kallam textiles limited - bse india

KALLAM TEXTILES LIMITED(Formerly Known as “Kallam Spinning Mills Limited”)

CIN -L18100AP1992PL0013860

Chowdavaram, GUNTUR - 522 019. AR, INDIA.

Ph: 0863-2344016 : Fax20863-2344000

E—mail: [email protected]: 37AAACK9363M1ZY

REF2KTL/ (15/ AR—2017—18 Dt : 24-09-2018

Bombay Stock Exchange Limited,

Corporate Relationship Division,

Floor 25, Phiroze Jeejeebhoy Towers,

Dalal Street,

Mumbai - 400 001.

Scrip Code: 530201

Dear Sir/Madam,

Sub: Annual Report 2017-18

Pursuant to Regulation 34(1) of the SEBI (Listing Obligations and Disclosure

Requirements) Regulations, 2015, we enclosed herewith Annual Report 2017-18 of

Kallam Textiles Limited (”Company”) duly approved and adopted by the members of

the Company at the 26th Annual General Meeting of the Company held on 22nd

September, 2018.

Kindly take on the record and acknowledge the same.

Thanking You,

Yours Truly,

For Kallam Textiles Limited,

1% ‘\ | l,

M.V.Subba Redd

Whole Time Directr

DIN: 00018719

Encl : Annual Report 2017-18

KALLAM TEXTILES LIMITED 26th ANNUAL REPORT 2017-18

GINNING SPINNING OPEN END DYEING WEAVING HYDEL

1



2

402 KMS CHENNAI NATIONAL HIG

HWAY - NH-5 KO

LKATA 1271 KMS

RESIDENTIAL TOWNSHIPS

RESIDENTIAL HOUSES

GINNING DIVISIONCORPORATE

OFFICE



3

KHIT ENGINEERING COLLEGE

KALLAM TOWNSHIPSOPEN END DIVISION

TEMPLE

CONTAINERS OPEN YARD

VISITORSSTAY

RAIN WATERHARVESTING

PLAY GROUND

SECURITY CLEARENCE

SPINNING DIVISION

RVR & JC ENGINEERING COLLEGE

ENTR

AN

CE R

OA

D

WAY TO TOWN SHIP



4

Mr.K.Haranadha Reddy, Chairman, Mr.G.V.K. Reddy, JMD, Mr.SV Govindraj, VP of our Company Exchaning Memorandum of Understanding (MoU) with

Sri N.Kiran Kumar Reddy, Hon'ble Chief Minister of Andhra Pradesh, December 2012.



5

Mr. GVK Reddy, JMD & CEO of our Company exchanging Memorandum of Understanding (MoU) with

Sri N.Chandrababu Naidu, Hon’ble Chief Minister of Andhra Pradesh

on 25th February, 2018



6

LISTING : Bombay Stock Exchange Ltd Scrip Code - 530201 Scrip ID - KALLAMREGISTRARS AND : 306, 3rd Floor, Right Wing, SHARE TRANSFER AGENT Amrutha Ville, Opp. Yashodha Hospital, Raj Bhavan Road, Somajiguda, Hyderabad – 500 082. Ph No.040-23374967 E-mail : [email protected] AUDITORS : M/s Chevuturi Associates, Chartered AccountantsINTERNAL AUDITORS : M/s Mastanaiah & Co., Chartered Accountants,COST AUDITORS : P.Srinivas, Cost AccountantSECRETARIAL AUDITORS : K.Srinivasa Rao & Co., Company SecretariesBANKERS : Andhra Bank, Indian Bank, Bank of BarodaAUDIT COMMITTEE : Sri S.Pulla Rao, Chairman Sri VSN Murthy, Smt. V.BhargaviSHARE TRANSFER : Mr. GVK Reddy, ChairmanCOMMITTEE Mr. P.Venkateswara Reddy, Mr. MV Subba ReddyNOMINATION AND : Mr.V.Ramgopal, ChairmanREMUNERATION COMMITTEE Sri VSN Murthy, Mr. Ajeya KallamCSR COMMITTEE : Mr. GVK Reddy, Chairman Mr.V.Ramgopal, Mr. MV Subba ReddySTAKEHOLDERS' : Mr. Ajeya Kallam, ChairmanRELATIONSHIP COMMITTEE Mr. GVK Reddy, Mr. MV Subba Reddy

Registered Office and Corporate Office : Chowdavaram, Guntur-522019, A.P., India. Phones : 0863-2344010, 16, E-mail : [email protected], Spinning, Open End Plants : Chowdavaram, Guntur-522019, A.P., India.Weaving and Dyeing Plants : Kunkupadu - 523265, Addanki, Prakasam (Dist.), A.P., India.Hydel Plants : Nelakondapalli (M) - 507160, Khammam (Dist.), Telangana, India

EXECUTIVE DIRECTORSSri P.Venkateswara ReddyManaging Director

Sri G.V. Krishna ReddyJoint Managing Director

Sri M.V. Subba ReddyWhole Time Director

NON EXECUTIVE DIRECTORSSri Ajeya Kallam (IAS)*Chief Secretary of A.P. (Rtd.)

Sri M.R.Naik#

Rtd. IAS Officer

Sri A.Krishna Murthy#

Rtd. Joint Commissioner of Labour

Sri S. Pulla RaoJC of Income Tax (Rtd.)

Sri V.Ramgopal*ED in Indian Bank (Rtd.)

Sri VSN MurthyCGM APIDC (Rtd.)

Smt. V.BhargaviChartered Accountant

→ About the Founder - 7→ Letter from JMD & CEO - 8→ Financial Highlights - 10→ Journey of the Company - 19→ Ex-Independent Directors - 37→ Loan History - 38→ Corporate Presentation - 39→ Directors Profile - 54→ Directors Report & Annexures - 58→ Report on Corporate Governance - 92→ Independent Auditors' Report - 108→ Financial Statements - 112

Contents

* Appointed in the Board w.e.f. 26th August, 2017.# Resigned from the Board w.e.f. 29th September, 2017.

Contents

COMPANY INFORMATION



7

Sri K. Haranadha Reddy is the founder and promoter of Kallam Textiles Ltd. (Formerly Kallam Spinning Mills Ltd.) and presently he is acting as Chairman Emeritus of our Company. He is aged about 82 years, holds a Masters Degree in Arts and graduate in Law. He has about 60 years of rich experience in cotton and spinning business. Further he got good experience in the Ginning, Pressing, Oil Mills, Chillies and Rice Business. He has associated with the company since its inception.

Sri K. Haranadha Reddy is also a Philanthropist. He started Kallam Academy of Educational Society, in the name of “Kallam Haranadha Reddy Institute of Technology” in Chowdavaram. Every year he gives education scholarships to poor students.

Sri Kallam Haranadha ReddyChairman Emeritus

About the founder

About the Founder



8

LETTER TO SHAREHOLDERS

“We have evolved from Kallam Group with hard work, consistent and stood for our moral values”.

Cotton is one of the most important elements in the spinning industry, our focus has been to develop competencies in this area. We directly source cotton (kappas) from the farmers and have created long-standing relationship with our suppliers.

Our international relationships give us the leeway to export if so desirable.

Dear Fellow Share holders,

We are happy to announce excellent performance results of your company for the financial year ended 2017-18 with a record annual turnover of Rs 3107 million growth of 8.3% y-o-y , and exports of Rs 911.57 million and record profit after tax of Rs 156 million growth of 23.4% y-o-y.

