Sambandam Spinning Mills Ltd

TO

THE MEMBERS

Your directors have pleasure in presenting the 50th Annual Report together with the Audited Accounts for the year ended March 31,2024.

2 DIVIDEND

The Directors have not recommended dividend for the year ended 31st March 2024 in view of the loss incurred during the year 2023-24.

3 MANAGEMENT DISCUSSION AND ANALYSIS

Core business of the company is manufacture and sale of cotton yarn and blended yarn. The management discussion and analysis given below discusses the key issues of the Industry with specific reference to the cotton yarn spinning sector.

Details of changes on following ratios (with reasons for changes if 25 % or more as compared to immediately previous financial year).

Key Financial Ratios :

a. INDUSTRY SENARIO

Industry behavior is determined by number of players in same industry and is very much further influenced by the Impact of macroeconomics variables that is very crucial. Further it depends on the Impact of anticipated domestic cotton shortage, and by the investment of high capex by other industry players. FY 23-24 was more challenging year when compared to FY 22-23. Adding to that Challenges facing the Indian textile and clothing industry include high raw material prices, escalating input costs, quality control orders (QCO), and the import of garments. Raw material (fiber) constitutes 60-70% of manufacturing costs, impacting the industry's competitiveness. Currently, most spinning mills are operating at only 60-70% capacity due to a lack of demand. The country's spinning gaints, recognising the looming threat, has shifted its focus from the Indian market to prioritize export markets due to its heavy reliance on the spinning industry.

Indian polyester, viscose yarn noticed mixed trend, Polyester Cotton remains sluggish in the Indian market. Trends for polyester, viscose, and cotton yarn have been mixed, with polyester-cotton (PC) yarn showing a declining trend. The price of polyester-cotton yarn has decreased, while polyester spun yarn has seen an up tick in trading prices. The market has shown a steady trend in polyester spun yarn prices, while viscose yarn prices have remained stable. Despite the majority of the market experiencing a usual low demand, there's an expectation among traders that the recent drop in yarn prices might draw in buyers. Buyers remain cautious due to uncertain market conditions.

Cotton candy prices experienced a slight decline of (0.33)%, settling at Rs. 58240 per candy, driven by profit booking following earlier gains. The market initially rose due to delays in shipments from major exporters like the US and Brazil, which boosted demand for Indian cotton from neighboring mills. This demand surge was further supported by a firm trend in cottonseed prices. Despite the onset of monsoon rains in southern states like Karnataka, Telangana, and Andhra Pradesh, signaling the beginning of the kharif 2024 season, cotton acreage dynamics are mixed. While Telangana is expected to see an increase in cotton planting, driven partly by shifts from chilli cultivation due to weak prices, North India faces challenges such as increased pest infestation and rising labor costs, potentially leading to a decrease in cotton acreage.

Technically, the market observed long liquidation with unchanged open interest, indicating a cautious sentiment among traders. Currently, support for Cotton candy is seen at 58000 Rs per candy and a breach below could test 57750 levels, while resistance stands at 58500. A breakout above this resistance could push prices towards 58750.

IMPORT DUTY IMPACT

There is no parity for spinning mills in the domestic market, Imports of cotton attract 11 percent customs duty and they are Rs. 5,000 to Rs. 6,000 a candy costlier. It has also affected our competitiveness. "Cotton prices have slipped to such lows after a long time, Buyers are not buying, while sellers too are not ready. Prices are below the MSP announced for the new seasons starting October.

The MSP for cotton for the 2024-25 crop year has been increased to Rs. 7,121 a quintal for the medium staple variety.

"Good monsoon rain and better crop prospects have also made the market slack", The textile sector was unable to get back to the strong position witnessed during 2018-19. With only two months remaining for the season to end during the current year 2024-25, all stakeholders have turned cautious as they have ample stock to meet their requirements.

