M?lange yarn, Mercerized yarn, core spun yarn etc., which will replace commodity counts in the forthcoming years.

Some of the research and prediction modelling study conducted by leading Institutes in India suggests that there may be a possibility of fourth wave of the COVID-19 pandemic in India, which may pose a challenge; however, the Company is continuously following the SoPs to safeguard its employees from spreading of COVID-19.

11. WIND MILL

The Company has wind mills with installed capacity of 35.15 MW for its captive power consumption.

The wind farm has generated 589 Lakhs Kwh as compared to 564 Lakhs Kwh of the previous year. The wind availability / velocity was better during initial wind season of the financial year 2021-22 as compared to the last financial year. All the Units generated by wind mills were adjusted for captive consumption at our Mills. The income during the year from the Wind Mill Division was

$ 39.27 Crores as against $ 37.59 Crores of previous year.

12. ASSOCIATE COMPANY

The Company has three Associate Companies viz., M/s. The Ramco Cements Limited, M/s. Ramco Industries Limited and M/s. Ramco Systems Limited.

In accordance with Rule 5 of Companies (Accounts) Rules, 2014, a statement containing the salient features of the financial statements of the Companys Associates is attached in Form AOC-1 as Annexure - I.

CONSOLIDATED FINANCIAL STATEMENTS

As per provisions of Section 129(3) of the Companies Act, 2013 and Regulation 34 of SEBI (LODR) Regulations, 2015, Companies are required to prepare Consolidated Financial Statements of its Subsidiaries and Associates to be laid before the Annual General Meeting of the Company.

Accordingly, the Consolidated Financial Statements incorporating the accounts of Associate Companies, viz. M/s. The Ramco Cements Limited, M/s. Ramco Industries Limited and M/s. Ramco Systems Limited, along with the Auditors Report thereon, forms part of this Annual Report. As per Section 136 (1) of the Companies Act, 2013, the Financial Statements including Consolidated Financial Statements are available at the Companys website at the following link at http://www.rajapalayammills.co.in.

The consolidated profit of the Company amounted to $ 16,657.61 Lakhs for the year ended 31st March, 2022 as compared to $ 10,118.48 Lakhs of the previous year.

The Consolidated Total Comprehensive Income for the year under review is $ 16,628.50 Lakhs as compared to $ 10,216.67 Lakhs of the previous year.

13. INTERNAL FINANCIAL CONTROLS

In accordance with Section 134(5)(e) of the Companies Act, 2013, the Company has Internal Financial Controls by means of Policies and Procedures commensurate with the size & nature of its operations and pertaining to financial reporting. In accordance with Rule 8(5)(viii) of Companies (Accounts) Rules, 2014, it is hereby confirmed that the Internal Financial Controls are adequate with reference to the financial statements. ERP System developed by Ramco Systems Limited has been installed for online monitoring of all functions and management information reports are being used to have better internal control system and to take decisions in time.

14. VIGIL MECHANISM / WHISTLE BLOWER POLICY

In accordance with Section 177(9) and (10) of the Companies Act, 2013 and Regulation 22 of SEBI (LODR) Regulations, 2015 the Company has established a Vigil Mechanism and has a Whistle Blower Policy. The policy is available at the Companys website. The Policy provides the mechanism for the receipt, retention and treatment of complaints and to protect the confidentiality and anonymity of the stakeholders. The complaints can be made in writing to be dropped into the Whistle Blower Drop Boxes or through E-Mail to dedicated mail IDs. The Corporate Ombudsman shall have the sole access to these. The Policy provides to the complainant access to the Chairman of the Audit Committee. The web link for the Vigil Mechanism is disclosed in the Corporate Governance Report.

15. DIRECTORS

Smt. R. Sudarsanam (DIN:00433926), was reappointed as Managing Director of the Company for a period of three years starting from 01-04-2020 to 31-03-2023 at the AGM held on 14-08-2019. Due to her age factor, she has resigned from the Board as well as from the position of Managing Director effective 31-05-2022.

Based on the recommendation of the Nomination and Remuneration Committee made at its meeting held on 25-05-2022, the Board of Directors at their meeting held on 25-05-2022 have appointed Smt. P.V.Nirmala Raju (DIN:00474960) as Managing Director for a period of 5 years starting from 01-06-2022, subject to the approval of the Shareholders. Approval of the Members has been sought for her appointment in the Notice convening the AGM.