About KTL

Your company is celebrating silver jubilee of 25 years in operation. Your company is diversified with vertical value addition and steered by visionary independent directors and guiding your company since inception. They also have an excellent track record and in their own fields. They were questioning each and every move of the company and going through balance sheet with minute details. All the working directors are dedicated and contribute at least twelve hours every day and six days a week. The company had encouraged all the employees to be hardworking and loyal to the company. More than 25% of the employees have been working since the inception of each of its divisions.

Your company had grown many folds from 12,096 to 59280 ring spindles. Your company had its core values taken from its founder Mr. Kallam Haranadha Reddy who is a mentor, philosopher, guide, and philanthropist. He stood for his moral values even during tough times.

Your company believes in core competency in textiles and focuses on value addition path.

Name Change

Your company christened as “Kallam Textiles Ltd”, in line with the change in Business profile. The company started with spinning and since the last 25 Years, Your company has moved to value added activities such as Ginning, Spinning, Open End, Weaving, Yarn Dyeing and Hydel Power Projects. We also have fabric processing, fabric dyeing and printing in our future pipeline. Keeping in view of all the above activities the new name to be broad-based representing all the activities.

Achievement

Your company had been listed on the Bombay Stock Exchange from 1995 with 100% compliance. The CAPEX of the company crossed to Rs 4200 million from Rs 120 million within 23 years. The CAPEX also has grown year after year without any setbacks.

Recognition of Excellence

Your company is committed to quality and certified ISO 9000 since 1999. In addition, your company is certified for BCI, 5S, OCS, Oeko- tex etc. Your company has best quality testing laboratories with a wide range of testing equipment. We test not only internally but also for various spinning mills around us.

Subsidies

Govt of India, Ministry of Textiles had introduced Technology Upgradation Fund since 1999. All the loans taken by your

Letter from JMD & CEO



9

company are backed by Technology Upgradation Fund incentives. The weaving and yarn dyeing had Technology Upgradation Fund subsidy of 10 % capital subsidy and 5% interest subsidy. In addition, Govt of Andhra Pradesh is providing power subsidy of Rs 1.50 / unit for the first five years of operation and Rs 2.00 / unit from sixth to the tenth year of operation. In addition, there is further interest subsidy of 8% for weaving and dyeing units.

Zero bad debtYour company has a very strict policy for collection of receivables. The company has no bad debts since the inception of the company. This is possible due to repeat order customers, payment against cash, Letter of Credit etc, and Post Dated Cheques from a customer with a guarantee from the sales agent. We have credit limits to every customer and agent.

MaintenanceWe have been consistently upgrading our machinery. The machinery is replaced every ten to fifteen years depending on the type of machinery, to keep us competitive with lower power cost, lower labour cost, and high-quality product. Your company also follows the best plant preventive maintenance programs to keep the machinery fit to operate 24/7. Your company also buys the best lubricants, original spare parts from OEMs.

ExportsYour company is a star export house. This year we crossed Rs 91.57 Cr in exports. The fabric exports attract 3% subvention on the packing credit and 1.2% duty drawback and a further 2.0% under MEIS.

Leadership

Mr P. Venkateswara Reddy, Managing director has more than 40 years experience in procurement of kappas & cotton. The quality of each bale of kappas and cotton carefully is tested and approved by him.

Mr GVK Reddy, JMD & CEO is a technocrat takes care of selection of machinery, operations, marketing, liasoning, strategy etc.

Mr MV Subba Reddy, whole time director look after finance and accounts.

Road aheadYour company has many plans towards future expansion. The Looms are to be increased from 248 to 310nos. The yarn dyeing to be increased from 5 tons to 10 tons/day. The process house to dye cloth and printing to one Lakh meters/day to be set up.

Andhra Pradesh state also has good potential to install windmills in Rayalaseema region. The Govt of AP also is giving a number of incentives. Your company also intends to increase captive power by windmills.

Reward Good WorkIn order to create a sense of ownership and participation among employees, to reward long-term employee’s loyalty towards the company, to motivate the employees with incentives to inspire loyalty and reward opportunities, to provide means to enable the company to attract and retain appropriate human talent in the employment of the company and to achieve sustained

growth of the company the board of directors in its meeting held on 28th May 2018 have approved and proposed for the approval of the shareholders for the issue of stock options as per which employees, who comply with certain eligibility criteria would be granted stock option to subscribe a specified number of equity shares of the company offered to them at a price to be determined. The proposed plan would be subject to and in Conformity with the SEBI guidelines.

Employee WelfareYour company also has townships both at Chowdavaram, Guntur, and kunkupadu (weaving plant). Each Employee provided with 500 sqft single BHK apartment. The provisions are provided by Employees departmental stores which operates on no profit & no loss policy. The groceries are around 10% cheaper than market prices due to mass procurement. Employee townships are provide with facilities such as Doctor, Tailor, Barber, Bank ATM, mineral water plant, vegetable shops, Fast food restaurant, cloth shop etc, so that they are self-sufficient and employees need not go out for their daily needs. Each township is also served by at least six different school buses so that each and every child has a decent education. There are parks, playgrounds and cruche for the children. Every year we plant at least 20,000 saplings. The quarters are provided with a green environment. The employees and their families can take walk in the morning or evening in the parks. In addition we also provide scholarships to employees children in order to encourage them for university education.

The Journey ContinuesWe see an unprecedented amount of opportunity in our future. Although we still have a lot of hard work ahead, our products are generating excitement among our customers. And when I pause to reflect on how far we've come over the past few years and how much further we'll go in the next one, I couldn't be more excited and optimistic.

We believe this solid performance will be the result of our various management approaches. Above all, we are resolved to making unrelenting efforts to raise corporate value by refocusing on the basics of manufacturing; strengthening our corporate constitution and providing products that ensure the satisfaction of customers worldwide.

Dividend / BonusWe have been rewarding our shareholders for the last 12 years by paying dividends. Further shareholders also rewarded by issuing one bonus share for every four shares held.

Invitation to ShareholdersI want to thank you for your trust and companionship. We will continue to play the long game. We invite you to Kallam Textiles Ltd-AGM 2018 and meet Team of Kallam Textiles and look forward for your attendance.

As always, thank you for your support.

Warm Regards,

G.V Krishna Reddy JMD & CEO Date: 09-08-2018

Letter from JMD & CEO



10

FINANCIAL HIGHLIGHTSOur Operations are vertical integrated Consistent Revenue Growth

36855410 6512 7071

8717

1563617625

21805

27846

34873

41573

47235

54362

0

10000

20000

30000

40000

50000

60000

COMPOUND ANNUAL GROWTH RATE (CAGR) : 23%

FY 2005-06 FY 2006-07 FY 2007-08 FY 2008-09 FY 2009-10 FY 2010-11 FY 2011-12 FY 2012-13 FY 2013-14 FY 2014-15 FY 2015-16 FY 2016-17 FY 2017-18

CAGR from FY 1995 - 96 to FY 2017-18 20.49%

GROSS REVENUE Lakhs : INR

0

5000

10000

15000

20000

25000

30000

35000

FY 2005-06 FY 2006-07 FY 2007-08 FY 2008-09 FY 2009-10 FY 2010-11 FY 2011-12 FY 2012-13 FY 2013-14 FY 2014-15 FY 2015-16 FY 2016-17 FY 2017-18

34775131

6233 68378165

1418815592

18654

21937

25127

27611

2972431377

COMPOUND ANNUAL GROWTH RATE : 18.44%

NET REVENUE Lakhs : INR

CAGR from FY 1995 - 96 to FY 2017-18 17.64%

Financial Highlights



11

Ginning Capacity 200 bales / Day

RingSpindles

59280

Weaving80,000

meters / DayHydel Power Generation

4.0 MW

EBITDA567

571

519411

FY 15 FY 16 FY 17 FY 18

(Rs in Millions) 283 Finance Cost 232

220218

FY 15 FY 16 FY 17 FY 18

(Rs in Millions)

Profit Before Tax (PBT)211 211

10680

FY 15 FY 16 FY 17 FY 18

(Rs in Millions) Net Assets 43873317

1621899

FY 09 FY 12 FY 15 FY 18

(Rs in Millions)

157Net Profit128

59

FY 16 FY 17 FY 18

(Rs in Millions) Consistent Growth

Yarn Dyeing5000

Kgs / Day

Open End Rotors 2912




12

Val

ue

Ad

dit

ion

Sta

tem

ent

of

10 y

ears

Fin

anci

als

SA

LE

OF

PR

OD

UC

TS

Partic

ulars

2017

-18

2016

-17

2015

-16

2014

-15

2013

-14

2012

-13

2011

-12

2010

-11

2009

-10

2008

-09

Qty

(kgs.)

