Directors Report of Kandagiri Spinning Mills Ltd.

Mar 31, 2024

Your directors hereunder submit their 48^thAnnual Report together with the audited accounts for the year ended
March 31,2024 (the year).

Performance Highlights	2023-24	2022-23
	(Rupees in Lakhs)
Revenue from Operations	150	123
Other Operating Income	-	-
Other Income	147	326
Total Turnover	297	449
Gross profit/(Loss) (i.e., Profit/(Loss) before interest, tax and depreciation)	85.40	301
Cash profit/(Loss) (i.e., Profit / (Loss) before depreciation and tax)	(147.57)	169
Profit/(Loss) before exceptional Item and tax	(176.74)	139
Exceptional Item: Profit/(Loss) after exceptional Item (before tax) - PBT	(176.74)	139
Tax Expense: Current Tax - Current year	_
- Prior year withdrawal	-	(14)
Deferred tax	_	-
Profit/(Loss) after exceptional Item and tax - PAT	(176.74)	153
Earnings per share - basic and diluted Rs.	(4.59)	3.97

Dividend

In view of the loss incurred during the past years and erosion of networth, no dividend is recommended by your
Board of Directors for the financial year 2023-24.

Retained Earnings

The current year loss of (Rs. 176.74 lakhs) is added to the negative retaining earnings as at the beginning of the year
of (Rs. 3632.74 lakhs) and the negative retained earnings as at the end of the year is (Rs. 3809.48 lakhs).

Financial Performance with respect to Operational Performance :

During the financial year 2023-24, the Company carried out trading of yarn and earned revenue of Rs. 150.31 lakhs.
During the financial year 2023-24, the Company continued to lease out its immovable property (land and building) to
M/s Sambandam Spinning Mills Limited upto 31.10.2023 and lease was terminated with effect from 31.10.2023 and
Company earned lease rental income of Rs 82.00 lakhs upto the referred period.

The sale of a portion of windmill land asset measuring about 2.701 acres situated at Pazhavoor village, Tirunelveli
District was executed during the year for which the Company received an advance amount of Rs 62.77 lakhs in
earlier years as reported and an amount of Rs 54.21 lakhs was forfeited on windmill land sale advances (as per
terms of agreement) during the financial year 2023-24. The total income of the Company during the FY 2023-24 is
Rs. 297.51 lakhs as against the previous year income of Rs. 448.59 lakhs. The Company has incurred loss after tax
of (Rs 176.74 lakhs) in the financial year 2023-24 as against the previous year profit after tax of Rs. 152.93 lakhs.
MANAGEMENT DISCUSSION AND ANALYSIS
(a) Industry structure and developments and future outlook:

During the financial year 2023-24, the Company continued to carry out yarn trading business and generated
revenue. High raw material prices, input cost escalation, quality control orders and import of garments were
the major challenges faced by the Indian Textile and Clothing Industry in the financial year 2023-24. Currently,
most of the textile mills are operating at only 60-70% due to lack of demand. The country''s textile giants,
recognizing the looming threat, has shifted its focus from the Indian market to prioritize export markets due to
its heavy reliance on the spinning industry. Value added yarns also witnessed sluggish markets during the
year. After a year of rough journey of business during FY 2023-24, textile Industry is expected to witness a
breathier this year 2024-25 with the improved revenue growth and operating margins, gradual recovery in
exports, lower cotton prices, evolving market conditions etc., reaffirming the status as a cornerstone of the
textile ecosystem. It is predicted that the textile Industry will recover in FY 2024-25 with 6-8% growth driven by
increased volume and mild realisation gains. Following two years of decline, improved domestic demand and
stabilized exports will boost the industry.

(b) Strategies and Future plans

The quality of goods produced hitherto by company has generated goodwill and brand image. The Board of
Directors hope to continue to use these advantages by continuing trading business and also exploring new
business in the coming years. The Promoter Directors started infusing funds and will continue to contribute
additional funds as and when necessary and exploring various possibilities for settling the outstanding
liabilities and revival of the Company in the near future.

(d) Risks and Concerns

Your Company has devised risk management policy which involves identification of the business risks as
well as the financial risks, its evaluation, monitoring, reporting and mitigation measures. The Audit
Committee and Board of Directors of the Company periodically review the risk management policy of the
Company so that management controls the risk through properly defined network. Head of Departments
are responsible for implementation of the risk management system as may be applicable to their respective
areas of functioning and report to the Board and the Audit Committee. The details of risk management
mechanism and key risks faced by the Company are enumerated in the risk management policy. Risk
management policy is uploaded in the company''s website www.kandagirimills.com.

(e) Internal control systems

The Company has in place a well established internal control procedures. Necessary checks and balances
have been instituted for timely correction with an effective internal audit system.

(f) Human resources management

Employees are your company''s most valuable resource. Your Company continues to create a favourable
environment at work place.

The company also recognises the importance of training and consequently deputes its work force to
training and development. The fact that the relationship with the employees continued to be cordial is
testimony to the company''s ability to retain high quality workforce.

(g) Environmental Protection, Health and Safety (EHS)

EHS continues to receive the highest priority in all operational and functional areas at all locations of your
Company. Systematic process safety analysis, audits, periodic safety inspections are carried out by expert
agencies and suitable control measures adopted for ensuring safe operations at the site. Various
processes as required for Pollution Control and Environmental Protection are strictly adhered to.

(h) Corporate Social Responsibility

The CSR provisions became inapplicable to the Company and accordingly, the CSR Committee was
dissolved by the Board with effect from 18.06.2020. There is no CSR obligation for the Company for the
FY 2023-24 in accordance with the provisions of section 135 of the Companies Act, 2013. Accordingly,
requirement of CSR disclosure in required format is not applicable for the Company

(i) Change in Key ratios

Details of significant changes on following ratios (i.e., changes if 25 % or more as compared to immediately
previous financial year

a.	Debtors turnover ratio	FY 2023-24 350	FY 2022-23 192	change 158	change % 82.29
b.	Inventory turnover ratio	-	-	-	-
c.	Interest coverage ratio	0.37	2.28	(1.91)	(83.77)
d.	Current ratio	0.44	0.25	0.19	76.00
e.	Debt equity ratio	(0.66)	(0.57)	(0.10)	(16.81)
f.	Operating profit margin %	37.41	220.49	(183.08)	(83.03)
g.	Net profit margin %	(117.58)	124.23	(241.81)	(194.65)
h.	Return on net worth %	(6.69)	(5.82)	(0.87)	(14.95)

Explanations

The Company let its immoveable property of land and building for lease and had earned lease income only upto
31.10.2023 and the lease was terminated thereon. The Company carried out yarn trading business and
generated revenue during the financial year 2023-24. There was reduction in current liabilities during the
FY 2023-24. The current year loss is mainly due to increase in interest cost. During the FY 2022-23, the Company
earned profit of Rs. 139.35 lakhs is mainly because of forfeiture of advances and net gain on fair value of
investments and still there was an erosion of networth. Because of the stated reasons, there had been significant
changes in the key ratios as compared to previous year.

Annual Return

Annual Return in the prescribed Form MGT-7 has been placed in the Company''s website, under the web link:
https://www.kandagirimills.com/myadmin/investers/KSML%20MGT-7%2031-03-2024.pdf

Number of Board Meetings

Four Board Meetings were held during the year under review and the gap between two meetings did not exceed
one hundred and twenty days. The said meetings were held on May 29, 2023, August 11, 2023, November
9, 2023, and February 14, 2024. The necessary quorum was present for all the meetings.

Establishment of Vigil Mechanism

The Company has established a vigil mechanism for Directors and employees to report their genuine
concerns. The policy has been uploaded on the Company''s web site under the web link:
http://www.kandagirimills.com/investors/ksml2014-wbp.pdf

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.

The Board of Directors of the Company is of the opinion that the existing Independent Directors and the
Independent Directors proposed for appointment/reappointment possess integrity, expertise and experience
including the proficiency.

Compliance with Secretarial Standards

The Company has adhered compliance on applicable Secretarial Standards.

Secretarial Audit Report

Company has appointed CS T. Saraswathi, Practising Company Secretary as Secretarial Auditor, to conduct
Secretarial Audit particularly with reference to compliance with Companies Act, 2013, and relevant SEBI
Regulations for the financial year 2023-24. The report of the Secretarial Audit for the financial year 2023-24 in
FORM MR-3 is annexed to this report and forms part of this report.

Audit Committee

Audit Committee as on 31^st March, 2024 comprises of three members viz., CA S. Elangovan, Independent
Director as Chairman, Sri. S. Gnanashekaran, Independent Director and Dr. A. Sarayu, Non-Executive Director
as Members. Further, during this year all the recommendations of the Audit Committee have been accepted by
the Board.

Policy of Directors Appointment and Remuneration

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.kandagirimills.com/investors/ksml2015-nrp.pdf. Further, information about elements of remuneration
package of individual directors is provided in the Annual Return in prescribed form MGT-7 uploaded in the
Company''s website www.kandagirimills.com.