In accordance with the provision of the Companies Act, 2013 and in terms of the Memorandum and Articles of Association of the Company, the following Directors retire by rotation at the ensuing Annual General Meeting and they are eligible for re-appointment:

1. Shri S.S. Ramachandra Raja (DIN: 00331491),

2. Shri A.V. Dharmakrishnan (DIN: 00693181)

Shri P.A.S. Alaghar Raja (DIN 00487312) has been re-appointed as Independent Director for another term of 5 years at the Annual General Meeting held on 25th August, 2021. In the opinion of the Board, Shri P.A.S. Alaghar Raja possess integrity, expertise and experience for being re-appointed as an Independent Director.

Pursuant to Rule 8(5)(iii) of Companies (Accounts) Rules, 2014, it is reported that, other than the above, there have been no changes in the Directors or Key Managerial Personnel during the year.

The Company has received necessary declarations from all the Independent Directors under Section 149(7) of the Companies Act, 2013, that they meet the criteria of independence as provided in Section 149(6) of the Companies Act, 2013.

Independent Directors have complied with the Code for Independent Directors prescribed in Schedule IV of the Companies Act, 2013.

The Company had formulated a Code of Conduct for the Directors and Senior Management personnel and the same has been complied with.

The Audit Committee has four members, out of which three are Independent Directors. Pursuant to Section 177(8) of the Companies Act, 2013, it is reported that there has not been an occasion, where the Board had not accepted any recommendation of the Audit Committee.

The Company has a policy relating to appointment and remuneration of Directors, Key Managerial Personnel and other employees duly approved by the Board of Directors, based upon the recommendation of Nomination and Remuneration Committee, in accordance with Section 178(3) of the Companies Act, 2013.

As per Provisio to Section 178(4), the salient features of the Nomination and Remuneration Policy should be disclosed in the Boards Report. Accordingly, the following disclosures are given:

Salient Features of the Nomination and Remuneration Policy:

The objective of the Policy is to ensure that:

(a) the level and composition of remuneration is reasonable and sufficient to attract, retain and motivate Directors of the quality required to run the Company successfully;

(b) relationship of remuneration to performance is clear and meets appropriate performance benchmarks; and

(c) remuneration to directors, key managerial personnel and senior management involves balance between fixed and incentive pay reflecting short and long term performance objectives shall be appropriate to the working of the company and its goals.

The Nomination and Remuneration Committee and this Policy are in compliance with the Companies Act, 2013 and SEBI (LODR) Regulations, 2015. During the year under review, there has been no change in the policy.

The web address of the Policy is at http://www.rajapalayammills.co.in/wp-content/themes/ramco/pdf/nomination-and-remuneration-policy.pdf

As required under Regulation 25(7) of LODR, the Company has programmes for familiarisation for the Independent Directors about the nature of the industry, business model, roles, rights and responsibilities of Independent Directors and other relevant information. As required under Regulation 46(2)(i) of LODR, the details of the Familiarisation Programme for Independent Directors are available at the Companys website, at the following link -http://www.rajapalayammills.co.in/wp-content/themes/ramco/pdf/familiarisation-programme-for-independent-directors-31-03-2022.pdf

The details of familiarisation programme are explained in the Corporate Governance Report also.

16. EVALUATION OF BOARD

Pursuant to Section 134(3)(p) of the Companies Act, 2013, and Regulation 25(4) of SEBI (LODR) Regulations, 2015, Independent Directors have evaluated the quality, quantity and timeliness of the flow of information between the Management and the Board, Performance of the Board as a whole and its Members and other required matters.

Pursuant to Schedule II, Part D of SEBI (LODR) Regulations, 2015, the Nomination and Remuneration Committee has laid down evaluation criteria for performance evaluation of Independent Directors, which will be based on attendance, expertise and contribution brought in by the Independent Director at the Board Meeting, which shall be taken into account at the time of reappointment of Independent Director.

Pursuant to Regulation 17(10) of SEBI (LODR) Regulations, 2015, the Board of Directors have evaluated the performance of Independent Directors and observed the same to be satisfactory and their deliberations beneficial in Board / Committee meetings.

Pursuant to Regulation 4(2)(f)(ii)(9) of SEBI (LODR) Regulations, 2015, the Board of Directors have reviewed and observed that the evaluation frame work of the Board of Directors was adequate and effective.

