Suryalakshmi Cotton Mills Ltd

To

The Members

Your Directors are pleased to present their Sixty-First Annual Report on the business and operations of the Company and the financial results for the year ended 31% March, 2024.

Financial Results

OPERATIONS

The Operations for the current financial year 2023-24 on a turnover of Rs. 786 crores resulted in a profit before tax of % 6.2 crores and a net profit of Rs. 3 crores. The production of both yarn and fabric were maintained at the last year's level. However, the sales realization in both the yarn and denim divisions saw a significant drop. The volumes have also remained stagnant with the turnover registering a 9% drop. The softening of the global commodity prices and ral material prices led to a lower sales realization.

DIVIDEND

Your Company proposes to further modernize  its machinery and production processes to keep pace with the evolving global trends in the industry. The Board, with a view to conserve resources has not recommended any dividend for the year under review.

CAPITAL EXPENDITURE

During the year under review the Company incurred capital expenditure of Rs. 3577.68 lakhs.

EXPORTS

International markets posed very tough challenges during the year impacted by economic and geopolitical uncertainties. The Company could maintain its current level of exports at Rs. 171 crores in the face of declining performance by the industry as a whole. The Company registered a small increase in the volume of exports by taking many proactive initiatives on sustainable practices leading to several strategic tie-ups with, CleanKore (for laser friendly dyeing), Regenagri Cotton (for traceability & soil health), and Indigo good (for reducing fresh Water intake). These were key to building a strong and positive image with major international brands like Lee, Wrangler, Wal-Mart, Amazon, Levis, etc. The Company fosters a strong relationship with its customers. The Company offers a fairly diversified range of denim fabrics including high quality ring yarns, different fibres, special and functional finishes, different weaves, etc. with recycled cotton and poly, organic cotton & BCI cotton.

FUTURE OUTLOOK

The present positive environment in the country through the Government initiatives like PM Mitra Parks Scheme aims to develop world-class infrastructure and integrated textile value chains. The Company's commitment to the sustainability and Government initiatives has received its due recognition in the market place both in domestic and international markets and in this scenario the company is confident of registering significant growth in the future.

DIRECTORS

We deeply regret to inform Sri. Navrang Lal Tibrewal jis demise on 08/01/2024. He was on the Board of the Company from July 2001 and guided the Company with his rich experience and advice during his tenure.

Sri. R. S. Agarwal resigned on 23/07/2023 and the Board wishes to place on record its appreciation of his wise counsel and valuable guidance.

Sri. Rajan Ravindra Shukla was withdrawn as IDBI Rs. Nominee Director on 08/05/2023. The Board wishes to place on record its appreciation of the valuable guidance received from Mr. Shukla.

Sri. R. Surender Reddy's Second-Term of appointment as an Independent Director ended on 31/03/2024 and the Board appointed him as a Non-Executive Non- Independent Director on 24/05/2024 and proposes to secure the members approval in the ensuing Annual General Meeting for appointment as Non-Executive Non- Independent Director liable to retire by rotation.

Sri. Arvind Sadashiv Mokashi, a retired banker was appointed as a Non-Executive Independent Director on 10/08/2023 for a period of five years.

Smt. Aruna Prasad, presently a Non-Executive Non- Independent Director is proposed to be appointed as a Non-Executive Independent Director for a period of five years at the ensuing Annual General Meeting.

Sri. L A. Agarwal's term of appointment as a Chairman & Managing Director ends in June 2024 and the Board has reappointed him on the existing terms subject to approval of the members of the company in the ensuing Annual General Meeting.

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

EVALUATION OF THE BOARD'S PERFORMANCE

In compliance with the Companies Act, 2013, and as per the latest Listing Regulations, the annual performance evaluation of the Board its Committees and of Individual Directors was carried out during the year under review. More details on the same are given in the Corporate Governance Report.

FAMILIARISATION PROGRAM FOR INDEPENDENT DIRECTORS

The Company has formulated a familiarisation program for the Independent Directors to provide insights into the Company to enable the Independent Directors to understandits business in depth and contribute significantly to the Company. The details of such program are available in the Company's website wwu.suryalakshmicom

DECLARATION BY INDEPENDENT DIRECTORS

The Company has obtained the declaration from the Independent Directors confirming that they meet the criteria of Independence laid down in Section 149(6) of the Companies Act, 2013.

MEETING OF INDEPENDENT DIRECTORS

A separate meeting of the Independent Directors was held under the Chairmanship of Sri. Dhruv Vijai Singh, Independent Director on February 13, 2024, inter-alia to discuss evaluation of the performance of Non-Independent Directors, the Board as a whole, evaluation of the performance of the Chairman, taking into account the views of the Executive and Non-Executive Directors and the evaluation of the quality, content and timeliness of flow of information between the management and the Board that is necessary for the Board to effectively and reasonably perform its duties.

The Independent Directors expressed satisfaction with the overall performance of the Directors and the Board as a whole.