However, overcoming the challenges with its inherent strengths; increased competitiveness; ability to meet the changing market trend; supportive Garment segment, SSML has generated a revenue of Rs. 218.08Crores

b. COMPANY'S PERFORMANCE

A new variety/brand of cotton called "Kasturi Cotton Bharth" is introduced in the industry and it is a initiative of the Ministry of Textiles, Government of India, The branding, traceability and certification of Kasturi Cotton is already implemented by Sambandam Spinning Mills Limited with the support of The Cotton Textiles Export Promotion Council (TEXPROCIL), in association with the Cotton Corporation of India (CCI). It has got very high standard on staple length, fibre strength and very low trash percentage and very low moisture content has got unique benefits such as Confirming to quantifiable standards of superior quality, increase of softness in a fabric, increase in strength of the fabric, durability of the fabric, improved colour vibrancy, confirmation of its origin ( made in India )and lastly verifiable and traceable using block chain technology and can generate trust among the users. Consumers too can see the journey of Kasturi Cotton in their product through the supply chain from start to finish.

SSML is known for being one of the first mills to produce Kasturi Cotton Yarn. Kasturi Cotton marks the new standard in cotton quality. It's the mark that superior cotton will bear from now on. It goes beyond being just a raw material. It will be cotton that reflects the elevated and enlightened spirit of India. Because of its unique special nature as described above Sambandam spinning mills has spear headed and started using in it (Kasturi Cotton) in yarn production as a front runner in the country to produce best quality yarn.

Further to above the company produces regenagri cotton yarn. Regenagri cotton is a regenerative agriculture initiative aimed at securing the health of the land and the wealth of those who live on it. In continuation of above innovation on usage of kasturi cotton, company remains steadfast in its commitment to delivering high quality products at all better price ranges. Boutique Living and Layers are gaining significant traction in the domestic market through this dedication to innovation, affordability and exceptional customer service

FY 23-24 was challenging year when compared to FY 22-23 since Yarn market was very turbulent during the year and your company is not an exception to that. Thus there is reduced turn over during the year 23-24 when compared to last year. The gross production volume stood at 71.50 Lakhs Kgs (including purchased one for trading of 6.10 lakhs kgs) during the financial year 2023-24 as against 62.29 Lakhs Kgs of last year.

The sale volume for the FY 2023-24 stood at 69.91 Lakh Kgs (including trading sales of 5.99 lakhs kgs) as compared to 65.76 Lakh Kgs of last year. The overall revenue from operation has come down by 11.75% during the FY 2023-24 of Rs 218.08 Crores from Rs 263.25 Crores of last year. Cost of manufacture was higher and sale could be made at a lower price to sustain the competitive market conditions. However Company's quality of yarn in value added segment has been well appreciated by the customers and the Company is receiving moderate volume of orders for value added counts.

During the year 23-24 ,capacity utilisation was in the range of 70% to 80% only due to uncertainties in off take that prevailed for quite some time. Further, even though solar power plant was available fully, the power generated could be used only to the extent of yarn production capacity usage as mentioned above. The wind mills have generated 193.05 lakh units and recorded generation of electric power of the value of Rs. 124.04 lakhs during the year However the company could manage to exceed market expectation on supplies and the yarn market is translated from buyers' market to sellers' market. The product mix were suitably adjusted to suit to consumer need, to maximize the productivity. Export market was not good during 23-24 when compared to 22-23.

