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Suryalata Spinning Mills Ltd.

BSE: 514138 Sector: Industrials
NSE: N.A. ISIN Code: INE132C01027
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P/E 6.12
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OPEN 139.45
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VOLUME 169
52-Week high 199.20
52-Week low 123.00
P/E 6.12
Mkt Cap.(Rs cr) 58
Buy Price 0.00
Buy Qty 0.00
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Suryalata Spinning Mills Ltd. (SURYALATASPG) - Director Report

Company director report

To

The Members

Your Directors have pleasure in presenting the 33rd Annual Report together with theCompany’s Audited Financial Statements for the financial year ended 31st March 2016.

Financial Results

The financial performance of the Company during the year ended 31st March 2016 hasbeen summarized below:

(Rs. in Lakhs)
Particulars Current Year 2015-16 Previous Year 2014-15
Gross Sales/Turnover 35396 37694
Net Sales/Turnover 35369 36541
Profit before Interest Depreciation and Tax 3181 3856
Interest 915 1070
Depreciation 811 868
Profit Before Tax 1456 1917
Less: Provision for tax 400 482
Deferred Tax Liability 95 170
Profit After Tax 961 1265
Add: Profit brought forward from last year 1033 925
Amount available for appropriation 1994 2190
Appropriations:
Transfer to
(a) General Reserve 500 1000
(b) Preference Shares Redemption Reserve 385 0
(c) Dividend on Equity Shares 25 77
(d) Dividend on Preference Shares 23 54
(e) Dividend distribution tax 10 26
Balance Carried forward to Balance Sheet 1051 1033

Note: The above figures are extracted from the Financial Statements as per IndianGenerally Accepted Accounting Principles (GAAP).

Operations

The year 2015-16 was marked by a prolonged globalweaknessrealizationcontinuedtodeclineofitakecontinued to remain sluggish terms of tradeweakened consumer preferences became increasingly demanding even then the Company isproud to have ending performance in the Financial Year 2015-16. Operations were broadlyeffected with the following.

• Average input (raw material) cost dropped to Rs. 87.70 per kg from Rs. 99.21 perkg in the previous year.

• Average yarn realization dropped to Rs. 136.43 per kg from Rs. 152.55 per kg inthe previous year.

• Contributions for operations fallen to Rs. 46.51 per kg from Rs. 51.78 per kg inthe previous year.

Highlights of the Company’s Affairs

The highlights of the Company’s performance are as under:

• Revenue from operations for the FY 2015-16 is Rs. 35396 Lakhs as compared toRs. 37694 lakhs in the previous year.

• Exports are Rs. 3055 lakhs compared to Rs. 10567 Lakhs in the previous year.

• Production quantities increased to 25795 MTS as against 24151 MTS in previousyear.

• Profit Before Tax for the FY 2015-16 is Rs.1456 as compared against Rs. 1917Lakhs in previous year.

• Profit After Tax is Rs. 961 Lakhs as against Rs. 1265 Lakhs in previous year.

• Cash Profits of Rs 2266 Lakhs as against Rs 2785 lakhs in previous year.

Capital expenditure

During the year under review your company has incurred Rs. 304 Lakhs towards thecapital expenditure. The company also spent Rs. 514 lakhs towards Civil structures ofExpansion project undertaken at Kalwakurthy Unit.

Future outlook

A note on the future outlook of your Company is presented under Management Discussionand Analysis which forms part of this Report.

Transfer to Reserves

The Company has proposed to transfer Rs. 500 lakhs to the general reserve for thefinancial year ended 31st March 2016.

Dividends

Your Directors have recommended the payment of Dividend on the Cumulative RedeemablePreference Shares as per the terms and conditions of the Issue for the Financial Year2015-16. The said Dividend will absorb a sum of H2253388/. The corporate dividend taxwill be H458737-.

Also your Directors have recommended the payment of Dividend on the Equity Shares at20% (i.e.) Rs. 2 per share of Rs. 10/- each to Non-promoter equity shareholders of theCompany for the year 2015-16. The dividend will absorb a sum of Rs 2529380/- and thedividend tax will be Rs 514922/-.

Deposits

During the year under review the Company has not accepted any deposits during theFinancial Year 2015-16 in pursuance of Chapter V Companies (Acceptance of Deposits) Rules2014.

Subsidiaries

YP Solar Power Private Limited had been incorporated as a Wholly Owned Subsidiary ofthe Company to establish solar power plant for captive consumption purpose. However thesame ceased to be a subsidiary w.e.f. 18th March 2016 as it could not turn up for thepurpose during the year.