Independent Auditors'' Report and Secretarial Audit Report

The Independent Auditors report and Secretarial Audit Report contains qualified opinion with respect to ''Material
uncertainty related to going concern'', the explanation is provided as follows:

Though the Company incurred loss of Rs 176.74 lakhs and erosion in networth for the year ended
March 31,2024, your Directors continued their effort to overcome the losses. As a part of measure, your Directors
continued to do the yarn trading business and also exploring new business in the coming years. The promoters
also started infusing funds and assured to contribute additional funds as and when necessary. Considering the
above, the Board of Directors deem it fit to continue adoption of Going Concern Concept in preparation of the
financial statements although the Statutory auditors have qualified their opinion with respect to the same.

The Auditors of the Company have not reported any fraud as specified under section 143(12) of the
Companies Act, 2013.

Particulars of Employees

The information required under section 197 of the Act and rules made there-under, in respect of employees of as
shown below:

(a) Employed throughout the year and in receipt of remuneration aggregating to Rs.1,02,00,000 or more - Nil

(b) Employed for part of the year and in receipt of remuneration of Rs.8,50,000 or more per month - Nil
Note : Remuneration includes salary and value of perquisites and nature of employment is contractual.

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.

Related Party Transactions

Transactions entered with related parties have been explained in Form AOC -2 annexed with this report and
forms part of this report. Further, Policy on dealing with Related Party Transactions has been uploaded on the
Company''s website, under the web link: http://www.kandagirimills.com/investors/ksml2014-rptp.pdf

Board Evaluation

In accordance with the provisions of Companies Act, 2013 and SEBI (LODR) Regulations, 2015 read with
“Guidelines on Board Evaluation issued by SEBI vide its Circular dt. January 5, 2017, In the separate meeting of
the Independent directors, performance of non-independent directors, performance of the board as a whole and
performance of the Chairman was evaluated taking into account the views of executive directors and non¬
executive directors.

The same was discussed and noted by the Board at the next Board Meeting followed the meeting of the
Independent directors. Further, Board carried out an annual evaluation of its own performance, Board
committees and individual directors pursuant to the provisions of Companies Act, 2013 and SEBI
(LODR) Regulations, 2015 read with “Guidelines on Board Evaluation issued by SEBI vide its Circular dt.
January 5, 2017

The performance of the Board was evaluated by the Board after seeking inputs from all the directors on the basis
of criteria such as the Board Composition and structure, effectiveness of the Board processes, information and
functioning etc. The performance of the Committees was evaluated by the Board after seeking inputs from the
Committee members on the basis of the criteria such as the composition of committees, effectiveness of
committee meetings etc. The Independent Directors were evaluated without the presence of the director getting
evaluated.

Independent Director CA S. Elangovan is proposed for reappointment this year.

Exemptions from certain regulations of SEBI (LODR) Regulations, 2015

Since the Company''s paid-up capital is less than Rupees Ten crores and networth is less than rupees twenty five
crores, the regulations 17 to 27, clauses (b) to (i) and (t) of sub-regulation (2) of regulation 46 and para C, D and E
of Schedule V of SEBI (LODR) Regulations, 2015 are not applicable to the Company. Accordingly, report on
Corporate Governance Report is not provided.

Deposits

There is no Outstanding / fresh deposits accepted from the shareholders) covered under Chapter V of the Act and
the same has been furnished herein below:-

i. Deposits at the beginning of the year on 01^st April, 2023 : NIL

ii. Deposits Accepted from shareholders during the year (2023-24) : NIL

iii. Deposits repaid during the year (2023-24) : NIL

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

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/renewed from the Directors:

i. Deposits at the beginning of the year on 01^st April, 2023 : Rs. 1441.57 lakhs

ii. Deposits accepted from Directors during the year (2023-24) : Rs 4.70 lakhs

iii. Deposits repaid during the year (2023-24) : Rs 35.00 lakhs

iv. Deposits outstanding at the end of the financial year on 31^st March, 2024 : Rs. 1411.27 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
Cost Audit Report

The total income of the Company for the FY 2022-23 is Rs. 4.49 crore which is below Rs. 35 crore and accordingly
the company did not come under the purview of both maintenance of cost records and audit of cost records for the
FY 2023-24. Further, the total income of the Company for the FY 2023-24 is Rs. 2.96 crores which is below
Rs. 35 crore and accordingly the company will not come under the purview of both maintenance of cost records
and audit of cost records for the FY 2024.25.

Directors

On the recommendation of Nomination and Remuneration committee, Board has appointed Sri S. Sivakumar as
an Additional Director (Non-Executive) of the Company with effect from 14.02.2024 to hold office upto the
ensuing 48^th AGM of the Company. Except this appointment, there is no other change in the Board of Directors
during the FY 2023-24.

On the recommendation of Nomination and Remuneration committee, Board has recommended for appointment
of Sri S. Sivakumar as a Non-Executive Director of the Company, liable to retire by rotation and included the
resolution in the notice of 48^th AGM for member''s approval.

At the 43^rd AGM of the Company held on 11.08.2019, Independent Director Sri. S. Gnanasekharan was
reappointed for five consecutive years from 11.08.2019 to 10.08.2024. Accordingly the tenure of Independent
Director Sri. S. Gnanasekharan ends on 10.08.2024

At the 44^th AGM of the Company held on 23.09.2020, with the approval of shareholders Dr. A. Sarayu was
appointed as Non-Executive Director of the Company, liable to retire by rotation and CA S. Elangovan was
appointed as Non-Executive Independent Director of the Company to hold office upto the conclusion of 48^th AGM
of the Company. On the recommendation of Nomination and Remuneration Committee, Board of Directors have
recommended for reappointment of Independent Director for a term of one year from 28.09.2024 to 27.09.2025
and included the resolution in the notice of 48^th AGM for member''s approval. Considering the tenure completion of
Chairman - Non-Executive Independent Director CS S. Gnanashekaran on 10-08-2024, on the
recommendation of Nomination and Remuneration Committee, Board of Directors at their meeting held on
08.08.2024 passed resolution for appointment of Non-Executive Independent Director CA S. Elangovan as
Chairman of the Company with effect from 10.08.2024.

Non-Executive Director Sri S. Devarajan retires by rotation at this ensuing (48^th) Annual General Meeting of the
Company and being eligible offers himself for reappointment. The resolution has been placed in the notice of
48^th AGM for member''s approval.

On the recommendation of Nomination and Remuneration committee, Board has appointed
CS Nattery Srinivasan Poornima as an Additional Director (Non-Executive, Independent) of the Company with
effect from 08.08.2024 to hold office upto the ensuing 48^th AGM of the Company. Further, on the recommendation
of Nomination and Remuneration committee, Board has recommended for appointment of
CS Nattery Srinivasan Poornima as a Non-Executive Independent Director of the Company for a term of one year
from 08/08/2024 to 07/08/2025, not liable to retire by rotation and included the resolution in the notice of 48^th AGM
for member''s approval.

Company''s Code of Conduct applicable to the board has been adopted by the board and all directors of the
company have confirmed compliance with the Code of Conduct.

Sri R. Selvarajan was reappointed as Managing Director of the Company at the 45^th AGM of the Company held on
25.09.2021 for a period of three years (from 01.10.2021 to 30.09.2024). On the recommendation of Nomination
and Remuneration Committee, Board of Directors have recommended for reappointment of Managing Director
for a period of one year from 01.10.2024 to 30.09.2025 and included the resolution in the notice of 48^th AGM for
member''s approval.

Key Managerial Personnel

MD and CFO didn''t receive any remuneration during the financial year 2023-24.

Auditors

At the 46^th AGM of the Company held on 24-09-2022, the members had approved the appointment of
M/s Krishnen & Associates, Chartered Accountants as Statutory Auditors of the Company for conduct of Statutory
Audit of the Company for five consecutive years from the financial year 2022-23 to financial year 2026-27.

Statutory Auditors M/s Krishnen & Associates, Chartered Accountants have confirmed their eligibility and
willingness to continue their office for the FY 2024-25. On the recommendation of the Audit Committee, Board is
placing the resolution for the remuneration payable to the statutory Auditors for the FY 2024-2025 before the
member''s for approval

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 the note 41 of the notes to the Standalone financial statements.

Disclosure as per Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal)
Act, 2013

The Company has zero tolerance for sexual harassment at workplace and has adopted a policy on prevention,
prohibition and redressal of sexual harassment at workplace in line with the provisions of Sexual Harassment of
Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the rules framed thereunder. The
Company has set up a Committee for addressing issues related to women and during the financial year 2023-24,
there were no complaints received on sexual harassment.

Performance of Associate Company

Your Company has an associate M/s SPMM Healthcare Services Private Limited within the meaning specified
under Section 2 (6) of Companies Act, 2013. M/s SPMM Healthcare services private Limited has recorded a total
revenue of Rs. 300.62 lakhs during the year 2023-24 as against Rs. 319.32 lakhs in the previous year and profit
after tax of Rs. 10.31 lakhs during the year 2023-24 as against Rs. 10.00 lakhs in the previous year. A separate
statement containing the salient features of the financial statement of the associate in FORM AOC -1 has also
been annexed with this report as per the requirements of provisions of section 129 of the Companies Act, 2013
and forms part of this report.

Significant and Material Orders passed by the Courts or Tribunals impacting the Company : NIL

Material Changes and Commitments during the year, if any, occurred between the end of the year and the
date of this report

There were no material changes and commitments between the end of the period under review and the date of
this report which could have an impact on the Company''s operation in the future or its status as a “going concern”.