Value

in

Lakh

s (Rs

.) Q

ty(kg

s.)Va

lue in

La

khs (

Rs.)

Qty

(kgs.)

Value

in

Lakh

s (Rs

.) Q

ty(kg

s.)Va

lue in

La

khs (

Rs.)

Qty

(kgs.)

Value

in

Lakh

s (Rs

.) Q

ty(kg

s.)Va

lue in

La

khs (

Rs.)

Qty

(kgs.)

Value

in

Lakh

s (Rs

.) Q

ty(kg

s.)Va

lue in

La

khs (

Rs.)

Qty

(kgs.)

Value

in

Lakh

s (Rs

.) Q

ty(kg

s.)Va

lue in

La

khs (

Rs.)

Cott

on

Yarn

64

,29,49

3 15

,109

59,53

,917

13,88

5 62

,08,54

4 13

,036

59,44

,719

13,13

6 54

,63,43

3 13

,067

52,09

,465

11,36

3 50

,91,19

1 9,8

0444

,15,12

8 9,

305 4

6,35,3

47

6,97

4 43

,98,27

2 6,

050

OE

Yarn

60

,26,54

6 7,

843

56,70

,818

6,53

7 58

,62,98

4 6,

152

57,78

,314

6,63

1 53

,62,37

9 6,

970

54,13

,448

6,38

2 41

,25,48

8 4,

859

30,21

,473

3,94

1 8,

73,17

4 78

8 -

-

Cott

on

Was

te 23

,96,34

4 1,

551

22,61

,114

1,35

6 22

,43,60

8 99

1 21

,83,64

7 1,

047

19,88

,743

1,06

3 16

,68,60

5 80

9 20

,43,54

1 1,

209

19,79

,591

1,14

5 16,4

2,137

56

4 13

,91,02

4 57

6

OE

Was

te 10

,80,81

5 17

5 9,

25,24

7 14

3 8,

76,91

0 98

8,

34,88

0 71

6,

45,94

1 42

4,

92,72

4 33

5,

71,30

4 88

4,48

,699

73 1

,74,44

3 22

-

-

Cotto

n Se

ed

92,91

,664

1,60

4 64

,90,05

9 1,

513

68,33

,480

1,32

0 82

,66,16

6 1,

307

77,13

,313

1,21

4 32

,34,42

9 45

6 21

,15,84

4 27

1 16

,513

22

--

--

Cotto

n Lint

45

,19,92

2 5,

150

33,43

,138

3,90

8 34

,18,35

5 3,

371

39,63

,851

4,19

5 40

,88,81

6 4,

529

22,67

,672

2,21

5 4,

03,84

0 64

2 1,

80,17

5 27

0 -

--

-

Sale

of

Gray

Fab

-ric

(Mtrs

) 2,4

6,12,8

47

15,40

0 2,

53,84

,238

15,26

4 2,5

8,18,4

04

15,35

6

1,21,6

7,760

7,

626

- -

- -

- -

- -

- -

- -

Sale

of

Fabr

ic W

aste

1,68

,248

59

1,56

,601

43

1,83

,921

45

22,46

0 6

- -

- -

- -

- -

- -

-

Sale

of Dy

ed F

ab-

ric (M

trs)

33,41

,032

3,17

3 29

,78,59

5 2,

678

2,53

,136

231

- -

- -

- -

- -

--

- -

--

Sale

of Dy

ed Ya

rn

(Kgs

) 5,

59,82

0 2,

080

2,32

,310

785

4,70

9 13

-

- -

- -

- -

- -

- -

- -

-

Sale

of

Powe

r (K

WH)

24

,53,06

6 11

7 15

,71,72

8 74

58

,77,92

5 25

1 38

,20,96

1 14

2 1,0

8,50,2

29

489

39,42

,927

195

1,07,9

7,342

32

283

,97,61

4 26

4 77,2

1,881

26

3 97

,50,55

1 33

1

Misc

ella-

neou

s Sa

les7,8

6,438

1,797

- 5

- -

- -

- -

13,64

8 1

- 35

90

,498

2 -

- -

-

Total

5

4,05

6 4

6,19

2 4

0,86

3 3

4,15

9 2

7,37

3 2

1,45

4 1

7,23

0 1

5,02

0 8

,611

6

,957




13

Share Price Moment

Year Open Price High Price Low Price Close Price

2005 11.50 44.90 8.59 29.20

2006 30.00 37.20 13.10 19.25

2007 20.85 29.00 14.70 25.85

2008 27.40 34.85 10.55 12.00

2009 11.03 29.80 9.06 25.70

2010 25.00 72.75 21.20 56.85

2011 58.25 71.85 22.05 24.50

2012 23.55 40.00 23.05 36.20

2013 36.25 42.50 18.45 33.00

2014 31.80 70.90 29.70 52.55

2015 52.55 100.00 40.55 89.90

2016 83.00 139.90 51.00 115.05

2017* 115.00 135.40 19.55 23.15

2018** 23.00 33.25 19.40 30.70

2017* : The Equity Shares of Rs.10/- each were Sub division into 5 Equity Shares of Rs.2/-and issue of Bonus shares in the proportion of 1 (one) equity share for every 4 (Four) existing equity shares.

2018** : During the year, Company has issued Bonus Shares. Price movement as taken up to 02-05-2018.

Source : bseindia.com

*2011-12 and 2012-13 we did not pay dividend due to major capital expenditure expansion.

* *

Dividend (%)

0

2

4

6

8

10

12

14

16

18

FY 2004-05 FY 2005-06 FY 2006-07 FY 2007-08 FY 2008-09 FY 2009-10 FY 2010-11 FY 2011-12 FY 2012-13 FY 2013-14 FY 2014-15 FY 2015-16 FY 2016-17 FY 2017-18

7

10

12 12

9

14

18

0 0

12

10 10 10 10




14

0

20

40

60

80

100

120

140

160

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017* 2018*

23.79 27.77 31.7638.98

57 5869

89102 106

125

147

BOOK VALUE

FINANCIAL YEAR

PER

SH

ARE

INR

* In 2017 & 2018 Book Value is Calculated on the Face Value of Rs 10 /- per share

0

2000

4000

6000

8000

10000

12000

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

1630 1903 21762670

3925 39854732

61026788

7298

8567

10112

` in

Lak

hs

Year

NET WORTH




15

FIXED ASSETS

` in

Lak

hs

Year

0

5000

10000

15000

20000

25000

30000

35000

40000

45000

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

5807 65518300

987211422

1312114815

2794729723 30028

36063

42159

RESERVES AND SURPLUS

` in

Lak

hs

Year

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

10000

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

941 1215 14881983

3238 3299

4047

5417

63336759

8029

9256




16

Segment wise Gross SalesIncluding Internal Transfers

"MANY OF OUR TERM LOANS ARE COVERED BY INTEREST SUBSIDY FROM TUF, GOVERNMENT OF INDIA AND ANDHRA PRADESH GOVERNMENT"

