Sri Lakshmi Saraswathi Textiles Arni Ltd Directors Report

Ladies and Gentlemen,

Your Directors present the 62^nd Annual Report of the Company along with the audited statement of accounts for the year ended 31st March 2026.

1. FINANCIAL RESULTS

S.NO.	Description	For the year ended 31.03.2026	For the year ended 31.03.2025
		(Rs.in Lakhs)	(Rs.in Lakhs)
1.	Total Income	8814.10	10022.80
2.	Total Expenses	10468.11	12136.64
3.	(Loss) before exceptional items and tax (III - IV )	(1574.43)	(2113.84)
4.	Exceptional Items	--	--
5.	(Loss) before tax	(1574.43)	(2113.84)
6.	Comprehensive Income - Net of tax	21270.78	43.10
7.	Tax expense	--	--
8.	Total comprehensive income for the period	19696.35	(2070.74)
9.	Earning per equity share
	(i) Basic Rs.	(47.24)	(62.13)
	(ii) Diluted Rs.	(47.24)	(62.13)

Details of Loss Carried Forward for the year ended 31.03.2026

Details	Rs.in Lakhs	Rs.in lakhs
Profit from business operation before		-598.65
Financial Expenses and Depreciation
Less:
1) Financial Expenses	511.24
2) Depreciation	464.54	975.78
Current year Loss		(1574.43)
Loss carried forward from previous years		(9195.89)
Loss carried forward		(10514.05)

2. PRODUCTION AND INCOME FROM OPERATIONS:

The production and income from operation of the current year and previous year are as under:

Details	2025-26	2024-25
Production in Kgs in Lakhs	41.90	43.18
Sales in Kgs in Lakhs	41.78	43.19
Revenue from operation Rs.in Lakhs	8727.79	9954.20

3. DIVIDEND

Due to the accumulated losses, your Directors are not in a position to recommend Dividend in this year.

4. TRADE PROSPECT AND OUTLOOK

High input cost and low recovery price in Textile business: Huge increase in Raw material prices - Cotton reached its peak prices which destabilized the entire Textiles supply chain. In addition, the labour, electricity and general administration costs have also increased manifold. This severely affected your company since our customers were not able to absorb the increase in price.

Low selling prices due to high imports from China: There has been very high imports of material at a very low cost which brought the selling prices of Synthetic blended yarns to drastically low price. The government has implemented Quality Control Orders (QCO) against anti dumping of yarns and fabrics from China and other countries. We are positive this move will help over the current year in potentially better selling prices of our yarns.

Decline in Sales/ Demand- Our key selling markets has been very dull as they majority of Apparel manufacturers have sluggishness in export markets. Owing to war situations, the quantities and demand for Finished products has been slower. Due to lack of export orders, most mills have been selling yarns in the domestic market with excess supply. This in turn has affected the supply chain of yarn and fabrics.

Overall the Textile industry has been going through turmoil for the past decade. High raw material prices, high imports of cheap yarns and fabrics, economic downturn and recessions scenarios across major buying markets of Europe, North America etc. has disrupted the total industry resulting in to many textile factories closing their operations due to a very slow and sluggish demand for yarns.

Your company has planned to monetize the Assets, mainly the lands, which are not put in to optimal usage. Accordingly, in Dec 2025 Quarter, the Company revalued the Fixed Assets, especially the lands in Chennai as well as in Arni, and necessary entries were passed in the books of Accounts as per Ind-As, standard accounting practice. To move in this direction, necessary amendments in the objects clause of Memorandum of Association need to be undertaken and the same is placed for approval.

We are hopeful FY 2026-2027 will have a positive outlook as the government has made some policy changes regarding Imports and Anti Dumping duties in certain Textile products. With some stability in raw material pricing and improved export demand, we can expect a much better performance.

5. CURRENT YEAR: The demand for the yarn and price realization at the beginning of the current year are good. Your Directors are doing their best to improve the performance to a reasonable level.

