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Suryalata Spinning Mills Ltd.

BSE: 514138 Sector: Industrials
NSE: N.A. ISIN Code: INE132C01027
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NSE 05:30 | 01 Jan Suryalata Spinning Mills Ltd
OPEN 86.10
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VOLUME 103
52-Week high 148.85
52-Week low 70.10
P/E 2.60
Mkt Cap.(Rs cr) 37
Buy Price 85.95
Buy Qty 3.00
Sell Price 85.95
Sell Qty 41.00
OPEN 86.10
CLOSE 85.95
VOLUME 103
52-Week high 148.85
52-Week low 70.10
P/E 2.60
Mkt Cap.(Rs cr) 37
Buy Price 85.95
Buy Qty 3.00
Sell Price 85.95
Sell Qty 41.00

Suryalata Spinning Mills Ltd. (SURYALATASPG) - Director Report

Company director report

To

The Members

Suryalata Spinning Mills Limited

Your Board of Directors present the 36th Annual Report of the companytogether with the Audited Financial Statements of Accounts for the financial year ended March31 2019.

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 during the year ended March 31 2019 has been summarizedbelow:

(Rs in Lakhs)

Particulars Current Year 2018 - 19 Previous Year 2017 - 18
Gross Sales/Turnover 43155 36333
Net Sales/Turnover 39111 33412
Profit before Interest Depreciation and Tax 4197 2715
Interest 1035 710
Depreciation 840 765
Profit Before Tax 2322 1240
Less : Provision for tax 535 400
Deferred Tax Liability 364 51
Profit After Tax 1423 789
Add : Profit brought forward from last year 890 922
Add : Adjustment due to adoption of Ind AS 11 2
Amount available for appropriation 2324 1713
Appropriations:
Transfer to
(a) General Reserve 1090 800
(b) Dividend on Equity Shares 19 19
(c) Dividend distribution tax 4 4
Balance Carried forward to Balance Sheet 1211 890

Details of Operations

The year under review was started with a rally of Raw Material prices along with CrudeOil prices due to the impending re-imposition of sanctions on Iran by the United Statesand continuing declines of production in Venezuela. Indian Rupee also depreciatedcontinuously in the first two quarters later on appreciated slightly and stabilized atthe end of the year. Increase in raw material prices and Rupee depreciation created Stresson Yarn price realizations. Despite all above the company executed and completed theModernization cum expansion project at Kalwakurthy unit increased the Sale volumes withwiden customer base and with foresighted de-risking strategies delivered a solidperformance in the FY 2018-19.

Operations were broadly affected with the following:

• Average input (raw material) cost increased to Rs 103.07 per kg. as against Rs90.49 in the previous year.

• Raw materials-fiber taxable @ 18% and finished product yarn taxable @ 12% underGST Act results to inverse duty structure and blockage of working capital funds about Rs4.00 cr at any time during the year.

• Average yarn realization achieved at Rs 156.01 per kg. as against Rs 139.91 perkg in the previous year.

• Contributions from operations increased to Rs 50.43 per kg. from Rs 47.20 per kgin the previous year.

• Operational cost maintained at Rs 41.61 per kg. as against Rs 41.23 per kg inthe previous year.

Highlights of the Companys Affairs

The highlights of the Companys performance are as under:

• Gross Revenue from operations for the FY 2018-19 is Rs 431.55 cr as compared toRs 363.33 cr in the previous year.

• Exports increased to Rs 51.98 cr as compared to Rs 39.84 cr in the previousyear.

• Production quantities increased to 25152 MTs as against Rs 23401 MTs in theprevious year.

• Profit Before Tax for the FY 2018-19 is Rs 23.22 cr as compared to Rs 12.40 crin the previous year.

• Profit after Tax is Rs 14.23 cr as against Rs 7.89 cr in the previous year.

Capital expenditure

The companys in hand project of Modernization cum expansion at Kalwakurthy unit hasbeen completed during the current financial year and incurred total Capital Expenditure ofRs 83.93 cr The project taken shape with modernization of 9120 spindles and expansion of21984 spindles thereby companys total spindle capacity increased to 115248 spindles.

Transfer to Reserves

The Company has decided to transfer Rs 10.90 cr to the general reserve for thefinancial year ended March 31 2019.

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 Year2018-19. The said Dividend will absorb a sum of Rs 4130000/-. The corporate dividend taxwill be Rs. 848934/-.

Also your Directors have recommended the payment of Dividend on Equity Shares at 18%(i.e.) Rs. 1.80 per share of Rs. 10/- each to Non-promoter equity shareholders of theCompany for the year 2018-19. The dividend will absorb a sum of Rs. 2276442/- and thedividend tax will be Rs. 467929Rs.

Investor Education and protection Fund (IEPF).

Pursuant to provisions of Section 124 and 125 of the Companies Act 2013 read with IEPFRules 2016 all unpaid or unclaimed dividends up to the financial year 2010-11 wastransferred to the Investor Education and Protection Fund established by the CentralGovernment. The shareholders whose dividends and shares have been transferred to the IEPFAuthority can claim their dividend and shares from the IEPF Authority.

Deposits

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

Extract of Annual Return

The Extract of Annual Return prepared in Form MGT-9 as per the provisions ofSection 92 of 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 (4) Board Meetings & Audit Committee Meetings were held during the FinancialYear 2018-19 as below:

1. May 9 2018

2. August 13 2018

3. November 5 2018

4. February 12 2019

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

1. Nomination and Remuneration Committee — November 5 2018 & February122019.

2. CSR Committee Meeting — May 19 2018

3. Stakeholders Relationship Committee Meeting — February 12 2019.

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 March31 2019 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 March 31 2019 andProfit and Loss Statement 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 endedMarch 31 2019 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. The disclosuresrelating to related party transactions as required in Form AOC-2 is enclosed tothis report as Annexure-II.