Quantity – Kgs / Mtrs, Revenue - Rs

2017-18

Cotton Yarn & Others

Quantity - 2,26,90,323

Revenue - 2,34,16,02,525

2016-17

Cotton Yarn & Others

Quantity - 1,80,48,228

Revenue - 2,06,62,23,298

OE Yarn

Quantity - 71,07,361

Revenue - 80,17,53,385

OE Yarn

Quantity - 65,96,065

Revenue - 66,80,48,152

Gray and Dyed Fabric

Quantity - 2,94,15,485

Revenue - 2,25,06,10,171

Gray and Dyed Fabric

Quantity - 2,87,51,744

Revenue - 1,87,75,38,356

Sale of Power (KWH)

Units - 24,53,066

Revenue - 1,16,57,377

Sale of Power (KWH)

Units - 15,71,728

Revenue - 73,95,506

SPINNING

DIVISION

DYEING DIVISION POWER

DIVISION

WEAVING DIVISION

OPEN END

& GINNING

DIVISIONS

Lakhs/INR Lakhs/INR

Bank of Baroda Sanctioned Out Standing as on 30.06.2018

Interest subsidy loans 990 835

Lakhs/INR Lakhs/INR

Indian Bank Sanctioned Out Standing as on 30.06.2018


No interest subsidy loans 600 510

Lakhs/INR Lakhs/INR

Andhra Bank Sanctioned Out Standing as on 30.06.2018

Interest subsidy loans 406 44No interest subsidy loans 893 534

Lakhs/INR Lakhs/INR

Andhra Bank Sanctioned Out Standing as on 30.06.2018



Lakhs/INR Lakhs/INR

Indian Bank Sanctioned Out Standing as on 30.06.2018






17

46%

20%

27%

7%

Exports Destinations and their Share Fiscal 2018

BangladeshKoreaChinaThailand

Fabric54%

Yarn 46%

Product wise split export Fiscal 2018

FY 2015 - 16

Rest of the worldIndia

TotalRevenue

(Rs. in Lakhs)27611

FY 2016 - 17

TotalRevenue

(Rs. in Lakhs)29724


FY 2017 - 18

TotalRevenue

(Rs. in Lakhs)31378


0

1000

2000

3000

4000

5000

6000

7000

8000

9000

10000

81-7102 YF71-6102 YF61-5102 YF

3509.9

4459

9115.7

2017-18 Exports - Lakhs in INR




18

Your company is recognized by the Government of India as Star Rated of Export House.The company has good export records both for yarn and fabric.

We export Yarn to Bangladesh, China, Japan, Korea, Bangkok, Srilanka, Vietnam etc.,

We export Fabric to Korea, Bangkok, Bangladesh, Srilanka, china etc.,

Government provide following export incentives

1) Duty draw back on yarn and fabric

2) MEIS for Fabric

3) 3% interest subvention on the packing credit for export of fabric.

The exports rendered since inception are enclosed.

Year 1996 - 97 1997 - 98 1998 - 99 1999 - 00 2000 - 01 2002 - 03 2003 - 04

Exports 9.19 56.93 71.32 119.16 41.27 11.36 118.57

Year 2004 - 05 2005 - 06 2006 - 07 2007 - 08 2008 - 09 2009 - 10 2010 - 11

Exports 45.01 13.36 99.45 162.05 177.04 91.90 234.50

Year 2011 - 12 2012 - 13 2013 - 14 2014 - 15 2015 - 16 2016 - 17 2017 - 18

Exports 142.27 333.82 390.53 410.98 350.95 445.90 911.57

Millions - INR

Thrust on Exports




19

JOURNEY OF THE COMPANY

Smt. Indira Gandhi Prime Minister of India In 1967 inaugurated Nagarjuna Sagar dam and released water to the left and right bank canals. Guntur district in Andhra Pradesh is one of the key beneficiaries of this project. Nagarjuna Sagar right Canal feeds Guntur district which has mostly black cotton soil. Black cotton soils are suitable for growing crops like cotton, chillies, tobacco. Irrigation system improved cotton production in this area, which was earlier dependent on rains.

In 1969 MCU5 long stable cotton with 32mm length was introduced to Guntur area, with improved cotton yield. There were also no ginning mills in Guntur area prior to 1969. Mr. Kallam Haranadha Reddy envisaged this opportunity of cotton ginning in this area and started Chandra Sekhara Ginning Mill in January 1973.

Mr. P Venkateswara Reddy joined Mr.Kallam Haranadha Reddy in the Ginning business and helped him to expand the business. It started with 4 Gins in 1973 in one location. By 1986 the company grew from operating 4 Gins in one location to operating 52 Gins at six locations. By 1986 they were processing 40,000 Bales/annum. Subsequently, the Ginning activity was extended to Bellary, Karnataka State. The demand for quality cotton in Guntur started attracting traders from Maharashtra, Gujarat and Tamil Nadu.

To cater for this growing Ginning activity more companies were incorporated in Kallam group namely M/s Ramakrishna Ginning Mill, M/s Siddartha Cotton Press, M/s Kallam Agro Products and Oils Pvt.Ltd., M/s Kallam Brothers Cottons Pvt.Ltd.

The best quality long stable cotton was ginned and supplied to best Spinning Mills in India namely M/s Century Textiles Ltd., M/s Mafatlal Industries Ltd., M/s Bombay Dyeing, M/s Vardhaman Textiles Ltd., M/s Super Spinning Mills Ltd., M/s Precot Mills Ltd., M/s. Thyagaraja Mills Ltd., M/s GTN Textiles Ltd., M/s Premier Textiles Ltd., M/s Ramalinga Mills Ltd., M/s Shanmuga Spinning Mills Ltd. etc. By 1986 Andhra Pradesh has become one of the biggest cotton Ginners in India. Chandra Sekhara Ginning Mill was very profitable during 1986-1992 and Mr.Kallam Haranadha reddy had strong desire to start forwarding integration by constructing a spinning mill. His friends from spinning mills strongly recommended Mr.Kallam Haranadha Reddy to start a Spinning Mill with the availability of quality cotton in Guntur in comparison to Tamilnadu having many Mills without any Cotton crop.

Inauguration Day 22nd March 1995 : Mr Haranadha Reddy Kallam, First MD & Founder (Left) with First Chairman Mr.T R Dinakaran (Right)

Journey of the Company



20

1992 - 1993

Kallam Agros ltd. was incorporated on 18th feb 1992. During the same time Mr.Kallam Haranadha Reddy asked his son-in-law Mr. GVK Reddy, lieutenant commander in India navy to join the family business. Mr.Kallam Haranadha Reddy and GVK Reddy visited various spinning mills in south india.

1993 - 1994Mr. Kallam Haranadha Reddy was appointed as Managing Director of Kallam Agros Ltd on 25th May 1993.

Mr.GVK Reddy joined as Whole Time Director on 21st June 1993.________________ ________________

Mr. Ramoji, Charted Accountant joined as CFO.Kallam Haranadha Reddy and GVK Reddy visited various spinning mills in South India to have first-hand information on the running of spinning mills.

________________ ________________

The company started functioning from office at Sangadigunta Guntur. Teak plantation division formed and started operations from November 1993 and collected Rs10.86 Lakhs.

________________ ________________

Land procurement started in 26th Feb 1994. (Total Ac 18.01).

Mr.TR Dhinakaran was appointed as Chairman of the Board who had long experience in Textile Industry from South India. ICICI team had come for a site inspection in Feb 1994.

