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Suryalata Spinning Mills Ltd.

BSE: 514138 Sector: Industrials
NSE: N.A. ISIN Code: INE132C01027
BSE 00:00 | 15 Feb 131.80 0
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126.25

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131.80

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NSE 05:30 | 01 Jan Suryalata Spinning Mills Ltd
OPEN 126.25
PREVIOUS CLOSE 131.80
VOLUME 68
52-Week high 178.00
52-Week low 110.00
P/E 6.17
Mkt Cap.(Rs cr) 56
Buy Price 126.25
Buy Qty 82.00
Sell Price 131.80
Sell Qty 90.00
OPEN 126.25
CLOSE 131.80
VOLUME 68
52-Week high 178.00
52-Week low 110.00
P/E 6.17
Mkt Cap.(Rs cr) 56
Buy Price 126.25
Buy Qty 82.00
Sell Price 131.80
Sell Qty 90.00

Suryalata Spinning Mills Ltd. (SURYALATASPG) - Director Report

Company director report

To

The Members

Suryalata Spinning Mills Limited

Your Directors have pleasure in presenting the 35th Annual Report togetherwith the Company's Audited Financial Statements for the financial year ended 31stMarch 2018.

Financial Results

The Company has prepared financial results in accordance with the Companies (IndianAccounting Standards) Rules 2015 (Ind AS) prescribed under Section 133 of the CompaniesAct 2013.

The financial performance of the Company during the year ended 31st March2018 has been summarized below:

(Rs. in Lakhs)
Particulars Current Year 2017 - 18 Previous Year 2016 - 17
Total Income 33412 35122
Profit before Interest Depreciation and Tax 2715 2971
Interest 710 792
Depreciation 765 809
Profit Before Tax 1240 1370
Less : Provision for tax 400 425
Deferred Tax Liability 51 62
Profit After Tax 789 883
Add : Profit brought forward from last year 922 1051
Add : Adjustment due to adoption of Ind AS 2 18
Amount available for appropriation 1713 1952
Appropriations:
Transfer to
(a) General Reserve 800 1000
(b) Dividend on Equity Shares 19 25
(c) Dividend distribution tax 4 5
Balance Carried forward to Balance Sheet 890 922

Details of Operations

The year and review was marked by various structural reforms the turbulence of suddennote ban coupled with induction of GST with effect from 1st July 2017. Alsocontinued Global weakness fluctuations in currency exchange and stress on realizationsare notable factors having effect on the operations. Despite all above with foresightedde-risking strategies and by maintaining the sale volumes the Company delivered a solidperformance in the FY 2017-18. Operations were broadly effected with the following:

Average input (raw material) cost maintained at Rs.90.49 (exclusive of GST) as againstRs.93.31 (inclusive of Excise Duty and Sales Tax) in the previous year. Raw materials -fiber taxable @ 18% and finished product yarn is taxable @ 12% under GST Act results toinverse duty structure.

Average yarn realization maintained at Rs.139.70 as against Rs.139.30 in the previousyear.

Contributions for operations increased to Rs.47.20 per kg. from Rs.44.69 in theprevious year. Operational cost increased to Rs.41.23 as against Rs.39.84 in the previousyear.

Highlights of the Company's Affairs

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

• Income from operations for the FY 2017-18 is Rs.33412 Lakhs as compared toRs.35122 Lakhs in the previous year.

• Exports are Rs.3984 Lakhs compared to Rs.4025 Lakhs in the previous year.

• Production quantities is 23401 MTs as against 24889 MTs in the previous yearas the plant produced finer counts.

• Profit Before Tax for the FY 2017-18 is Rs.1240 Lakhs as compared to Rs.1370Lakhs in the previous year.

• Profit after Tax is Rs.789 Lakhs as against Rs.883 Lakhs in the previous year.

Capital expenditure

During the year under review your company has incurred Rs.459.96 Lakhs towards thecapital expenditure. The Company also spent Rs.715.15 Lakhs towards modernization cumexpansion project undertaken at Kalwakurthy unit.

Transfer to Reserves

The Company has proposed to transfer Rs.800 Lakhs to the general reserve for thefinancial year ended 31st March 2018.

Dividends

Your Directors have recommended the payment of Dividend on the Cumulative RedeemablePreference Shares as per the terms and conditions ofthe Issue for the Financial Year201718. The said Dividend will absorb a sum of Rs.4130000/-. The corporate dividend taxwill be Rs.840771/-.

Also your Directors have recommended the payment of Dividend on Equity Shares at 15%(i.e.) Rs.1.50 per share of Rs.10/- each to Non-promoter equity shareholders of theCompany for theyear 2017-18. The dividendwill absorb a sum of Rs.1897035/- and thedividend tax will be Rs.386192/-.

Deposits

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

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 to the Report as Annexure I.