The Boards observations on the evaluations for the year under review were similar to their observations for the previous year. No specific actions have been warranted based on current year observations. The Company would continue to familiarize its Directors on the industry, technological and statutory developments, which have a bearing on the Company and the industry, so that Directors would be effective in discharging their expected duties.

17. MEETINGS

During the year, five Board Meetings were held. The details of the Meetings of the Board and its various Committees held during the financial year including the number of meetings attended by each Director are given in Corporate Governance Report.

18. SECRETARIAL STANDARD

As required under Clause 9 of Secretarial Standard 1, the Board of Directors confirms that the Company has complied with applicable Secretarial Standards.

19. PUBLIC DEPOSITS

Pursuant to Rule 8(5)(v) & (vi) of Companies (Accounts) Rules, 2014, it is reported that the Company has not accepted any deposit from public during the financial year under review. There was no outstanding of deposits as on 31-03-2022 (Previous year: NIL). The Company has no deposit, which is not in compliance with the Chapter V of the Companies Act, 2013.

The Company has received a sum of $ 0.08 Crores (net of repayment), (PY: $ 3.50 Crores) from Directors as loan during the financial year 2021-22. The loans from Directors are not treated as deposits under Chapter V of the Companies Act, 2013.

20. ORDERS PASSED BY REGULATORS

Pursuant to Rule 8(5)(vii) of Companies (Accounts) Rules, 2014, it is reported that, no significant and material orders have been passed by the Regulators or Courts or Tribunals, impacting the going concern status and Companys operations in future.

21. PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS

Pursuant to Section 186(4) of the Companies Act, 2013, it is reported that:

(a) the particulars of loans are provided under Note No. 51(b)(i).

(b) the particulars of the guarantees and investments are provided under Note No.47 and Note No. 12 & 13 respectively of Notes forming part of financial statements. The guarantees are provided to secure the loans from Banks / Financial Institutions at a competitive pricing by the borrowers.

22. CORPORATE SOCIAL RESPONSIBILITY

In terms of Section 135 and Schedule VII of the Companies Act, 2013, the Board of Directors have constituted a Corporate Social Responsibility (CSR) Committee and adopted a CSR Policy which is based on the philosophy that "As the Organization grows, the Society and Community around it also grows."

The Company has undertaken various projects in the areas of education, health, rural development, environmental sustainability, livelihood enhancement projects, disaster management activity, etc. largely in accordance with Schedule VII of the Companies Act, 2013.

Though there was no CSR obligations under Section 135(5) of the Companies Act, 2013, for the Company to spend any amount towards CSR activity due to losses incurred during previous years, the Company has spent an amount of $ 42.88 Lakhs on CSR activities. The Company had also spent a sum of $ 20.05 Lakhs on other social causes and projects, which do not qualify as CSR expenditure under the classifications listed out in Schedule VII of the Companies Act, 2013.

The CSR policy is available at the Companys website at the following link at http://www.rajapalayammills.co.in/wp-content/uploads/2022/07/corporate-social-responsibility-policy.pdf

The Annual Report on CSR activities as prescribed under Companies (Corporate Social Responsibility Policy) Rules, 2014 is attached as Annexure - II.

23. AUDITS

STATUTORY AUDIT

M/s. N.A. Jayaraman & Co. Chartered Accountants (FRN: 001310S) and M/s. SRSV Associates, Chartered Accountants (FRN:015041S), who have been appointed as the Statutory Auditors of the Company at the 81st Annual General Meeting, would be the Auditors of the Company till the conclusion of forthcoming 86th Annual General Meeting.

No change is proposed in the Auditors for the Company. The existing Auditors are eligible for re-appointment for the second term of 5 years.

The Audit Committee and the Board of Directors at their meeting held on 25-05-2022 had recommended their appointment as Statutory Auditors, pursuant to Section 139 of the Companies Act, 2013 for a period of 5 years from the conclusion of 86th Annual General Meeting till the conclusion of 91st Annual General Meeting. Accordingly the matter relating to the re-appointment of Statutory Auditors has been included in the notice convening the 86th Annual General Meeting. Written consent from the Auditors for their proposed re-appointment and necessary certificates under Rule 4 of the Companies (Audit and Auditors) Rules, 2014 confirming that their re-appointment, if made shall be in accordance with the conditions as prescribed by law and they satisfy the criteria provided under Section 141 of the Companies Act, 2013 has been received.

