Suryalata Spinning Mills Ltd Directors Report.

To

The Members,

Suryatata Spinning Mills Limited

Your Board of Directors present the 38th Annual Report of the company together with the Audited Financier! Statements of Accounts for the financial year ended 31ST March, 2021.

Financial Results

The Company has prepared financial results in accordance with the Companies (Indian Accounting Standards) Rules, 20IS (Ind AS) prescribed under section 133 of the Companies Act, 201 3,

The financial performance doting the year ended 31 “March, 2021 has been summarized below:

(Rs. in Lakhs)

Particulars Current Year 2020 -21 Previous Year 2019-20
Revenue from Operations 27,653 37.0 i 5
Profit before Interest Depredation and Tax 4916 4.242
Interest 1149 1,145
Depreciation 1119 1.106
Profit Before Tax 2648 1,991
Less : Provision for tax 483 357
Deferred Tax Liability 288 223
Profit After Tax 1877 1,411
Add : Profit brought forward from last year 1081 1,198
Amount available for appropriation 2958 2,609
Appropriations:
Transfer to
(a) General Reserve 1500 1,500
(b) Dividend on Equity Shares 13 23
(c) Dividend distribution tax - 5
Balance Carried forward to Balance Sheet 1442 1.081

The Companys key performance indicators are as under.

Details of Operations

In the year under review, operations were encountered sluggishness in the 1“ two Quarters of 2020-21. Due to COVID-19 Pandemic and Economic uncertainly, especially in the manufacturing segment selling prices fallen following with drop in Raw Material Prices, Crude Prices. Rupee Depreciation etc,. Plant operations dropped drastically in the “Two Quarters as migrant labour moved to their natives and the prominent weaving markets of Mumbai and Bhilwara remained closed. Economy recovered gradually from the third quarter as migrant labour returned and mills in Mumbai and other markets resumed operations. In the Financial Year 2020-21 the Company revenue operations were dropped by ONE Quarter period. However the company achieved good performance with demand increases from rural markets, gradual opening of Urban markets and ease of supply chains among others. The Company has posted highest ever profits during the year under review.

Average yam realization dropped by Rs. 3.96 i.e to f 135.37 per kg. as against f 139.33 per kg in the previous year.

Average input (raw material) cost fallen by Rs. 10.72 (i.e) to f 74.34 per kg. as against f 85.06 in the previous year.

Contributions from operations increased by f.6.76 per kg. (i.e) f.6f .03 as against Rs.54.27 per kg in the previous year.

Operational cost increased by f 3.63 per kg. (i.e) Rs. 49.67 as against Rs..46.04 per kg in the previous year.

Highlights of the Companys Affairs

The highlights of the Companys performance are as under:

• Revenue from operations for the FY 2020-21 is Rs.2 7,653 Lakhs as compared to Rs. 37,015 Lakhs in the previous year as the plant operations were effected due to COVID-19 and we lost one quarter period (i.e) Dropped by 25%.

• Exports maintained at Rs. 2,100 Lakhs as compared to Rs. 4.603 Lakhs in the previous year. FOB values exports US$ 27,85,051 as against LIS$ 60,76,631 In the previous year i.e Dropped by 54.17%.

• Production quantities Decreased to 21488 MTs as against 26165 MTs in the previous year

• Profit before Tax for the FY 2020-21 is Rs. 2,648 Lakhs as compared to Rs.1,991 Lakhs in the previous year.

• Profit after Tax is Rs.1,877 Lakhs as against Rs. 1,41 1 Lakhs in the previous year.

• There is no change in business during the year under review.

COVID-19 Impact

The outbreak of the deadly COVID-19 virus and the ensuing lockdown imposed across the country affected business operations. COVID-19 is an unprecedented challenge. The health of the employees and workers became a priority. Stoppage of operations during lockdown period, idling of workforce and remobilization of workforce after lock down resulted a large financial burden to the Company. This lockdown gave India time to make a concerted effort to flatten the outbreak curve. However, towards later part of the year consequent to significant opening of the economic activity across the nation the demand picked up in the period post Covid-19.

India experienced a massive second wave of Covid-19 infections from March 2021. However, we expect no major changes in our economic activity as the nation is preparing to face the Pandemic with vaccines and preparedness.