________________ ________________

ICICI sanctioned Term Loan for Rs 375 Lakhs and SCSCI sanctioned Term Loan for Rs 325 Lakhs in March 1994 for the setting of the Spinning Unit. In addition, they have also underwritten to take 7,50,000 equity shares. ICICI sanctioned a bridge loan of 340 Lakhs to fund the share capital prior to the public issue.

________________ ________________

1994 - 1995The foundation stone for Spinning unit was laid on 22nd April 1994 by Mr.Kallam Haranadha Reddy. The company started mobilizing promoters equity in May 1994. Orders were placed for plant and machinery and necessary advances were paid.

________________ ________________

ICICI started for verification of the land documents for the previous period of 33 Years. The company was started to mobilize promoter’s equity.

________________ ________________

ICICI Securities (I-SEC) had been appointed as lead managers to the public issue in September 1994. The ICICI security was impressed by the progress of the project and invested in the promoters stake to an extent of 7,00,000 shares. Road shows of IPO were conducted by WTD & CFO across Pan India.

________________ ________________

SRG financial (SRGFMCPL) had been appointed as registrar of the issue in October 1994 And underwriter of the issue ICICI Ltd., SCICI Ltd., Andhra Bank, Enam Securities, Sushil N.Shah, K.Ravindra Babu, Marg Securities etc.

________________ ________________

The Andhra Bank sanctioned Rs 3 Cr towards working capital. The name of the company was changed to Kallam Spinning Mills Ltd 22 Sep 1994. On 22nd March 1995 Spinning Mill was inaugurated by Sri. Narayanan, CMD, Andhra Bank.

________________ ________________

In March 1995 - 3024 Spindles were commissioned. The Company issued 3.1 Million Equity Shares of Rs 10/- each, accrued to be Rs 31 Million for the Public Issue on 02.03.1995 and the issue was oversubscribed by 4.7 times.

________________ ________________




21Journey of the Company



22




23

1994 - 1995Industry Veteran Mr.Dinakar was appointed as a chairman of Kallam Spinning Mills Ltd. The first Township was started by taking a loan of Rs 25 Lakhs from Chaitanya Gramin Bank.

________________ ________________

The Turnover of your Company during the year : Rs 74.72 Millions.

________________ ________________

1995 - 1996On 28th April 1995, Your Company was listed in Hyderabad, Coimbatore, and Bombay Stock Exchanges. On October 1995- Total 12,096 Spindles commenced the Commercial operation.

________________ ________________

Mr. GVK Reddy, Whole Time Director participated in ITMA, Milan (Italy) October 17th – 26th in 1995.

________________ ________________




24

1996 - 1997The production capacity increased to 3500 kgs/day. The company believes in quality in each of its activity. At most importance is given for quality of product & quality system.

________________ ________________

Mr.GVK Reddy visited Mauritius, Singapore, Taiwan and Korea for export of yarn. The ICICI Sanctioned Rs 74 Lakhs foreign currency loan for the purchase of auto cone winder. The Andhra bank sanctioned Rs 100 Lakhs for the purchase of machinery.

________________ ________________

Board of Directors: Mr. TR. Dinakaran – Chairman Mr. Kallam Haranadha Reddy- MD Mr. GVK Reddy – WTD Mr. L.S. Manivannan – Director Mr. K.Nagi Reddy – Director Mr. Y. Ravindranadh – Director Mr. Ch. Radha Krishna Murthy – DirectorMr. TV. Ratnam – Director

________________ ________________

Added 2 Cards, 1 Auto leveler Draw Frame, 1 LF 1400 and 1 Murata Auto Cone Winder and Second Blow room line . Your Company Exported Rs 9.19 Million to Bangladesh, Taiwan and Korea. Turnover of your Company grew to Rs 165.82 Million.

________________ ________________

Your Company started Exports to Bangladesh in May 1996 which is the first Export Business. Mr. T.V Ratnam Ex-Director, SITRA was appointed as a Director of the Company.

________________ ________________

12,096 spindles increased to 13,104 Spindles and UT-3 evenness testing Machine added, production capacity is increased.

________________ ________________

1997 - 1998Mr.N.Prabhakarao – Superintendent Engineer of Electrical (Rtd) & GVK Reddy - Whole Time Director conducted survey on Nagarjuna Sagar Right and Left Canals for exploring feasibility of the hydroelectric project.

________________ ________________

Applied to Govt of Andhra Pradesh for Hydroelectric power project of 4 MW Capacity on first come first basis.

________________ ________________

SBI caps appraised for expansion of Spinning unit.The production capacity increased to 3500 kgs/day.

________________ ________________

The turnover of your Company During the year was Rs 224.58 Million. Yarn Export reached 25.35% of the turnover.

________________ ________________

1998 - 1999Mr. MR Naik a retired I.A.S. Officer was appointed as Director.

________________ ________________

Mr. T.Venkateswarlu, a practicing Charted Accountant and having experience in the field of Sales Tax and Income tax appointed as an additional director.

________________ ________________

IRDEA sanctioned Rs 3.63 Cr loan for 0.8 MW Hydel project. Your company entered into agreement for setting up the Mini Hydel power project.

________________ ________________

The turnover of your company during the year: Rs 241.71 Million. Yarn export reached 29.50% of the turnover

________________ ________________

Hydro power plants of 4.0 MW sanctioned by the Government of Andhra Pradesh.

________________ ________________

Spindle Capex increased to 18,144 spindles with the help of Andhra Bank by sanction of FCTL USD 1.12 Million.

________________ ________________

Mr MV Subba Reddy, M.Com was appointed as Whole Time Director. Mr L Sreerama Murthy, a retired Regional Manager of Andhra Bank appointed as Director.

________________ ________________




25

1999 - 2000The turnover of your company during the year was Rs 286.69 Million.

Yarn export reached 40.60% of the turnover.________________ ________________

Mr.N.Prabhakarao, Superintending Engineer (retired), Andhra Pradesh State Electricity Board was appointed as Director of the company.

________________ ________________

Board of Directors: Mr. TR. Dinakaran – ChairmanMr. Kallam Haranadha Reddy- MDMr. GVK Reddy – WTDMr. K.Nagi Reddy – DirectorMr. L.Sreerama Murthy - DirectorMr. M.Ramchand Naik - DirectorMr. MV.Subba Reddy - DirectorMr.N.Prabhakarao- Director

________________ ________________

Ministry of Textiles Govt of India introduced Technology Upgradation Fund (TUF) Scheme for the first time. ICICI sanctioned Rs 17 Million under TUF for Spinning.

________________ ________________

The Spinning Division was awarded ISO 9002 by TUV Germany.________________ ________________

All regulatory permissions were obtained for Hydel Project. Land for all 3 projects was acquired with the help of Kallam Ranga Reddy who is the brother of Kallam Haranadha Reddy.

________________ ________________

2000 - 2001The turnover of your company during the year was Rs 262.04 Million.

Yarn exports Rs 41.27 Millions due to the domestic market price opportunity.

________________ ________________

M/s. BFL Ltd. was finalised as Electrical and Mechanical (E&M) Supplier and advances for Hydro Power Projects were paid.

________________ ________________

2001 - 2002

Power plants were commissioned on 29th Jan 2002 and above 24 Lakh Units of Power Generated Successfully and this gave a lot of support given to spinning division.

________________ ________________

Mr. V.S.N. Murthy appointed as a Nominee Director from IREDA.________________ ________________

The turnover of the company during the year: Rs 249.41 Million________________ ________________

Your company commenced civil works for Hydel plants and started receiving plant and machinery.

________________ ________________

Mr. GVK Reddy, Whole Time Director visited Finland and Italy for witnessing testing of Hydroelectric plant machinery.

