Southern Magnesium & Chemicals Ltd Directors Report

To

The Members,

SOUTHERN MAGNESIUM AND CHEMICALS LIMITED

Your Directors hereby present the 38th Annual Report of your Company together with the Audited Financial Statements and the Auditors Report of your Company for the financial year ended, 31st March, 2024. The summarized financial results for the financial year ended on 31st March, 2024 are as under:

FINANCIAL REPORT / OPERATIONS:

(Rs. In Lakhs)

Particulars	Current Year	Previous Year
	As on 31.03.2024	As on 31.03.2023
Net Sales / Income from Operations	946.70	856.96
Other income	34.39	8.75
Total Expenses	536.35	377.34
Exceptional items	0	0
Net Profit (+) / (Loss) before Tax for the Period	444.74	488.37
Current Tax	112.12	128.98
Tax Related to Previous year	0	(1.22)
Deferred Tax	(0.42)	7.63
Net Profit (+) / (Loss) for the Period	333.04	352.98

REVIEW OF OPERATIONS:

During the period under review your company has recorded a revenue of Rs. 946.70 Lakhs as compared with Rs. 856.96 Lakhs of the previous year and the profits of the Company have reduced to Rs. 333.04 Lakhs when compared to the profit of Rs. 352.98 Lakhs in the previous year.

DIRECTORS RESPONSIBILITY STATEMENT

The Board of Directors hereby confirms and declares that:

(a) In the preparation of the annual accounts for the year ended 31st March 2024, the applicable accounting standards had been followed along with proper explanation relating to material departures;

(b) The directors 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 at the end of the financial year and of the statement of profit and loss of the Company for that period;

(c) The directors 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) The directors had prepared the annual accounts for the year ended 31st March, 2024 on a going concern basis; and

(e) The directors had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively.

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

DISCLOSURES UNDER SECTION 134 OF THE COMPANIES ACT, 2013:

1. State of affairs of the company:

The Company deals in the business of Magnesium Metal and related goods. During the year, the Company has seen increase in terms of the Sales. The Company has earned a net profit of Rs. 333.04 Lakhs which is reflected in the financial results of the Company.

2. Amounts, if any, carried to reserves:

The Board of Directors of your Company has decided not to transfer any amount to the Reserves for the year under review.

3. Dividend:

The Company has not declared any dividend during the year under review.

4. Inter - Corporate deposits:

(i) The details relating to deposits are as follows: The Company has Inter Corporate Deposits, the details of which are given below.

(a) Accepted during the year - Nil

(b) Remained unpaid or unclaimed as at the end of the year – Nil

(c) Whether there has been any default in repayment of deposits or payment of interest thereon during the year and if so, number of such cases and the total amount involved at the beginning of the year; - Nil

Maximum outstanding during the year - Rs. 18.72 Lakhs

Outstanding at the end of the year - Rs.6.24 Lakhs

(ii) The details of deposits which are not in compliance with the requirements of the Act- Nil

5. Share Capital:

The authorized share capital of the Company consists of 40,00,000 equity shares of Rs. 10/- each and 10,00,000 - 5% redeemable cumulative preference shares of Rs. 10/- each aggregating to Rs. 5 Crore.

The paid-up share capital of the Company is Rs. 3,00,00,000/- divided into 30,00,000 equity shares of Face Value Rs. 10/- each. During the year under review, the Company has not issued any shares with differential voting rights nor granted stock options nor sweat equity.

6. Deposits:

The Company has not accepted any deposits covered under Chapter V of the Companies Act, 2013.

7. Number of meetings of the Board:

Secretarial Standards as applicable have been complied with. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013 and Securities and Exchange Board of India (Listing Obligation and Disclosure Requirements) Regulations, 2015, as amended from time to time. Further, 4 (Four) meetings of the board were held during the year as per the details given below:

S. No.	Date of Meeting	Total No. of Directors on the Date of Meeting	No. of Directors Attended	% of Attendance
1	26.05.2023	6	6	100
2	10.08.2023	6	6	100
3	10.11.2023	6	6	100
4	06.02.2024	6	6	100

 

S. No	Name of the Director	Number of meetings which director was entitled to attend	Number of Meetings Attended	% of Attendance
1	Mr. N. Ravi Prasad	4	4	100
2	Mr. N. Rajender Prasad	4	4	100
3	Mr. G. Raghavendra Rao	4	4	100
4	Mr. V. S. S. Prakash	4	4	100
5	Mr. K. Eshwariah	4	4	100
6	Mrs. K. Padmavathi*	3	3	100
7	Mr. Raghunath Vemali**	1	1	100

*Resigned with effect from 24.01.2024

**Appointed on the board with effect from 06.02.2024

8. Material changes and commitments, if any, affecting the financial position of the company which have occurred between the end of financial year of the company to which the financial statements relate and the date of the report:

There are no material changes and commitments affecting the financial position of the Company which occurred between the end of the financial year to which these financial statements relate and the date of this report.