Renewable Energy

At Suryalata, we believe that the world will be Increasingly driven by renewable energy. India is expected to play a prominent role In greening of the world. India set a target of 450 GW of renewable energy capacity by 2030. During this COVID-19 Pandemic period, the company evaluated various opportunities and entered agreements to set up solar power plants in manufacturing units. The company has taken steps for Solar plant Installations of 4.342 MW on BOT basis at Kalwakurthy Unit and 4.585 MW on differed payment CAPEX mode at Urukondapet Unit, in addition to the existing Solar plant of 1 MW (i.e) Total 9.927 MW Solar plants as against power connected Load of 12,650 MW. These Initiatives and efforts are being self reliant to the 20% of existing power consumptions in rite coming years.

Capital expenditure

The Company had spent Rs. 65.10 lakhs towards construction of workers quarters within tire premises of plants and Rs. 190.39 lakhs spent towards Installation of balance equipment required to increase the production and Rs. 46.19 lakhs spent. for installation of material transportation/ handling system etc,, i.e total investment in the assets Rs. 301.68 lakhs in FY 20-21. The Company also acquired Movable vehicle for a value of Rs. 30.88 Lakhs.

Transfer to Reserves

The Company has decided to transfer f 1500/- Lakhs to the general reserve for the financial year ended March 31,2021.

Dividends

Your Directors have recommended the payment of Dividend on the Cumulative Redeemable Preference Shares as per the terms and conditions of the Issue for the Financial Year 2020-21. The said Dividend will absorb a sum off 40,52,329/-.

Also, Your Directors have recommended the payment of Dividend on Equity Shares at 20% (i.e.) f2 per share of f10/- each to Non-promoter equity shareholders of the Company for the year 2020-21. The dividend will absorb a sum of f25,29,380.

Investor Education and protection Fund (IEPF).

Pursuant to provisions erf Section 124 and 125 of the Companies Act 2013 read with IEPF Rules 2016, all unpaid or unclaimed dividends up to the financial year 2012-3 3 was transferred to the Investor Education and Protection Fund established by the Central Government, after sent

notice to all sliareholders whose shares are due to he transferred to the 1EPF Authority and published requisite advertisement in the newspaper. The shareholders whose dividends and shares have been transferred to the IEPF Authority can claim their dividend and shares from the IEPF Authority. All unpaid or unclaimed dividends up to the financial year 2013-14 will be transferred to the Investor Education and Protection Fund as per the due dates falling this year.

Deposits

During the year under review the Company has not accepted any deposits in pursuance of Chapter V Companies (Acceptance of Deposits) Rules, 2014.

Disclosures under the Companies Act, 2013.

Extract of Annual Return

Pursuant to section 134 (3) (a) IL section 92 (3) of the Companies Act, 2013 read with Rules 12 of the Companies (Management A Administration) Rules, 2014, the Annual Return of the company for Financial Year 2020 - 21 placed on the companys website at www.suryalata.com.

Number of Meetings of the Board of Directors 8. Committees.

Four (4) Board Meetings A Audit Committee Meetings weie held during the Financial Year 2020-21 as below:

1. 25“June, 2020

2. 12"September, 2020

3. 12“November, 2020

4. 12th February, 2021

The Meetings of the following Committees held on the respective dates as mentioned below:

1. Nomination and Remuneration Committee - IS*1 June, 2020.

2. CSR Committee Meeting - 25“ June, 2020.

3. Stakeholders Relationship Committee Meeting — 12th February. 2021.

For details pertaining to attendance of Directors for the said Meetings, please refer to the Corporate Governance Report, which forms part of this report.

Changes in Share Capital

During the year, the Company has Redeemed 7% Cumulative Redeemable Preference Shares of 1,50,000 each @ ^100 on 05 March, 2021 as per the terms of issue due for redemption. Apart from this there was no change in the share capital of tire Company during the financial year under review. Total outflow from the Capital Redemption Reserve by virtue of this redemption is Rs. 1,50,00,000.