As a innovative process in marketing, company has recently constructed and inaugurated a special Sambandam spinning mills all products Studio at the mills premises during the month of April 204. New products and it varied application products are displayed in the studio. The studio is mainly to cater to the needs of customers .This is attracting existing and new customers for improving the business

A few photographs of such studios are displayed at the end of this Annual report

Members may note that towards the end of FY 22-23 company had decided to explore the possibility to dispose off Unit IV machineries (after retaining a portion of it) from plant and machineries situated at Udayapatti salem). Accordingly those machineries were disposed off during current FY 23-24 and this is taken on record in the books of accounts

c. Outlook:

After a year of rough journey of business during FY 23-24, the Indian cotton yarn spinning industry is expected to witness a breather this year with the improved revenue growth & operating margins, gradual recovery in exports, lower cotton prices, evolving market conditions etc reaffirming its status as a cornerstone of the textile ecosystem. SSML is well positioned to accelerate its growth level with its strong fundamentals, high competence, challenging ability;

ICRA predicts the domestic cotton spinning industry will recover in FY2025, with 6-8% growth driven by increased volume and mild realisation gains. Following two years of decline, improved domestic demand and stabilised exports will boost the industry.

Cotton prices have declined nearly 7.5 per cent over the past month due to a lack of movement and slack demand for yarn. However, industry experts say once the natural fibre's prices stabilise, the industry might turn confident and return to buy.

Currently, the situation is improving, There is movement in cotton bales and yarn due to improved demand. Mills are increasing production due to expectation of increase in yarn demand and yarn price.

However in spite of all odds as above India's cotton yarn spinners are expected to see a 100-basis point improvement in operating profitability to 11-12 per cent in fiscal 2024 (FY24), despite a projected 10-12 per cent on-year fall in revenue due to lower realisations and muted exports, according to CRISIL Ratings. Although the operating profitability will remain below the pre-pandemic five-year average of 12-13 per cent, the rise in profitability in fiscal 2024 will follow a sharp fall of approximately 600-700 basis points estimated for fiscal 2023. The credit profiles of cotton yarn spinners are expected to remain stable as they have deleveraged balance sheets due to low capital expenditures in the past few fiscal years, generating cash flows in fiscal 2024, and likely improvement in operating profitability in fiscal 2024, as per a CRISIL Ratings analysis of 101 cotton yarn spinners accounting for approximately 35 per cent of the industry's revenues. Expected improvement in capacity utilisation, supported by improving domestic and export volumes in fiscal 2023, will boost operating profitability of yarn spinners in fiscal 2025. Although cotton prices had begun rising in February-March 2024 and soared to all-time highs by May-June 2024, cotton demand remains steady with 4-5 per cent volume growth expected in fiscal 2025, supported by stable domestic readymade garments demand.

d) ENVIRONMENT PROTECTION, HEALTH AND SAFETY (EHS)

EHS is given utmost importance in all operational and functional areas at all four locations of the Company. Regular safety audits, periodic safety inspections are carried out by expert agencies in a systematic way and suitable control measures are followed and safe operations are ensured at factory sites. All processes as required for Pollution Control and Environmental Protection are strictly followed.

e) INTERNAL CONTROL AND SYSTEMS

The company has adequate Internal Control Systems in place that commensurate with the size, scale, and complexity of its operations and does the evaluation of risk in board meeting periodically. The Company is continuously making improvements in internal control systems and Auditors are carrying out internal audits and advising the management on strengthening of internal control systems then and there. The reports are discussed periodically. Significant audit observations and corrective actions thereon are presented to the Audit committee periodically.

Further the Company is certified with ISO 9001, ISO 14001 and ISO 45001 on the manufacturing systems. Further, the Company's Better Cotton Initiatives and organic cotton yarn is certified by GCL. Further Sambandam Spinning Mills Limited is the approved and preferred customer for following buying houses namely Inditex, C&A and Marco Polo.

f) HUMAN RESOURCES MANAGEMENT

The company has a congenial work atmosphere at all places and has implemented various welfare measures for the employees. As a policy the Company gives utmost importance to its employees in all work related activities including upskilling of capacity etc. The company engages only local workers.