6. DETAILS OF KEY MANAGERIAL PERSONNEL (KMP)

According to Section 203 of the Companies Act, 2013, the following are the Key Managerial Personnel of the Company:

Mr. Balakrishna S - Managing Director

Mr. R. Padmanaban - Joint Managing Director and CFO

Mr. D.Krishnamoorthy - Company Secretary

Mr. R. Padmanahban, Joint Managing Director, who retires by rotation at the ensuing Annual General Meeting and being eligible, offers himself for re-appointment.

7. ANNUAL RETURN

The Annual Return of the Company as on March 31, 2026 is available on the Companys website and can be accessed at www.slstindia.com

8. DETAILS OF MEETINGS OF BOARD AND COMMITTEES OF BOARD HELD DURING 2025-26.

a) There were Five Board meetings held during the year 2025-26. The details and attendance record of Directors at the Board Meetings are as under.

Date of Meeting	Board Strength (on the date of meeting)	No .of Directors Present
07.04.2025	5	4
24.05.2025	5	5
11.08.2025	5	5
12.11.2025	5	5
12.02.2026	5	5

b) There were Four Audit Committee meetings held during the year 2025-26. The details and attendance record of Directors at the Audit Committee Meetings are as under.

Date of Meeting	Committee Strength (on the date of meeting)	No.of Directors Present
24.05.2025	3	3
11.08.2025	3	3
12.11.2025	3	3
12.02.2026	3	3

c) There was one Independent Directors meetings held during the year 2025-26. The details and attendance record of Directors at the Independent meetings are as under.

Date of Meeting	Independent Directors meetings Strength (on the date of meeting)	No. of Directors Present
24.05.2025	3	3

d) There were two Nomination and Remuneration Committee meetings held during the year 2025-26. The details and attendance record of Directors at the Nomination and Remuneration Committee meetings are as under.

Date of Meeting	Committee Strength (on the date of meeting)	No. of Directors Present
24.05.2025	3	3
12.11.2025	3	3

e) There was one Stakeholders Relationship Committee Meeting held during the year 2025-26. The details and attendance record of Directors at the Stakeholders Relationship Committee Meeting are as under.

Date of Meeting	Committee Strength (on the date of meeting)	No. of Directors Present
24.05.2025	4	4

f) Since CSR is not applicable, no CSR Committee meeting held during the year 2025-26.

g) Details of Board and Committee Meetings Attendance Record of Individual Directors:

Details	Annual General Meeting	Board Meetings	Audit Committee Meetings	Nomination and Remuneration Committee Meetings	Stakeholders Relationship Committee Meeting	Corporate Social Responsibility Committee Meeting	Independent Directors Meetings
Total No.of Meetings held during 2025-26	1	5	4	2	1		1
S.No.	Name of the Director			Whether attended		Number of Meetings Attended
1. Sri Balakrishna S	Yes	5	N.A.	N.A.	1	--	N.A.
2. Sri R.Padmanaban	Yes	5	N.A.	N.A.	1	--	N.A.
3. Sri Sridhara Rao	Yes	5	4	2	1	--	1
4. Ms.Umaa Sharvani	Yes	5	4	2	1	--	1
5 . Ms.Sivarani J	Yes	4	4	2	N.A	N.A.	1

9. DIRECTORS RESPONSIBILITY STATEMENT

In terms of Section 134(5) of the Companies Act, 2013, the Directors state that -

1. In the preparation of Annual Accounts for the year ended 31st March 2026, the applicable accounting standards had been followed along with proper explanation relating to material departures.

2. 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 ended 31st March 2026, and of the profit/ loss of the company for that period.

3. The Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities.

4. The Directors had prepared the annual accounts on a going concern basis.

5. 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.

6. The Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

10. INDEPENDENT DIRECTORS

a) The Company has received necessary declaration from each independent director under Section

149(7) of the Companies Act, 2013, that he/ she meets the criteria of independence laid down in Section 149(6) of the Companies Act, 2013 and Regulation 25 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

b) Terms and conditions of appointment of Independent Directors can be viewed at the company Website: www.slstindia.com

11. REMUNERATION POLICY

The Remuneration Policy was recommended by Nomination and Remuneration Committee at its meeting held on February 11, 2015 and adopted by the Board of Directors at its meeting held on the same day and the policy can be viewed at the company website www.slstindia.com

12. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS UNDER SECTION 186

The Company has not given any Loans, guarantees or Investments covered under Sec 186 of Companies Act 2013.

13. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES UNDER SEC 188(1) COMPANIES ACT 2013

(a) i) Disclosure of details of Related Parties under employment of the company.

(Rs.in Lakhs)

Related Parties	Name of Director to whom related	Nature of relation ship with Key Management persons.	Salary, Allowance and Bonus	PF	Total
Mr.R.Thirumalai	R.Padmanaban	Brother	21.26	1.53	22.79
Mr.R.Rajagopal	R.Padmanaban	Brother	8.70	0.63	9.32
Mr.Srish Jayender Balakrishna	Balakrishna S	Son	9.09	0.63	9.72

ii) Borrowings from Directors

A. S.No. Name of the Director	Year	Amount Borrowed Rs.in Lakhs
1. Sri R.Padmanaban, Joint Managing Director	2025-26	459.95

 

Loan Amount outstanding as on 31st March 2026
B. S.No. Name of the Director	Total Amount Outstanding Rs.in Lakhs
1. Sri R.Padmanaban, Joint Managing Director	2362.20
2 Sri. Balakrishna S, Managing Director	68.60

(b) Disclosure of particulars of contracts/arrangements entered into by the company with related parties referred to in sub-section (1) of section 188 of the Companies Act, 2013 in Form No. AOC 2 is provided in ANNEXURE - 2.

14. MATERIAL CHANGES

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

15. DETAILS TO BE DISCLOSED UNDER RULE 8(3) OF COMPANIES (ACCOUNTS), RULES 2014.

The information to be disclosed under RULE 8(3) OF COMPANIES (ACCOUNTS), RULES 2014 is given in ANNEXURE - 3.

16. RISK MANAGEMENT POLICY

The Board of Directors framed and adopted a Risk Management Policy at its meeting held on March 31, 2017 and the Risk Management Policy can be viewed at the Company website www.slstindia.com

17. 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 on March 23, 2017. The Board of Directors adopted a CSR Policy, as recommended by the CSR Committee, which is in line with Section 135 of the Companies Act, 2013, which can be viewed at the Company Website: www.slstindia.com. Annexure - 4

As the company has incurred loss in the current and previous years, CSR is not applicable.

18. EVALUATION OF BOARD

BOARD EVALUATION Pursuant to the provisions of the Companies Act, 2013, and Regulation 17 of the SEBI( LODR) Regulations, 2015 the Board has carried out an annual performance evaluation of its own performance, the directors individually as well as the evaluation of the working of its Audit, Nomination & Remuneration and other Committees. The boards performance for the current year was assessed on the basis of participation of directors, quality of information provided, quality of discussion and contribution etc. The overall performance of the Board and Committees of the Board was found satisfactory. The overall performance of Chairman, Executive Directors and the Nonexecutive Directors of the Company is satisfactory. The review of performance was based on the criteria of performance, knowledge, analysis, quality of decision making etc.

19. DETAILS TO BE DISCLOSED UNDER RULE 8(5) OF COMPANIES (ACCOUNTS), RULES 2014.

The information to be disclosed under RULE 8(5) OF COMPANIES (ACCOUNTS), RULES 2014 is given in ANNEXURE - 5.

20. DISCLOSURE ON AUDIT COMMITTEE

The composition of the Audit Committee is as below:

Member & Chairman	Sri S.Sridhara Rao
Member	Ms.Sivarani J
Member	Ms.Umaa Sharvani

All the members have wide exposure in the relevant areas.

21. ESTABLISHMENT OF WHISTLE BLOWER POLICY AND VIGIL MECHANISM

A Whistle Blower Policy and Vigil Mechanism was adopted by the Board of Directors at its meeting held on March 9, 2015. The policy can be viewed at the company website www.slstindia.com.

22. SECRETARIAL AUDIT REPORT

The Secretarial Audit Report for the year 2025-26 is provided in ANNEXURE - 6.

There are no qualification made by the Secretarial Auditor.

23. DETAILS TO BE DISCLOSED UNDE RULE 5(1) OF THE COMPANIES (APPOINTMENT AND REMUNERATION OF MANAGERIAL PERSONNEL) RULES, 2014

The required disclosures are provided in ANNEXURE - 7.

