surat textile mills ltd share price Management discussions

Dear Shareholders,

Your directors present their 77^th Annual Report on the performance of the Company together with the Audited Financial Statements for the financial year ended 31^st March, 2023.The disclosures required under the head Managements Discussion and Analysis Report pursuant to Schedule V of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, also forms part of this report.

Financial Highlights

The financial performance of discontinued and continuing business operations of the Company for the financial year ended 31^st March, 2023 is summarised below:

(Rs. in Lakhs)

Particulars	Discontinued Operations		Continuing Operations
	2023	2022	2023	2022
Revenue from Operations	93.02	1,687.43	2531.34	0.00
Other income	7423.90	1.22	931.53	606.09
Operating Profit/(Loss) / EBITDA	7339.29	(118.29)	418.98	64.61
Finance Costs	0.00	0.00	3.46	6.06
Profit/(Loss) before Depreciation and Amortisation Expenses	7339.29	(118.29)	415.52	58.55
Depreciation and Amortisation Expenses	0.00	7.19	41.34	35.60
Profit/(Loss) before tax	7339.29	(125.48)	374.18	22.95

Review of Operations

As the Members are aware, the operating environment of Polyester Chips and Yarn segment was unfavourable for the majority part of FY 22 and further to preserve the value of the plant assets (being in shut down condition), the Board after evaluating various options, decided to sell the assets of the companys Manufacturing Division together with all specified tangible assets, including land, buildings and plant and machineries in relation to the unit and entered into the necessary definitive agreements and executed the same in April, 2022.

Consequent to sale/transfer of the assets, the management after considering various options for possible alternate business, commenced the new activities of trading in commodities and other commodity related business from third quarter of FY23 as covered and permissible under the Object Clause of the Memorandum of Association, while considering the resources and size of the Company.

Discontinued Operations

Your Company earned total income of Rs. 7516.92 Lakhs during FY 23 which includes Rs. 7423.90 Lakhs as other income which comprises of profit on sale of assets of Jolwa Manufacturing division.

The profit before tax for FY 23 was Rs. 7339.29 Lakhs. After necessary provisions for tax expenses etc., the profit after tax for FY23 was Rs. 5938.21 Lakhs.

The Company has been gradually deploying the funds in phase manner in the new activity after considering the safety of funds with sustainable growth and proposes to increase the volume after taking into consideration the other related external risk factors, if any, and the overall business scenario in the related segment.

Continuing Operations

The Company has initiated the purchase and sale of certain commodities viz. Metal, Energy & Agricultural products which are exchange deliverable in physical Opportunities arise from time to time when safe trading can be entered into to make reasonable gains in profit.

During FY 23, your Company generated Income from Operations of Rs. 2531.34 Lakhs from the Commodity trading business which commenced from 3rd Quarter of FY 23. Further, your Company earned Rs. 931.53 Lakhs from other income which comprises of Income from Investments in Mutual Fund schemes and other money market instruments.

The Company earned other Income of Rs. 606.09 lakhs for FY22. Profit before tax for FY 23 was Rs. 374.18 Lakhs as compared to Rs. 22.95 Lakhs in the previous year. The funds realized on sale of assets of Jolwa manufacturing division were also deployed in good quality financial instruments for the remaining period of FY 23.

Dividend

With a view to conserve the resources for future growth, the directors of the Company have decided not to recommend any dividend on equity shares of the Company for the year ended 31 March, 2023.

Transfer to Reserves

The Board of Directors has decided to retain the entire profits for F.Y. 2022-23 in the retained earnings.