9. Board Evaluation:

The board of directors has carried out an annual evaluation of their own performance, Board Committees and Individual Directors pursuant to the provisions of the Act and the corporate governance requirements to the extent applicable as prescribed by Securities and Exchange Board of India ("SEBI").

The performance 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 committees was evaluated by the board after seeking inputs from the committee members on the basis of the criteria such as the composition of committees, 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 director to the board and committee meetings like preparedness of the issues to be discussed, meaningful and constructive contribution and inputs in meetings, etc.

In a separate meeting of Independent Directors, performance evaluation of Non- Independent directors, performance of the Board as a whole taking into account the views of Executive Directors and Non- Executive Directors was considered. The same was discussed in the board meeting that followed the meeting of the Independent Directors, at which the performance of Board, its committee and individual directors was also discussed.

10. Policy on Directors appointment and remuneration and others details:

The company has framed and adopted a policy on nomination and remuneration of directors, key managerial personnel, and other employees of the company in line with the provisions of section 178 of the Companies Act, 2013. The policy is available on the website at: https:// southernmagnesium.com/Investor/code/Nomination%20and%20Remuneration%20Policy.pdf

It is affirmed that the appointment and remuneration of directors, key managerial personnel and all other employees are in accordance with the remuneration policy of the company.

11. Audit Committee:

The Composition of Audit Committee as on March 31, 2024 is as follows:

Name	Category	Designation
Mr. G. Raghavendra Rao	Independent Non- Executive Director	Chairperson
Mr. V. S. S. Prakash	Independent Non- Executive Director	Member
Mr. K. Eshwariah	Independent Non- Executive Director	Member
Mr. N. Rajender Prasad	Jt. Managing Director and CFO	Member

Four meetings of the committee were held during the year as per the details given below:

S. No.	Date of meeting	Total No. of Directors on the Date of Meeting	No. of Directors attended	% of Attendance
1.	26.05.2023	4	4	100%
2.	10.08.2023	4	4	100%
3.	10.11.2023	4	4	100%
4.	06.02.2024	4	4	100%

All members of Audit Committee are financially literate and have accounting and related financial management expertise.

All the recommendations made by the Committees of Board including the Audit Committee were accepted and approved by the Board.

12. Stakeholders Relationship Committee:

The Composition of Stakeholders relationship committee as on March 31, 2024 is as follows:

Name	Category	Designation
Mr. G. Raghavendra Rao	Independent Non- Executive Director	Chairperson
Mr. V. S. S. Prakash	Independent Non- Executive Director	Member
Mr. K. Eshwariah	Independent Non- Executive Director	Member
Mr. N. Rajender Prasad	Jt. Managing Director and CFO	Member

Nine meetings of the committee were held during the year as per the details given below:

S. No.	Date of meeting	Total No. of Directors on the Date of Meeting	No. of Directors attended	% of Attendance
1.	19.04.2023	4	4	100%
2.	29.04.2023	4	4	100%
3.	24.07.2023	4	4	100%
4.	10.10.2023	4	4	100%
5.	30.12.2023	4	4	100%
6.	20.02.2024	4	3	75%
7.	21.02.2024	4	3	75%
8.	21.03.2024	4	3	75%
9.	27.03.2024	4	3	75%

13. Nomination and Remuneration Committee:

The Composition of Nomination and remuneration Committee as on March 31, 2024 is as follows:

Name	Category	Designation
Mr. G. Raghavendra Rao	Independent Non- Executive Director	Chairperson
Mr. V. S. S. Prakash	Independent Non- Executive Director	Member
Mr. K. Eshwariah	Independent Non- Executive Director	Member
Mr. N. Rajender Prasad	Jt. Managing Director and CFO	Member

Three meetings of the committee were held during the year as per the details given below:

S. No.	Date of meeting	Total No. of Directors on the Date of Meeting	No. of Directors attended	% of Attendance
1.	19.04.2023	4	4	100
2.	08.11.2023	4	4	100
3.	01.02.2024	4	4	100

14. Internal Financial Control Systems and their Adequacy:

The details in respect of internal financial control and their adequacy are included in the Management Discussion and Analysis which forms part of this report.

15. Declaration by Independent Directors:

The Company has received necessary declaration from Independent Directors under Section 149(7) of the Companies Act, 2013, that they meet criteria of Independence laid down in Section 149(6) of the Companies Act, 2013 and the applicable Listing Regulations and that they have complied with the Code for Independent Directors prescribed in Schedule IV to the Companies Act, 2013.