There are no associate companies or joint venture companies within the meaning ofsection 2(6) of the Companies Act 2013. There has been no material change in the natureof the business of the subsidiaries.

Disclosures under the Companies Act 2013

Extract of Annual Return

The Extract of Annual Return prepared in Form MGT-9 as per the provisions of Section 92of the Companies Act 2013 read with Rule 12 of the Companies (Management andAdministration) Rules 2014 is enclosed as Annexure I to this Report.

Number of Meetings of the Board of Directors

Four (04) Board Meetings & Audit Committee Meetings were held during the FinancialYear 2015-16 as below:

1. 25th May 2015

2. 12th August 2015

3. 7th November 2015

4. 4th February 2016

The Meetings of the following Committee’s held on the respective dates asmentioned below:

1. CSR Committee Meeting – 25th May 2015

2. Independent Directors Meeting – 4th February 2016

3. Stake holders relationship Committee Meeting – 07th November 2015

For details pertaining to attendance of Directors for the said Meetings please referto the corporate governance report which forms part of this report.

Changes in share capital

During the year under review your company has made an issue and allotment of 385000Cumulative Redeemable Preference shares of face value of Rs. 100/- each on preferentialbasis at par to the promoters & promoters group of the Company.

Consequently the paid up preference share capital of the company has increased from Rs.15000000/- to Rs. 53500000/-.

Directors Responsibility Statement

Pursuant to the requirements under Section 134 of the Companies Act 2013 with respectto the Directors’ Responsibility Statement the Board of Directors of the Companyhereby confirms:

(a) that in the preparation of the annual accounts for the financial year ended 31stMarch 2016 the applicable accounting standards have been followed;

(b) that the directors have selected such accounting policies and applied themconsistently and made judgments and estimates that are reasonable and prudent so as togive a true and fair view of the state of affairs of the Company as at 31st March 2016and Statement of Profit and Loss of the Company for that period;

(c) that the directors have taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of Companies Act 2013 forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities;

(d) that the directors have prepared the annual accounts for the financial year ended31st March 2016 on a going concern basis;

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

(f) that the directors have devised proper systems to ensure compliance with theprovisions of all applicable laws and that such systems were adequate and operatingeffectively;

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

The Independent Directors have submitted the Declaration of Independence as requiredpursuant to Section 149 (7) of the Companies Act 2013 stating that they meet the criteriaof independence as provided in Sub-Section (6) of section 149 of Companies Act 2013.

Related Party Transactions

All the related party transactions are entered on arms length basis and are incompliance with the applicable provisions and listing regulations.

There are no materially significant related party transactions made by the Company withpromoters Directors or Key Managerial Personnel etc which may have potential conflictwith the interest of the Company at large. Thus disclosure pertaining to Related Partytransactions in Form AOC-2 is not required.

The disclosure with respect to transactions with Related parties in compliance withAccounting standard 18 is disclosed in notes forming part of financial statements annexedto this report.

The Company has adopted a related party transactions policy and the policy as approvedby the board is uploaded on the Company’s website www.suryalata.com

Particulars of Loans Guarantees and Investments :

During the year under review the Company has granted unsecured loan to a Companycovered in the register maintained under section 186 of the Companies Act 2013.

However the Company has not given any guarantee or provided any securities to anyperson or body corporate.

Particulars of Employees

The details 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 2014enclosed as Annexure – II.

Further during the year under review none of the employees are receiving remunerationas set out in Rule 5(2) Companies (Appointment And Remuneration Of Managerial Personnel)Rules 2014.

Details of Directors and Key Managerial Personnel’s appointed or resigned duringthe year:

Pursuant to the provisions of section 196 197 198 and 203 read with schedule V of theCompanies Act 2013 Smt. Madhavi Agarwal (DIN 06866592) was appointed as ExecutiveDirector of the Company with the designation Whole-Time Director in the last AnnualGeneral Meeting of the Company held on 21st September 2015 for a period of Five (5)years.

Pursuant to the provisions of section 196 197 198 and 203 read with schedule V of theCompanies Act 2013 Sri Mahender Kumar Agarwal (DIN 00012807) was reappointed as JointManaging Director of the Company in the last Annual General Meeting of the Company held on21st September 2015 for a period of Five (5) years.