Directors Responsibility Statement

Pursuant to the requirements under Section 134 of the Companies Act, 2013 with respect to the Directors Responsibility Statement, the Board of Directors of the Company hereby confirms:

(a) that in the preparation of the annual accounts for the Financial Year ended 31” March, 2021, the applicable accounting standards have been followed;

<b) that the directors 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 its at 3IsMarch, 2021, and Profit and Loss Statement of the Company for that period;

(c) that the directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of Companies Act, 2013 for safeguarding the assets of the Company and for preventing and delecting fraud and other irregularities;

(d) that the directors have prepared (he annual accounts for die financial year ended 31” March, 2021, on a going concern basis;

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

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

Statement on declaration given by Independent Directors under Sub-Section (6) of Section 149 of the Companies Act, 2013.

The Independent Directors have submitted the Declaration of Independence, as required pursuant to Section 149 (7) of the Companies Act, 2013 stating that they meet the criteria of independence as provided in Sub-Section (6) of section 149 of Companies Act, 2013 A as per regulation 16( I)(b) of SEBI (LODR) Regulations 2015.

Related Party Transactions

All the related party transactions are entered in the ordinary course of business and on arms length basis they are in compliance with the applicable provisions of Companies Act 2013 and listing regulations. Ihe disclosures relating to related party transactions as required in Form AOC-2 is enclosed to this report as Annexure-I.

The Company has adopted a related party transactions policy and the said policy as approved by the board Is uploaded on the Companys website www.suryalata.com.

Particulars of Loans, Guarantees and Investments:

During the year under review, the Company has not granted any loans, neither provided guarantees nor made any investments covered in the register maintained under section 186 of the Companies Act, 2013.

Particulars of Employees

The details pursuant to Section 197(12) of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is enclosed as Annexure II.

Further during the year under review, the list of top ten employees in terms of remuneration drawn as set out in Rule 5 Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is enclosed as Annexure II.

Details of Directors and Key Managerial Personnels appointed or resigned during the year:

Appointment and resignation of directors after the closure of financial year and till the date of the report-

Sri Harishchandra Prasad Kanuri was appointed by the Board of Directors of the Company as Additional Director (under the category of the Independent Director) of the Company subject to the approval/ratification of the members of the Company in the ensuing annual General Meeting of the Company, w.e.f 27.08.2021 for a period of 5 years from 27.08.2021 to 26.08.2026 and Sri LakshmiUanth Reddy Konda resigned from the position of Independent Director w.e.f 24.08.2021. Aforesaid appointment and resignation were considered and approved in the resolution passed through circulation on 26.08.2021.

Apart from the details mentioned above, there were no appointments or resignation of Key Managerial Personnels during the financial year under review.

In accordance with the provisions of the Companies Act:. 2013 and in terms of Ar ticles of Association of the Company, Sri. Mahender Kumar Agarwal, Joint Managing Director of the Company is liable to retire by rotation at the ensuing Annual General Meeting and being eligible, offers himself for re-appointment.

Committees of the Board:

Currently the Board has four Committees:

1. The Audit Committee

2. The Nomination and Remuneration Committee

3. Corporate Social Responsibility Committee

4. Stakeholders Relationship Committee Audit Committee

The Audit Committee consists of Shri R Surender Reddy, Chairman, Sri K R Suresh Reddy, Member and Sri K Lakshmikanth Reddy, Member. Ail the recommendations tirade by the Audit Committee were accepted by the Board.

Nomination and Remuneration Committee.

The Nomination and Remuneration Committee consists of Sri K R Suresh Reddy, Chairman, Sri R Surender Reddy, Member and Sri IC Lakshmikanth Reddy, Member,

Policy on directors appointment and remuneration and other details:

The Company follows a policy on remuneration of directors and other senior managerial personnel. The Policy is recommended by lire Nomination and Remuneration Committee and approved by tire Board. More details of the same was given in the Corporate Governance Report .

Corporate Social Responsibility Committee.

The Corporate Social Responsibility Committee consists of Sri R Surender Reddy, Chairman, Sri Vithaldas Agarwal, Member and Sri Mahender Kumar Agarwal, Member.

This policy encompasses the Companys philosophy for giving back to society as a corporate citizen and lays down the guidelines and mechanism for undertaking socially useful programmes for the welfare 6. sustainable development of the community at large.

Corporate Social Responsibility Policy.

Tire core theme of the Companys CSR policy is giving back to the society from which it draws its resources by extending helping hand to the needy and the underprivileged.

