suryalakshmi cotton mills ltd Directors report


To

The Members

Your Directors are pleased to present their Sixtieth Annual Report on the business and operations of the Company and the financial results for the year ended 31st March, 2023.

Financial Results

( in Lakhs)

2022-2023 2021-2022
Gross Profit before Interest & Depreciation 6,795.19 8,505.43
Less : Interest 2,449.35 2,426.28
: Depreciation & Amortisation expense 1,756.18 1,604.39
4205.53 4,030.67
Profit/(Loss) before prior year Adjustment 2,589.66 4,474.76
Exceptional Items (719.36) 520.31
Profit / (Loss) before tax for the year 1,870.30 4,995.07
Less: Current Tax 319.73 -
Less : Deferred tax liability 278.44 1,558.07
Profit / (Loss) after tax from continuing operations 1,272.13 3,437.00
Profit / (loss) from discontinued operations (272.97) (4,964.18)
Tax expense on discontinued operations (40.95) (1,548.82)
Profit / (Loss) after tax from discontinued operations. (232.02) (3,415.36)
Profit / (Loss) for the period 1,040.11 21.64
Other Comprehensive Income (23.59) 15.87
Total Comprehensive Income for the period 1,016.52 37.51
Add : Opening Other Equity 23,164.67 21,527.41
Add : Equity component on preferential shares 63.99
Add : Share premium on allotment of Preferential Equity shares - 1,599.75
Sub Total 24,245.18 23,164.67
Less: Dividend on Equity share capital - -
Less: Corporate Dividend Tax - -
Less: Transferred to General Reserve - -
Other Equity at year end 24,245.18 23,164.67

OPERATIONS

The Operations for the current financial year 2022-23 reflects the continued optimism in the Indian economy. The turnover at Rs. 857.3 crores has registered an increase of 9.4% over the previous year. The profit after tax is Rs.10.4 crores, a significant improvement over the last year. The production in both the Spinning and Denim fabric divisions has been satisfactory. There is significant improvement in the domestic and export realization of Denim fabric. The yarn sales have largely remained stable both in volume and realization while the fabric division has seen some growth in the domestic business and better export realization. The performance of the spinning division is subdued on account of fluctuations in cotton prices.

POWER PLANT

The company has completed the sale of the Power Plant and used the sale proceeds to reduce the term loan liabilities.

DIVIDEND

In compliance with the conditions imposed by our lenders on declaration of dividend during the restructuring arrangement, your board regrets its inability to recommend a dividend for the year under review. The company is in the process of exiting from restructuring arrangement and your board is confident, barring unforeseen circumstances, of resumption of dividend pay out to shareholders at the earliest reasonable opportunity.

CAPITAL EXPENDITURE

During the year under review the Company incurred capital expenditure of Rs. 2347.64 lakhs for solar power plant, fancy yarn attachment & carding machinery & others.

EXPORTS

The American and European economies have been experiencing recessionary trends since last year impacting the fabric exports to these markets. The company however had undertaken sustainable initiatives like recycling and cleankore (sustainable dyeing technology) to achieve around 15% growth in export revenues. The export realization had also improved significantly on account of better product mix and innovations which were well received by our reputed clientele like Lee, Wrangler, Dickies, Timberland, Wal-Mart, Amazon Gorge, Primark, Salisbury, Jack & Jones, etc. The Company hopes to improve on these initiatives in the coming year.

FUTURE OUTLOOK

While the performance in the financial year 2022-23 is encouraging the rising other input costs like dyes, chemicals, coal & power etc. present a challenge and an opportunity to the Company. The Company will continue to do its best in the present global scenario to meet the evolving challenges.

DIRECTORS

IDBI withdrew the nomination of Sri. Rajan Ravindra Shukla in the first week of May 2023. The Board wishes to place on board its appreciation of the contribution made by Sri. Rajan Ravindra Shukla to the deliberation of the Board during his tenure.