Conservation of energy, technology absorption, Research and development and foreign exchange
earnings and outgo : NIL

Credit rating of securities

The necessary to obtain credit rating does not arise to the Company during the year under review.

Designated Person for Significant Beneficial Ownership

Pursuant to the Companies (Management and Administration) 2^nd Amendment Rules, 2023, Ms. J. Asifa,
Company Secretary of the Company shall be responsible for furnishing and extending cooperation for providing
information to the Registrar of Companies or any other authorised officer with respect to beneficial interest in
shares of the Company.

General Disclosures

• There is no proceeding initiated or pending under the Insolvency and Bankruptcy Code, 2016

• There was no instance of onetime settlement with any Bank or Financial Institution

Annexures to this Report

The following are the annexures to this report

1. Director''s Responsibility Statement in Annexure 1

2. Statement containing salient features of the financial statement of associate company (Form AOC - 1)
in Annexure 2

3. Form AOC - 2 in Annexure 3

4. Secretarial Audit Report (Form MR-3) in Annexure 4

5. Particulars of Remuneration in Annexure 5

6. MD/CFO Certification in Annexure 6

Cautionary Note

Statements in the Directors'' 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 might differ materially from those either expressed or implied in the statement.
Important factors that could influence the Company''s operations include global and domestic economic
conditions, government regulations, tax laws, economic developments within the country and other related
factors such as litigation and industrial relations.

Acknowledgement

Directors of your Company record their sincere appreciation of the dedication and commitment of all employees.
Your directors thank the Management, Shareholders, Customers, Suppliers, Bankers and other stakeholders for
their continued support during the year. The directors of your company thank Central/State Governments and
other government agencies for their support and look forward to their continued support in future.

For and on behalf of the Board

Salem S. Gnanashekaran

August 08, 2024 Chairman

(DIN :06796817)

---

Mar 31, 2017

The directors have pleasure in submitting their 41^st Annual Report together with the audited accounts for the year ended March 31, 2017 (the year).

Performance Highlights	2016 - 17	2015 - 16
	(Rupees in Lakhs)
Export - Direct	803	179
- Merchandise	519	7544
Domestic	6379	6740
Other Operating Income	101	15
Total Turnover	7803	14478
Gross profit/(Loss) (i.e., Profit before interest and depreciation)	(698)	868
Cash profit/(Loss) (i.e., Profit / before depreciation)	(1949)	(375)
Profit/(Loss) before exceptional Item and tax	(2661)	(1134)
Exceptional Item - Profit on sale of Windmill	1545	-
Profit/(Loss) after exceptional Item (before tax) - PBT	(1116)	(1134)
Profit/(Loss) after exceptional Item and tax - PAT	(1116)	(1134)
Earnings per share - basic and diluted Rs.	(28.99)	(29.45)

Dividend

In view of the loss incurred during the year, no dividend could be recommended by your Board of Directors for the financial year 2016-17.

Reserves and Surplus

The current year loss of Rs. 1116 lakhs has been added to the deficit at the beginning of the year of Rs. 1258.62 lakhs and the deficit aggregates to Rs. 2374.51 lakhs at the end of the year.

Financial Performance with respect to Operational Performance:

During the financial year 2016-17, your Company was not able to run all the units at fullest capacity. The capacity utilization of all the units got reduced resulting in lower production of 32.90 lakh kgs and the Company was able to achieve only a turnover of Rs. 7803 lakhs as against the turnover of Rs. 14478 lakhs of the previous year 2015-16.

The cash loss incurred by the Company during the previous year 2015-16 and the continued adverse market behavior and abnormal increase in cotton prices and lower yarn prices, resulted in losses during the current year also. Despite aforesaid adverse factors, the Company made repayment of term loans (nearly Rs. 20 crore) which has affected the entire working capital. The financial crunch affected the timely repayment of term loans and creditors payments. In view of the delayed payments to creditors, the procurement of raw material was also affected.

As a consequence of the above and also due to non-recovery of fixed costs since the Company had not run at the fullest capacity during the year, your Company incurred loss of Rs. 2661 lakhs as against previous year 2015-16 loss of Rs. 1134 lakhs

To overcome this situation and to ease off the financial crisis, strategic decision of selling windmill assets and Unit -III of the Company was taken. The proceeds from the sale of windmill assets were utilized for bank repayments and certain creditor payments. Sale of Unit-III is under progress and the proceeds will be utilized for remaining payment obligations of the Company and also for the working capital needs to run the business.

The above said loss of Rs. 2661 lakhs got reduced by the profit on sale of Windmill assets of Rs. 1545 lakhs resulting in net loss of Rs. 1116 lakhs for the financial year 2016-17

MANAGEMENT DISCUSSION AND ANALYSIS

The core business of the company is manufacture and sale of cotton yarn. The management discussion and analysis given below discusses the key issues of the cotton yarn spinning sector.

(a) Industry structure and developments:

The FY 2016-17 witnessed high volatility and abnormal increase in cotton prices and sluggish demand for yarn products both in domestic and international markets. Cotton prices were uneconomical in relation to market price of yarn. Surplus production, uneconomical exports and reduced demand for medium quality yarn in the domestic market are some of the reasons for the lower performance of the industry. These circumstances have created challenges of shifting towards new value added products, selling at higher price or premium price for the better quality of yarn, better productivity and enhancing marketing strategies for evolution of new markets. Decision to reduce exports at the present juncture due to the uneconomical prices also aggravated situation due to competition from other developing countries like Indonesia, Vietnam, Bangladesh, Philippines etc.

(b) Outlook

The industry expects an improvement during the current year. Further, there is an increasing demand for value added yarns and also other cellulosic fibres in both domestic and international markets. In view of these factors, Company''s performance is expected to improve substantially during the year 2017-18.

(c) Strategies and Future plans

By using the sale proceeds of Unit-III asset, your company propose to repay a substantial portion of term loans and other payment obligations and propose to utilize the balance sale proceeds towards working capital requirements. Further for betterment in the operations of the Company, in addition to cotton yarn, your directors have planned to produce value added products viz., “Viscose, Polyester and Melange varieties of yarn” based on the market requirements. And the production of these varieties had already been started and it is well received in the market. The profitability is also quite good as compared to cotton yarn.

(d) Risks and Concerns

Your Company has devised Risk Management Policy which involves identification of the business risks as well as the financial risks, its evaluation, monitoring, reporting and mitigation measures. The Audit Committee and Board of Directors of the Company periodically review the Risk Management Policy of the Company so that management controls the risk through properly defined network. Head of Departments are responsible for implementation of the risk management system as may be applicable to their respective areas of functioning and report to the Board and the Audit Committee. The details of risk management mechanism and key risks faced by the Company are enumerated in the risk management policy. Risk management policy is uploaded in the company''s website www.kandagirimills.com.

(e) Internal control systems

The Company has in place a well established internal control procedures covering various areas such as procurement of raw materials, production planning, quality control, maintenance planning, marketing, cost management and debt servicing. Necessary checks and balances have been instituted for timely correction with an effective internal audit system.

Your company is certified ISO 9001: 2008 for Quality Management System Standards (Manufacture and supply of yarn) and ISO 14001: 2004 for Environmental Management System Standards (the systems). Further, your company''s laboratory is also certified by NABL.

(f) Human resources management

Employees are your company''s most valuable resource. Your Company continues to create a favourable environment at work place.

The company also recognizes the importance of training and consequently deputes its work force to various work related courses/seminars including important areas like Total Quality Management (TQM), Technical skills etc. The fact that the relationship with the employees continued to be cordial is testimony to the company''s ability to retain high quality workforce.

(g) Environmental Protection, Health and Safety (EHS)

EHS continues to receive the highest priority in all operational and functional areas at all locations of your Company. Systematic process safety analysis, audits, periodic safety inspections are carried out by expert agencies and suitable control measures adopted for ensuring safe operations at the site. Various processes as required for Pollution Control and Environmental Protection are strictly adhered to.

(h) Corporate Social Responsibility

Board of Directors of the Company has constituted Corporate Social Responsibility (CSR) Committee and devised a CSR policy to carry out CSR initiatives in line with the requirements specified under the Companies Act, 2013. Since the Company has no average net profit, there is no CSR Obligation for the FY 2016-17. However, Company has spent Rs. 1.23 lakhs towards unspent CSR obligation of previous year which the details have been given in the annexure to this report. The CSR policy has been hosted on the website of the Company www.kandagirimills.com.

Extract of Annual Return

The extract of annual return in Form MGT - 9 has been annexed with this report and forms part of this report.

Number of Board Meetings

The details pertaining to meetings of the Board has been explained under Corporate Governance Report annexed with this report and forms part of this report.

Establishment of Vigil Mechanism

The Company has established a vigil mechanism for Directors and employees to report their genuine concerns. The policy has been uploaded on the Company''s website under the web-link: http://www.kandagirimills.com/investors/ksml2014-wbp.pdf

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.

Secretarial Auditors'' Report

Company appointed M/s B. K. Sundaram & Associates, Practicing Company Secretaries as Secretarial Auditors to conduct Secretarial Audit of the Company for the financial year 2016-17. The report of the Secretarial Audit for the financial year 2016-17 in FORM MR-3 is annexed to this report and forms part of this report. There are no disqualifications, reservations or adverse remarks or disclaimers in Secretarial Auditors Report.

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.