Pursuant to the provisions of section 203 of the Act the key managerial personnel (whoare not Directors) of the Company are – Sri. Nageswara Rao Kommineni Chief FinancialOfficer Smt. Prameela Rani Meka Company Secretary. There has been no change in the keymanagerial personnel during the year.

However subsequent to closure of Financial year 2015-

16 Smt. Prameela Rani Meka Company Secretary of the Company has submitted herresignation w.e.f. 31st May 2016. The Company has appointed Sri. Deepesh Kumar Pipalwaas Whole-time Company Secretary of the company w.e.f. 1st June 2016.

During the year the non-executive directors of the Company had no pecuniaryrelationship or transactions with the Company other than the sitting fees commission andreimbursement of expenses incurred by them for the purpose of attending meetings of theCompany.

In accordance with the provisions of the Companies Act 2013 and in terms of Articlesof Association of the Company Sri K K Sinha Director of the Company is liable to retireby rotation at the ensuing Annual General Meeting and being eligible offers himself forre-appointment.

Committees of the Board:

Currently the Board has four Committees:

1. Audit Committee

2. Nomination and Remuneration Committee

3. Corporate Social Responsibility Committee

4. Stakeholders Relationship Committee

Audit Committee

The Audit Committee consists of Sri R Surender Reddy Chairman Sri R S Agarwal Memberand Sri K R Suresh Reddy Member. All the recommendations made by the Audit Committee wereaccepted by the Board.

Nomination and Remuneration Committee.

The Nomination and Remuneration Committee consists of Sri K R Suresh Reddy ChairmanSri K. Lakshmi Kanth Reddy Member and Sri R. S. Agarwal Member.

Policy on directors’ appointment and remuneration and other details:

The Company follows a policy on remuneration of directors and other senior managerialpersonnel’s. The Policy is recommended by the Nomination and Remuneration Committeeand approved by the Board. More details of the same is given in the Corporate GovernanceReport.

Corporate Social Responsibility Committee

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

This policy encompasses the Company’s philosophy for giving back to society as acorporate citizen and lays down the guidelines and mechanism for undertaking sociallyuseful programmes for the welfare & sustainable development of the community at largeis titled as the Suryalata Spinning Mills Limited Corporate Social Responsibility Policy.

The core theme of the Company’s CSR policy is giving back to the society fromwhich it draws its resources by extending helping hand to the needy and theunderprivileged.

Corporate Social Responsibility is the commitment of business to contribute forsustainable economic development. It is the contribution of the corporate sector forphilanthropic causes like education health water environment and community welfare. Inalignment with vision of the company through its CSR initiatives will continue toenhance value creation in the society through its services conduct & initiatives soas to promote sustained growth of the society in fulfillment of its role as a SociallyResponsible Corporate with environmental concern.

The Report on Corporate Social Responsibility as per Rule 8 of (Corporate SocialResponsibility Policy) Rules 2014 is prepared and the same is enclosed as Annexure III tothis Report.

Stakeholders Relationship Committee:

Stakeholders relationship committee consists of

Sri K. R Suresh Reddy Chairman

Sri Vithaldas Agarwal Member and

Sri Mahender Kumar Agarwal Member.

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

Auditors

Statutory Auditors:

The Auditors M/s. Brahmayya & Co. Chartered Accountants (ICAI Firm RegistrationNo 000513S) Hyderabad Statutory Auditors of the Company retires at the ensuing AnnualGeneral Meeting and are eligible for re-appointment pursuant to section 139 of theCompanies’ Act 2013.

Auditor’s Report

The Auditor’s Report to the Shareholders for the year under review does notcontain any qualification or adverse remark.

Secretarial Auditor

The Board has appointed M/s R. & A Associates a firm of practicing CompanySecretaries Hyderabad as the Secretarial Auditors to conduct Secretarial Audit of theCompany for the Financial year ended 31st March 2016 in compliance with the provisions ofSection 204 of the Companies Act 2013.

The Secretarial Audit Report issued by M/s. R & A Associates in Form MR-3 isenclosed as Annexure IV to this Report.

Cost Auditor :

The Board of Directors have appointed M/s. Aruna Prasad & Co. Cost AuditorsChennai for conducting the cost audit of the Company for the financial year 2016-17 incompliance 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 Committeeand has recommended her remuneration for the ratification of Members at the ensuing annualgeneral meeting.