As required under Regulation 33(1)(d) of SEBI (LODR) Regulations, 2015, the Auditors have also confirmed that they hold a valid certificate issued by the Peer Review Board of the Institute of Chartered Accountants of India.

The report of the Statutory Auditors for the year ended 31st March, 2022 does not contain any qualification, reservation or adverse remark and no instance of fraud has been reported by Auditors under Section 143(12) of Companies Act, 2013.

SECRETARIAL AUDIT

Shri M.R.L. Narasimha, a Practicing Company Secretary is the Secretarial Auditor of the Company. Pursuant to Section 204(1) of the Companies Act, 2013, the Secretarial Audit Report submitted by the Secretarial Auditor for the year ended 31st March, 2022 is attached as Annexure - III. The report does not contain any qualification, reservation or adverse remark.

COST AUDIT

As per Section 148(1) of the Companies Act, 2013 read with Rule 3 of Companies (Cost Records and Audit) Rules, 2014, the Company is required to maintain cost records and accordingly such records and accounts are made and maintained.

The Board of Directors had approved the appointment of Shri M. Kannan, Cost Accountant as the Cost Auditor of the Company to audit the Companys Cost Records relating to manufacture of textile products for the year 2022-23 at a remuneration of $1,75,000/- (Rupees One Lakh Seventy-five Thousand only) exclusive of GST and out-of-pocket expenses.

The remuneration of the cost auditor is required to be ratified by the members in accordance with the provisions of Section 148(3) of the Companies Act, 2013 and Rule 14 of Companies (Audit and Auditors) Rules, 2014. Accordingly, the matter is being placed before the Members for ratification at the ensuing Annual General Meeting.

The Cost Audit Report for the financial year 2020-21 due to be filed with Ministry of Corporate Affairs by 12-09-2021, had been filed on 06-09-2021. The Cost Audit Report for the financial year 2021-22 due to be submitted by the Cost Auditor within 180 days from the closure of the financial year will be filed with the Ministry of Corporate Affairs, within the due date.

24. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE

EARNINGS AND OUTGO

Pursuant to Section 134(3)(m) of the Companies Act, 2013 and Rule 8(3) of Companies (Accounts) Rules, 2014, the information relating to Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo is attached as Annexure - IV.

25. ANNUAL RETURN

In Accordance with Section 92(3) of the Companies Act, 2013, read with Rule 12(1) of Companies (Management and Administration) Rules, 2014, the copy of the Annual Return for the year ended 31-03-2021 has been placed on the website of the Company and web link of such Annual Return is - http://www.rajapalayammills.co.in/wp-content/themes/ramco/pdf/annual-return-31-03-2021.pdf

26. CORPORATE GOVERNANCE

The Company has complied with the requirements regarding Corporate Governance as stipulated in SEBI (LODR) Regulations, 2015. As required under Schedule V(C) of SEBI (LODR) Regulations, 2015 a Report on Corporate Governance being followed by the Company is attached as Annexure - V.

As required under Schedule V(E) of SEBI (LODR) Regulations, 2015 a Certificate from the Auditors confirming compliance of conditions of Corporate Governance is also attached as Annexure - VI to this Report.

As required under Regulation 34(3) read with Schedule V Para C (10)(i) of SEBI (LODR) Regulations, 2015 Certificate from the Secretarial Auditor that none of the Companys Directors have been debarred or disqualified from being appointed or continuing as Directors of Companies, is enclosed as Annexure - VI A.

No complaints had been received pertaining to sexual harassment, during the year under review. The relevant statutory disclosure pertaining to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013, are available at Point No. 10 (xii) of Corporate Governance Report.

27. PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES

The disclosures in terms of provisions of Section 197(12) of the Companies Act, 2013 read with Rule 5(1), (2) and (3) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, relating to remuneration are provided in Annexure - VII.

28. INDUSTRIAL RELATIONS AND PERSONNEL

The Company has 4,173 employees as on 31-03-2022 (PY: 3,340). Industrial relations with employees remained cordial during the year. Human Resources Development activities received considerable focus. The emphasis was on imparting training and development of the skill-set of the employees to enable them to face the challenges in the work environment.