Policy of Directors Appointment and Remuneration

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.kandagirimills.com/investors/ksml2015-nrp.pdf. Further, information about elements of remuneration package of individual directors is provided in the extract of Annual Return as provided under Section 92(3) of the Act, in prescribed form MGT-9 annexed with this report and forms part of this Report.

Independent Auditors'' Report

There is no qualification in the Independent Auditors'' Report except Independent Auditor has pointed out the delay in repayment of bank term loan principal and interest dues to the bankers. Your directors wish to state that due to cash flow constraints there was delay in repayment of bank term loan principal and interest dues which has been subsequently paid off.

Particulars of Employees

The information required under section 197 of the Act and rules made there-under with subsequent amendments thereto, in respect of employees of as shown below:

(a) Employed throughout the year and in receipt of remuneration aggregating to Rs.1,02,00,000 or more - Nil

(b) Employed for part of the year and in receipt of remuneration of Rs.8,50,000 or more per month - Nil Note : Remuneration includes salary and value of perquisites and nature of employment is contractual.

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.

Related Party Transactions

Transactions entered with related parties have been explained in Form AOC -2 annexed with this report and forms part of this report. Further, Policy on dealing with Related Party Transactions has been uploaded on the Company''s website, under the web link: http://www.kandagirimills.com/investors/ksml2014-ptp.pdf

Board Evaluation

The Board of Directors has carried out an annual evaluation of its own performance, board committees, and individual directors pursuant to the provisions of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements), Regulations 2015.

The performance of the board was evaluated by the board after seeking inputs from all the directors on the basis of criteria such as the board composition and structure, effectiveness of board processes, information and functioning, etc. as provided by the Guidance Note on Board Evaluation issued by the Securities and Exchange Board of India on January 5, 2017.

The performance of the committees was evaluated by the board after seeking inputs from the committee members on the basis of criteria such as the Composition of committees, effectiveness of committee meetings, etc.

The Board and the Nomination and Remuneration Committee reviewed the performance of individual directors on the basis of criteria such as the contribution of the individual director to the board and committee meetings like preparedness on the issues to be discussed, meaningful and constructive contribution and inputs in meetings, etc.

In a separate meeting of independent directors, performance of non-independent directors, performance of the board as a whole and performance of the Chairman was evaluated, taking into account the views of executive directors and non-executive directors. The same was discussed in the board meeting that followed the meeting of the independent directors, at which the performance of the board, its committees, and individual directors were also discussed. Performance evaluation of independent directors was done by the entire board, excluding the independent director being evaluated.

None of the Independent directors are due for reappointment.

Familiarization Programme of the Independent Directors

Periodic presentations are made by Senior Management, Statutory and Internal Auditors at the Board/Committee meetings on business and performance updates of the Company, 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 to the Independent directors.

Deposits

The following are the details of deposits covered under Chapter V of the Act

i. Deposits Accepted from shareholders during the year (2016 - 17): Rs. 17.66 lakhs

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

iii. 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.

Cost Audit Report

Cost Audit Report for the FY 2015-16 in XBRL format was filed with MCA on 23.08.2016 vide SRN G09734229. M/s. S. MAHADEVAN &CO., Cost Accountants were reappointed as Cost Auditors of the Company for the FY 2016-17 and the Cost Audit report for the year 2016-17 in XBRL format will be filed with MCA well within the due date.

Though it is not mandatory, as a best Corporate Governance practice, by way of rotation in place of existing cost auditors of the Company M/s. S. MAHADEVAN &CO., Board on the recommendation of the Audit Committee, appointed cMa K.M. Krishnamurthy, Cost Accountant as Cost Auditor of the Company for the FY 2017-18. Board places before the members the resolution for ratification of remuneration payable to the Cost Auditor for the FY 2017-18.

Directors

During the year, Independent directors of the Company viz., Sri P. S. Ananthanarayanan (w.e.f 11.02.2017), Dr. V. Gopalan (w.e.f. 06.05.2017) and Sri N. Asoka (w.e.f 06.05.2017) were resigned from the Board due to their pre-occupations and other commitments. The Board places on record its appreciation and gratitude for the invaluable contributions made by these directors during their tenure as a member of the Board of Directors.

The other Independent Directors Sri S. Gnanasekharan and Sri Kameshwar M. Bhat were appointed at the 38^th AGM of the Company held on 28.09.2014 for a term of five consecutive years and shall hold office up to the conclusion of the 43^rd AGM of the Company.

Board has appointed Dr. V. Sekar (on 25.03.2017), Dr. R. Ramarathnam (on 06.05.2017) and Sri D. Balasundaram (on 06.05.2017) as Additional Directors (Non-Executive, Independent) and they shall hold office up to the ensuing (41^st) AGM of the Company. Resolutions proposing their appointment as Independent Directors of the Company to hold office up to the conclusion of the 45^th AGM of the Company included in the notice of the 41^st AGM of the Company for members'' approval.

Non- Executive director Sri M. Rajamani retires by rotation this year and he desires not to get re-elected and in his place Sri. S. Sivakumar has been proposed for appointment as Non-executive director of the Company, liable to retire by rotation and the resolution is placed before the members for approval. Board recorded its appreciation for the valuable services rendered by Sri S. Rajamani to the Company during the tenure of his office.

Company''s Code of Conduct applicable to the board has been adopted by the board and all directors of the company have confirmed compliance with the Code of Conduct

Key Managerial Personnel

Members at the AGM held on 27.09.2015 approved the revision in the remuneration package of Chairman and Managing Director, Sri R. Selvarajan and Chief Financial Officer and Non- Executive director, Sri S. Vijay Shankar. Sri S. Vijay Shankar receives remuneration only in his capacity as Chief Financial Officer and do not receive sitting fees etc., in his capacity as non-executive director. In view of the unsatisfactory financial performance of the Company, CMD and CFO had forgone their increase in salary as a gesture.

Change in designations of Directors

Chairman and Managing Director Sri R. Selvarajan has tendered his resignation from the position of Chairman of the Company and expressed his willingness to continue as Managing Director of the company with effect from 01.06.2017. Board at its meeting held on 06.05.2017 accepted his resignation and on the recommendation of the Nomination and Remuneration Committee elected Non-Executive Director, Sri S. Devarajan as Non-Executive Chairman of the Company effective from 01.06.2017. Chairman and Managing Director Sri R. Selvarajan will be continued as Managing director of the Company with effect from 01.06.2017.

Auditors

The auditors M/S M.S. Krishnaswami & Rajan, Chartered Accountants, retire at the ensuing annual general meeting. In accordance with the provisions of Section 139 of the Companies Act, 2013 read with the relevant rules, by rotation in place of retiring Auditors M/S M.S. Krishnaswami & Rajan, Chartered Accountants, on the recommendation of the Audit Committee your Company''s board is placing the resolution for appointment of M/s R. Sundararajan & Associates, Chartered Accountants (who confirmed their eligibility and willingness to accept office, if appointed) as statutory Auditors of the Company for the financial year 2017-18.

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 3.20 to the notes to the financial statements.

Disclosure as per Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013

The Company has zero tolerance for sexual harassment at workplace and has adopted a policy on prevention, prohibition and redressal of sexual harassment at workplace in line with the provisions of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the rules framed there under. The Company has set up a Committee for addressing issues related to women and during the financial year 2016-17, there were no complaints received on sexual harassment.

Performance of Associate Company

Your Company has an associate M/s SPMM Healthcare Services Private Limited within the meaning specified under Section 2 (6) of Companies Act, 2013. M/s SPMM Healthcare services private Limited has recorded a total revenue of Rs. 3,74.39,022/- during the year 2016-17 as against Rs. 3,18,59,942/- in the previous year and profit after tax of Rs.17,97,013/- during the year 2016-17 as against Rs. 47,29,843/- in the previous year. A separate statement containing the salient features of the financial statement of the associate in FORM AOC -1 has also been annexed with this report as per the requirements of provisions of section 129 of the Companies Act, 2013 and forms part of this report.

Significant and Material Orders passed by the Courts Or Tribunals impacting the Company : NIL Material Changes and Commitments during the year, if any

There were no material changes and commitments between the end of the period under review and the date of this report which could have an impact on the Company''s operation in the future or its status as a “going concern”.

Annexure to this Report

The following are the annexure to this report:

1. Director''s Responsibility Statement in Annexure-1.

2. Conservation of energy, technology absorption, Research and development and foreign exchange earnings and outgo in Annexure -2.

3. Statement containing salient features of the financial statement of associate company (Form AOC - 1) in Annexure -3.

4. Form AOC - 2 in Annexure -4.

5. Extract of Annual Report (Form MGT-9) in Annexure -5.

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

7. Details of CSR Expenditure in Annexure -7.

8. Particulars of Remuneration in Annexure -8.

9. CEO / CFO Certification in Annexure- 9.

10. Corporate Governance Report in Annexure -10.

Cautionary Note

Statements in the Directors'' 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 might differ materially from those either expressed or implied in the statement. Important factors that could influence the Company''s operations include 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.

Acknowledgement

Directors of your Company record their sincere appreciation of the dedication and commitment of all employees in achieving and sustaining excellence in all areas of the business. Your directors thank the Shareholders, Customers, Suppliers, Bankers and other stakeholders for their continued support during the year. Your Company''s consistent growth has been made possible by the hard work, solidarity, cooperation and support of the management team. The directors of your company thank State Bank of India, Karnataka Bank Limited and Axis Bank Limited, Central/State Governments and other government agencies for their support, and look forward to their continued support in future.