Vigil Mechanism/Whistle Blower Policy :

The Board of Directors of the Company have adopted Whistle Blower Policy. This policyis formulated to provide an opportunity to employees and an avenue to raise concerns andto access in good faith the Audit Committee to the highest possible standards of ethicalmoral and legal business conduct and its commitment to open communication in case theyobserve unethical and improper practices or any other wrongful conduct in the Company toprovide necessary safeguards for protection of employees from reprisals or victimizationand to prohibit managerial personnel from taking any adverse personnel action againstthose employees.

The Policy on vigil mechanism/whistle blower policy may be accessed on theCompany’s website www.suryalata.com

Details of adequacy of internal financial controls

The company has in place adequate internal financial controls with reference tofinancial statements. During the year such controls were tested and no reportablematerial weakness in the design or operation were observed.

Corporate Governance

A detailed Report on Corporate Governance is enclosed as Annexure V ManagementDiscussion and Analysis Report and the Certificate from the Auditors of your Companyregarding compliance of conditions of Corporate Governance as stipulated under Schedule Vof SEBI (LODR) Regulations 2015 forms part of this Report.

Change in the Nature of Business

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

The details of significant material orders passed by the regulators or courts ortribunals impacting the going concern status and Company’s operations in future

No significant or material orders were passed by the regulators or courts or tribunalsimpacting the going concern status and company’s operations in future during the yearunder review.

Material changes and Commitments if any affecting the financial position of theCompany

There were no material changes and commitments in the business operations of theCompany from the Financial Year ended 31st March 2016 to the date of signing of theDirector’s Report.

Conservation of energy technology absorption foreign exchange earnings and outgo.

The information with respect to Conservation of energy technology absorption foreignexchange earnings and outgo pursuant to Section 134(3)(m) of the Act read with Rule 8 ofCompanies (Accounts) Rules 2014 are provided in the Annexure VI to this Report.

Risk Management Policy

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

Declaration with the compliance with the code of conduct by Members of the board andSenior Management personnel

The Company has complied with the requirements about code of conduct for Board membersand Sr. Management Personnel.

The said policy is available on the website of the Company www.suryalata.com

Mechanism for Board Evaluation

The board of directors has carried out an annual evaluation of its own performanceboard committees and individual directors pursuant to the provisions of the schedule IV ofthe Companies Act 2013 and the corporate governance requirements as prescribed bySecurities and Exchange Board of India (Listing Obligations and Disclosure Requirements)Regulations 2015.

The Directors evaluation was broadly based on the parameters such as understanding ofthe Company’s vision and objective skills knowledge and experience participationand 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 theDirectors individually as well as evaluation of the working of its Board Committees. Astructured questionnaire was prepared covering various aspects of the Board’sfunctioning such as adequacy of the composition of the Board and its Committees BoardCulture execution and performance of specific duties obligations and governance.

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

Disclosure pertaining to sexual harassment of women at workplace

During the Financial year ended 31st March 2016 the Company has neither received anycomplaints nor there are any pending complaints pertaining to sexual harassment.

Acknowledgments

The Board of Directors places on record its gratitude to IDBI Bank Limited State Bankof India Insurance Companies and Government Authorities for their assistance andcooperation. The Board also acknowledges the support of the shareholders of the Company.The Board also places on record their deep sense of appreciation for the committedservices of all the employees of the Company.

For and on behalf of the Board
For Suryalata Spinning Mills Limited
Place: Secunderabad R. Surender Reddy
Date: 08th August 2016 DIN 00083972 Chairman

ANNEXURE II

PARTICULARS OF EMPLOYEES

Information as per Rule 5(1) of Chapter XIII Companies (Appointment and Remunerationof Managerial Personnel) Rules 2014

Name of Director Designation Remuneration FY 15-16 Remuneration in FY 14-15 % of increase in remuneration Ratio of remuneration to MRE
Executive Directors
Vithaldas Agarwal Managing Director 6408942 7288595 (12.15) 54.49 times
Mahender Kumar Agarwal Joint Managing Director 7002316 7876159 (11.09) 59.54 times
*Madhavi Agarwal Whole-Time Director 4459774 854833 521.71% 37.92 times
* Madhavi Agarwal was appointed as Whole Time Director of the Company w.e.f 6th November 2014 and the remuneration paid for the Financial Year 2014-15 has been mentioned accordingly.
Key Managerial Personnel
K Nageswara Rao Chief Financial Officer 2138240 1990330 7.43 18.18
*Prameela Rani M Company Secretary 444702 173427 156.42 3.78

*Prameela Rani M was appointed as Company Secretary of the Company w.e.f 6th November2014 and the remuneration paid for the Financial Year 2014-15 has been mentionedaccordingly.