16. Risk Management:

The Board of the company regularly reviewed and has adopted measures to frame, implement and monitor the risk management plan for the company. The Board is responsible for reviewing the risk management plan and ensuring its effectiveness. The audit committee has additional oversight in the area of financial risks and controls. Major risk indentified, if any, by the business functions are systematically addressed through mitigating actions on a continuing basis.

17. Particulars of Loans, Guarantees or Investments under Section 186 of the Companies Act, 2013:

There were no loans, guarantees or investments made by the Company under Section 186 of the Companies Act, 2013 during the year under review.

18. Particulars of contracts or arrangements made with related parties:

No transactions/contracts/arrangements of the nature as specified in Sec.188 (1) of the Companies Act, 2013 were entered by the company during the year under review with related party/parties.

During the year, the Company had not given Loans and Advances in the nature of Loans to firm/ companies in which directors are interested.

19. The change in the nature of business, if any:

There was no change in the nature of Business.

20. The details of directors or key managerial personnel who were appointed or have resigned during the year:

(a) During the period under review, the following changes occurred in the Board:

S. No.	Name of the Director/KMP	Appointment/ Cessation	Effective Date
1.	Mrs. Sneha Sridayal Soni	Cessation as Company Secretary	31.10.2023
2.	Ms. Pasupulati Manisha	Appointment as Company Secretary	10.11.2023
3.	Mrs. Padmavathi Kollipara	Cessation as Nominee Director	24.01.2024
4.	Mr. Raghunath Vemali	Appointment as Nominee Director	06.02.2024

(b)the following changes have occurred after the end of the financial year:

S. No.	Name of the Director/KMP	Appointment/ Cessation	Effective Date
1.	Mrs. Urmi Nuthakki Prasad	Appointment as Additional Director	15.04.2024
2.	Mr. G. Raghavendra Rao	Completion of Second Tenure as an Independent Director	13.08.2024
3.	Mr. Surya Sesha Prakash Valluru	Completion of Second Tenure as an Independent Director	13.08.2024
4.	Mr. Eshwariah Kaparthi	Completion of Second Tenure as an Independent Director	13.08.2024
5.	Mr. Purna Chandrarao Nibhanapudi	Appointment as Additional Director categorized as Independent	13.08.2024
6.	Mr. Venkata Narayana Reddy Konda	Appointment as Additional Director categorized as Independent	13.08.2024

21. The names of companies which have become or ceased to be its Subsidiaries, joint ventures or associate companies during the year:

The Company does not have any Subsidiary, Joint venture or associate company which have become or ceased to be its Subsidiaries, joint ventures or associate company during the year.

22. The details of significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and companys operations in future:

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

23. Particulars of Employees:

The information required under Section 197 of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014, are given below: a. The ratio of remuneration of each director to the median remuneration of the employees of the company for the financial year:

Non Executive Directors	Ratio to median remuneration
Mr. Raghavendra Rao Griddalur	NA
Mr. Surya Sesha Prakash Valluru	NA
Mr. Kaparthi Eshwaraih	NA
Mr. Raghunath Vemali	NA
Executive Directors	Ratio to median remuneration
Mr. N. Ravi Prasad	22.02 : 1
Mr. N. Rajender Prasad	17.06 : 1

b. The percentage increase or decrease in remuneration of each Director, Chief Executive Officer, Chief Financial Officer, Company Secretary in the financial year:

Director, chief executive officer,	% of increase in remuneration
chief financial officer, company	in the financial year
secretary
Mr. N. Ravi Prasad –MD and CEO	23.92
Mr. N. Rajender Prasad – Jt.MD and CFO	-1.20
Ms. Pasupulati Manisha	NA

c. The percentage increase in median remuneration of employees in the financial year: NA.

d. The number of permanent employees on the rolls of the company: 33

e. Average percentile increase already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration:

Average increase in salaries of employees other than managerial personnel in 2023-24 27.19% Average increase in salaries of managerial personnel in 2023-24 is 11.54% f. Affirmation that the remuneration is as per the remuneration policy of the company: The Company affirms remuneration is as per the Remuneration policy of the company.

g. Further information required pursuant to Section 197 read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of employees of the Company, is available at the registered office of the company. If any Member is interested in obtaining this information or a copy thereof, such Member may write to the Company at the Registered Office in this regard.

24. The details about the policy developed and implemented by the company on corporate social responsibility initiatives taken during the year:

The Company has not developed and implemented any Corporate Social Responsibility initiatives as the said provisions are not applicable.