Corporate Social Responsibility is the commitment of business to contribute for sustainable economic development, it is the contribution of rhe corporate sector for philanthropic causes like education, health, water, Sanitation, Animal Welfare, environment and community development. F.nlarges this to synchronization with CSR activities. In alignment with vision of the company, through its CSR initiatives will continue to enhance value creation

in the society, through its services, conduct initiatives, so as to promote sustained growth of ttie society, in fulfillment of its role as a Socially Responsible Corporate, with environmental concern.

The Report on Corporate Social Responsibility as per Rule 8 of (Corporate Social Responsibility Policy) Rules, 2014 is enclosed as Annexute IH.

Stakeholders Relationship Committee.

Stakeholders Relationship Committee consists of Sri K R Suresli Reddy, Chairman, Sri Vittialdas Agarwal, Member and Sri Mahender Kumar Agarwal, Member.

The Scope of the committee shall include considering and resolving the grievances of the security holders of the company which may arise due to any of the reasons cited in the Stakeholders Relationship Committee of the company.

Auditors:

Statutory Auditors:

At the Annual General Meeting (AGM) held on September 4, 2017, M/s K.S Rao A Co., Chartered Accountants (ICAI Firm Registration Number 00310?%), were appointed as Statutory Auditors of the

Company to hold office for a period of five years and their appointment will be subject to the ratification of members at every Annual General Meeting. However, pursuant to the Companies (Amendment) Act, 2017, the ratification of tiie auditors at every annual general meeting of the company has been dispensed with.

K S Rao 2. CO, chartered Accountants, who are the statutory Auditors of the company has issued an unmodified Auditors Report (standalone) for Financial Year ended 31st March, 2021 and the Auditors have not reported any matter under section 143( 12) of the companies Act 2013 and therefore no details is required to be disclosed under section 134(3) of the Companies Acts 2013,

Auditors Report

The Auditors Report to the Shareholders for the year under review does not contain any qualification or adverse remark.

Secretarial Auditor

The Board has appointed VCAN Associates, a firm of practicing Company Secretaries, Hyderabad as the Secretarial Auditors to conduct Secretarial Audit of the Company for the Financial Year ended 31st March, 2021 in compliance with the provisions of Section 204 of the Companies Act, 2013,The Secretarial Audit Report issued by VCAN Associates, in Form MR-3 is enclosed as Annexure IV.

Internal Auditor

The Board of Directors of the Company have appointed M/s Brahmayya &. Co., Charted Accountants as Internal Auditors to conduct Internal Audit of the Company for the Financial Year ended 3151 March, 2021,

Cost Auditor:

M/s. Aruna Prasad A Co., Cost Auditors were appointed as Cost Auditor for conducting the cost audit of the Company for the financial year 2020-21 and paid remuneration of T3S000/-. The Board of Directors have appointed M/s. Aruna Prasad A Co., Cost Auditors, Chennai for conducting the cost audit of the Company for the financial year 2021 - 22, in compliance to the provisions of Section 148 of the Companies Act, 2013 read with Companies (Cost Records and Audit Rules,) 2014, on the recommendations made by the Audit Committee and has recommended her remuneration for the approval of Members at the ensuing Annual General Meeting.

Corporate Governance Report

The report on Corporate Governance as per Regulation 34(3) read with Schedule V of rhe STB! (L.ODR) Regulations is included as a part of this Annual Report. The requisite certificate from VCAN Associates confirming the compliance with the conditions of Corporate Governance is attached to the report on Corporate Governance.

Management Discussion and Analysis

In terms of provisions erf Regulation 34(2) of SEBI Listing Regulations report on Management Discussion S. Analysis for the year under review is provided in a separate section forming part of this Annual Report.

Vigil Mechanism/Whistle Blower Policy:

The Board of Directors of the Company has adopted Whistle Blower Polity. This polity is formulated to provide an opportunity to employees and an avenue to raise concerns and to access in good faith the Audit Committee, to the highest possible standards of ethical, moral and legal business conduct and its commitment to open communication, in case they observe unethical and improper practices or any other wrongful conduct in the Company, to provide necessary safeguards for protection of employees from reprisals or victimization and to prohibit managerial personnel from taking any adverse personnel action against those employees.

The Policy on vigil mechanism/whistle blower policy may be accessed on the Companys website www.suryalata. com

Details of adequacy of internal financial controls.

The company has in place adequate internal financial controls with reference to financial statements. During the year, such controls wete tested and no reportable material weaknesses in the design or operation were observed. Change in the Nature of Business.