During the year, Sri. Paritosh Agarwal (DIN: 00008738), Managing Director will retire at the ensuing Annual General Meeting and being eligible, offers himself for reappointment.

Further details about the above directors are given in the Corporate Governance Report as well as in the Notice of the ensuing Annual General Meeting being sent to the shareholders along with the Annual Report.

EVALUATION OF THE BOARDS PERFORMANCE

In compliance with the Companies Act, 2013, and as per the latest Listing Regulations, the annual performance evaluation of the Board its Committees and of Individual Directors was carried out during the year under review.

More details on the same are given in the Corporate Governance Report.

FAMILIARISATION PROGRAM FOR INDEPENDENT DIRECTORS

The Company has formulated a familiarisation program for the Independent Directors to provide insights into the Company to enable the Independent Directors to understand its business in depth and contribute significantly to the Company. The details of such program are available in the Companys website www.suryalakshmi.com

DECLARATION BY INDEPENDENT DIRECTORS

The Company has obtained the declaration from the Independent Directors confirming that they meet the criteria of Independence laid down in Section 149(6) of the Companies Act, 2013.

MEETING OF INDEPENDENT DIRECTORS

A separate meeting of the Independent Directors was held under the Chairmanship of Sri R. Surender Reddy, Independent Director on February 14, 2023, inter-alia to discuss evaluation of the performance of Non-Independent Directors, the Board as a whole, evaluation of the performance of the Chairman, taking into account the views of the Executive and Non-Executive Directors and the evaluation of the quality, content and timeliness of flow of information between the management and the Board that is necessary for the Board to effectively and reasonably perform its duties.

The Independent Directors expressed satisfaction with the overall performance of the Directors and the Board as a whole.

POLICY ON APPOINTMENT & REMUNERATION OF DIRECTORS

The Board of Directors has framed a policy which lays down a framework in relation to remuneration of Directors, Key Managerial Personnel and Senior Management of the Company. The Policy broadly lays down the guiding principles, philosophy and the basis for payment of remuneration to Executive and Non-executive Directors (by way of sitting fees and commission), Key Managerial Personnel, Senior Management and other employees.

The policy also provides the criteria for determining qualifications, positive attributes and Independence of Directors and criteria for appointment of Key Managerial Personnel / Senior Management and performance evaluation which are considered by the Nomination and Remuneration Committee and the Board of Directors while making selection of the candidates. The above policy has been posted on the website of the Company at www. suryalakshmi.com.

DIRECTORS RESPONSIBILITY STATEMENT

Your Directors state that:

(a) in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;

(b) the Directors had selected such accounting policies and applied them consistently and made judgements 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 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 the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(d) the Directors had prepared the annual accounts 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 are operating effectively.

(f) 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.

DISCLOSURES UNDER THE COMPANIES ACT, 2013

i) Annual Return:

The Companys Annual Return has been hosted on Companys website and can be accessed at the web link www.suryalakshmi.com. Therefore, the extract of Annual Return as per the provisions of Section 92 of the Companies Act, 2013 and Rule 12 of Companies (Management and Administration) Rules, 2014 has not been annexed to this Boards Report. ii) Number of Board Meetings:

The Board of Directors met four times during the year 2022-2023. The details of the board meetings and the attendance of the Directors are provided in the Corporate Governance Report. iii) Audit Committee:

The Board has constituted the Audit Committee which comprises of Sri R. Surender Reddy, as the Chairman and Sri R. S. Agarwal, Sri Navrang Lal Tibrewal and Sri Rajan Ravindra Shukla since 30/04/2022 as the members. More details on the committee are given in the Corporate Governance Report. iv) Related Party Transactions:

All the related party transactions are entered into on arms length basis and are in compliance with the applicable provisions of the Companies Act 2013 and the Listing Regulations. There are no materially significant related party transactions made by the company with Promoters, Directors or Key Managerial Personnel etc. which may have potential conflict with the interest of the company at large. Thus disclosure in Form AOC-2 is not required to be made. All Related Party Transactions are disclosed to the Audit Committee and the Board.