For and on behalf of the Board of

Kandagiri Spinning Mills Limited

Salem R. Selvarajan

May 06, 2017 Chairman and Managing Director

---

Mar 31, 2015

Dear Members,

The directors have pleasure in submitting their 39th Annual Report together with the audited accounts for the year ended March 31, 2015 (the year).

Performance Highlights

2014 - 15 2013 - 14

(Rupees in Lakhs)

Export - Direct 224 389

- Merchandise 12706 13012

Domestic Sales 5993 5945

Other operating income 13 15

Total Turnover 18936 19361

Gross profit (i.e., Profit before 2096 2541 interest and depreciation)

Cash profit (i.e., Profit / before 981 1408 depreciation)

Profit before exceptional Item and tax 227 625

Exceptional Item - provision for diminution - 45 in investments

Profit after exceptional Item (before tax) 227 580 - PBT

Profit after exceptional Item and tax - PAT 156 382

Earnings per share - basic and diluted Rs. 4.04 9.92

Dividend

In view of the carried over losses as at March 31, 2015, no dividend is recommended by your board of directors for the financial year 2014-15.

Reserves and Surplus

The current year profit after tax of Rs.155.67 lakhs has been added to the surplus/(deficit) at the beginning of the year of (Rs.262.16 lakhs). The written down value of fixed assets of Rs.18.37 lakhs, whose lives have been expired as at April 1,2014, have been adjusted net of tax, in the opening balance of profit and loss account. As such surplus/(deficit) as at the end of the year amounts to (Rs.124.86 lakhs).

Financial Performance with respect to Operational Performance:

During the year under review, your company's turnover was reduced by Rs. 425 lakhs mainly because of decrease in yarn prices. However your company's production was increased to 93.58 lakh kgs of yarn from 84.00 lakh kgs of yarn as compared to previous year. During the year under review there was high volatility in the cotton and yarn prices in both domestic and global markets. Power tariff rate was also increased during the month of Jan' 2015 which resulted in additional burden to the Company. Due to the aforesaid adverse effects, your Company's profit was lowered to Rs. 227 lakhs as against Rs. 625 lakhs of the previous year.

Your company successfully commissioned the dedicated feeder line for its unit III & unit II by the month end of October 2014 and March 2015 respectively and because of this feeders, and purchase of third party power there was optimum utilisation of GENSET power and uninterrupted power supply was available to our company which resulted in the substantial reduction in the power costs inspite of increased power tariff rate by TANGEDCO. Commissioning of Dedicated feeder line for Unit I is under progress and expected to get completed by the month end of August 2015.

Extract of Annual Return

The extract of annual return in Form MGT - 9 has been annexed with this report and form part of this report.

Number of Board Meetings

The details pertaining to meetings of the Board has been explained under Corporate Governance Report annexed to the director's report and forms part of this report.

Establishment of Vigil Mechanism

The Company has established a vigil mechanism for Directors and employees to report their genuine concerns. The policy has been uploaded on the Company's website under the web-link: http://www.kandagirimills.com/investors/ksml2014-wbp.pdf

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 and revised Clause 49 of the Listing Agreements. Further, there has been no change in the circumstances which may affect their status as Independent director during the year.

Secretarial Audit Report

The Company appointed M/s B.K. Sundaram & Associates, Practising Company Secretaries as Secretarial Auditors, to conduct Secretarial Audit particularly with reference to compliance with Companies Act, 1956/2013, Listing Agreement and relevant SEBI Regulations for the financial year 2014-15. The report of the Secretarial Audit for the financial year 2014-15 in FORM MR-3 is annexed to this report and forms part of this report.

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 none of the recommendations of the Audit Committee has been rejected by the Board.

Policy of Directors Appointment and Remuneration

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 covered under Corporate Governance Report and forms part of this report. Further, information about elements of remuneration package of individual directors is provided in the extract of Annual Return as provided under Section92(3) of the Act, prescribed form MGT-9 annexed with this report and forms part of this Report.

Auditors and Secretarial Auditors Report

There are no disqualifications, reservations or adverse remarks or disclaimers in the Auditors and Secretarial Auditors Report.

Particulars of Employees

The information required under section 197 of the Act and rules made there under, in respect of employees of as shown below:

(a) Employed throughout the year and in receipt of remuneration aggregating to Rs.60,00,000 or more - Nil

(b) Employed for part of the year and in receipt of remuneration of Rs.5,00,000 or more per month - Nil

Note : Remuneration includes salary and value of perquisites and nature of employment is contractual.

Managerial Remuneration

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

Related Party Transactions

Transactions entered with related parties have been explained in Form AOC -2 annexed with this report and forms part of this report. Further, Policy on dealing with Related Party Transactions has been uploaded on the Company's website, under the web link:http://www.kandagirimills.com/investors/ksml2014-rptp.pdf

Board Evaluation

The board of directors had carried out an annual evaluation of its own performance, Board committees and individual directors pursuant to the provisions of the Companies Act, 2013 and clause 49 of the SEBI listing agreement.

In the separate meeting of the Independent directors, performance of non-independent directors, performance of the board as a whole and performance of the Chairman was evaluated taking into account the views of executive directors and non-executive directors. The same was discussed at the next Board Meeting followed the meeting of the Independent directors and the Independent Directors were evaluated without the presence of the director getting evaluated and also the performance of the Board, its Committees and individual directors were also discussed by the Board. The individual directors and the board as a whole in accordance with the performance Evaluation Policy guidelines were evaluated mainly on the basis of the criteria such as attendance, participation, contribution and the benefits derived by the Company. The Chairman was evaluated on the key aspects of his role. The performance of the committees was evaluated by the board after seeking inputs from the committee members on the basis of the criteria such as the composition of committees, effectiveness of committee meetings, etc. The Performance Evaluation policy is uploaded in the Company's website.

None of the Independent directors are due for reappointment.

Familiarisation Programme of the Independent Directors

Seminars and Site visits to plant locations are organized for the Independent directors to enable them to familiarize with the strategy, operations and functions of the Company. Periodic presentations are made by Senior Management, Statutory and Internal Auditors at the Board/Committee meetings on business and performance updates of the Company, 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 to the Independent directors.

Deposits

The following are the details of deposits covered under Chapter V of the Act

i. Deposits Accepted from shareholders during the year (2013 - 14) : Rs. 255.87 lakhs

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

iii. Any default in repayment of deposits or payment of interest thereon during the year : NIL Cost Audit Report

As per the directions of the Cost Audit Branch of the Ministry of Corporate Affairs, M/s. S. MAHADEVAN & CO., Cost Accountants, was appointed as Cost Auditors for audit of Cost Accounts of the Company and his report for the year ended 31st March 2014 was submitted on 24.09.2014 to the Ministry of Corporate Affairs (VIDE SRN S31227200 dated 17.09.2014). Due date for submission of Cost Audit Report in XBRL format was 180 days from the date of end of the financial year.

M/s. S. Mahadevan & Co. were again reappointed for Audit of Cost Accounts of the Company for the year ended 31.3.2015. In view of the Company maintaining the Cost Records continuously, and in order to provide the comparable audited figures for the year 2014-15, in the cost audit report for the year 2015-16, the Board decided to continue the cost audit for the year 2014-15 on a voluntary basis. The Cost Auditor will submit the report to the Board of Directors for the year 2014-15, after duly certifying the cost records, in due course.

Directors

Sri Kameshwar M. Bhat and other existing independent directors Sri P. S. Anathanarayanan, Dr V. Gopalan, Sri S. Gnanasekharan and Sri N. Asoka were appointed as Independent directors for a period of five consecutive years at the last AGM held on 28.09.2014. Non- Executive directors Sri M. Rajamani and Dr. A. Sarayu were also appointed at the last AGM held on 28.09.2014 and they are liable to retire by rotation. Sri S. Vijay Shankar resigned from the post of Joint Managing Director and continued as non- executive director from 01.04.2014 and also designated as Chief Financial Officer from 01.04.2014 and Sri S. Vijay Shankar retires by rotation this year and being eligible offers himself for reappointment. Company's Code of Conduct applicable to the board has been adopted by the board and all directors of the company have confirmed compliance with the Code of Conduct.

The present term of Chairman and Managing Director expires on 30th September, 2015. Nomination and Remuneration Committee at its meeting held on 26.05.2015 has recommended the reappointment of Chairman and Managing Directors for a period of three years. Board of Directors of the Company has included the resolution for the reappointment of the Chairman and Managing Director in the notice of the ensuing AGM for the approval of the members.

Key Managerial Personnel

Nomination and Remuneration Committee at its meeting held on 26.05.2015 had recommended the increase in the remuneration of Chief Financial Officer Sri S. Vijay Shankar with effect from 01.10.2015 which was subsequently approved by the Audit Committee and the Board at their respective meetings and accordingly Board of Directors has placed the proposal for the approval of the members.

Auditors

The auditors, M/S M.S. Krishnaswami & Rajan, Chartered Accountants, retire at the ensuing annual general meeting and have confirmed their eligibility and willingness to accept office, if appointed. On the recommendation of the Audit Committee your Company's board is placing the resolution u/s 139(2) of the Company's Act, 2013 for appointing him as the statutory Auditor of the Company for the current financial year.