The fact that relationship with the employees continues to be cordial is testimony to the Company's ability to retain high quality workforce. In view of the aforesaid relationship no man days were lost during the year

g) DISCLOSURE ON ANTI SEXUAL HARASSMENT POLICY OF WOMEN AT WORK PLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT 2013

Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 provides for protection against sexual harassment of women at workplace and for the prevention and redressal of complaints of sexual harassment and also for the matters incidental thereto. The Company has accordingly adopted the policy against Sexual Harassment of Women at Workplace, for the purpose of preventing, prohibiting and redressing sexual harassment of female employees at all the workplace within the Company which are based on fundamental principles of justice and fair play. Internal Complaints Committee under the sexual harassment of women at Workplace (Prevention, Prohibition and Redressal) Act, 2013, has been formed and complied with. Further, Anti Sexual Harassment Committee constituted at each unit shall be responsible for redressal of complaints related to sexual harassment. The details of all such Complaints and its proper redressal through prompt corrective steps are informed to the Top Management so as to ensure that suitable processes and mechanisms are put in place to ensure that issues of sexual harassment, if any, are effectively addressed. During the year, no complaints of sexual harassment was received by the Company from any of its Units

h) COST AUDIT

In view of applicability of maintenance of cost records and cost audit for the company, cost audit for year 2023-24 is completed in time and the same is submitted by the auditor to the board of Directors and the same is filed with MCA before the due date .

Board of directors have approved the appointment of Dr. C. Dhanapal, Practising Cost Accountant (Membership Number : 14293) Cost Accountants for audit of cost accounts of the Company. In accordance with the provisions of the Companies Act 2013 and the Rules framed there under, Cost Audit for the Company is applicable for the financial year 2024 - 25 and the resolution for ratification of the remuneration payable to the Cost Auditor for the year 2024-25 is placed before the members for ratification at the 50th Annual General Meeting of the Company scheduled on 21-09-2024.

In view of the Company maintaining the cost records and the statutory requirement for the cost audit of such records, Cost Audit for the year 2024-25 shall be conducted and its report thereon will be produced.

i) BOARD MEETINGS :

During the year under review Four board meetings were held and the intervening gap between any two board meetings did not exceed 120 days or extended permitted days by Government. Dates of the board meetings and details of directors' attendance at the meetings are furnished in the Corporate Governance report at Annexure - VII.

j) DIRECTORS

There is no change in Board of Directors during the year. 2023-24

The Company has adequate Independent Directors in compliance with the Act and SEBI (Listing Obligations and Disclosures Requirements) Regulations, 2015 (Hereinafter referred to as Listing Regulations). Familiarization Program on the Company and its operation was conducted for the Independent Directors periodically during every meeting .Requisite declaration from the Independent Directors of the Company under Section 149 (7) of the Act confirming that they meet with the criteria of their Independence laid in Section 149 (6) have been obtained. The Board is of the opinion that the Independent Non-Executive Directors of the Company possess requisite qualifications, expertise and experience and they hold highest standards of integrity. Mrs Annapoorani (DIN:08276668), Non Executive Independent Director, first term was completed on 10.8.2024 and being eligible offers herself for re-appointment at this Annual General Meeting. Further tenure (II term of five years) of two directors Sri.S.Gnansekaran and Sri.Kameshwar bhat was completed on 10.8.2024 and hence two new Independent directors are appointed effective from 11.8.2024 and this is proposed in the notice of this Annual report for members passing resolutions on same

Company's policy on Directors' appointment and remuneration including criteria for determining qualifications, positive attributes, independence of a director and other matters provided under section 178(3) of the Act are covered under Nomination and Remuneration Policy and it is available in the web-link of the Company http://www.sambandam.com. Further, information about elements of remuneration package of individual directors is provided in the Annual Return as provided under Section 92(3) of the Act, Under Serial No. 9 of this Report.

Declaration by Independent Directors

Independent directors of the Company have submitted a declaration that each of them meets the criteria of independence as provided in Sub-Section (6) of Section 149 of the Act. Further, there has been no change in the circumstances which may affect their status as Independent director during the year.

Declaration on adherence to the Code of Conduct.