Omnibus approval is obtained for the transactions which are foreseeable and repetitive in nature. A statement of all related party transactions is presented before the Audit Committee and the Board on a quarterly basis, specifying the nature, value and terms and conditions of the transactions. The Related Party Transactions Policy as approved by the Board is uploaded on the companys website at the web link: http://www.suryalakshmi.com/investor.corporate. governance.aspx

v) REPORTING OF FRAUDS

There was no instance of fraud during the year under review, which required the Statutory Auditors to report to the Audit Committee and / or Board under Section 143(12) of Act and Rules framed thereunder.

vi) No Loans/Guarantees / Investments under Section186 of the Companies Act, 2013 have been made during the year.

vii) There were no significant and material orders passed by the Regulators/ Courts that would impact the going concern status of the Company and its future operations

CORPORATE GOVERNANCE

As per the latest Listing Regulations on Corporate Governance, Management Discussion and Analysis Report forms part of the Annual Report (ANNEXURE - 5). The Company has complied with the corporate governance requirements under the Companies Act, 2013 as stipulated under the Listing Regulations. A separate section on corporate governance under the Listing Regulations, along with a certificate from the auditors confirming the compliance, is annexed and forms part of the Annual Report (ANNEXURE - 1).

CORPORATE SOCIAL RESPONSIBILITY POLICY

At Suryalakshmi a major concern has been, the sincere effort by the Company to recognize the role played by the Society at large, the environment and its human resources in its sustainability and growth and to strive to discharge its social responsibility as a corporate citizen. To this end, the Company has always tried to strike a fine balance of economic, environmental and social commitments. The sustainable stewardship mantra is not limited to philanthropy, but encompasses holistic community development and other initiatives to strengthen business sustainability. The core areas for Suryalakshmis Corporate Social Responsibility (CSR) Programmes for this year have been health care, environment and education. Details of the projects / activities implemented by the Company are furnished in a separate ANNEXURE-2 to this report. The Company constituted a Committee of CSR consisting of Sri L. N. Agarwal, Sri Paritosh Agarwal and Sri R. Surender Reddy, with Sri L. N. Agarwal as Chairman.

STAKEHOLDERS RELATIONSHIP COMMITTEE

The reconstituted Stakeholders Relationship Committee consists of following Directors. Mr. Navrang Lal Tibrewal, Chairman (Independent Director), Sri L. N. Agarwal, (member), Sri Paritosh Agarwal (member) and Sri E.V.S.V. Sarma, Compliance Officer & Company Secretary.

RISK MANAGEMENT

The Company has instituted a proper mechanism for identifying and establishing controls to effectively manage different kinds of risks viz., Trend Related Risks, Raw Material Risks, Brand / Technology Risks, Operational Quality Risks, Human Resources Risks, Regulatory Risks and Financial Risks. A Committee headed by Sri Paritosh Agarwal, Managing Director periodically reviews the risks and takes steps to mitigate identified risks.

WHISTLE BLOWER POLICY

The Company has in place a Whistle Blower policy for vigil mechanism for Directors and employees to report to the management about unethical behaviour, fraud, violation of Companys Code of Conduct, which also ensures safeguards against victimization of those employees who seek to make use of the free access to the Audit Committee for this purpose. None of the Personnel has been denied access to the audit committee. The Whistle Blower Policy has been posted on the website of the Company at www. suryalakshmi.com/investor-corporate-governance.aspx

DECLARATION ABOUT COMPLIANCE WITH THE CODEOF CONDUCT BY MEMBERS OF THE BOARD AND SR.MANAGEMENT PERSONNEL.

The Company has complied with the requirements of Code of Conduct for Board members and Sr. Management Personnel.