Update on Merger

Honble National Company Law Tribunal (NCLT), Ahmedabad Bench had vide its order dated 7th September, 2022 (Ref.: CP (CAA) No. 61 / AHM / 2021 in CA (CAA) No. 58 / AHM / 2021), under Sections 230-232 and read with Section 66 of the Companies Act, 2013 and other applicable provisions of the companies Act, 2013 read with the Companies (Compromise, Arrangement and Amalgamations) Rules, 2016 has approved the Scheme of Amalgamation of Vareli Trading Company Limited (VTCL) ("Transferor Company") with Surat Textile Mills Limited (STML) ("Transferee Company") and their respective shareholders and creditors. Pursuant to the order, the appointed date of the scheme is fixed at April 01, 2019 and the scheme has become effective from September 26, 2022 i.e., the last day on which the certified copy of the order was filed with the Registrar of Companies by both companies.

Accordingly, the Company has prepared its financials for F.Y. 2023 after giving effect to the aforesaid Scheme and corresponding figures for the year ended March 31, 2023 and March 31, 2022 have been restated to give effect to the Scheme with effect from April 01, 2019.

Share Capital

The Paid-up Equity Share Capital of the Company as on 31st March, 2023 was Rs.2220.64 Lakhs comprising of 22,20,64,440 equity shares of Rs.1 each fully paid up.

On the Scheme of Amalgamation becoming effective and with effect from the Appointed Date, all the investment including 7,75,80,026 number of the equity shares of Surat

Textile Mills Limited, the "Transferee Company", being held by Vareli Trading Company Limited (VTCL), stands cancelled off and the same shall amount to Reduction of Share Capital of STML to that extent. Accordingly, the issued, subscribed and paid-up share capital of STML stands reduced from Rs. 22,20,64,440/- to Rs. 14,44,84,414/-.

Further, in compliance to the Order of Honble NCLT Ahmedabad bench in the matter of Scheme of Amalgamation of VTCL with STML, the Board of Directors of the Company at their meeting held on 30th September, 2022 approved the allotment of 7,75,80,026 equity shares of face value of Rs. 1/- (Rupee one) each to the shareholders of VTCL (the transferor company) credited as fully paid up of STML in the ratio of 521 equity shares of the face value Rs. 1/- (Rupee one) each of STML for every 1 equity share of Rs. 10/- (Rupees 10) of VTCL credited as fully paid up held on the record date by such equity shareholders or their respective legal heirs, executors or administrators or, as the case may be, successors in VTCL (the "New Equity Shares").

Therefore, considering the issue of 7,75,80,026 equity shares to the shareholders of VTCL (the transferor Company) in the exchange ratio as approved under the Scheme under Clause 18(vi) of NCLT Order, there is no such reduction in the Issued, Subscribed and Paid-up share capital of STML and as on 31st March 2023, the issued subscribed and paid-up share capital of STML remains unchanged at Rs. 22,20,64,440/.

Further, in response to the Companys application to BSE Limited for Listing of aforesaid 7,75,80,026 equity shares issued pursuant to the approval of Scheme of Arrangement, the exchange vide its E-Letter dated 24th November, 2023 granted its approval to the same.

Upon scheme being effective and on reclassification of capital of VTCL, the Authorised Share Capital of Vareli Trading Company Limited (the transferor Company) got consolidated / added up with the Authorised Share Capital of your Company with effect from 1st April 2019. Accordingly, the Authorized Share Capital of STML stands increased to Rs. 84,00,00,000/- divided into 84,00,00,000 number of Equity Shares of Rs. 1/- each fully paid-up.

During the year under review, your Company has neither issued any shares with differential voting rights nor has granted any stock options or sweat equity. The Company has paid Listing Fees for the Financial Year 2023-24, to BSE Limited where its equity shares are listed.

Nature of New Business

During the quarter ended 31st December 2022, the Company commenced trading in commodities and other commodity related activities on trial basis while considering the resources and size of the Company. The Company generated Revenue from such operations for FY 2022-23 amounting to Rs. 2531.34 Lakhs.

Commodity trading involves buying and selling commodities via exchanges and hedging them via derivatives. Commodity futures are derivative contracts in which the purchaser agrees to buy or sell a specific quantity of a physical commodity at a specified price on a particular date in the future. Futures are derivative, which are investments that derive their value from the price of another asset, typically called the underlying asset.