The Company has complied with provisions relating to the constitution of Internal Complaints Committee under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

29. RELATED PARTY TRANSACTION

Prior approval / Omnibus approval is obtained from the Audit Committee for all related party transactions and the transactions are periodically placed before the Audit Committee for its approval. No transaction with the related party is material in nature, in accordance with Companys "Related Party Transaction Policy" and Regulation 23 of SEBI (LODR) Regulations, 2015. In accordance with Indian Accounting Standard - 24 (Related Party Disclosure), the details of transactions with the related parties are set out in Note No. 51 of disclosures forming part of Financial Statements.

As required under Regulation 46(2)(g) of SEBI (LODR) Regulations, 2015, The Companys Related Party Transaction Policy is disclosed in the Companys website and its web link is http://www.rajapalayammills.co.in/wp-content/themes/ramco/pdf/related-party-transaction-policy-2022.pdf

30. RISK MANAGEMENT POLICY

Pursuant to Section 134(3)(n) of the Companies Act, 2013 and Regulation 17(9) of SEBI (LODR) Regulations, 2015, the Company has developed and implemented a Risk Management Policy. The Policy envisages identification of risk and procedures for assessment and minimization of risk thereof. The Risk Management policy of the Company is available at the Companys website at the following weblink-http://www.rajapalayammills.co.in/wp-content/themes/ramco/pdf/risk-management-policy.pdf

31. INVESTOR EDUCATION AND PROTECTION FUND (IEPF)

Dividend amount remaining unclaimed / unpaid for a period of over 7 years was transferred to IEPF as detailed below:

Dividend Details Amount Transferred (in $) Date of Transfer to IEPF
Final Dividend 2013-2014 5,29,235 21-08-2021

Shares transferred to IEPF during the year under review are as given below:

Date of Transfer to IEPF
205 01-09-2021
80 16-09-2021
20 23-09-2021

Year wise amount of unpaid / unclaimed dividend lying in the unpaid account and corresponding shares, which are liable to be transferred to IEPF and due dates for such transfer, are tabled below:

Year Type of Dividend Date of Declaration of Dividend Last date for claiming Unpaid Dividend Due date for transfer to IEP Fund No. of Shares of $10/- each Amount of unclaimed / unpaid Dividend as on 31-03-2022 - $
2014-2015 Dividend 12-08-2015 11-08-2022 10-09-2022 2,59,370 6,48,425
2015-2016 Interim Dividend 16-03-2016 15-03-2023 14-04-2023 2,84,514 8,53,542
2016-2017 Dividend 10-08-2017 09-08-2024 08-09-2024 2,80,929 11,23,716
2017-2018 Dividend 10-08-2018 09-08-2025 08-09-2025 1,18,007 4,72,028
2018-2019 Dividend 14-08-2019 13-08-2026 12-09-2026 1,19,780 4,79,120
2019-2020 Dividend 15-09-2020 14-09-2027 14-10-2027 1,39,877 1,39,051*
2020-2021 Dividend 25-08-2021 24-08-2028 23-09-2028 2,57,369 1,27,839*

* Net of TDS

32. APPOINTMENT OF REGISTRAR AND SHARE TRANSFER AGENT

Share transfer and other related matters had been handled by the Company in-house till 19-04-2022. The Company has appointed M/s.Cameo Corporate Services Limited as its Registrar and Share Transfer Agent. The shifting of electronic connectivity to M/s. Cameo Corporate Services Limited has been made effective 20-04-2022. The Contact details of M/s. Cameo Corporate Services Limited is given in the Corporate Governance report.

33. MATERIAL CHANGES SINCE 1ST APRIL, 2022

There have been no changes affecting the financial position of the Company between the end of the financial year (31-03-2022) and till the date of this report (25-05-2022).

34. DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to Section 134(5) of the Companies Act, 2013, the Directors confirm that:

(a) they had followed the applicable accounting standards along with proper explanation relating to material departures, if any, in the preparation of the annual accounts for the year ended 31st March, 2022;

(b) they had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as on 31st March, 2022 and the profit of the Company for the year ended on that date;

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

(d) they had prepared the Annual Accounts on a going concern basis;

(e) 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; and

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

ACKNOWLEDGEMENT

The Directors are grateful to the various Departments and agencies of the Central and State Governments for their help and co-operation. They are thankful to the Financial Institutions and Banks for their continued help, assistance and guidance. The Directors wish to place on record their appreciation of employees at all levels for their commitment and their contribution.

By Order of the Board,
For RAJAPALAYAM MILLS LIMITED,
RAJAPALAYAM, P.R. VENKETRAMA RAJA
25th May, 2022. CHAIRMAN