POLICY ON APPOINTMENT & REMUNERATION OF DIRECTORS

The Board of Directors has framed a policy which lays down a framework in relation to remuneration of Directors, Key Managerial Personnel and Senior Management of the Company. The Policy broadly lays down the guiding principles, philosophy and the basis for payment of remuneration to Executive and Non-executive Directors

(by way of sitting fees and commission), Key Managerial Personnel, Senior Management and other employees.

The policy also provides the criteria for determining qualifications, positive attributes and Independence of Directors and criteria for appointment of Key Managerial Personnel/ Senior Managementand performance evaluation which are considered by the Nomination and Remuneration Committee and the Board of Directors while making selection of the candidates. The above policy has been posted on the Website of the Company at www.suryalakshmicom.

DIRECTORS' RESPONSIBILITY STATEMENT

Your Directors state that:

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

- the Directors had selected such accounting policies and applied them consistently and made judgements 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 profit and loss of the Company for that period;

- the Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

- the Directors had prepared the annual accounts on a going concern basis; and

- the Directors had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and are operating effectively.

- the Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

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 at the web link Wwwu.surualakshmi.com. Therefore, the extract of Annual Return as per the provisions of Section 92 of the Companies Act, 2013 and Rule 12 of Companies (Management and Administration) Rules, 2014 has not been annexed to this Board's Report.

ii) Number of Board Meetings:

The Board of Directors met four times during the year 2023-2024. The details of the board meetings and the attendance of the Directors are provided in the Corporate Governance Report.

iii) Audit Committee:

Consequent to the changes in the Board of Directors during the year the Audit Committee presently consists of Sri. Dhruv Vijai Singh, Sri. Arvind Sadashiv Mokashi, Smt. Aruna Prasad, and Sri. R. Surender Reddy with Sri. Dhruv Vijai Singh as Chairman.

More details on the committee are given in the Corporate Governance Report.

iv) Related Party Transactions:

Al the related party transactions are entered into on arm's length basis and are in compliance with the applicable provisions of the Companies Act 2013 and the Listing Regulations. There are no materially significant related party transactions made by the company with Promoters, Directors or Key Managerial Personnel etc. which may have potential conflict with the interest of the company at large. Thus disclosure in Form AOC-2 is not required to be made. All Related Party Transactions are disclosed to the Audit Committee and the Board.

Omnibus approval is obtained for the transactions which are foreseeable and repetitive in nature. A statement of all related party transactions is presented before the Audit Committee and the Board on a quarterly basis, specifying the nature, value and terms and conditions of the transactions for its review. The Related Party Transactions Policy as approved by the Board is uploaded on the company's Website at the web link: http-//wuuw.suryalakshmicom/investor. corporate.qgovernance.aspx

v) REPORTING OF FRAUDS

There was no instance of fraud during the year under review, Which required the Statutory Auditors to report to the Audit Committee and / or Board under Section 143(12) of Act and Rules framed thereunder.

vi) Ne Loans / Guarantees / Investments under Sectionl186 of the Companies Act, 2013 have been made during the year.

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

CORPORATE GOVERNANCE

As per the Listing Regulations on Corporate Governance, Management Discussion and Analysis Report forms part of the Annual Report (ANNEXURE Rs. 5). The Company has complied with the corporate governance requirements under the Companies Act, 2013 as stipulated under the Listing Regulations. A separate section on corporate governance under the Listing Regulations, along with a certificate from a Practising Company Secretary confirming the compliance, is annexed and forms part ofthe Annual Report (ANNEXURE Rs. 1).

CORPORATE SOCIAL RESPONSIBILITY POLICY

At Suryalakshmi a major concern has been, the sincere effort by the Company to recognize the role played by the Society at large, the environment and its human resources in its sustainability and growth and to strive to discharge its social responsibility as a corporate citizen. To this end, the Company has always tried to strike a fine balance of economic, environmental and social commitments. The sustainable stewardship mantra is not limited to philanthropy, but encompasses holistic community development and other initiatives to strengthen business sustainability. The core areas for Suryalakshmi's Corporate Social Responsibility (CSR) Programmes for this year have been health care, environment and education. Details of the projects / activities implemented by the Company are furnished in a separate ANNEXURE-2 to this report. The Company constituted a Committee of CSR consisting of Sri. LA. Agarwal, Sri. Paritosh Agarwal and Sri. R. Surender Reddy, with Sri. L AN. Agarwal as Chairman.

STAKEHOLDERS RELATIONSHIP COMMITTEE

The reconstituted Stakeholder's Relationship Committee consists of the following Directors Rs. Sri. L. A. Agarwal, Sri. Paritosh Agarwal, and Sri. Arvind Sadashiv Mokashi with Sri. Arvind Sadashiv Mokashi as the Chairman.