Number of Meetings of the Board of Directors

Four (4) Board Meetings & Audit Committee Meetings were held during the FinancialYear 2017-18 on the below mentioned:

1. 19th May 2017

2. 4th September 2017

3. 9th December 2017

4. 10th February 2018

The Meetings of the following Committee's held on the respective dates as mentionedbelow:

1. Nomination and Remuneration Committee (NRC)

Meeting — 4th September 2017.

2. Corporate Social Responsibility (CSR) Committee

Meeting — 19th May 2017.

3. Stakeholders Relationship Committee (SRC) Meeting - 10th February 2018.

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

There was no change in the share capital of the Company during the financial year underreview.

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 Company herebyconfirms:

(a) that in the preparation of the annual accounts for the Financial Year ended 31stMarch 2018 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 31stMarch 2018 and 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 2018 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 arm's 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 with theapplicable Accounting Standards is disclosed in notes forming part of financial statementsannexed to 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 not granted any loans neither providedguarantees nor made any investments covered in the register maintained under Section 186of the Companies Act 2013.

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 2014 isenclosed as Annexure — H.

Further during the year under review the list of top ten employees in terms ofremuneration drawn as set out in Rule 5(2) Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 is enclosed as Annexure - HH.

Details of Directors and Key Managerial Personnel's appointed or resigned during theyear:

There was no change in Directors of the Company during the Financial year under review.

In accordance with the provisions of the Companies Act 2013 and in terms of Articlesof Association of the Company Sri Mahender Kumar Agarwal Joint Managing Director of theCompany is liable to retire by rotation at the ensuing Annual General Meeting and beingeligible 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. The Corporate Social Responsibility Committee

4. The 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. Lakshmikanth Reddy Member and Sri R S Agarwal Member.

Policy on Key Managerial Personnel's appointment 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 Committee andapproved by the Board. More details of the same is given in the Corporate GovernanceReport.

Corporate Social Responsibility Committee.

The Corporate Social Responsibility consists of Sri R Surender Reddy Chairman SriVithaldas 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 programs for the welfare & sustainable development of the community at largeis titled as the Suryalata Spinning Mills Limited Corporate Social ResponsibilityPolicy.

The core theme of the Company's CSR policy is giving back to the society from which itdraws its resources by extending helping hand to the needy and the under privileged.

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 sanitation animal welfareenvironment and community development. In alignment with vision of the company throughits CSR initiatives will continue to enhance value creation in the society through itsservices conduct & initiatives so as to promote sustained growth of the society infulfillment of its role as a Socially Responsible Corporate with environmental concern.

The Report on Corporate Social Responsibility as per Rule 8 of (Corporate SocialResponsibility Policy) Rules 2014 is enclosed as Annexure IV.

Stakeholders Relationship Committee.

Stakeholders Relationship Committee consists of Sri K R Suresh Reddy Chairman SriVithaldas 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.

Auditor :

Statutory Auditors :

At the Annual General Meeting (AGM) held on September 4 2017 M/s. K.S.Rao & Co.Chartered Accountants (ICAI Firm Registration Number 003109S) were appointed asStatutory Auditors of the Company to hold office for a period of five years and thereappointment will be subject to the ratification of members at every Annual GeneralMeeting. However pursuant to the Companies (Amendment) Act 2018 the ratification of theauditors at every annual general meeting of the company has been dispensed with.

Auditor's Report

The Auditor's Report to the Shareholders for the year under review does not contain anyqualification or adverse remark.

Secretarial Auditor

The Board has appointed M/s. VCAN & Associates a firm of practicing CompanySecretaries Hyderabad as the Secretarial Auditors to conduct Secretarial Audit of theCompany for the Financial Year ended 31st March 2018 in compliance with theprovisions of Section 204 of the Companies Act 2013.

The Report of the Secretarial Auditor in Form MR-3 is enclosed as Annexure V tothe 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 2017-18 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 the Company'swebsite www.surya.la.ta.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 Management Discussion and Analysis Reportand the Certificate from the Auditors of your Company regarding compliance of conditionsof Corporate Governance as stipulated under Schedule V of SEBI (LODR) Regulations 2015forms 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 2018 to the date of signingof the Board'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 Senior 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 participation andattendance 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's functioningsuch as adequacy of the composition of the Board and its Committees Board Cultureexecution 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 work place.

During the Financial year ended 31st March 2018 the Company has neitherreceived any complaints nor there are any pending complaints pertaining to sexualharassment.

Acknowledgments.

The Board of Directors places on record its gratitude to IDBI Bank Limited State Bankof India IndusInd Bank Limited Insurance Companies and Government Authorities for theirassistance and co-operation. The Board also acknowledges the support of the shareholdersof the Company. The Board also places on record their deep sense of appreciation for thecommitted services of all the employees of the Company.

For and on behalf of the Board

For Suryalata Spinning Mills Limited

Vithaldas Agarwal Mahender Kumar Agarwal
Managing Director Joint Managing Director
DIN:00012774 DIN: 00012807
Place: Secunderabad
Date : 19th May 2018