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 3.19 of the Notes to the financial statements.

Disclosure as per Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013

The Company has zero tolerance for sexual harassment at workplace and has adopted a policy on prevention, prohibition and redressal of sexual harassment at workplace in line with the provisions of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the rules framed thereunder. The Company has set up a Committee for addressing issues related to women and during the financial year 2014-15, there were no complaints received on sexual harassment.

Performance of Associate Companies

Your Company has an associate M/s SPMM Healthcare Services Private Limited within the meaning specified under Section 2 (6) of Companies Act, 2013. M/s SPMM Healthcare services private Limited has recorded a total revenue of Rs. 3,92,43,57/- during the year 2014-15 as against Rs. 3,85,73,790/- in the previous year and profit after tax of Rs.43,63,920/- during the year 2014-15 as against Rs.9,89,364/- in the previous year. A separate statement containing the salient features of the financial statement of the associate in FORM AOC -1 has also been annexed with this report as per the requirements of provisions of section 129 of the Companies Act, 2013 and forms part of this report.

Material Changes and Commitments during the year, if any

There were no material changes and commitments between the end of the period under review and the date of this report which could have an impact on the Company's operation in the future or its status as a "going concern".

Significant And Material Orders Passed By The Courts Or Tribunals Impacting The Company

NIL

Shares

Your Company's Shares are traded only in Bombay Stock Exchange.

Annexures to this Report

The following are the annexures to this report

1. Director's Responsibility Statement in Annexure 1

2. Conservation of energy, technology absorption, Research and development and foreign exchange earnings and outgo in Annexure 2

3. Statement containing salient features of the financial statement of associate company (Form AOC - 1) in Annexure 3

4. Form AOC - 2 in Annexure 4

5. Extract of Annual Report (Form MGT-9) in Annexure 5

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

7. CSR Policy in Annexure 7

8. Particulars of Remuneration in Annexure 8

9. Corporate Governance Report in Annexure 9

Cautionary Note

Statements in the Directors' 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 might differ materially from those either expressed or implied in the statement. Important factors that could influence the Company's operations include 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.

Appreciation

Directors of your Company record their sincere appreciation of the dedication and commitment of all employees in achieving and sustaining excellence in all areas of the business. Your directors thank the Shareholders, Customers, Suppliers, Bankers and other stakeholders for their continued support during the year. Your Company's consistent growth has been made possible by the hard work, solidarity, cooperation and support of the management team.

The directors of your company thank State Bank of India, Karnataka Bank Limited and Axis Bank Limited, Central/State Governments and other government agencies for their support, and look forward to their continued support in future.

For and on behalf of the Board

Salem R. Selvarajan May 28, 2015 Chairman and Managing Director

---

Mar 31, 2014

Dear Members,

The directors have pleasure in submitting their 38th Annual Report together with the audited accounts for the year ended March 31, 2014 (the year).

Performance highlights

2013-14 2012-13

(Rs. in lakhs)

Export - Direct 389 -

- Merchandise 13012 6584

Domestic Sales 5945 9453

Other operating income 15 17

Total Turnover 19361 16054

Gross profit (ie. profit before interest and depreciation) 2541 2886

Cash profit/ (ie. Profit / before depreciation) 1408 1649

Profit before exceptional Item and tax 625 828

Exceptional Item - provision for diminution in investments 45 -

Profit after exceptional Item (before tax) - PBT 580 828

Profit after exceptional Item and tax - PAT 382 585

Earnings per share -basic and diluted Rs. 9.92 15.20

Dividend

In view of the carried over losses as at March 31, 2014, no dividend is recommended by your board of directors for the financial year 2013-14.

Financial Performance with respect to Operational Performance:

During the year under review, your company achieved a turnover of Rs. 19361 lakhs as against Rs. 16054 lakhs during the previous year, registering an increase of nearly 21%. However the profit before tax was lowered to Rs. 625 lakhs as against Rs. 828 lakhs mainly due to increase in cotton price and backing out of 40% of power generated through windmill by TANGEDCO. Your company was able to retain this level of profitability through dedicated efforts aimed at improving operational efficiency, timely purchase of cotton though there is an uncertainty in its prices and focus on optimal product mix and effective cost reduction measures. Your company successfully installed and commissioned the dedicated feeder line for its unit II by the end of March 2014. The benefits arising out of this dedicated power line, such as usage of third party power in the power cut period, optimum utilisation of GENSET power and uninterrupted power supply will be available to our company in the coming years.

COST AUDIT REPORT

As per the directions of the Cost Audit Branch of the Ministry of Corporate Affairs, M/s. S.MAHADEVAN & CO., Cost Accountants Coimbatore, was appointed as Cost Auditor for audit of Cost Accounts of the Company and his report for the year ended 31st March 2013 was submitted on 24.09.2013 to the Ministry of Corporate Affairs (VIDE SRN: S22477152, dated 24.09.2013). Due date for submission of Cost Audit Report in XBRL format was 27.09.2013.

M/s. S.Mahadevan & Co. were again reappointed for Audit of Cost Accounts of the Company for the year ended 31.3.2014. Their reports for the year ended 31.3.2014 will be filed before the due date.

DIRECTORS

Mr. V.Mahadevan, Independent Director did not attend the meetings of the Board and the Audit Committee held during the year on account of his continued illness. He submitted his resignation which was accepted at the Board Meeting held on 14.02.2014. Board appointed Mr. S.Gnanasekharan, a Practising Company secretary, as an independent director in the place of Mr. V.Mahadevan.

Sri S. Vijay Shankar had resigned as Joint Managing Director and continues as non-executive director with effect from 01.04.2014. Board designated Sri S.Vijay Shankar as Chief Financial Officer at the Board Meeting held on 01.04.2014.

In accordance with the provisions of section 196(3) of the Companies Act, 2013, the Nomination and Remuneration Committee recommended to the Board for the continuation of Sri R. Selvarajan as Chairman and Managing Director for his remaining tenure i.e. up to 30.09.2015 eventhough he attains the age of seventy on 01/10/2014 keeping in view of his experience.

The Company had, pursuant to the provisions of clause 49 of the listing agreements entered into with Stock Exchanges appointed Dr. V.Gopalan, Mr. P.S.Anathanarayanan, Mr. N.Asoka and Mr. S.Gnanasekharan as Independent Directors of the Company. In accordance with the provisions of section 149 of the Companies Act, 2013, these directors are being appointed as Independent directors for five consecutive years commencing from the date of the forthcoming Annual General Meeting of the Company and they are not liable to retire by rotation.

Sri S.Devarajan, Director, retires by rotation and he is eligible for reappointment. Sri S.Sivakumar also retires by rotation but he desires not to get reelected. Board recorded its appreciation for the valuable services rendered by Mr. S.Sivakumar to the company during the tenure of his office.

Company''s Code of Conduct applicable to the board has been adopted by the board and all directors of the company have confirmed compliance with the Code of Conduct.

AUDITORS

Auditors, M/S M.S.Krishnaswami & Rajan, Chartered Accountants, retire at the ensuing annual general meeting and have confirmed their eligibility and willingness to accept office, if appointed. On the recommendation of the Audit Committee your Company''s board is placing the resolution u/s 139(2) of the Companies Act, 2013 for appointing him as the statutory Auditor of the Company for the current financial year.

ANNEXURE

Annexure to this report details Statement on directors'' responsibility, conservation of energy, technology absorption, Research and development and foreign exchange earnings and outgo.

APPRECIATION

Directors of your Company record their sincere appreciation of the dedication and commitment of all employees in achieving and sustaining excellence in all areas of the business. Your directors thank the Shareholders, Customers, Suppliers, Bankers and other stakeholders for their continued support during the year. Your Company''s consistent growth has been made possible by the hard work, solidarity, cooperation and support of the management team.

The directors of your company thank State Bank of India, Karnataka Bank Limited and Axis Bank Limited, the Government of Tamil Nadu and other government agencies for their support, and look forward to their continued support in future.

For and on behalf of the Board Salem R. Selvarajan August 13, 2014 Chairman and Managing Director

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Mar 31, 2013

The directors have pleasure in presenting their 37th Annual Report together with the audited accounts for the year ended March 31, 2013 (the year).

Performance Highlights 2012-13 2011-12

Turnover (Rupees lakhs)

Export - Direct 137

- Merchandise 6584 4641

Domestic Sales 9453 7856

Other operating income 17 4

Total Turnover 16054 12638

Profit

Gross profit (ie. profit before Interest, 2886 194 depreciation and tax)

Cash profit/(loss) 1649 (1205)

(i.e. profit/(loss) before depreciation and tax)

Profit/floss) before tax (PBT) 828 (2008)

Profit/(loSs- after tax (PAT) 585 1298

Earnings per share - basic and diluted (Rupees) 15.20 (33.72)



Dividend

In view of the carried over losses as at March 31, 2013, no dividend is recommended by your board of directors for the financial year 2012-13.

Financial Performance with respect to Operational Performance:

During the year under review, your company was able to effect a turnaround in performance through dedicated efforts aimed at improving operational efficiency, timely purchase of cotton in the market, remunerative prices and good demand for yarn, focus on optimal product mix and effective cost reduction practices, all of which resulted in improved sales and return to profitability. Your Company achieved a sales turnover of Rs. 16054 lakhs as against Rs. 12638 lakhs recorded in the previous year, registering an increase of about 27% over the previous year. Your Company has earned profit before tax of Rs.828 lakhs during the year as against loss of Rs.2008 lakhs in the previous year, despite the severe power cut which lead to abnormal increase in the power cost and high interest cost during the year.