________________ ________________

Both the Hydro Power plants were constructed in a record time of 9 months, 15 days.

________________ ________________




26




27

2002 - 2003Mr P.Venkateswara Reddy was appointed as Managing Director w.e.f 28th September 2002. Prior to Joining M/s. Kallam Spinning Mills Limited, he was Managing Director of M/s. Kallam Agro Products & Oils Pvt. Ltd. He has in-depth knowledge in selection of Kappas and Cotton Lint. He is very conservative by nature. After Joining in M/s.Kallam Spinning Mills Limited, he was actively involved in civil construction works. He is highly dedicated, hardworking and a much-disciplined personality.

________________ ________________

Mr GVK Reddy appointed as Joint Managing Director w.e.f 28th September 2002.

________________ ________________

Mr. Kallam Haranadha Reddy resigned as Managing Director and continued to be chairman of the board.

________________ ________________

Your company has utilized TUF scheme for replacement of Textool ringframe with LMW ringframes and procurement of Auto Cone winder.

________________ ________________

The turnover of your company during the year: Rs 253.50 Million. Yarn exports just Rs 11.36 Millions of the turnover due to the domestic market support.

________________ ________________

Your company successfully completed its "value addition " program during the year by adding 4 Ring frames, 1 Comber, 1 Autoconer Machinery with the assistance of Andhra Bank by getting Rs. 184 Lakhs Loan facility and TUF scheme. The Spindleage increased from 18,114 to 20,040. Your company had manufactured finer counts, thereby increasing the value addition.

________________ ________________

2003 - 2004Spindle Capex increased to 22,608 Spindles.

________________ ________________

Board of Directors: Mr. Kallam Haranadha Reddy - ChairmanMr. P. Venkateswara Reddy - MDMr. GVK Reddy – JMDMr. L.Sreerama Murthy - DirectorMr. M.Ramchand Naik - DirectorMr. MV.Subba Reddy - DirectorMr.N.Prabhakarao- DirectorMr. V.S.N. Murthy - Nominee Director of IREDA

________________ ________________

The Andhra Bank has sanctioned Rs.140 Lakhs under TUF Loan to our Company for adding 5 Ring frames and 1 Carding Machine.

________________ ________________

The Turnover of the Company During the year: Rs 373.80 Millions.Yarn exports Rs 118.57 Millions of the turnover.

________________ ________________

2004 - 2005Andhra Bank sanctioned Rs 14.40 Cr under TUF for further increasing the spindle to 33,648 Spindles.

________________ ________________

Board of Directors: Mr. P. Venkateswara Reddy - MDMr. GVK Reddy – JMDMr. MV.Subba Reddy – WTDMr.N.Prabhakarao - DirectorMr. V.S.N. Murthy - Nominee Director of IREDAMr. M.Ramchand Naik - DirectorMr. A.Krishna Murthy – Director

________________ ________________

The company has declared first maiden Dividend of 7%.________________ ________________

Mr. A.Krishna Murthy – Deputy Commissioner of Labour (Retired) appointed as Director of the Company.

________________ ________________

Yarn exports Rs 45.01 Millions of the turnover.The Turnover of the Company During the year: Rs 319.40 Million

________________ ________________

2005 - 2006The Turnover of the Company during the year : Rs 340.95 Millions. Yarn exports Rs 13.36 Millions of the turnover.

________________ ________________

M/s. Big Share services Pvt Ltd appointed as R&T agents.________________ ________________

Board of Directors: Mr. K. Haranadha Reddy – ChairmanMr. P. Venkateswara Reddy - MDMr. GVK Reddy – JMDMr. MV.Subba Reddy – WTDMr.N.Prabhakarao - DirectorMr. V.S.N. Murthy - Nominee Director of IREDAMr. M.Ramchand Naik - DirectorMr. A.Krishna Murthy – Director




28

________________ ________________

Andhra Bank sanctioned Rs 17.80 Cr under TUF for further spindle increased to 44160. The company has Declared a Dividend of 10%.

________________ ________________

Mr. K. Haranadha Reddy resigned as Managing Director from the Board on 31st Jan 2004 for the purpose of enrolling in Bar Council as an advocate.

________________ ________________

The Bar Council has, vide letter dated 03rd March 2005 given their approval to Mr K. Haranadha Reddy to act as a Non-executive Director of the Company for the period of three years.

________________ ________________

2006 - 2007To increase the value addition, your company was planned to construct Open End Unit for utilizing Spinning Unit’s byproducts.

________________ ________________

Indian Bank sanctioned Rs 198 Millions under TUF for establishment of Open End Unit.

________________ ________________

The total spindles running in the Plant are 38,640. The turnover of your company during the year: Rs 513 Millions. Yarn exports Rs 99.45 Millions of the turnover.

________________ ________________

The company has declared a Dividend of 12%.6,624 spindles of compact were added.

________________ ________________

5 No’s TFO and one Autoconer winder added.________________ ________________

2007 - 2008The Open End Unit building is under construction. The total spindleage increased to 44,712 of which 6,624 spindles are compact.

________________ ________________




29

The Machinery orders for Open End Unit is being finalized and LC’s are being established, your Company indents to put up latest Machinery for the Open End Unit in the first phase 3 Nos Open End Machines with 416 Routers each will be installed.

________________ ________________

Mr. A. Rajendra Prasad (Retired DGM, Andhra Bank) appointed as Director of Board.

________________ ________________

Yarn exports Rs 162.05 Millions of the turnover.________________ ________________

2008 - 2009The turnover of your company during the year: Rs 683.67 Million.

Yarn exports Rs 177.04 Millions of the turnover.________________ ________________

Board of Directors: Mr. K. Haranadha Reddy – ChairmanMr. P. Venkateswara Reddy - MDMr. GVK Reddy – JMDMr. M.V.Subba Reddy – WTDMr.N.Prabhakarao - DirectorMr. V.S.N. Murthy - Nominee Director of IREDAMr. M.Ramchand Naik - DirectorMr. A.Krishna Murthy – DirectorMr. S. Pulla Rao – DirectorMr. A. Rajendra Prasad - Director

________________ ________________

Your Company has declared a Dividend of 9%. The total spindleage increased to 50,256 of which 15,456 spindles of compact.

________________ ________________

Mr. S. Pulla Rao – (Retired Joint Commissioner of Income Tax) appointed as Director.

________________ ________________

Your Company is in process of commencing Open End Unit with 1248 Routers. All Machineries are state of art technology. The Company imported the Open End Machinery from ORLIKON. The addition of routers will increase the turnover of the Company.

________________ ________________

Your Company also in the process of installing modern automatic TMC Ginning Unit. The Ginning Unit will have 24 Gins with automatic Kappas suction and Pneumatic cotton lint suction system and automatic bale press.

________________ ________________

The Ginning Unit upgradation effects to reduce the transportation cost, Contamination level is bringing to Zero. The Ginning Unit located within Spinning Unit premises. Your Company is installing dedicated feeder 33KV Line. This will give uninterrupted power supply to chowdavaram unit.

________________ ________________




30

2009 - 2010Open End unit commenced with 1,248 rotors we have received 832 additional rotors. A new TMC Ginning unit with 24 High Production Nipha Ginning Machines were commissioned with a capacity of 200 bales per day. Civil works for Third 1.6 MW Mini Hydel power plants at Biravunipalli were started.

________________ ________________

We are using our own waste produced in Ring Spinning and converting into Yarn.

________________ ________________

We have purchased Open End Machine from Schlafhorst

BD416, Longest Machine available with added features.________________ ________________

Company has declared a Dividend of 14%. The spindleage increased to 52,000 out of which compact spindles are 22,080 spindles. TFO capacity has increased to 8 Machines.