25. Disclosure as per Sexual Harassment of Women at Work Place (Prevention, Prohibition and Redressal) Act, 2013:

Your company has zero tolerance for sexual harassment at work place and has adopted a policy on prevention, prohibition and Redressal of sexual harassment at work place in line with the provision of Sexual Harassment of Women at Work Place (Prevention, Prohibition and Redressal) Act, 2013 and rules framed thereunder.

An Internal Complaints Committee ("ICC") has been set up by the senior management (with women employees constituting the majority). The ICC is responsible for redressal of complaints related to sexual harassment and follows the guidelines provided in the Policy.

No complaints have been received by the company on sexual harassment during the financial year.

26. Disclosure Requirements:

As per Regulation 15 of SEBI (LODR), 2015, corporate governance report with certificate from Practicing Company Secretary thereon is not applicable to the company. Management Discussion and Analysis as required is attached hereunder and forms part of this report.

The company has formulated a whistle blower policy. A copy of the same is made available at the registered office of the company and also at the website of the company. The provisions of this policy are in line with the provisions of Section 177(9) of the Act.

Your Company has a vigil mechanism to deal with instances of fraud and mismanagement, if any. The Whistle Blower Policy enables reporting of unethical behavior, actual or suspected fraud or violation of the Companys code of conduct or ethics policy, to the management. The vigil mechanism also ensures that strict confidentiality is maintained and provides adequate safeguards against victimization of employees who avails this mechanism and also provides for direct access to the Chairman of the Audit committee in exceptional cases.

27. Details in respect of Frauds reported by Auditors under 143(12) of Companies Act 2013

During the period under review there were no instances of Fraud reported by the Auditors in the Company.

28. Disclosure of certain types of agreements binding listed entities as per Schedule V Clause G of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015:

During the year under review there are no such agreements.

29. Auditors:

Company has re-appointed M/s. Brahmayya & Co., Chartered Accountants (Firm Registration No. 000513S) Hyderabad, as Statutory Auditors of the Company at its AGM held on 30.09.2022 to hold office as statutory auditor for a period of five years and being eligible they continue to hold office.

30. Auditors Report:

During the period under review no qualification/reservations/adverse remarks have been made by the Statutory Auditor. The Report provided by them as attached is self-explanatory.

31. Secretarial Auditor Report:

The company has appointed M/s. D. Hanumanta Raju & Co., Practicing Company Secretaries, Hyderabad as the Secretarial Auditors of the company to undertake audit as per the provisions of Section 204 of the Companies Act, 2013 and the report of the secretarial auditor is annexed to this report. Managements reply to the observations, comments and qualifications made by the secretarial auditor are as under:

1. As required under Regulation 31(2) of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, hundred percent of the shareholding of promoters and promoters group is not held in dematerialized form.

The board of directors of the company is discussing the matter with the promoters and has requested them from time to time to complete de-materialization of their share holding immediately.

32. Annual Return Web Link:

Pursuant to the provisions of Section 92 and Section 134 of the Companies Act, 2013, as amended from time to time, the Annual Return as on March 31, 2024 in form MGT-7 is available on the Companys website https://southernmagnesium.com/Investor/NewsEvents/Annual%20Returns/ Annual%20Return%202023-24.pdf

33. Conservation of energy, technology absorption, foreign exchange earnings and outgo:

The information pertaining to conservation of energy, technology absorption, Foreign exchange Earnings and outgo as required under Section 134 (3)(m) of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014 is as under:

(A)	Conservation of energy	: NIL
(B)	Technology absorption	: Not Applicable
(C)	Foreign exchange earnings	: NIL
(D)	Foreign exchange outgo	: Rs. 620.77 Lakhs

34. The details of Application made or any Proceeding pending under the Insolvency and Bankruptcy Code, 2016 (31 of 2016) during the year along with their status as at the end of the Financial Year:

During the period under review, there was neither any application made nor any proceedings initiated or pending under the Insolvency and Bankruptcy Code, 2016.

35. The details of difference between amount of the Valuation done at the time of One Time Settlement and the valuation done while taking loan from the Banks or Financial Institutions along with the reasons thereof:

During the period under review, there was no "One Time Settlement" with any Bank.

36. Maintenance of Cost Records:

Maintenance of cost records is not specified by the Central Government under sub-section (1) of Section 148 of the Companies Act, 2013 to our company.

37. Acknowledgement:

Your Directors wish to place on record their gratitude to shareholders and thank the customers, bankers, vendors, State and Central Governments Authorities for their continued support to your Companys growth. Your Directors also wish to place on record, their appreciation for the contribution made by the employees at all levels, who, through their competence, sincerity, hard work, solidarity and dedicated support enabled your company to make continued progress.