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Suryalakshmi Cotton Mills Ltd.

BSE: 521200 Sector: Industrials
BSE 00:00 | 18 Feb 27.90 0






NSE 00:00 | 19 Feb 28.75 0.65






OPEN 30.00
52-Week high 82.75
52-Week low 25.10
Mkt Cap.(Rs cr) 47
Buy Price 26.20
Buy Qty 100.00
Sell Price 30.00
Sell Qty 100.00
OPEN 30.00
CLOSE 27.90
52-Week high 82.75
52-Week low 25.10
Mkt Cap.(Rs cr) 47
Buy Price 26.20
Buy Qty 100.00
Sell Price 30.00
Sell Qty 100.00

Suryalakshmi Cotton Mills Ltd. (SURYALAXMI) - Director Report

Company director report


The Members

Your Directors are pleased to present their Fifty Fifth Annual Report on the businessand operations of the Company and the financial results for the year ended 31st March2018.

Financial Results

(in H Lakhs)

Particulars 2017- 2018 2016- 2017
Gross Profit before Interest & Depreciation 6841.13 9732.17
Less : Interest 3897.72 3755.47
: Depreciation & Amortisation expense 2887.73 3103.18
6785.45 6858.65
Profit/(Loss) before prior year Adjustment 55.68 2873.52
Exceptional Items * 215.84 195.69
Profit before tax for the year 271.52 3069.21
LESS : Provision for Income Tax for the year 63.44 720.72
LESS : Deferred tax liability (306.97) 397.61
Profit / (Loss) after tax 515.05 1950.88
ADD : Profit brought forward from last year/ Retained earnings 12390.03 11000.35
12905.08 12951.23
Dividend on Equity Share Capital 166.72 300.10
Corporate Dividend Tax 33.94 61.10
Transferred to General Reserve 100.00 200.00
Profit transferred to Balance Sheet 12604.42 12390.03

• Exceptional item of the current year includes GST transition input creditavailed on Finished Goods and work in process of H153.39 lakhs Profit on sale of assetsof H38.33 lakhs and Excess Provision Written back of H24.12 lakhs (Previous year Net losson sale of assets H1.59 lacs and Insurance claim for loss of Profit received H197.28lacs).


During the year under review we recorded a strong revenue from operation of H764Crores despite various challenges faced by us. We experienced a growth of 7.38% and 10%in the revenue of spinning business segment and garment segment respectively. During theyear we experienced an increase in trade receivables by 35.44% which further helped us toincrease our current assets by 17.26%. A rise in our total expenditure led to a decreasein our PAT to H515.05 lakhs.

The denim industry is currently plagued by excess capacity adversely affecting thevolumes and margins. The power division continued to be affected by the problem of highcross subsidy rates in Maharashtra. Realisations in yarn division have been generallystagnant while in the case of denim fabric sales were severely impacted in the domesticmarket. In export sales volumes have improved but the realization has been much lower onaccount of intense competition. In addition the raw material rates have been higher. As aresult of all these adverse factors the operations have been badly affected limiting thenet profit after tax to H515 lakhs.


In view of the inadequate profits the Board regrets its inability to recommend adividend for the year 2017-18.

Capital Expenditure

During the year under review the Company incurred capital expenditure of H9.96 Crores.


The exports at H159 Crores represents a small increase over that of previous yearthough the volume growth has been 19%. The exports have been impacted by weak globalmarkets coupled with 4% reduction in the duty draw back and strengthening of rupee in theprevious year eroding margins considerably. The industry's export competitiveness hasalso been affected by blockage in GST refunds and slow disbursements in rebates on Statelevies. As the domestic market has been sluggish there has been intense competition inexport market resulting in eroded margins. However the Company has succeeded in retainingold customers while increasing its share of business with leading brands like WranglerWalmart etc. The Company also continues its focus on new product development and betterdelivery in terms of quality and innovation in fabric design.

Future Outlook

The denim industry has weathered a rough patch battling the effects of demonetizationquickly followed by disruption on account of introduction of GST. It has now to contendwith cheaper imports of fabrics & garments from Bangladesh and Sri Lanka. The exportcompetitiveness continues to be a concern. The company is exploring options with newgarment factories emerging in Africa and Vietnam regions. The Company is confidentof its ability to face the evolving scenario with renewed dedication to improvements inquality and service for customer satisfaction.