1. The Median Remuneration of the employees of the Company during the financial yearwas Rs. 117600/- .

2. In the financial year there was an increase 10 % in the median remuneration ofemployees.

3. There are 362 permanent Employees on the Rolls of the Company as on 31st March2016.

4. Average percentage increase made in the salaries of employees other than themanagerial personnel in the last financial year i.e. 2014-15 was 10% and for financialYear 2015–16 also it was 10 % . However there was no change in the remuneration ofKey Managerial Personnel’s except Chief Financial Officer which was increased by 7.43% for the Financial Year 2015-16.

5. The key parameters for the variable component of remuneration availed by thedirectors are considered by the Board of Directors based on the recommendations of theNomination and Remuneration Committee.

6. It is hereby confirmed that the remuneration is as per the remuneration policy ofthe Company.

ANNEXURE IV

Form No. MR-3

SECRETARIAL AUDIT REPORT

FOR THE FINANCIAL YEAR ENDED 31ST MARCH 2016

[Pursuant to section 204(1) of the Companies Act 2013 and rule No. 9 of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014]

To

The Members

Suryalata Spinning Mills Limited

Surya Towers I Floor 105 Sardar Patel Road Secunderabad Telangana - 500003

We have conducted the secretarial audit of the compliance of applicable statutoryprovisions and the adherence to good corporate practices by Suryalata Spinning MillsLimited (hereinafter called "the company"). Secretarial Audit was conducted in amanner that provided us a reasonable basis for evaluating the corporate conducts/statutorycompliances and expressing our opinion thereon.

Based on our verification of the Company’s books papers minute books forms andreturns filed and other records maintained by the company and also the informationprovided by the Company its officers agents and authorized representatives during theconduct of secretarial audit we hereby report that in our opinion the company hasduring the audit period covering the financial year ended on 31st March 2016 compliedwith the statutory provisions listed hereunder and also that the Company has properBoard-processes and compliance-mechanism in place to the extent in the manner and subjectto the reporting made hereinafter:

We have examined the books papers minute books forms and returns filed and otherrecords maintained by the Company for the financial year ended on 31st March 2016according to the provisions of:

(i) The Companies Act 2013 (the Act) and the rules made thereunder;

(ii) The Securities Contracts (Regulation) Act 1956 (‘SCRA’) and the rulesmade thereunder;

(iii) The Depositories Act 1996 and the Regulations and Bye-laws framed thereunder

(iv) Foreign Exchange Management Act 1999 and the rules and regulations madethereunder to the extent of Foreign Direct Investment Overseas Direct Investment andExternal Commercial Borrowings (Not applicable to the Company during the Audit Period);

(v) The following Regulations and Guidelines prescribed under the Securities andExchange Board of India Act 1992 (‘SEBI Act’): —

(a) The Securities and Exchange Board of India (Substantial Acquisition of Shares andTakeovers) Regulations 2011;

(b) The erstwhile Securities and Exchange Board of India (Prohibition of InsiderTrading) Regulations 1992 and the Securities and Exchange Board of India (Prohibition ofInsider Trading) Regulations 2015

(c) The Securities and Exchange Board of India (Issue of Capital and DisclosureRequirements) Regulations 2009; (Not applicable to the Company during the Audit period)

(d) The Securities and Exchange Board of India (Employee Stock Option Scheme andEmployee Stock Purchase Scheme) Guidelines 1999 and The Securities and Exchange Board ofIndia (Share Based Employee Benefits) Regulations 2014 notified on 28 October 2014; (Notapplicable to the Company during the Audit Period)

(e) The Securities and Exchange Board of India (Issue and Listing of Debt Securities)Regulations 2008 (Not applicable to the Company during the Audit Period);

(f) The Securities and Exchange Board of India (Registrars to an Issue and ShareTransfer Agents) Regulations 1993 regarding the Companies Act and dealing with client

(g) The Securities and Exchange Board of India (Delisting of Equity Shares)Regulations 2009 (Not applicable to the Company during the Audit Period); and

(h) The Securities and Exchange Board of India (Buyback of Securities) Regulations1998 (Not applicable to the Company during the Audit Period).