24. DETAILS TO BE DISCLOSED UNDER RULE 5(2) OF THE COMPANIES

(APPOINTMENT AND REMUNERATION OF MANAGERIAL PERSONNEL) RULES, 2014.

None of the employees was in receipt of remuneration in excess of the prescribed limits, under Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014. Hence there is no report under this category.

25. INFORMATION REQUIRED UNDER THE SEXUAL HARASSMENT OF WOMEN AT THE WORKPLACE (PREVENTION, PROHIBITION & REDRESSAL) ACT, 2014.

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.

The company has in place a system to redress complaints received regarding sexual harassment in line with the requirements of the Sexual Harassment of women at the workplace (Prevention, Prohibition & Redressal) Act, 2013

All employees (permanent, contractual, temporary, apprentices and trainees) are covered under this policy.

The following is a summary of sexual harassment complaints received and disposed off during the year 2025-26.

- No of complaints received - Nil

- No of complaints disposed off. - NA

26. FINANCE

The Board of Directors thanks Indian Overseas Bank and State Bank of India for their continued assistance and co-operation.

27. LABOUR

The relationship with labour continues to be cordial. Your Directors place on record their appreciation of the devoted services of the Officers, Members of the Staff and Workers during the year.

28. COST AUDIT

Your Company is required to maintain cost records as specified by the Central Government under subsection (1) of section 148 of the Companies Act, 2013 and accordingly such accounts and records are made and maintained,

The Company has appointed M/s.S V M & Associates, Cost Accountants, as Cost Auditor of the Company for the financial year 2025-26.

The enabling resolution for appointment of M/s.S V M & Associates, Cost Accountants, as Cost Auditor of the Company has been placed in the AGM Notice.

29. AUDITORS AND AUDITORS REPORT.

M/s. S. Viswanathan LLP, Chartered Accountants, were appointed as Statutory Auditors of the Company to hold office for a term of five years from the conclusion of 61^st Annual General Meeting till the conclusion of the 66^th Annual General Meeting

The Notes on financial statements referred to in the Auditors Report are self-explanatory and do not call for any further comments. The Auditors Report does contain some qualification, reservation, remark or disclaimer for which reply has been given in the Directors Report.

Auditors Report:

The Report of Auditors and Notes forming part of the Accounts are attached along with the Annual Report. Comments on Statutory Auditors Report:

Reply to the qualifications made in Auditors report

S.No.	QUALIFICATION	REPLY
1.	Material Uncertainty Related to Going Concern: The Companys net worth has been completely eroded. As per the books of accounts, the accumulated losses for the reporting period amount to ?10,514.05 lakhs (Previous Year: ?9,195.88 lakhs), and the turnover for the year ended March 31, 2026, has declined to ?8,727.79 lakhs (Previous Year: ?9,948.58 lakhs). Furthermore, the Statement of Profit and Loss indicates that the Company has incurred net losses for the previous three consecutive financial years, including the period under audit. These events and conditions indicate the existence of a material uncertainty that may cast significant doubt on the Companys ability to continue as a going concern. However, the financial statements have been prepared on a going concern basis, predicated on managements assessment that the Company will generate sufficient profits in the foreseeable future.	The company has incurred losses and the capital has been eroded. However, the financial statements have been prepared on a going concern basis based on the Companys Assets and future business prospects. The Company envisage to operate its Textiles business to the optimum level and reduce the losses There is a reduction of over 30% loss in FY25-26 comparing with FY24-25. The company has proposed to add the real estate business in the objects clauses of the Memorandum of Association which will enable to monetize the lands. This will influx cash flow and bring profits. Hence The management is hopeful that the company will generate profits in the ensuing financial years.
2.	The auditor has drawn attention regarding obtaining the balance confirmations or sufficient alternative audit evidence for significant outstanding balances. This includes Advances Made (Rs.395.57 lakhs), Advances Received (Rs.93.09 lakhs), Trade Receivables (Rs.75.05 lakhs), and Trade Payables (Rs.3,350.77 lakhs). Furthermore, out of the Trade Payables confirmed Rs.1,116.45 lakhs, there remains an unreconciled difference of Rs.3.40 lakhs	The management is confident that all the amounts shall be collected in the ensuing quarters of the FY 26-27.
3.	The auditor reported significant defaults in the remittance of undisputed statutory dues to appropriate authorities during the financial year. The outstanding non-compliances as of the audit report date are as follows:	The management expects that all the statutory amounts shall be paid in the ensuing quarters of the FY 26-27
	(a)ESI: Principal of Rs.4.71 lakhs and accumulated interest of ?0.16 lakhs remain unpaid (excluding unascertainable amounts for the garments division).
	(b)EPF: Principal of Rs.124.78 lakhs, alongside accumulated interest of Rs.12.38 lakhs and damages of Rs.13.07 lakhs, remain unpaid.
	(c)TDS/tCs: Principal of Rs.24.47 lakhs and accumulated interest of Rs.2.96 lakhs remain unpaid.
	(d)GST: An erroneously claimed excess IGST Input Tax Credit (ITC) of Rs.6.75 lakhs remains unreversed and unpaid.