As provided under SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, all the Board members and senior management personnel of the Company have confirmed adherence to the Code of Conduct of Sambandam Spinning Mills Ltd., Limited for the financial year ended March 31,2024.

k) DIRECTORS' RESPONSIBILITY STATEMENT AS PER SECTION 134(5) OF THE COMPANIES ACT, 2013

Pursuant to the requirement of Section 134(5) of the Act, and based on the representations received from the management, the directors hereby confirm that:

a) in the preparation of the annual accounts for the financial year 2023-24, the applicable accounting standards Ind AS have been followed and there are no material departures;

b) they 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 at the end of the financial year and of the loss of the Company for the financial year;

c) they have taken proper and sufficient care to the best of their knowledge and ability for the maintenance of adequate accounting records in accordance with the provisions of the Act. They confirm that there are adequate systems and controls for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d) they have prepared the annual accounts on a going concern basis;

e) they have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and operating properly; and

f) they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

l) SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS

During the year under review no orders were passed by the Regulators or Courts or Tribunals impacting the going concern status and the operations of the Company.

m) PARTICULARS OF EMPLOYEES - information pursuant to Rule 5 (2) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014

None of the employees (other than the Directors and KMPs whose remuneration is displayed in "u" below) of the Company has drawn remuneration exceeding Rs 8.5 lakhs per month or Rs 102 lakhs per annum during the year.

Managerial Remuneration

Statistical Disclosures pursuant to Rule 5 of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 with subsequent amendments thereto is annexed with this report and forms part of this report

n) Related Party Transactions :

All Related Party Transactions that were entered into during the financial year were only at arm's length basis in the ordinary course of business, whose accounts placed before the shareholders at the General Meeting for approval. However, as per regulatory requirements an omnibus approval of the audit committee for such transactions has been obtained. The Company has not entered into any new contract / arrangement during the year with related parties However, existing contract details are mentioned in Form No. AOC-2 appended to this Annual report. Further the details of all transactions with related parties have been disclosed in Notes to the Standalone Financial Statement forming an integral part of this Annual Report The Transactions as required under Indian Accounting Standards 'Ind AS-24 are reported in Note 47 of the Notes to Accounts of the Standalone Financial Statements. The Company's Policy on dealing with related party transactions is available on the Company's website

o) BOARD EVALUATION

During the year under review, the Board adopted a formal mechanism for evaluating its performance and as well as that of its Committees and individual Directors, including the Chairman of the Board. The exercise was carried out through a structured evaluation process covering various aspects of the Board functioning such as composition of the Board and Committees, experience and competencies, performance of specific duties and obligations, governance issues, etc. Separate exercise was carried out to evaluate the performance of individual Directors including the Board Chairman who were evaluated on parameters such as attendance at Board Meetings and General Meetings; participation in Board proceedings; independence and candidness shown at meetings; clarity and objectiveness in expressing views at meetings; awareness of governance code, compliance requirements, risk framework, etc. interactions with other Directors / Senior Management during and outside meetings; keenness to continuously familiarize with the industry and the Company etc.

Your Company has in place a Policy relating to selection, remuneration and evaluation of Directors and Senior Management.. The said Policy is available on the website of the Company www.sambandam.com

Outcome of evaluation process

Based on inputs received from the members, it emerged that the Board had a good mix of competency, experience, qualifications and diversity. Each Board member contributed in his/her own manner to the collective wisdom of the Board, keeping in mind his/her own background and experience. The necessary disclosures under SEBI Regulations given hereunder:

a. Observations of Board evaluation carried out for the year 23-24

i. All compliance parameters as per SEBI circular have been full filled

b. Previous year 22-23 observations and action taken

i. Achieved turnover of Rs 263.25 crores

ii. Achieved EBIDTA of 4.79%

c. Proposed actions for 24-25 based on current year observations

i. To achieve a turnover of Rs 350 crores

ii. To aim for EBIDTA of 20 %

iii. To implement Integrated accounting package fully

p) FAMILIARIZATION PROGRAMME OF THE INDEPENDENT DIRECTORS

Presentations during every quarter are made by Senior Management and Internal Auditors at the Board meetings and Committee meetings on the business and performance updates of the Company, local and global business environment, business risks and its mitigation strategy, impact of regulatory changes on strategy etc. Updates on relevant statutory changes encompassing important laws are regularly intimated then and there to all the Directors including the Independent Directors.