(vi) Relying on the representations given by the Company and its officers with regardto other laws specifically applicable to the Company and its compliance and the limitedreview done by us we opine that the Company has complied with the following laws

• Textiles (Development & Regulation) Order 2001;

• Textiles (Consumer Protection) Regulation 1988;

• Technology Up-gradation fund scheme

• Foreign Trade Policy 2009-14 & 2015-2020

• Hank yarn notification issued under Essential Commodities Act 1955

We have also examined compliance with the applicable clauses of the following:

(i) Secretarial Standards issued by The Institute of Company Secretaries of India

(ii) The erstwhile Listing Agreement entered into by the Company with Bombay StockExchange and the Securities and Exchange board of India (Listing Obligations andDisclosure Requirements) Regulations 2015 notified with effect from 1st of December2015.

During the period under review the Company has complied with the provisions of the ActRules Regulations Guidelines Standards etc. mentioned above.

We further report that;

The Board of Directors of the Company is duly constituted with proper balance ofExecutive Directors Non-Executive Directors and Independent Directors. The changes in thecomposition of the Board of Directors that took place during the period under review werecarried out in compliance with the provisions of the Act.

Adequate notice of at least seven days is given to all directors to schedule the BoardMeetings the agenda and detailed notes on agenda were generally sent in advance and asystem exists for seeking and obtaining further information and clarifications on theagenda items before the meeting and for meaningful participation at the meeting.

All decisions at Board Meetings and Committee Meetings are carried out unanimously asrecorded in the minutes of the meetings of the Board of Directors or Committee of theBoard as the case may be.

We further report that there are adequate systems and processes in the Companycommensurate with the size and operations of the company to monitor and ensure compliancewith applicable laws rules regulations and guidelines.

We further report that during the audit period;

i. The Company has obtained Members Approval in 32nd

Annual General Meeting by way of Special Resolution for issue of 500000 CumulativeRedeemable Preference Shares of Rs 100/- each on Private Placement Basis.

ii. The Company has Issued and Allotted 385000 (Three Lakhs Eighty Five Only)redeemable cumulative preference shares of Rs. 100/- (Rupees Hundred Only) each to thepromoters and promoter group of the Company.

iii. The Company has Obtained Members approval in the 32nd Annual General Meeting byway of Special resolution for Alteration of Articles of Association of the Company tobring in line with Companies Act 2013.

iv. YP Solar Power Private Limited ceased to be a subsidiary of the Company w.e.f 18thMarch 2016.

For and on Behalf of

R & A Associates

Company Secretaries

R. Ramakrishna Gupta

Partner

FCS No.: 5523

C P No.: 6696

T 202 Technopolis 1-10-74/B

Above Ratnadeep Super Market

Chikoti gardens Begumpet Hyderabad Telangana-500 016

Date : 8th August 2016

Place: Hyderabad

This report is to be read with our letter of even date which is annexed as"Annexure – A" and forms an integral part of this report

ANNEXURE _ A

To

The Members

Suryalata Spinning Mills Limited

Surya Towers I Floor 105 Sardar Patel Road Secunderabad Telangana - 500003

Our report of even date is to be read along with this letter:

1. Maintenance of secretarial records is the responsibility of the management ofSuryalata Spinning Mills Limited ("the Company"). Our responsibility is toexpress an opinion on these secretarial records based on our audit.

2. We have followed the audit practices and processes as were appropriate to obtainreasonable assurance about the correctness of the contents of the Secretarial records. Theverification was done on test basis to ensure that correct facts are reflected insecretarial records. We believe that the processes and practices we followed provide areasonable basis for our opinion.

3. We have not verified the correctness and appropriateness of financial records andBooks of Accounts of the company.

4. Where ever required we have obtained the Management representation about thecompliance of laws rules and regulations and happening of events etc.

5. The compliance of the provisions of Corporate and other applicable laws rulesregulations standards is the responsibility of management. Our examination was limited tothe verification of procedures on test basis.

6. The Secretarial Audit report is neither an assurance as to the future viability ofthe company nor of the e_cacy or effectiveness with which the management has conducted theaffairs of the company.

7. We have relied up on the information provided by the Management with respect torelated party transactions for its compliance.

For and on Behalf of

R & A Associates

Company Secretaries

R. Ramakrishna Gupta

Partner

FCS No.: 5523

C P No.: 6696

T 202 Technopolis 1-10-74/B

Above Ratnadeep Super Market

Chikoti gardens Begumpet Hyderabad Telangana-500 016

Date : 8th August 2016

Place: Hyderabad