Impact of Covid-19

The operations of the Company were largely unaffected by COVID-19 related impact in FY 2022-23.

Industry Structure and Development

Indian Economy

Fiscal 2023 was the first normal year post-pandemic. Consumption rebounded in specific sectors. The performance of two sectors - agriculture and construction - stood out in the fourth quarter.

A stronger than expected fourth quarter lifted Indias growth to 7.2% in FY 23, exceeding the 7% cited in the second advance estimates released in February, underscoring the countrys economic resilience in the face of multiple challenges.

Data released by NSO showed growth in January-March - the fourth quarter of the 2022-23 fiscal- was 6.1%, higher than the upwardly revised 4.5% in the previous quarter, which helped India retain the fastest growing major economy tag. The better-than-expected growth in Q4 FY 23 is encouraging and is reflective of the sustained strength in domestic demand amid gloomy global outlook. The fall in commodity prices also helped lift growth, reducing the drag from net exports. It also charts the course of action for businesses so they can fully leverage the benefits of rapid economic expansion.

It shows sustained economic momentum combined with macroeconomic, financial and fiscal stability.

Opportunities, Challenges, Threats, Risks and Concerns

While comparing with stock and bond markets, we believe it is comparatively safer to trade in commodities as commodity prices are generally less volatile than stocks, and returns typically better than high quality bonds.

However, the commodity markets still remain unpredictable as they are affected by natural and manmade vagaries. To hedge this risk the Company enters into a trade by buying physical and selling forward to lock-in the spread and Returns on Investment and the trades are never kept open but always hedged.

There are also additional risks to transactions of:

1. Mark to market risk: At the time when the transaction is open, there can be volatility in prices of underlying commodity, which may result in providing additional margin or mark-to-market funds, though this does not impact overall profit amount, it might impact ROI as more money will be deployed in the trade than initially planned.

2. Exchange counter-party risk: When we sell the commodity on exchange platform, the counterparty is exchange. i.e., MCX OR NCDEX, these exchanges are highly regulated by SEBI, therefore we do not see any default, but one should be aware if there is a settlement failure at exchange and the exchange is unable to honor pay-outs against the sale transaction, it will be risk of exchange default. This is a highly unlikely scenario

The continuous observance is kept by regulatory authorities to make sure that the commodity prices are market-driven and free from manipulations and other threats.

The Company tries to mitigate these risks by taking quick actions and proactive initiatives and sound business management practices and minimize the impact of these risks to the extent possible.

We believe there is a good opportunity for scaling up this activity.

Business Outlook

India is expecting another year of solid economic performance.

The investment momentum was solid through the fourth quarter and should continue this fiscal, driven by public investments and a gradual pick-up in private investments aided by the PLI scheme. Government Capex, led by infrastructure, is budgeted for a sharp rise.

This fiscal, private consumption is expected to continue to face crosscurrents. While lower inflation will be supportive, higher interest rates may curtail sectors such as automobile and housing.

The economists predict growth to slow in FY24 as global conditions weigh down the economy. Growth is likely to moderate, in part, due to normalization of base effect.

Slowdown in external demand and some waning of pent- up demand will also result in growth moderation.

India is expected to retain its tag of the fastest-growing major economy. The International Monetary Fund (IMF) has forecast 5.9% growth while the RBI sees a higher 6.5% rise.

Some drag to growth is expected from weaker manufacturing and slowing exports given external headwinds, but the robust domestic demand is anchoring economic growth.

Indias growth trajectory is supportive of increased commodity trade and the appeal of financial investments.

Finance and Liquidity

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

Our Cash and cash equivalents include deposits with banks and funds deployed with financial institutions under various Mutual Fund Schemes and Money market instruments. We continue to be debt-free and maintain adequate liquidity to meet our operational requirements.

There was no outstanding term loan at the beginning or at the end of financial year 2022-23. No fresh Term Loan was availed by the Company during the year. The Company has not availed any working capital facility from Banks during the year.