________________ ________________

The turnover of your company during the year: Rs 830.59 Millions. Yarn exports Rs 91.90 Millions of the turnover.

________________ ________________

We are in Process of installing One more waste cleaning line which will enable us to consume all the wastes producing Spinning and Open End to convert into Salable Yarn.

________________ ________________




31

2010 - 2011The Open End Unit Capacity increased to 832 rotors.

________________ ________________

Third Mini Hydel Power Plant of 1.6 MW was commissioned on 27th March, 2011 and taking up the total Hydro power project installed capacity to 4.0 MW. The turnover of your company during the year: Rs 1418.78 Million. Yarn exports Rs 234.50 Millions of the turnover.

________________ ________________

Board of Directors:Mr. P. Venkateswara Reddy - MDMr. GVK Reddy – JMDMr. M.V.Subba Reddy – WTDMr. V.S.N. Murthy - Nominee Director of IREDAMr. M.Ramchand Naik - DirectorMr. A.Krishna Murthy – DirectorMr. S. Pulla Rao – Director

________________ ________________

Your company has declared a highest Dividend of 18%. Your company had a record profit of PBT Rs 201.5 Million.

The Spindleage has increased to 54,550.

________________ ________________

Your Company had identified suitable land for further expansion and implanting a Mega Project in near future at Kunkupadu Village, Addanki Mandal, Praksam Dist. This land is near to NH 16.. The Land is gravel soil and having very high load bearing Capacity. It is 3KM from Gundlakamma River, with a possibility of drawing water from the river.

________________ ________________

Your Company is registered land admeasuring Ac. 70 in the name of the Company and also negotiations going purchase of Ac 50 in one bit.

________________ ________________

2011 - 2012The Turnover of your Company During the year: Rs 1559.21 Millions of which Exports are Rs 142.27 Million.

________________ ________________

Your Company had commenced the civil work for the 248 looms project at Kunkupadu Village, Addanki Mandal, Andhra Pradesh State.

________________ ________________

Total 120 Acres of Land Purchased for Weaving & Dyeing Unit at Kunkupadu.

________________ ________________

The Spindle age has increased to 56,400 and out of which 31,488 are Compact.

Open End Unit Capacity increased to 2,912 ________________ ________________

We maintain regional quality test center, do extensive testing of Cotton Yarn for mills in and around Guntur.

________________ ________________

The Quality testing department is a profit center of own.________________ ________________




32

2012 - 2013




33

Rs 9.90 Cr sanctioned by Bank of Baroda for installing Yarn Dyeing plant of 5 Tons/day. This will help for manufacturing of Grey fabric and dyed shirting fabric.

________________ ________________

Our Weaving Unit capacity of Production is 80000 Meters / Day of Woven Fabric including 70% yarn dyed shirting and 30% of bottom weight fabric.

________________ ________________

Your Company had taken up Dyeing of Cotton Yarn. The Project is being implemented at cost of Rs.12.5 Crores and Rs 9.90 Cr sanctioned by Bank of Baroda for installing Yarn Dyeing plant of 5 Tons/day. This will help for manufacturing of Grey fabric and dyed shirting fabric.

________________ ________________

Ginning Machines increased from 24 to 28 Machines. Indian Bank sanctioned Rs 106.92 Cr for Weaving Project for installing 248 Looms.

________________ ________________

We have the state of art machinery in Weaving preparatory, Weaving Loom shed and sophisticated testing equipment and instruments aimed at Continuing to be a Market leader in Quality during the future years for our Greenfield Weaving and Dyeing Unit.

________________ ________________

The Turnover of your Company During the year: Rs 1865.32 Millions of which Exports are Rs 333.82 Million.

________________ ________________

2013 - 2014The Turnover of your Company During the year : Rs 2193.69 Millions of which Exports are Rs 390.53 Millions.

________________ ________________

We are conducting frequently Medical camps for our employees and their families. conducting employees Get-together functions. Govt of AP issued for drawing 500 CuM per day of water from Gundlakamma River.

________________ ________________

Your Company has declared a Dividend of 12%.The Project work at Weaving Unit is under progress.

________________ ________________

We are giving the awards/ gifts to the employees on the occasion of 26th Jan ( Republicday) & 15th Aug ( Independence day) Every Year since the company incorporation.

________________ ________________

Your Company had completed the Civil work at Weaving & Dyeing Unit. Machines are put into Trail. Quality production is yet to be established.

________________ ________________

2014 - 2015The Turnover of your Company During the year: Rs 2512.68 Million of which Exports are Rs 410.98 Million.

________________ ________________

Board of Directors:Mr. P. Venkateswara Reddy - MD Mr. GVK Reddy – JMD Mr. M.V.Subba Reddy – WTD Mr. V.S.N. Murthy - Nominee Director of IREDA Mr. M.Ramchand Naik - Director Mr. A.Krishna Murthy – Director Mr. S. Pulla Rao – DirectorSmt. V. Bhargavi - Director

________________ ________________

The Company has declared a Dividend of 10%.________________ ________________

Appointment of Smt. V. Bhargavi, FCA as a woman director of the Company.

The Weaving Unit was commissioned on 1st September, 2014.




34

2015 - 2016Your Company has been awarded BCI Certification ( Known as Better Cotton Initiative) certified in Dec-2015 for procuring Cotton form the farmers with better cotton practices who have been certified by the BCI as a Registered farmers.

________________ ________________

Tecnorama, Italy Sample dyeing Machine is specially designed for developing samples of Fibers / Yarns was installed. Sample Dyeing Machine are controlled by programmable controller known as Semi Auto Matic Controls.

________________ ________________

Your Company has declared a Dividend of 10%. Dyeing Unit was commissioned on 23rd September, 2015.

________________ ________________

The Turnover of your Company during the year: Rs 2761.05 Millions of which Exports are Rs 350.95 Million.

________________ ________________

2016 - 2017The Equity Shares of Rs.10/- each were Sub division into 5 Equity Shares of Rs.2/-

________________ ________________

The Weaving & Dyeing Units carried Greenery plantation in nearly Ac.70 and Hydel Power plants carried Greenery plantation in Ac.20 and Spinning Unit Carried Greenery plantation.

________________ ________________

The Company is conscious of the importance of environmentally clean and safe operations since the Company incorporation.

________________ ________________

Your Company has declared a Dividend of 10%.________________ ________________

The Spindle age has been increased from 56,400 Spindles to 59,280 Spindles. The Turnover of your Company During the year: Rs 2972.40 Millions of which Exports are Rs 445.90 Million.

________________ ________________

The Company’s policy requires conduct of operations in such a manner, so as to ensure safety of all concerned, compliances of environmental regulations and preservation of natural resources for future Generations.

________________ ________________




35

2017 - 2018Your company obtained ISO 9001 – 2017 Accreditation for Weaving & Dyeing Unit. Your company certified for OKS (Organic Cotton Certified). Confidence in Textiles certified by OEKO Tex Standard.

________________ ________________

Mr Ajeya Kallam, (IAS, Retired as Chief Secretary to the Govt of Andhra Pradesh) appointed as Director of the Company.

________________ ________________

Mr.Ramgopal Retired Executive Director of Indian Bank appointed as Director of the Company.

________________ ________________

Board of Directors:Mr. P. Venkateswara Reddy - MDMr. GVK Reddy – JMDMr. M.V.Subba Reddy – WTDMr. V.S.N. Murthy - Nominee Director of IREDAMr. S. Pulla Rao – DirectorSmt. V. Bhargavi – DirectorMr. Ajeya Kallam – DirectorMr. Varanasi Ram Gopal – Director

________________ ________________

The Company has declared a Dividend of 10% .i.e Rs 0.20 Per Equity Share of Face Value of Rs 2. Bonus shares given in the ratio of 1 Equity share for Every 4 Equity Shares.