Smt. Padmini Agarwal Whole-time Director (DIN No. 01652449) will retire at the ensuingAnnual General Meeting and being eligible offers herself for reappointment.

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

Evaluation of the Board's Performance

In compliance with the Companies Act 2013 and as per the latest Listing Regulationsthe annual performance evaluation of the Board and of its Committees was carried outduring the year under review. More details on the same are given in the CorporateGovernance Report.

Familiarisation Program for Independent Directors

The Company has formulated a familiarisation program for the Independent Directors toprovide insights into the Company to enable the Independent Directors to understand itsbusiness in depth and contribute significantly to the Company. The details of such programare available in the Company's website

Policy on Appointment & Remuneration of Directors

The Company follows a policy on appointment and remuneration of Directors and SeniorManagement Employees. The policy is approved by the Nomination & RemunerationCommittee and the Board. More details on the same is given in the Corporate GovernanceReport.

Declaration by Independent Directors

The Company has obtained the declaration from the Independent Directors confirming thatthey meet the criteria of Independence provided in Section 149(6) of the Companies Act2013.

Directors' Responsibility Statement

Your Directors state that:

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

(b) the Directors had selected such accounting policies and applied themconsistently and made judgements and estimates that are reasonable and prudent so as togive a true and fair view of the state of affairs of the Company at the end of thefinancial 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 ofadequate accounting records in accordance with the provisions of the Companies Act 2013for safeguarding the assets of the Company and for preventing and detecting fraud andother 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 theCompany and that such internal financial controls are adequate and are operatingeffectively.

(f) the Directors had devised proper systems to ensure compliance with theprovisions of all applicable laws and that such systems were adequate and operatingeffectively.

Disclosures Under the Companies Act 2013

i) Annual Return:

The Company's Annual Return has been hosted on Company's website and can be accessed atthe weblink

ii) Number of Board Meetings:

The Board of Directors met four times during the year 2017-2018. The details of theboard meetings and the attendance of the Directors are provided in the CorporateGovernance Report.

iii) Changes in Share Capital:

There is no change in the share capital.

iv) Audit Committee:

The Board has constituted the Audit Committee which comprises of Sri R. Surender Reddyas the Chairman and Sri R.S.Agarwal Sri Navrang Lal Tibrewal and Sri A Mallikarjun as themembers. More details on the committee are given in the Corporate Governance Report.

v) Related Party Transactions:

All the related party transactions are entered into on arm's length basis and are incompliance with the applicable provisions of the Companies Act 2013 and the ListingRegulations.

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 in Form AOC-2 is not required.

All Related Party Transactions are presented to the Audit Committee and the Board.Omnibus approval is obtained for the transactions which are foreseeable and repetitive innature. A statement of all related party transactions is presented before the AuditCommittee and the Board on a quarterly basis specifying the nature value and terms andconditions of the transactions. The Related Party Transactions Policy as approved by theBoard is uploaded on the company's website at the web link:

vi) There are no frauds reported by the Auditors U/s.143(12) of the Companies Act2013.

vii) No Loans/Guarantees / Investments under Section 186 of the Companies Act 2013have been made during the year.

viii) There were no significant and material orders passed by the Regulators/Courts that would impact the going concern status of the Company and its futureoperations.

Corporate Governance

As per the latest Listing Regulations on Corporate Governance Management Discussionand Analysis Report forms part of the Annual Report (Annexure - 5).

The Company has complied with the corporate governance requirements under the CompaniesAct 2013 and as stipulated under the Listing Regulations. A separate section on corporategovernance under the Listing Regulations along with a certificate from the auditorsconfirming 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 torecognize the role played by the Society at large the environment and its human resourcesin its sustainability and growth and to strive to discharge its social responsility as acorporate citizen. To this end the Company has always tried to strike a fine balance ofeconomic environmental and social commitments.

The sustainable stewardship mantra is not limited to philanthropy but encompassesholistic community development and other initiatives to strengthen businesssustainability.

The core areas for Suryalakshmi's Corporate Social Responsibility (CSR) Programmes forthis year have been health care environment and education. Details of the projects /activities implemented by the Company are furnished in a separate Annexure-2 tothis report.