Directors and Key Managerial Personnel

(i) Directors liable to retire by rotation

In accordance with the provisions of Section 152 of the Companies Act, 2013 and the Articles of Association of the Company, Mr. Alok P. Shah (DIN: 00218180) whose office is liable to retire by rotation at the ensuing Annual General Meeting, being eligible, seeks reappointment. Based on performance evaluation and the recommendations of the Nomination and Remuneration Committee, the Board recommends his reappointment.

(ii) Appointment/Re-appointment

At the 76^th Annual General Meeting of the Company held on 13^th September, 2022, the members approved the appointment of Mr. Alok P. Shah as Managing Director of the Company for a period 3 (three) years with effect from 1^st July, 2022 upto 30^th June, 2025.

The members also approved the appointment of Mr. Deepak N. Shah as an Independent Director of the Company to hold office for 5 (Five) consecutive years from 11^th August, 2022 to 10^th August, 2027, not liable to retire by rotation.

On the recommendation of the Nomination and Remuneration Committee, the Board of Directors at their meeting held on 24^th May, 2023 subject to approval of shareholders, approved the proposal for revision in terms of appointment and remuneration payable to Mr. Alok P. Shah (DIN: 00218180) with effect from 1^st April, 2023 upto the remaining period of his tenure ending on 30^th June, 2025.

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

A brief resume of directors being appointed / reappointed along with the nature of their expertise, their shareholding in your Company and other details as stipulated under Regulation 36 (3) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 is appended as an annexure to the Notice convening the 77th AGM to be held on 11^th August,2023.

(iii) Resignation / Retirement

Mr. Manikant R. Momaya (DIN: 00023993), Managing Director of the Company resigned as member of the Board with effect from 28th April, 2022.

Further, Mr. Yogesh C. Papaiya (DIN: 0023985) retired from the post of Wholetime Director and CFO of the Company on expiry of his term on 10th August, 2022.

(iv) Key Managerial Personnel (KMP)

The following Directors/Officials of the Company have been designated as Key Managerial Personnel (KMP) of the Company by the Board of Directors in terms of the provisions of Section 203 of the Companies Act, 2013 and the Regulations:

1. Mr. Alok P. Shah, Managing Director

2. Mr. Paresh V. Chothani, Wholetime Director

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

4. Ms. Mahek Gaurav Jaju, Company Secretary

During the year under review, Mr. Chinmay M. Methiwala resigned from the post of Company Secretary and Compliance officer with effect from 30^th November, 2022 to pursue better career prospects. Further, pursuant to provisions of Section 203 of the Companies Act, 2013 Ms. Mahek Gaurav Jaju has been appointed as Company Secretary and Compliance Officer with effect from 20^th March, 2023.

Earlier, the Board of Directors of the Company at their meeting held on 11th August, 2022 approved the appointment of Mr. Chandresh S. Punjabi as Chief Financial Officer (CFO) of the Company designated as Key Managerial Personnel, with immediate effect.

Independent Directors

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

In terms of the provisions of Section 149(7) of the Companies Act, 2013 read with Regulation 25(8) of the Regulations, all the Independent Directors of the Company have furnished a declaration to the Compliance Officer of the Company at the meeting of the Board of Directors held on 24th May, 2023 stating that they fulfil the criteria of Independent Director as prescribed under Section 149(6) of the Companies Act, 2013 read with Regulation 16(1)(b) of the Regulations, and are not being disqualified to act as an Independent Director. Further, they have declared that they are not aware of any circumstance or situation, which exist or may be reasonably anticipated, that could impair or impact their ability to discharge their duties with an objective independent judgment and without any external influence.

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

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

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

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

Separate Meeting of Independent Directors

In terms of requirements under Schedule IV of the Companies Act, 2013 and Regulation 25 (3) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, a separate meeting of the Independent Directors was held on 25^th March, 2023.