Your Company''s Wind Electric Generators (WEGs) recorded very good generation of electricity of the value of Rs.1094 lakhs during the year (as against Rs.671 lakhs during 2011-12) - 63% increase over the previous year, resulting in considerable savings in power cost.

COST AUDIT REPORT

As per the directions of the Cost Audit Branch of the Ministry of Corporate Affairs, M/s. S. MAHADEVAN & CO., Cost Accountants, Coimbatore, has been appointed Cost Auditor for audit of Cost Accounts of the Company and their report for the year ended 31st March 2012 has been submitted on 25.01.2013 to the Ministry of Corporate Affairs (VIDE SRN No.S20009809, dated 25-01-2013). Due date for submission of that Cost Audit Report was 31.01.2013.

M/s. S. Mahadevan & Co. have been reappointed for Audit of Cost Accounts of the Company for the year ended 31.3.2013. Their reports for the year ended 31.3.2013 will be filed well before the due date.

Directors

Sri N.Asoka and Sri V.Mahadevan retire by rotation and they are eligible for reappointment. Your Company''s Code of Conduct applicable to the board has been adopted by the board and all the directors of the company have confirmed due compliance with the Code of Conduct.

Auditors

The auditors, M/s. M.S. Krishnaswami & Rajan, Chartered Accountants, retire at the end of the ensuing annual general meeting and they have confirmed their eligibility and willingness to accept office, if appointed.

Annexure

Annexure to this report details Statement on Directors'' responsibility, conservation of energy, technology absorption, Research and development and foreign exchange earnings and outgo.

Compliance Certificate u/s 383A

Compliance Certificate pursuant to Section 383A of the Companies Act, 1956 obtained from M/s. B.K. Sundaram Associates, Practicing Company Secretaries, is also annexed to this report.

Appreciation

Directors of your Company record their sincere appreciation of the dedication and commitment of all employees in achieving and sustaining excellence in all areas of the business. Your directors thank the Shareholders, Customers, Suppliers, Bankers and other stakeholders for their continued support during the year. Your Company''s consistent growth has been made possible by the hard work, solidarity, cooperation and support of the management team.

Directors of your Company thank State Bank of India, Karnataka Bank Limited and Axis Bank Limited, the Government of Tamil Nadu and other government agencies for their support, and look forward to their continued support in future.

For and on behalf of the Board

Salem R. Selvarajan

May 27, 2013 Chairman and Managing Director

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Mar 31, 2012

The directors have pleasure in submitting their 36th Annual Report together with the Audited Statement of Accounts for the year ended March 31, 2012 (the year).

Performance Highlights 2011-12 2010-11 (Rupees lakhs)

Gross sales/income from operations Export

- Direct 137 289

- Merchandise 4641 5903

4778 6192

Domestic Sales 7856 8981

Other income 4 4

Total Turnover 12638 15177

Gross profit (ie. profit before interest and depreciation) 194 3311

Cash profit/(loss) (ie. profit/(loss) before depreciation) (1205) 2188

Profit/(loss) before tax (2008) 1404

Profit/(loss) after tax (1298) 926

Earnings per share

-basic and diluted Rs. (33.72) 24.06

Dividend

In view of the loss incurred during the year, no dividend is recommended by your board of directors. Operating and Financial Performance

Your company's revenue from operations during the year has fallen from Rs.15177 lakhs to Rs.12638 lakhs due to the steep fall in yarn prices triggered by the crashing of yarn prices in take first quarter of 2011-12. In view of the imparity of cotton prices with yarn price coupled with power cut by nearly 60%, your company incurred loss of Rs.2008 lakhs as against profit of Rs.1404 lakhs recorded in the previous year.

Your company's Wind energy converters (WEC) generated power of the value of Rs.671 lakhs (Rs.787 lakhs in 2010-11) resulting in savings in power cost.

Management discussion and analysis

The core business of the company is manufacture and sale of cotton yam. The management discussion and analysis given below discusses the key issues of the cotton yarn spinning sector.

(a) Industry performance

(i) The last couple of years have seen almost all the economies of the world go through tumultuous times and India has been no exception to the troubled economic situation. With slackening global demand, tight liquidity situation, and the monetary tightening measures taken by Reserve Bank of India to tame inflation, the Indian industries experienced dampening economic activity.

(ii) The year under review was quite challenging for Textile Industry. Sharp rise in the price of Cotton and Yarn in the beginning of the year and sudden and steep fall in the price of cotton within a few weeks in April 2011 coupled with ban on Export of Yarn during the quarter of the previous Financial Year impacted the yam market and there was virtual standstill during the next few months. The spinning sector was overburdened with high cost raw material carried in stock as at the end of the previous year and the inability of the market to absorb that cost resulted in huge loss to almost all companies in the Spinning Industry. Even though Cotton price started stabilizing in the second half of 2011-12, Yarn market did not recover throughout the year.

(iii) Power shortage in Tamil Nadu became severe during the second half of 2011-12 necessitating increased use of gensets to meet the shortfall resulting in increased cost of production during that period.

(iv) Bank interest rates were increased by almost 3% during the year as per the Reserve Bank of India's monitory tightening measures, which resulted in abnormal increase in Financial Cost during the year.

(b) Outlook

Since the cotton price has almost stabilized, the industry expects to improve its margin during the year. Demand for your Company's product is quite appreciable in domestic market. Inspire of depreciating rupee, the export market is not picking up due to present crisis in the European and US Markets. Your directors do not foresee much improvement in the export market, However, it is hoped the Government of India will intervene with some relief packages to improve the exports. Baring the above situation, the Company's performance will be good in the coming years.

(c) Strategies and Future plans

As part of future plans the deferred expansion will be taken up for implementation, at the appropriate time once the textile industry comes to a recovery path. The Company is also actively examining the possibility of reducing costs at all levels and evaluating new value added products, which will have fresh demand in domestic as well as international markets.

(d) Internal control and systems

The Company has in place well established internal control procedures covering various areas such as procurement of raw materials, production planning, quality control, maintenance planning, marketing, cost control and debt servicing. Necessary checks and balances have been instituted for timely correction.

(e) Human resources management

Employees are your company's most valuable resource. Your Company continues to create a favourable environment at work place. Your Company has various welfare measures both government sponsored and privately envisaged. The company also recognises the importance of training and consequently deputes its work force to various work related courses/seminars including important issues like Total Quality Management (TQM). The fact that the relationship with the employees continued to be cordial is testimony to the company's ability to retain high quality workforce. In view of the above no man days were lost during the year under report.

(f) Corporate Social Responsibility

Your company's main activity may be centered around making quality yarn but its concerns reach out beyond the above stated business, to the welfare of your company's employees and to the society at large to which your company owes its growth. Your Company, along with your group's associate Company Sambandam Spinning Mills Limited, is collaborating with two Multi Speciality Hospitals in Salem which, apart from rendering medical service to your company's employees and their families are also offering medical relief to the public at large at subsidized rates. Besides your Company has been taking care of the food requirements of The Tamilnadu Association for the Blind School, Ayothiyapattinam, Salem District.

(g) Cautionary note

Statements in the Directors' 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 might differ materially from those either expressed or implied in the statement. Important factors that could influence the Company's operations include 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.

COST AUDIT REPORT:

As per the directions of the Cost Audit Branch of the Ministry of Corporate Affairs, M/s.S.MAHADEVAN & CO., Cost Accountants Coimbatore, was appointed Cost Auditor for audit of Cost Accounts of the Company and his report for the year ended 31st March 2011 was submitted on 14.9.2011 to the Ministry of Corporate Affairs (VIDE SRN B 20301032 dated 14.9.2011). Due date for submission of that Cost Audit Report was 27.9.2011

M/s. S. Mahadevan & Co. were again reappointed for Audit of Cost Accounts of the Company for the year ended 31.3.2012. Their reports for the year ended 31.3.2012 will be filed before the due date, i.e. 27.9.2012.

Directors

Sri P.S.Ananthanarayanan and Dr.V.Gopalan. retire by rotation and are eligible for reappointment.

The Companies Code of Conduct applicable to the board has been adopted by the board and all directors of the company have confirmed compliance with the Code of Conduct.

Auditors

The auditors, M.S. Krishnaswami & Rajan, Chartered Accountants, retire at the ensuing annual general meeting and have confirmed their eligibility and willingness to accept office, if appointed.

Annexure

Annexure to this report details Statement on directors' responsibility, conservation of energy, technology absorption, Research and development and foreign exchange earnings and outgo.

Compliance Certificate u/s 383A

Compliance Certificate pursuant to Section 383A of the Companies Act, 1956 obtained form M/s B.K.Sundaram Associates, Practicing Company Secretaries, Tiruchirapalli, is also annexed to this report.

Appreciation

Directors of your Company record their sincere appreciation of the dedication and commitment of all employees in achieving and sustaining excellence in all areas of the business. Your directors thank the Shareholders, Customers, Suppliers, Bankers and other stakeholders for their continued support during the year. Your Company's consistent growth has been made possible by the hard work, solidarity, cooperation and support of the management team.