q) DEPOSITS

The following are the details of deposits (accepted from the shareholders) covered under Chapter V of the Companies Act 2013.

i. Deposits at the beginning of the year on 1st April, 2023 : Rs 829.92 lakhs

ii. Deposits Accepted from shareholders during the year (2023-24) : Rs 38.05 lakhs

iii. Deposits repaid to shareholders during the year (2023-24) : Rs 58.40 lakhs

iv. Deposits of shareholders outstanding at the end of the financial year on 31st March, 2024 :

Rs 809.57 lakhs

v. Remained unpaid or unclaimed as at the end of the year : NIL

vi. Any default in repayment of deposits or payment of interest thereon during the year : NIL Company has duly complied with the provisions of section 73 of the Companies Act, 2013 read with relevant rules with respect to fixed deposits.

The following are the details of deposits accepted from the Directors which is not covered under definition of deposits Rules.

.i. Deposits at the beginning of the year on 1st April, 2023 : Rs 52.50 lakhs

ii. Deposits accepted from Directors during the year (2023-24) : Rs 53 lakhs

iii. Deposits repaid to Directors during the year (2023-24) : 25.50 lakhs

iv. Deposits of Directors outstanding at the end of the financial year on 31st March, 2024 :

Rs 80.00 lakhs

v. Remained unpaid or unclaimed as at the end of the year : NIL

vi. Any default in repayment of deposits or payment of interest thereon during the year : NIL

r) INDUSTRY ASSOCIATIONS

Sri S. Dinakaran, Joint Managing Director of the Company is a special invitee in the Committee of Administration and Yarn Committee of the Cotton Textiles Export Promotion Council (TEXPROCIL), Mumbai. He is also a director in Confederation of Indian Textile Industry (CITI), Delhi. By virtue of the offices he holds, Sri S. Dinakaran has been representing to SIMA at the appropriate time to get relief to the ailing Textile Industry.

s) REPORT ON PERFORMANCE AND FINANCIAL POSITION OF THE ASSOCIATE COMPANIES

There are two associate Companies -

SPMM Health Care Services Pvt. Ltd. - 49.75% investment in the share capital of that Company.

This Company has recorded total revenue of Rs 300.33 Lakhs and profit after tax (PAT) of Rs 10.31 Lakhs during the year ended 31.3.2024 as against Rs 319.32 Lakhs Revenue and Rs 10 .00 Lakhs PAT recorded in the previous year 2022-23.

Salem IVF Centre Pvt. Ltd. - 26.88% investment in the share capital of that Company.

This Company has recorded total revenue of Rs 237. 45 lakhs and loss of Rs 17.07 lakhs during the year 23-24 as against the revenue of Rs 290.55 lakhs and profit after tax Rs 9.89 lakhs the Previous Year 2022 - 2023.

HIGHLIGHTS OF PERFORMANCE OF SUBSIDIARIES OR ASSOCIATE COMPANIES

SPMM Health Care Services Pvt Ltd., revenue decreased marginally by 5.95% from operations during 23-24 when compared to 22-23.wheras the profit has increased marginally due to operational reasons.