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

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

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

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

Familiarization / Orientation program for Independent Directors

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

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

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

Number of meetings of the Board

During the financial year 2022-23, 7 (Seven) Board Meetings were held on the following dates 30th May, 2022, 30^th June, 2022, 11^th August, 2022, 30^th September, 2022, 14^th November, 2022, 14^th February, 2023 and 20^th March, 2023. The gap between any two meetings was not more than one hundred twenty days as mandated under the provisions of Section 173 of the Companies Act, 2013 and Regulation 17(2) of the Regulations.

Board Evaluation

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

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

During the period under review, the Board of Directors have carried out the evaluation of the performance of Independent Directors and their independence criteria and the Independent Directors in their meeting held on 25^th March, 2023 have evaluated the performance of the Chairman and Non-Independent Directors and the Board as a whole and also assessed the quality, quantity and timeliness of flow of information between the Board and Company management.

Committees of the Board

As on 31^st March, 2023, the Board had four committees: the audit committee, the corporate social responsibility committee, the nomination and remuneration committee and stakeholders relationship committee. During the year under review, all recommendations of the Audit Committee were accepted by the Board of Directors of the Company unanimously. A detailed note on the composition of the Board and its committees is provided in the Corporate Governance Report.

Code of Conduct for Directors and Senior Management

All Board members and Senior Management personnel have affirmed compliance with the Code of Conduct for the year 2022-23. A declaration to this effect signed by the Managing Director of the Company is contained in this Annual Report.

The Managing Director and CFO have certified to the Board with regard to the financial statements and other matters as required under regulation 17(8) of the SEBI Listing Regulations, 2015.

Code for Prevention of Insider Trading

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

Procedure for Nomination, Appointment & Remuneration of Directors

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

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

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

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

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

Auditors

(i) Statutory auditors

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

The requirement for the annual ratification of auditors appointment at the AGM has been omitted pursuant to Companies (Amendment) Act, 2017, notified on 7th May, 2018.

During the year, the Statutory Auditors have confirmed that they satisfy the independence criteria required under the Companies Act, 2013, the Code of Ethics issued by the Institute of Chartered Accountants of India (ICAI). The Audit Committee reviews the independence of the Auditors and the effectiveness of the Audit process. The Auditors attend the Annual General Meeting of the Company.

Report on Financial Statements

The report of M/s Sharp & Tannan Associates, Chartered Accountants (ICAI Registration No. 109983W), the Statutory Auditors of the Company on the financial statements of the Company for the year ended 31 March, 2023 is annexed to the financial statements in terms of the provisions of Section 134(2) of the Companies Act, 2013. The observations of the Auditors in their report are self-explanatory and/or explained suitably in the Notes forming part of the Financial Statements. The report of the Statutory Auditors does not contain any qualification, reservation or adverse remark which needs any explanation or comment of the Board.

(ii) Secretarial Audit

The Board has appointed M/s Jigar Vyas & Associates, Practicing Company Secretaries as Secretarial Auditor for the Financial Year 2022-23 in terms of the provisions of Section 204 of the Companies Act, 2013. The Secretarial Audit Report of the Company for the Financial Year ended 31 March, 2023 in the prescribed form MR-3 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is enclosed as "Annexure E" to this report.

The Secretarial Audit Report does not contain any qualification, reservation or adverse remark which needs any explanation or comment of the Board.

Annual Secretarial Compliance Report

The Company has undertaken an audit for the Financial Year 2022-23 for all applicable compliances as per Securities and Exchange Board of India Regulations and Circulars/Guidelines issued thereunder. The Annual Secretarial Compliance Report duly signed by Mr. Jigar Vyas Practicing Company Secretary (ICSI Membership No. FCS 8019) has been submitted to the Stock Exchanges within the stipulated time, in compliance with the provisions of the Regulation 24A of SEBI (LODR) Regulations, 2015.