RISK MANAGEMENT

The Company has instituted a proper mechanism for identifying and establishing controls to effectively manage different kinds of risks viz. Trend Related Risks, Raw Material Risks, Brand / Technology Risks, Operational Quality Risks, Human Resources Risks, Regulatory Risks and Financial Risks. A Committee headed by Sri. Paritosh Agarwal, Managing Director periodically reviews the risks and takes steps to mitigate identified risks.

WHISTLE BLOWER POLICY

The Company has in place a Whistle Blower policy for vigil mechanism for Directors and employees to report to the management about unethical behaviour, fraud, violation of Company's Code of Conduct, which also ensures safeguards against victimization of those employees who seek to make use of the free access to the Audit Committee for this purpose. None of the Personnel has been denied access to the audit committee. The Whistle Blower Policy has been posted on the website of the Company at www. suryalakshmi.com/investor-corporate-governance.aspx

DECLARATION ABOUT COMPLIANCE WITH THE CODEOF CONDUCT BY MEMBERS OF THE BOARD AND SR. MANAGEMENT PERSONNEL.

The Company has complied with the requirements of Code of Conduct for Board members and _ Sr. Management Personnel.

DISCLOSUREUNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITIONAND REDRESSAL) ACT, 2013

The Company has in place an Anti-Sexual Harassment Policy in line with the requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. Internal Complaints Committee has been set up to redress complaints received regarding 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 of during each Calendar year:

a) No. of Complaints received Rs. NIL

b) No. of Complaints disposed off during the year Rs. NIL

c) No.ofcases pending asatend ofthe Financial Year- NIL

AUDITORS

I. Statutory Auditors and their Report:-

M/s. Brahmayya & Co, Chartered Accountants, Hyderabad (ICAI Firm Regn Mo.000513S) Were appointed as auditors for a period of 5 years in the 59% AGM on a remuneration mutually agreed upon by the Board of Directors and the Statutory Auditors.

The Company has received the prescribed certificate from the Auditors regarding the appointment and the necessary consent for his appointment as Auditors. The Auditors' Report to the shareholders for the year under review does not contain any qualification, reservation or adverse remark.

II. Cost Auditor and Cost Audit Report

As per the requirement of Central Government and pursuant to Section 148 of the Act, 2013 read with the Companies (Cost Records and Audit) Rules, 2014 as amended from time to time, your Company was required to maintain cost records and accordingly, such accounts are made and records have been maintained relating to Textile Divisions every year.

Pursuant to Section 148 of the Companies Act, 2013 the Board of Directors on the recommendation of the Audit Committee, has appointed M/s. S. Hariharan & Associates, Cost Accountants (Firm Registration No.100486) as the Cost Auditors for the Financial Year 2024-2025 and has recommended their remuneration to the shareholders for their ratification at the ensuing Annual General Meeting. M/s. S. Hariharan & Associates, Cost Accountants have confirmed their appointment is within the prescribed limits and also certified that they are free from any disqualification.

III. Secretarial Auditor and Secretarial Audit Report

The Board had appointed KV.C Reddy & Associates to carry out Secretarial Audit under the provisions of Section 204 of the Companies Act, 2013 for the financial year 2024-2025. The report of the Secretarial Auditor for the financial year 2023-2024 does not contain any qualifications, reservation or adverse remarks and is annexed to this report as ANNEXURE -3.

INTERNAL CONTROL SYSTEMS & THEIR ADEQUACY

Your Company has effective and adequate internal control systems in place commensurate with the size and complexity of the organisation. Internal and operational dudit is carried by M/s. K. Vijaya Raghavan & Associates LLP, a reputed firm of Chartered Accountants. The Internal Audit system is designed to meet the statutory requirements as well as ensure proper implementation of management and accounting controls. The internal auditors submit their report to the Managing Director and also to the Audit Committee, which reviews the report and ensures that the Audit observations are attended to by the Management

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO

The Company already has a solar power capacity of 5 MU. The Company is installing another Solar Power Plant for 1.5 MU at its Amanagallu division to promote alternative source of energy. Information on conservation of energy, technology absorption, foreign exchange earnings and out go, as required to be given pursuant to provision of Section 134 of the Companies Act, 2013 read with the Companies (Accounts) Rules, 2014 is annexed here to marked ANNEXURE-4 and forms part of this report.

DEPOSITS

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

COMPLIANCE WITH SECRETARIAL STANDARDS

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

EMPLOYEES

Periodic Training programmes for developing a skilled workforce, personality development programmes, yoga camps, etc., encouragement of employee participation in district / state level sports events are regularly undertaken. An integrated woman focused program trains unskilled women to undertake skilled jobs at its units.

Disclosure pertaining to the remuneration and other details as required under Section 134 & 197(12) of the Act, and the Rules framed thereunder is enclosed as ANNEXURE-6 to the Board's Report.

ACKNOWLEDGEMENTS

The Board of Directors are pleased to place on record their appreciation of the cooperation and support extended by Banks and various State and Central Government Agencies. The Board also wishes to place on record its appreciation of the valuable services rendered by the employees of the Company.