The Company constituted a Committee of CSR consisting of Sri L.N.Agarwal Sri ParitoshK. Agarwal and Sri R.Surender Reddy with Sri L.N.Agarwal as Chairman.

The Company could not spend the planned amounts on the CSR activities in view ofcertain pending approvals from the local authorities. Steps are being taken to obtain thesame at the earliest and complete the commitments.

Risk Management

The Company has instituted a proper mechanism for identifying and establishing controlsto effectively manage di3erent kinds of risks viz. Trend Related Risks Raw MaterialRisks Brand / Technology Risks Operational Quality Risks Human Resources RisksRegulatory Risks and Financial Risks.

A Committee headed by Sri Paritosh Agarwal Managing Director periodically reviews therisks and take steps to mitigate identified risks.

Whistle Blower Policy

The Company has in place a Whistle Blower policy for vigil mechanism for Directors andemployees to report to the management about unethical behaviour fraud violation ofCompany's Code of Conduct. None of the Personnel has been denied access to the auditcommittee.

Declaration About Compliance with the Code of Conduct by Members of The Board and Sr.Management Personnel.

The Company has complied with the requirements about Code of Conduct for Board membersand 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 Harrasment Policy in line with the requirementsof the Sexual Harrassment of Woman at Workplace (Prevention Prohibition and Redressal)Act 2013. Internal Complaints Committee has been set up to redress complaints receivedregarding 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 offduring each Calender year:

A) No. of Complaints received - NIL b) No. of Complaints disposed off - NIL


I. Auditors and Their Report:-

The Auditors' Report to the shareholders for the year under review does not contain anyqualification reservation or adverse remark or disclaimer made.

II. Cost Auditor and Cost Audit Report

As per the requirement of Central Government and pursuant to Section 148 of theCompanies Act 2013 read with Companies (Cost Records and Audit) Rules 2014 as amendedfrom time to time your Company has been carrying our audit of cost records relating toTextile Division every year.

Pursuant to Section 148 of the Companies Act 2013 the Board of Directors on therecommendation of the Audit Committee has appointed M/s. Aruna Prasad & Co. CostAccountants (Firm Registration No. 100883) as the Cost Auditors for the Financial Year2018-19 and has recommended their remuneration to the shareholders for their ratificationat the ensuing Annual General Meeting. M/s. Aruna Prasad Co. Cost Accountants haveconfirmed their appointment is within the prescribed limits and also certified that theyare 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 theCompanies Act 2013 for the financial year 2017-18. The report of the Secretarial Auditoris annexed to this report as Annexure -3.

Internal Control Systems & their adequacy

Your Company has an effective and adequate internal control systems in placecommensurate with the size and complexity of the organisation. Internal and operationalaudit is carried by M/s.K.Vijaya Raghavan & Associates LLP a reputed firm ofChartered Accountants. The Internal Audit system is designed to meet the statutoryrequirements as well as ensure proper implementation of management and accountingcontrols.

The internal auditors submit their report to the Managing Director and also to theAudit Committee which reviews the report and ensures that the Audit observations areattended by the Management.

Conservation of Energy Technology Absorption Foreign Exchange Earnings and Outgo

Information on conservation of energy technology absorption foreign exchange earningsand out go as required to be given pursuant to provision of Section 134 of the CompaniesAct 2013 read with the Companies (Accounts) Rules 2014 is annexed here to marked Annexure-4and forms part of this report.


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


Periodic Training programmes for developing a skilled workforce personalitydevelopment programmes yoga camps etc. encouragement of employee participation indistrict / state level sports events are regularly undertaken.

An integrated woman focused program trains unskilled women to undertake skilled jobs atits units.

Disclosure pertaining to the remuneration and other details as required under Section197(12) of the Act and the Rules framed thereunder is enclosed as Annexure-6 to theBoard's Report.


The Board of Directors are pleased to place on record their appreciation of thecooperation and support extended by All India Financial Institutions Banks and variousState and Central Government Agencies.

The Board also wishes to place on record its appreciation of the valuable servicesrendered by the employees of the Company.

for and on behalf of the Board
Date : 19th May 2018 L.N.AGARWAL
Place : Secunderabad Chairman & Managing Director