(iii) Cost records and cost audit

Consequent to the sale / transfer of assets of Jolwa Manufacturing division in April 2022 and no other manufacturing activity in operation, maintenance of cost records and requirement of cost audit as prescribed under the provisions of Section 148(1) of the Companies Act, 2013 are not applicable for the business activities carried out by the Company for the FY 2022-23. The Company had intimated to the Ministry of Corporate Affairs, Cost Audit Department updating them on the decision of the management with an intimation to the outgoing cost auditors.

Internal Auditor

Pursuant to the provisions of Section 138 of the Companies Act, 2013 and Rules made thereunder, during the year under review, M/s Aadil Aibada & Associates, Chartered Accountants has acted as Internal Auditors of the Company.

The audit committee in consultation with the Internal Auditor formulates the scope, functioning, periodicity and methodology for conducting the internal audit. Audit observations of Internal Auditors and corrective actions thereto are periodically presented to the Audit Committee of the Board.

The Board of Directors reappointed M/s Aadil Aibada & Associates, Chartered Accountants, to carry out the Internal Audit of the Company for the Financial Year 2023-24.

Risk Management

Your Company periodically assesses the risks in the internal and external environment along with treating the risks and incorporates risk management plans in its strategy, business and operational plans.

Your Company recognizes that the risk is an integral part of business and is committed to managing the risks in proactive and efficient manner.

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

Reporting of frauds by auditors

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

Internal Financial Control System and their Adequacy

The Company has a proper and adequate system of internal financial controls which includes the policies and procedures for ensuring the orderly and efficient conduct of its business, including adherence to the Companys policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records and the timely preparation of reliable financial information. During the year, such controls were tested and no material weaknesses in the design or operations were observed.

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

Statutory Auditors of the Company have in their Report dated 24th May, 2023, opined that the Company has, in all material respects adequate internal financial controls over financial reporting and such internal financial controls over financial reporting were operating effectively as at 31st March, 2023.

Whistle Blower Policy / Vigil Mechanism

In terms of the provisions of Section 177 of the Companies Act, 2013 and the Regulations, the Company has established an effective mechanism called Vigil Mechanism (Whistle Blower Mechanism).

The purpose of this policy is to provide a framework to promote responsible whistle blowing by employees or by any other person who avails such mechanism. It protects employees or any other person who avails such mechanism wishing to raise a concern about serious irregularities, unethical behaviour, actual or suspected fraud within the Company by reporting the same to the Audit Committee.

During the year under review, no complaint has been received and no employee was denied access to the Audit Committee.

The functioning of the Whistle Blower Mechanism/Vigil Mechanism existing in the Company is reviewed by the Audit Committee on Annual basis.

The Whistle Blower Policy has been posted on the Website of the Company at http: //www.surattextilemillsltd.com/ policies.aspx.

Deposits from Public

The Company has not accepted any deposits from public and as such no amount on account of principal or interest on deposits from public was outstanding as on 31st March, 2023.

Related Party Transactions

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

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

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

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

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

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

Subsidiary, Joint Venture and Associate Companies

The Company has no subsidiary / joint venture / associates for the financial year ended 31st March, 2023. Accordingly, the requirements pursuant to Section 129(3) of the Companies Act, 2013 read with Rule 5 of the Companies (Accounts) Rules, 2014 is not applicable.

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

Particulars of Loans, Guarantees and Investments

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

Material changes and commitments

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

Directors Responsibility Statement

Pursuant to the requirements of Section 134(1)(c) read with Section 134(5) of the Companies Act, 2013 and on the basis of explanation and compliance certificate given by the executives of the Company, and subject to disclosures in the Annual Accounts and also on the basis of discussions with the Statutory Auditors of the Company from time to time, the Board is of the opinion that the Companys internal financial controls were adequate and effective during Financial Year 2022-23.