STATEMENT OF IMPACT OF QUALIFIED OPINION OF STATUTORY AUDITOR.:

The Auditors qualified opinion, Managements explanations thereon and Statement of Impact of Audit Qualifications are given in ANNEXURE - 1.

30. MANAGEMENT DISCUSSION AND ANALYSIS REPORT

Management Discussion and Analysis Report is part of Directors Report. ANNEXURE-8

31. DISCLOSURE REGARDING ACCOUNTING TREATMENT.

In preparation of financial statement the treatment prescribed in all the applicable Accounting Standards are followed and no alternative treatment has been adopted.

32. CORPORATE GOVERNANCE REPORT

Regulation 15 of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015, does not apply to your company, as your companys equity share capital and net worth is below the threshold limit prescribed under the said Regulation and hence the Report on Corporate Governance is not provided.

33. DECLARATION BY CEO AFFIRMING COMPLIANCE WITH CODE OF CONDUCT

Declaration from CEO has been given ANNEXURE - 9

34. COMPLIANCE CERTIFICATE REGARDING CORPORATE GOVERNANCE.

The certificate is not applicable as the provisions of Corporate Governance does not apply to your company.

35. DISCLOSURES WITH RESPECT TO DEMAT SUSPENSE ACCOUNT/ UNCLAIMED SUSPENSE

ACCOUNT

There are no shares in demat suspense account or unclaimed suspense account.

36. STATEMENT OF DEVIATION/ VARIATION OF USE OF FUNDS RAISED THROUGH ANY PUBLIC

ISSUE.

The company has not raised any fund through public, right or preferential issue of any security in recent time. Hence there is no Report on any deviation/ variation of the use of such funds.

37. DISCLOSURE OF COMPLIANCE WITH SECRETARIAL STANDARDS.

The Directors have devised proper systems to ensure compliance with the provisions of all applicable Secretarial Standards and that such systems are adequate and operating effectively.

38. RELATED PARTY TRANSACTION POLICY.

The Board of Directors framed and adopted a Related Party Transaction Policy at its meeting held on October 9, 2021 and the Related Party Transaction Policy can be viewed at the Company website www.slstindia.com

39. DIRECTORS REPORT PLACED IN WEBSITE.

This Directors report is placed in companys website and the same can be viewed at www.slstindia.com

40. DISCLOSURES UNDER MATERNITY BENEFIT ACT, 1961:

The Company has complied with provisions relating to Maternity Benefit Act, 1961.

41. ACKNOWLEDGEMENT AND APPRECIATION

Your Directors would like to thank Company would like to express their gratitude for the co-operation and assistance extended to the Company by its Bankers, Customers, Suppliers, Contractors, Government and Local Authorities, etc. The Directors also wish to thank all its Shareholders for their unstinted support. The Directors would like to sincerely thank and place on record their appreciation of the consistent and dedicated services of the employees at all levels who have immensely contributed to the performance of the Company during the period under review.

	By Order of the Board
	for SRI LAKSHMI SARASWATHI
	TEXTILES (ARNI) LIMITED
Place : Chennai	(BALAKRISHNA S)
Date : May 27, 2026	Chairman & Managing Director