Salem IVF Centre Pvt Ltd., Revenue from operations has decreased by 18.28 % from operations during 23-24 when compared to 22-23.

t) CHANGES OR COMMITMENTS AFTER THE YEAR ENDED ON 31.3.2024

No material change or commitments affecting the financial position of the company has occurred between the close of the financial year on 31.3.2024 and the date of this report. Company has sold during June 2024 Non current financial asset-investment in equity instruments of unquoted equity shares of 7,04,060 @ face value at Rs 10 each from the Associate Company, Salem IVF Centre Private Limited - Salem Tamilnadu. This information has been displayed in BSE website also.

u) Information pursuant to section 197 (12) of the Act read with Rule 5(1) & 5(2) of the Companies (Appointment and Remuneration of Managerial personnel) Rules 2014 :

(i) Ratio of the remuneration of each Director, Company Secretary, Chief Marketing Officer, Chief Financial Officer and Chief Technical Officer to the median remuneration of the employees of the Company;

(ii) Percentage increase in their remuneration in 2023-24 as compared to the previous year (2022-23): (Median Remuneration : Rs 1,44,456 in 2023-24).There is no change (no increase) in the remuneration of directors and KMPs during the year 23-24

Note : 1. All appointments are contractual

2. Remuneration includes salary, perquisites

# Only sitting fees is payable to Non-executive and Independent Directors for the meetings of the Committee or of the Board attended by them.

(a) Variation in the sitting fees paid to Directors depends on their attendance at the Board / Committee Meetings.

(iii) Number of permanent employees on the rolls of the Company : 1566

(iv) No variable component of the remuneration to any director.

4 AUDITORS

At the 48th Annual General Meeting held on 23.09.2022, M/s P.N Raghavendra Rao & Co, Chartered Accountants, Firm Registration No. FRN : 003328S were appointed as statutory Auditors of the Company upto conclusion of 53rd AGM. Statutory Auditor M/s P.N. Raghavandra Rao & Co., Chartered Accountants have confirmed their eligibility to remain as Auditors for the year 2024-25. On the recommendation of the Audit Committee, Board is placing the resolution for fees payable for the year 2024-25 to the statutory Auditors before the member's for approval.

Secretarial auditor of the company for Year 2023-24 Sri. B.Kalyanasundaram of M/s B.K.Sundaram & Associates has expired in February 2024 and so casual vacancy arose on account of that . Hence a new secretarial auditor CS.T.Saraswathi Mem No : F8000 COP 8899 for the year 2023-24 is appointed and the secretarial audit report in form MR-3 is attached as annexure to this Annual Report.

5 Particulars of Loans, Guarantees or Investments under Section 186 of the Companies Act, 2013

Details of loans, guarantees and investments covered under the provisions of Section 186 of the Companies Act, 2013 are given in note 51 to the notes to the financial statements.

6 VIGIL MECHANISM / WHISTLE BLOWER POLICY

The Company has an established vigil mechanism for Directors / Employees to report concerns about unethical behavior, actual or suspected fraud, or violation of the code of conduct or ethics policy. It also provides for adequate safeguards against victimization of directors/ employees who avail of the mechanism. The Company affirms that no personnel have been denied access to the audit committee. The Company has formulated a Policy on Vigil Mechanism and has established a mechanism that any personnel may raise Reportable Matter after becoming aware of the same. All suspected violations and Reportable Matters are reported to an Independent Director and member of the Audit Committee and suitable directions/actions are informed to the Managing Director of the Company.

The Company has adopted Whistle Blower Policy in line with the provisions of Section 177(9) of the Companies Act 2013 which can be accessed on the Company's Website under the web link http://www.sambandam.com

7 AUDIT COMMITTEE :

Details of Composition of Audit committee are covered under corporate governance report annexed with this report and forms part of this report. Further, during this year all the recommendations of the Audit committee have been accepted by the Board.

8 REPORTS OF STATUTORY AUDITORS AND SECRETARIAL AUDITORS

Reports of the Statutory Auditors and the Secretarial Auditors for the year under review are free from any qualification, reservation or adverse remark or disclaimer. Secretarial Audit Report in Form MR-3 is attached, which forms part of this report - refer Annexure VI. It also confirms that none of the directors of the board of directors on the board of the company have been debarred or disqualified from being appointed or continuing as the directors of the companies by the board /MCA or any such statutory authority

Applicable Secretarial standards, ie SS1 and SS2, relating to "Meeting of the board of directors "and "General meeting "respectively, have been duly complied with by the company.