DISCLOSURE UNDER THE SEXUAL

HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITIONAND REDRESSAL) ACT, 2013

The Company has in place an Anti-Sexual Harassment Policy in line with the requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. Internal Complaints Committee has been set up to redress complaints received regarding sexual harassment. All employees (permanent, contractual, temporary and trained) are covered under the Policy. The following is a summary of sexual harassment complaints received and disposed of during each Calendar year:

a) No. of Complaints received - NIL

b) No. of Complaints disposed off during the year - NIL

c) No. of cases pending as at end of the Financial Year - NIL

AUDITORS

I. Statutory Auditors and their Report:-

M/s. Brahmayya & Co, Chartered Accountants, Hyderabad (ICAI Firm Regn No.000513S) were appointed as auditors for a period of 5 years in the 59th AGM on a remuneration mutually agreed upon by the Board of Directors and the Statutory Auditors.

The Company has received the prescribed certificate from the Auditors regarding the appointment and the necessary consent for his appointment as Auditors. The Auditors Report to the shareholders for the year under review does not contain any qualification, reservation or adverse remark.

II. Cost Auditor and Cost Audit Report

As per the requirement of Central Government and pursuant to Section 148 of the Act, 2013 read with the Companies (Cost Records and Audit) Rules, 2014 as amended from time to time, your Company has required to maintain cost records and accordingly, such accounts are made and records have been maintained relating to Textile Divisions every year.

Pursuant to Section 148 of the Companies Act, 2013 the Board of Directors on the recommendation of the Audit Committee, has appointed M/s. S. Hariharan & Associates, Cost Accountants (Firm Registration No.100486) as the Cost Auditors for the Financial Year 2023-2024 and has recommended their remuneration to the shareholders for their ratification at the ensuing Annual General Meeting. M/s. S. Hariharan & Associates, Cost Accountants have confirmed their appointment is within the prescribed limits and also certified that they are free from any disqualification.

III. Secretarial Auditor and Secretarial Audit Report

The Board had appointed Mr. K. V. Chalama Reddy, Company Secretary in Whole-time Practice (M. No. F9268), to carry out Secretarial Audit under the provisions of Section 204 of the Companies Act, 2013 for the financial year 2023-2024. The report of the Secretarial Auditor for the financial year 2023-2024 does not contain any qualifications, reservation or adverse remarks and is annexed to this report as

ANNEXURE -3.

INTERNAL CONTROL SYSTEMS & THEIR ADEQUACY

Your Company has effective and adequate internal control systems in place commensurate with the size and complexity of the organisation. Internal and operational audit is carried by M/s. K. Vijaya Raghavan & Associates LLP, a reputed firm of Chartered Accountants. The Internal Audit system is designed to meet the statutory requirements as well as ensure proper implementation of management and accounting controls. The internal auditors submit their report to the Managing Director and also to the Audit Committee, which reviews the report and ensures that the Audit observations are attended to by the Management.

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

The Company has Solar Power for 5 MW at its Amanagallu division to promote alternative source of energy, information on conservation of energy, technology absorption, foreign exchange earnings and out go, as required to be given pursuant to provision of Section 134 of the Companies Act, 2013 read with the Companies (Accounts) Rules, 2014 is annexed here to marked ANNEXURE-4 and forms part of this report.

DEPOSITS

The Company has not accepted any deposits from the public during the year under review.

COMPLIANCE WITH SECRETARIAL STANDARDS

The Company has complied with the Secretarial Standards issued by the Institute of Company Secretaries of India.

EMPLOYEES

Periodic Training programmes for developing a skilled workforce, personality development programmes, yoga camps, etc., encouragement of employee participation in district / state level sports events are regularly undertaken. An integrated woman focused program trains unskilled women to undertake skilled jobs at its units.

Disclosure pertaining to the remuneration and other details as required under Section 134 & 197(12) of the Act, and the Rules framed thereunder is enclosed as ANNEXURE-6 to the Boards Report.

ACKNOWLEDGEMENTS

The Board of Directors are pleased to place on record their appreciation of the cooperation and support extended by Banks and various State and Central Government Agencies. The Board also wishes to place on record its appreciation of the valuable services rendered by the employees of the Company.