There has been no change in the nature of business of the Company during the financial year under review.

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

No significant or material orders were passed by the regulators or courts or tribunals impacting the going concern status and companys operations in future during the year under review

Material changes and Commitments, if any, affecting the financial position of the Company occurred after the closure of financial year till the time of adoption of this report.

No other material changes and commitments liave occurred after the close of the year till the date of this Report, which affect the financial position of the Company. Further, there is no change in the nature of business of tire Company.

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

The information with respect to Conservation of energy, technology absorption, foreign exchange earnings and outgo pursuant to Section 134(3)(m) of the Act read with RuleS of Companies (Accounts) Rules, 2.014. are provided in the Annexure V to this Report.

Risk Management Policy.

The Company has policy for identifying risk and established controls to effectively manage the risk. Further the company has laid down various steps to mitigate the identified risk. The audit committee has additional oversight in the area of financial risks and controls. Major risks identified by the businesses and functions are systematically addressed through mitigating actions on a continuing basis.

Declaration with the compliance with the code of conduct by Members of the board and Senior Management personnel,

Tire Company has complied with the requirements about code of conduct for Board members and Sr. Management Personnel.

The said polity is available on the website of the Company www.smyaiata.com

Mechanism for Board Evaluation.

The board of directors has carried out an annual evaluation of its own performance, board committees and individual directors pursuant to the provisions of the schedule IV of the Companies Act, 2013 and the corporate governance requirements as prescribed try Securities and F.xchange Board of India (Llstirig Obligations and Disclosure Requirements), Regulations 2015.

The Directors evaluation was broadly based on the parameters such as understanding of the Companys vision, objective, skills, knowledge and experience, participation and attendance in Board/ Committee meetings; governance and contribution to strategy; interpersonal skills etc.

The Board has carried out the annual performance evaluation of its own performance, the Directors individually as well as evaluation of the working of its Board Committees. A structured questionnaire was prepared covering various aspects of the Boards functioning such as adequacy of ttie composition of the Board and its Committees, Board Culture, execution and performance of specific duties, obligations and governance.

A meeting of the Independent Directors was also held which reviewed performance of non-independent directors, performance of the board as a whole and performance of the chairman after taking into account the views of executive directors and non-executive directors. The same was discussed in the board meeting that followed the meeting of the independent directors, at which the performance of the board, its committees and individual directors was also discussed. Performance evaluation of independent directors was done by the entire board, excluding the independent director being evaluated.

Policy on Sexual Harassment

The Company has adopted policy on Prevention of Sexual Harassment of Women at Workplace in accordance with the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act; 2013.The Company regularly conducts awareness programmes for its employees.

Disclosure pertaining to sexual harassment of women at workplace.

During the Financial year ended 3T" March, 2021 the Company has neither received any complaints nor there are any pending complaints pertaining to sexual harassment, and the Company had created Internal Complaints committee.

Environment, Health and Safety

The Company considers it is essential to protect the Earth and limited natural resources as well as the health and well being of every person. The Company strives to achieve safety, health and environmental excellence in all aspects of its business activities. Acting responsibly with a focus on safety, health and the environment is part of the Companys DNA.

Compliance with Secretarial Standards

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

Prevention of Insider Trading Code

The Company has a policy i.e., code of conduct prohibiting insider trading in conformity with SEBI (Prohibition of Insider Trading) Regulations, 201S. The said polity contains necessary procedures applicable to Directors, officers and designated persons for trading in the securities of the Company.

The trading window closure are intimated in advance to all the concerned during which period, the Board of Directors and designated persons are not permitted to trade in the securities of the company.

Acknowledgments.

Tise Company is grateful to its Customers, Shareholders, Suppliers, Brinks S* Financial institutions, Central &. State Government Authorities for their constant support. Tiie Board of Directors also place on record their deep appreciation of the contribution made by the employees at all levels, the consistent growth of the Company was made possible by tiieii fiard work, loyally, dedication, coordination and support.

for and on behalf of the Board for Suryaiata Spinning Mills Limited
Mahender Kumar Agarwal Vithaldas Agarwal
Joint Managing Director Managing Director
DIN: 0001280/ DIN: 00012774
Place: Secunderabad Date: 27.08.2021