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

(a) in the preparation of the annual accounts for the financial year ended 31st March, 2023, the applicable accounting standards read with requirements set out under Schedule III to the Act, have been followed and there are no material departures from the same;

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

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

(d) they have prepared the Annual Accounts for the Financial Year ended 31st March, 2023 on a going concern basis;

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

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

Corporate Governance

The Company is committed to maintain the quality standards of Corporate Governance. A detailed Report on Corporate Governance as stipulated under Schedule V(C) of the Regulations is provided in a separate section in Annexure G and forms part of this Report.

The requisite Certificate of Compliance from a Practicing Company Secretary, confirming compliance with the conditions of Corporate Governance is attached to this Report.

Business Responsibility Report

The Business Responsibility Reporting as required by Regulation 34(2) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, is not applicable to your Company for the financial year ended 31st March, 2023.

Corporate Social Responsibility (CSR)

In terms of the provisions of Section 135 of the Companies Act, 2013, the Corporate Social Responsibility Committee ("CSR Committee") is in existence to monitor the Corporate Social Responsibility Policy of the Company as approved by the Board. The said policy is available on the website of the Company at http://www.surattextilemillsltd.com/policies. aspx

The CSR Committee comprises of Mr. Ketan Jariwala as the Chairman, Mr. Harishchandra Bharucha and Mr. Paresh V. Chothani as Members.

The CSR Committee of the Company has laid down the policy to meet the Corporate Social Responsibility. The CSR Policy includes any activity that may be prescribed as CSR activity as per the Rules of the Companies Act, 2013. The CSR Committee met on 20^th March, 2023 to review the Corporate Social Responsibility Policy.

Further, pursuant to Rule 3(2) of the Companies (Corporate Social Responsibility Policy) Amendment Rules, 2022 ("the Amendment Rules") issued by MCA notification dated 20^th September 2022, the Company is exempted from CSR compliance / spending for the F.Y. 2022-23, since the Company is not falling under the criteria as prescribed in accordance with the provisions of Section 135 (1) of the Companies Act, 2013 with respect to net worth or turnover or net profit during the immediately preceding financial year, however, the disclosure with respect to constitution of CSR Committee and the report of the committee has been made forming part of the Annexure B.

Board policies

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

Policy on Directors Appointment and Remuneration

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

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

Particulars of Employees and Related Disclosures

During the financial year 2022-23, none of the employee of the Company was in receipt of remuneration prescribed in terms of the provision of Section 197(12) of the Companies Act, 2013 read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rule, 2014.

Annual Return

In accordance with the provisions of the Companies Act, 2013, the annual return will be hosted on website of the Company at http://www.surattextilemillsltd.com after necessary certification and filing the same with the authority.

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

The particulars as prescribed under sub section (3)(m) of Section 134 of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules 2014 are given in Annexure A forms integral part of this Report.

Significant and Material Orders passed by the Regulators/ Proceedings

There are no significant and material orders passed by the regulators or courts or tribunal impacting the going concern status and the Companys operations in the future.

Further no application against the Company has been filed or is pending under the Insolvency and Bankruptcy Code, 2016, nor has the Company done any one-time settlement with any Bank or Financial institutions.

Compliance with the provisions of Secretarial Standards

The Directors have devised proper systems and processes for complying with the requirements of applicable Secretarial Standards issued by the Institute of Company Secretaries of India and such systems were adequate and operating effectively.

Reconciliation of Share Capital Audit

In terms of Regulation 76 of the SEBI (Depositories and Participants) Regulations, 2018, the Reconciliation of Share Capital Audit is undertaken by a firm of Practicing Company Secretaries on quarterly basis. The audit is aimed at reconciliation of total shares held in CDSL, NSDL and in physical form with the admitted, issued and listed capital of the Company.

The Reconciliation of Share Capital Audit Report(s) as submitted by the Auditor on quarterly basis was filed with BSE Limited (BSE) through BSE Listing Centre, where the original shares of the Company are listed.

Health, safety and environment

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

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

The Company obtained necessary approvals from concerned Government Department / Pollution Control Board and all required environment clearances / safety clearances / stipulations are complied with at Plant facilities of the Company.