The directors of your company thank State Bank of India, Karnataka Bank Limited and Axis Bank Limited, the Government of Tamil Nadu and other government agencies for their support, and look forward to their continued support in future.

For and on behalf of the Board

Salem R. Selvarajan

May 30, 2012 Chairman and Managing Director

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Mar 31, 2011

Dear Members,

The directors have pleasure in submitting their 35th Annual Report together with the Audited Statement of Accounts for the year ended March 31, 2011 (the year).

Financial Results 2010-11 2009-10 (Rupees lakhs)

Gross sales/Income from operations

Export - Direct 288 623

- Merchandise 5903 3526

6191 4149

Domestic 9279 6599

Conversion charges earned - 3

15470 10751

Less sales tax and cess recovery 282 187

Net sales/Income from operations 15188 10564

Gross profit (ie. profit before interest and depreciation) 3172 2143

Cash profit (ie. profit before depreciation) 2188 1228

Profit before tax 1404 449

Profit after tax 926 334

Earnings per share - Basic Rs. 24.06 8.67

Dividend

Board of Directors of your Company declared an interim dividend of Rs.2 per equity share of Rs.10 each at the Board Meeting held on January 29, 2011. Further your directors are pleased to recommend a final dividend of Rs.2 per equity share of Rs.10 each. The interim and the proposed final dividend will entail a cash outflow of Rs. 1,79,24,514/-.

Operating and Financial Performance

Your Company has had very steady performance in 2009-10. This year's annual results has shown growth in turnover of over 44% driven by strong domestic and merchandise export market for yarn compared to previous year's growth of 20%. Despite the steady increase in cotton price, yarn selling prices also increased correspondingly. On account of timely purchase of cotton, supported by good demand for yarn in the domestic and merchandise export market, your Company could achieve an operating profit of Rs.3172 lakhs for the year with an increase of 48% over previous year and profit before tax of Rs.1404 lakhs with an increase of 212%. Your Company's decision to buy power from third party has reduced the power cost (net) by almost 1%.

Your Company's Wind Energy Converters (WEC) generated power of the value of Rs.787 lakhs as against Rs.772 lakhs in the previous year.

Management discussion and analysis

Core business of your Company is manufacture and sale of cotton yarn. The management discussion and analysis given below discusses the key issues of the cotton yarn spinning sector.

(a) Industry performance

Indian economy in general is on a steady growth mode and has shown more resilience than some of the other developed economies around the world. Yarn production in India has been steady. Yarn prices registered increase during the year due to increased demand from domestic and international markets. Fiscal and other initiatives taken by the Government of India have eased the pressures in the economy leading to revival of textile industry. However raw material cost continued to remain high and continuance of power cut and restrictions on power supply during peak hour affected the performance of textile industry in Tamilnadu.

(b) Outlook

Even though cotton price is highly volatile and speculative at present, your directors are of opinion that it would stabilize in the coming months. The domestic and international markets were not encouraging in the first quarter of 2011-12. Divergent interests of different sectors of the textile industry need to be properly balanced and timely intervention by Central Government to ensure that is necessary. Barring unforeseen circumstances, your directors are confident that during the current financial year also your Company will be in a position to maintain its productivity and profitability at an improved level.

(c) Strategies and Future plans

As part of future plan, your directors are exploring the possibilities to take up modernization of spinning unit I and manufacture of value added yarn like slub yarn, provided the prevailing situation continues to improve. Your Company is also actively examining the possibility of entering non-woven textiles market. Plans are afoot to intensify efforts in the area of: Research and Development and towards this end, a new team of young in house technocrats has been formed and these efforts are expected to result in various measures like cost reduction and new product development in the near future.

(d) Internal control and systems

Your Company has in place well established internal control procedures covering various areas such as procurement of raw materials, production planning, quality control, maintenance planning, marketing, cost control and debt servicing. Necessary checks and balances have been instituted for timely correction.

(e) Human Resources Management

Employees are your Company's most valuable resource. Your Company continues to create a favourable environment at work place. Your Company has various welfare measures both government sponsored and privately envisaged. The Company also recognises the importance of training and consequently deputes its work force to various work related courses/seminars including important issues like Total Quality Management (TQM). Because of these, your Company is able to attract and retain well trained and dedicated workforce. The fact that the relationship with the employees continued 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 under report.

(f) Corporate Social Responsibility

Your Company's main activity may be centered around making quality yarn but its concerns reach out beyond the above stated business, to the welfare of your Company's employees and to the society at large to which your Company owes its growth. With this initiative, your Company has been imparting comprehensive training to the new entrants to the Company's fold, simultaneously continuing technical education to the existing staff and workforce. Your Company's along with your group's associate Company Sambandam Spinning Mills Limited, is collaborating with two multi speciality hospitals in Salem which, apart from rendering medical service to your Company's employees and their families are also offering medical relief to the public at large at subsidized rates. Besides your Company has been taking care of the food requirements of The Tamilnadu Association for the Blind School, Ayothiyapattinam, Salem District.

(g) Cautionary note

Statements in the Directors' 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 might differ materially from those either expressed or implied in the statement. Important factors that could influence the Company's operations include 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.

Homage to Founder Director

Your directors note with deep regret the sad demise of Sri S.P. Ratnam, founder director and chairman Emeritus of the Company. Your directors place on record their deep sense of appreciation for the valuable services rendered by him to the Company during the tenure of his office.

Directors

Sri S. Devarajan retires by rotation and is eligible for reappointment. Sri M. Rajamani also retires by rotation but he expressed his unwillingness to be reappointed due to his other preoccupations. Board records its appreciation for the valuable services rendered by him to the Company during the tenure of his office.

Your Company's Code of Conduct applicable to the board has been adopted by the board and all the directors of the Company have confirmed compliance with the Code of Conduct.

Auditors

The auditors, M/s. M.S. Krishnaswami & Rajan, Chartered Accountants, retire at the ensuing annual general meeting and have confirmed their eligibility and willingness to accept office, if re-appointed.

Annexure

Annexure to this report details Statement on directors' responsibility, conservation of energy, technology absorption, Research and Development and foreign exchange earnings and outgo.

Compliance Certificate u/s 383A

Compliance Certificate pursuant to Section 383A of the Companies Act, 1956 obtained from M/s.B.K.Sundaram Associates, Practising Company Secretaries, Tiruchirapalli, is also annexed to this report.

Appreciation

Directors of your Company record their sincere appreciation of the dedication and commitment of all employees in achieving and sustaining excellence in all areas of the business. Your directors thank the Shareholders, Customers, Suppliers and Bankers and other stakeholders for their continued support during the year. Your Company's consistent growth has been made possible by the hard work, solidarity, cooperation and support of the management team.

Directors of your Company thank State Bank of India, Karnataka Bank Limited and Axis Bank Limited, Government of Tamil Nadu and other government agencies for their support, and look forward to their continued support in future.

For and on behalf of the Board R. Selvarajan Chairman and Managing Director

Salem May 23, 2011

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Mar 31, 2010

The directors are pleased to present their 34th Annual Report and Audited Accounts for the year ended March 31, 2010 (the year).

Financial results 2009-10 2008-09

(Rs. lakhs)

Gross sales/Income from operations

Direct exports 623 547

Merchandise exports 3433 2626

4056 3173

Domestic Sales 6692 5553

Conversion charges earned 3 1

10751 8727

Less sales tax and cess recovery 187 142

Net sales/Income from operations 10564 8585

Gross profit (ie. profit before interest and depreciation) 2143 1243

Cash profit (ie. profit before depreciation) 1228 344

Profit/loss) before tax 449 (385)

Profit/floss) after tax 334 (266)

Earnings per share - Basic Rs. 8,67 (6.92)

Dividend

With a view to conserving the reserves and aiso to meet the increase in requirements of working capital, the directors of your company do not recommend any dividend for the year ended March 31, 2010.

Directors

Sri V. Mahadevan and N. Asoka retire by rotation and are eligible for reappointment.

The Companys Code of Conduct applicable to the board has been adopted by the board and all the directors of the Company have confirmed compliance with the Code of Conduct.

Auditors

The auditors, M.S. Krishnaswami & Rajan, Chartered Accountants, retire at the ensuing annual general ¦ meeting and have confirmed their eligibility and willingness to accept office, if appointed.

Annexure

Annexure to this report details Statement on directors responsibility, conservation of energy, technology absorption, Research and Development and foreign exchange earnings and Qutgo.

Compliance Certificate u/s 383A

The compliance certificate pursuant to section 383A of the Companies Act, 1956 obtained from M/s. B.K. Sundaram & Associates, practising Company secretaries, Tiruchirapalli, is also annexed to this report.

Appreciation

The directors of your Company record their sincere appreciation of the dedication and commitment of all employees in achieving and sustaining excellence in all areas of the business. Your directors thank the Shareholders, customers, suppliers and bankers and other stakeholders for their continued support during the year. Your Companys consistent growth has been made possible by the hard work, solidarity, cooperation and support of the management team.

The directors of your Company thank State Bank of India, Karnataka Bank Limited and Axis Bank Limited, the Government of Tamil Nadu and other government agencies for their support, and look forward to their continued support in future.

For and on behalf of the Board Salem R. Selvarajan

May 29, 2010 Chairman and Managing Director