The Company has adopted a related party transactions policy and the said policy asapproved by the board is uploaded on the Company's website www.snrya.la.ta.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-III.

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-III.

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

During the financial year under review Sri R S Agarwal resigned from the board witheffect from February 15 2019. Further in accordance Sections 149 152 160 and otherapplicable provisions if any of the Companies Act 2013 (Act) and the Rules framedthereunder read with Schedule IV to the Act and regulation 17(1A) and Chapter IV of theSecurities and Exchange Board of India (Listing Obligations and Disclosure Requirements)Regulations 2015 the shareholders of the company vide there special resolutions passedthrough postal ballot approved the continuation of Sri R Surender Reddy and Sri KLakshmikanth Reddy as directors of the company till the conclusion of the current term andre-appointment for a further period of five years along with Sri K R Suresh Reddy witheffect from August 6 2019.

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 Sri R Surender Reddy Chairman Sri K R Suresh ReddyMember and Sri K Lakshmikanth Reddy Member. During the year under review due to theresignation Sri R S Agarwal ceased to be the member of the committee w.e.f. February 152019 and Sri K Lakshmikanth Reddy was appointed as member of the committee with effectfrom March 29 2019. All the recommendations made by the Audit Committee were accepted bythe 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 Surender Reddy Member. During the year underreview due to the resignation Sri R S Agarwal ceased to be the member of the committeew.e.f. February 15 2019 and Sri R Surender Reddy was appointed as Member of the Committeew.e.f. March 29 2019.

Policy on directors. appointment and remuneration and other details:

The Company follows a policy on remuneration of directors and other senior managerialpersonnel. 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 Companys 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 large.

Corporate Social Responsibility Policy.

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

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 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 2017 the ratification of theauditors at every annual general meeting of the company has been dispensed with.

Auditors Report

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

Secretarial Auditor

The Board has appointed VCAN & Associates a firm of practicing CompanySecretaries Hyderabad as the Secretarial Auditors to conduct Secretarial Audit of theCompany for the Financial Year ended March 31 2019 in compliance with the provisions ofSection 204 of the Companies Act 2013.

The Secretarial Audit Report issued by VCAN & Associates in Form MR-3 is enclosedas Annexure V.

Internal Auditor

The Board of Directors of the Company have appointed Brahmayya & Co. CharteredAccountants as Internal Auditors to conduct Internal Audit of the Company for theFinancial Year ended March 312019.

Cost Auditor:

The Board of Directors have appointed Aruna Prasad & Co. Cost Auditors Chennaifor conducting the cost audit of the Company for the financial year 2019-20 in complianceto the provisions of Section 148 of the Companies Act 2013 read with Companies (CostRecords and Audit Rules) 2014 on the recommendations made by the Audit Committee and hasrecommended her remuneration for the approval of Members at the ensuing Annual GeneralMeeting.

Corporate Governance Report

The report on Corporate Governance as per Regulation 34(3) read with Schedule - V ofthe SEBI Listing Regulations

is included as a part of this Annual Report. The requisite certificate from VCAN& Associates confirming the compliance with the conditions of Corporate Governanceis attached to the report on Corporate Governance.

Management Discussion and Analysis

In terms of provisions of Regulation 34(2) of SEBI Listing Regulations report onManagement Discussion & Analysis for the year under review is provided in a separatesection forming part of this Annual Report.

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 Companyswebsite 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.

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 Companys operations in future.

No significant or material orders were passed by the regulators or courts or tribunalsimpacting the going concern status and companys operations in future during the year underreview.

Material changes and Commitments if any affecting the financial position of theCompany occurred after the closure of financial year till the time of adoption of thisreport.

No other material changes and commitments have occurred after the close of the yeartill the date of this Report which affect the financial position of the Company. Furtherthere is no change in the nature of business of the Company.

However Sri K K Sinha Director of the company resigned from the board w.e.f. August14 2019.

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 thisReport.

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 Companys vision 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 Boards 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.

Policy on Sexual Harassment

The Company has adopted policy on Prevention of Sexual Harassment of Women at Workplacein accordance with the Sexual Harassment of Women at Workplace (Prevention Prohibitionand Redressal) Act 2013. The Company regularly conducts awareness programmes for itsemployees.

Disclosure pertaining to sexual harassment of women at workplace.

During the Financial year ended March 31 2019 the Company has neither received anycomplaints nor there are any pending complaints pertaining to sexual harassment and theCompany had created Internal Complaints committee.

Environment Health and Safety

The Company considers it is essential to protect the Earth and limited naturalresources as well as the health and well being of every person. The Company strives toachieve safety health and environmental excellence in all aspects of its businessactivities. Acting responsibly with a focus on safety health and the environment is partof the Companys DNA.

Compliance with Secretarial Standards

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

Prevention of Insider Trading Code

As per SEBI (Prohibition of Insider Trading) Regulation 2015 the Company has adopteda Code of Conduct for Prevention of Insider Trading. The Company has designated thecompany secretary being the compliance officer who will be responsible for setting forthprocedures and implementing the code for trading in Companys securities. During the yearunder review there has been due compliance with the said code.

Acknowledgments.

The Company is grateful to its Customers Shareholders Suppliers Banks &Financial institutions Central & State Government Authorities for their constantsupport. The Board of Directors also place on record their deep appreciation of thecontribution made by the employees at all levels the consistent growth of the Company wasmade possible by their hard work loyalty dedication coordination and support.

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 : August 14 2019