Green Initiatives

In commitment to keep in line with the Green Initiatives and going beyond it, electronic copy of the Notice of 77th Annual General Meeting of the Company including the Annual Report for FY 2022-23 are being sent to all Members whose e-mail addresses are registered with the Company / Depository Participant(s).

Code on Social Security

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

Insurance

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

CEO and CFO certification.

Pursuant to Regulation 17(8) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, Managing Director and CFO Certification forms part of the Annual Report.

Managing Director and CFO also provide quarterly certification on financial results, while placing the financial results before the Board in terms of the Listing Regulations.

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

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

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

During the year under review, there were no cases filed pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

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

Internal Complaints Committee

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

The Company has also adopted a policy on Prevention of Sexual Harassment at workplace. The objective of the policy is to provide its women employees, a workplace free from harassment/discrimination and every employee is treated with dignity and respect. The said policy is available on the official website of the Company i.e., http://www.surattextilemillsltd.com/policies.aspx

During the year under review, ICC has not received any complaint pertaining to sexual harassment of women at workplace.

Indian Accounting Standard (Ind AS)

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

The financial statements for the year ended 31 March, 2023 have been prepared in accordance with the Indian Accounting Standards ("Ind AS") as required under the provisions of Section 133 of the Companies Act, 2013 read with rules made there under, as amended.

Internal Control Systems & their adequacy

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

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

Industrial Relations / Human Resources

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

Segment wise or Product wise Performance

The Companys business segment consists of a single segment of "trading in commodities and other commodity related activities" in accordance with Ind AS 108 - Operating Segments notified pursuant to the Companies (Indian Accounting Standard) Rules, 2015.

Significant change in Key financial ratios

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

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

Sr. Particulars No.	FY 2022-23	FY 2021-22	% Variance	Reason for Variance
1 Debtors Turnover Ratio (times)	-	17.87	-	-
2 Inventory Turnover Ratio (times)	-	3.37	-	-
3 Current Ratio (times)	114.91	11.64	890.26%	Sale Proceeds of Jolwa Assets deployed
4 Debt Service Coverage Ratio	11.65	4.20	177.62%	Decrease in Lease Liability
5 Return on Equity Ratio	2.20%	0.60%	266.84%	Better Returns on Investments
6 Return on Capital employed	2.73%	0.21%	1220.96%	Better Returns on Investments
7 Return on Investment	4.32%	6.56%	(34.18%)	Financial markets Effected due to High Interest Rates/Inflation
4 Debt Equity Ratio (times)	-	-	-	-
5 Operating Profit Margin (%)	-	(0.45 %)	-	-
6 Net Profit Margin (%)	12%	-	-	-
7 Return on Net Worth (%)	35.89%	(3.88 %)	-	-
8 Interest Coverage Ratio	-	-	-	-

Note:

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

2. The manufacturing operations of the Company at its Polymerisation plant at Jolwa remained suspended since May 21, Hence the Ratios for FY2022 and FY2023 are not comparable.

The manufacturing operations of the Company at its Polymerisation plant at Jolwa remained suspended since May 21, Hence the Ratios for FY2022 and FY2023 are not comparable.

Other Disclosures / Reporting

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

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

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

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

4. There was no revision in the financial statements.

Forward Looking Statement

Certain statements made in the Directors Report relating to the Companys objectives, projections, outlook, expectations, estimates and others may constitute forward looking statements within the meaning of applicable laws and regulations.

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

Acknowledgement

Your directors wish to acknowledge the co-operation and assistance extended to the Company by the Companys Bankers and State & Central Government agencies.

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

The Board of Directors also wish to place on record its sincere appreciation for the committed services by the Companys executives, staff and workers. Your directors also appreciate and acknowledge the confidence reposed in them by shareholders and other investors of the Company.

For and on	behalf of the Board of Directors
	Alok P.Shah
	Managing Director
Surat, 6th July,2023	DIN: 00218180