9 EXTRACT OF ANNUAL RETURN

In Accordance with Section 92(3) of the Companies Act, 2013, read with Rule 12(1) of Companies (Management and Administration) Rules, 2014, the copy of the Annual Return for the year ended 31-03-2024 has been placed on the website of the Company and web link of such Annual Return is http://www.sambandam.com/results/2024-08-30-MGT-7-2023-24.pdf or www.sambandam.com

10 TRANSFER OF UNPAID AND UNCLAIMED DIVIDEND AMOUNT TO INVESTOR EDUCATION AND PROTECTION FUND ACCOUNT :

Pursuant to the provisions of section 124 of the Companies Act, 2013, which came in to effect from 07.09.2016, the declared dividends which remained unpaid or unclaimed for a period of seven years, has to be transferred by the company to the Investor Education and Protection Fund (IEPF) established by the Central Government. During the year 2023-24, transfer of Unclaimed Dividend of the year 2015-16 was applicable since dividend was declared for the financial year 15-16.

However, shareholders are requested to take note that as per IEPF rules, the company is required to transfer unpaid dividend and underlying shares also in respect of which final dividend was not claimed / paid of the year 16-17, to IEPF authority. Shareholders who have not claimed their dividend of the year 16-17 can write to the Company or Registrar and transfer agent M/s Cameo Corporate Services Limited, at 'Subramanian Building', No.1, Club House Road, Chennai - 600 002 who are the Registrars and Share Transfer Agents (RTA) of the Company for further details and for claiming unclaimed dividend lying unpaid. In case no valid claim is received, the dividend and shares in respect of which the dividend are lying unpaid / unclaimed will be transferred to IEPF authority on the due date. Further in terms of rule 6(3) of the IEPF rules, statement containing the details of shareholders who have not claimed dividend for previous years, and his folio number /DP-ID /client ID is made available on company's website for information and necessary action by shareholder. In case, the concerned shareholder wish to claim the shares after transfer to IEPF, an application has to be made to the IEPF authority in form IEPF- 5 online and submit the hard copy of such form IEPF -5 along with necessary documents to the company as prescribed under the rules and the same is available at IEPF website (ie) www.iepf .gov.in.

Annexures to this Board Report

The following are the annexures to this report

1. Statement containing salient features of the financial statement of associate company (Form AOC - 1) in Annexure - I

2. Form AOC - 2 in Annexure - II

3. CMD / CFO Certification in Annexure - III

4. Conservation of energy, technology absorption, Research and development and foreign exchange earnings and outgo in Annexure - IV

5. Details of CSR Expenditure in Annexure - V

6. Secretarial Audit Report (Form MR-3) in Annexure - VI

7. Corporate Governance Report in Annexure - VII

11 CAUTIONARY NOTE

Statements in the Board's report and the management discussion and analysis describing the Company's objectives, expectations or predictions may be forward looking within the meaning of applicable securities laws and regulations. Actual results may differ materially from those expressed in the statement. Important factors that could influence the Company's operations including global and domestic demand and supply conditions affecting selling prices of finished goods, input availability and prices, changes in government regulations, tax laws, economic developments within the country and other related factors such as litigation and industrial relations.

12 ACKNOWLEDGEMENT

Your directors thank the Company's customers, vendors , bankers and investors for their continued support during the year. Your directors place on record their appreciation for the contribution made by the employees at all levels. Your Company's consistent growth but for the market conditions has been made possible by the hard work, solidarity, cooperation and support of the management team.

Your directors thank Canara Bank, Karnataka Bank Limited, HDFC bank, South Indian Bank, CSB Bank, and the State and Central Government departments for their support, and look forward to their continued support in future