________________ ________________

The Turnover of your Company During the year:Rs 3138 Millions. Your company reached exports of Rs 911.57 Millions.

________________ ________________




36Journey of the Company



37

EX- INDEPENDENT DIRECTORS OF THE COMPANY

Mr L.S. ManivannanDuration of

Directorship:1994-1999

Mr T.VenkateswarluChartered Accountant in Practice

Duration of Directorship:1998-1999

Mr T.V.RatnamRtd. Director SITRA


Mr N.Prabhakara RaoRtd Superintendent Engineer of APSEB


Mr Y.RavindranathRtd. Deputy Commissioner

of Income TaxDuration of


Mr T.R.DinakaranDuration of

Directorship :1994-2001

Mr Ch. Radhakrishna MurthyRtd Chief Manager,

Andhra BankDuration of


Mr L.Sree Rama MurthyRtd Regional Manager of Andhra Bank


Mr A.Krishna MurthyRtd Joint Commissioner

of LabourDuration of


Mr M.R.Naik Rtd IAS Officer


Mr A.Rajendra PrasadRtd Deputy General Manager,

Andhra BankDuration of


Ex- Independent Directors



38

S.No.

Loan AmountRs. in Lakhs Institution / Bank Year of

SanctionLoan Outstanding as on 31st March 2018

Rs. in Lakhs

1 375 ICICI 1994 Nil

2 325 SCICI 1994 Nil

3 74 ICICI 1996 Nil

4 100 Andhra Bank 1996 Nil

5 USD 1.12 Mil. Andhra Bank 1998 Nil



8 363 IREDA 1999 Nil









17 1980 Indian Bank 2007 Nil

18 995 INDIAN BANK 2008 402

19 893 ANDHRA BANK 2009 583

20 480 ANDHRA BANK 2009 400

21 1350 INDIAN BANK 2010 1245

22 10692 INDIAN BANK 2011 8672

23 1350 ANDHRA BANK 2011 1270

24 600 ANDHRA BANK 2011 570

25 990 BANK OF BARODA 2012 850

26 960 INDIAN BANK 2013 905

27 1300 ANDHRA BANK 2014 1248

28 990 INDIAN BANK 2015 970

29 980 ANDHRA BANK 2016 936

30 1000 ANDHRA BANK 2016 880

31 600 INDIAN BANK 2016 540

32 720 ANDHRA BANK 2017 302

TERM LOAN HISTORY OF THE COMPANY

Loan History



39

Long Term Vision

The Company had chosen vertically integrated value addition so that the raw material fluctuation will have least impact on the finished

product and margins of the company.

Vertical integration is not only helping meeting the raw material fluctuations but also engineering the down stream products suiting exactly the up stream process with minimum cost of manufacturing.

Zero Bad Debit Policy

The Company is conservative enough and never took risks on sale of finished products and there are no bad debits

for the company during the last 25 years.

Grants / Subsidies

Your company started commercial operations in 1995 with few or nil subsidies from Indian Govt. The TUF was introduced by Ministry of Textiles, Govt of India in 1999. The company availed TUF for all its term loans. Further to give momentum Govt of Andhra Pradesh sanctioned power subsidy in 2005. This helped Spinning, Open-End and Ginning divisions.

In 2015 Govt of AP introduced Interest subsidy of 8% for weaving and power subsidy of Rs 1.50 / unit for the first 5 years and

Rs 2.00 / unit from 6th to 10th year.

The Weaving and Dyeing projects could avail the above facilities. This has helped to reduce the finance and power cost.

Govt of India for the first time introduced 10% capital subsidy in 2012 for Airjet looms in addition to 5% TUF interest subsidy.

Corporate Presentation25 Years of Commitment to the Excellence in Quality

Our Values Kallam Textiles Ltd evolved from Kallam Group with Hard work, Integrity, Discipline and Consistency.

Listing Kallam Textiles Ltd has been listed in BSE since 1995 and has 100% compliance from inception to till date.

Capex

The Company made a humble beginning in 1995 with commissioning of 12096 ring spinning spindles.

Over a period of time, it had grown from 12 Cr capex to 500 Cr capex within 23 years.

The company grew in capex turnover year on year without set backs.

Corporate Presentation



40

Quality Commitment

The company is committed to continuously improve the quality of its products and services so that it can met or exceeded customer

expectations. Spinning is ISO 9000 certified since 1999.

Corporate Governance

The company always had independent directors who are visionaries and ensured that company is steered in the right direction.

The Company whole time directors are well known for their hard work and integrity.

HRPOLICY

The Company employed committed professionals in manufacturing, technical, marketing, financial departments. The company believed in

unmatched and best services to its customers.

The Company was accredited this year under "Pradhan Mantri Kaushal Vikas Yojana " where in we can train all the workers for their skill

development under this programme.

Customer Loyalty

The Company has loyal and committed customer base who keep buying company products month on month and year on year basis.

simply company had repeat order loyal customers.

Directors of the company, visit customers on regular basis both in India and abroad.

Bankers Loyalty

Kallam Group has been doing business with Andhra Bank for the last six decades.

The Company since inception had paid all its loan commitments in time and never defaulted on interest and principal repayments.

The bankers had always competing with lower interest rates and extend financial assistance at all times.

Kallam Textiles Ltd, had never changed its bankers and kept cordial relationship at all times. This give advantage to negotiated better Interest rates

Constant Technological Up gradation

The Company invested in latest state of art technology with a view to manufacture best quality products with least man power, least power cost etc.

The average life of the machinery is less than seven years.

The Company always invested in new machinery and never resorted in buying second hand machinery.

Strict Plant Preventive

Maintenance Program

The Company follows scheduled preventive maintenance programme for all its equipment with highly skilled Technicians.





41

Key Strengths

1. The management team is well experienced with hands on experience in all areas of operations and key members of the team are able to access to trend forecasts and strategic planning at macro and micro levels.

2. Since cotton sourcing is the single most important element in the spinning industry, our focus has been to develop competencies in this area. We source directly from the farmers and have created long-standing relationship with our suppliers. Our international relationships give us the leeway to source instantly from global markets if so desirable.

3. We use the latest machines and equipment, scientifically monitor our labor productivity and have adopted a policy of constant improvement. In addition, we also use MIS tools for operating at optimal efficiency. We have provided adequate attention to many other related areas, like shipping and logistics, spare parts sourcing and financial planning to increase our overall efficiency.

4. Most of our customers are repeat customers. This is testimony to our product quality and standardization. Our aim has been to always lead in the area of product development.

5. Our fair policies and consistent quality have earned us significant goodwill in the markets we operate in, giving us an advantage against competition.

6. By following a proactive labor policy, we have been able to develop a workforce that identifies themselves as a part of a family rather than as mere employees. Our units have enjoyed the distinction of never having suffered any labor unrest from inception.

7. With our quality yarn we can weave fabric at a competitive price and higher production levels. We also benefited by reducing packing cost and taxes.

8. There is an ample availability of land for future plans.


Exports

The Company is a star export house recognized by the Ministry of Commerce, Govt of India.

There is a 3 % interest subvention on packing credit on export of fabric. Company utilizes the packing credit there by reducing interest cost to the company.

Currently yarn fetches 1.2 % duty draw back and fabric export fetches 1.3 % duty draw back of 2.0 % under MEIS scheme.

The Company had exported Rs 91 Cr worth of yarn and fabric during the FY 2017 - 18. During the current financial year the exports expects to cross Rs 100 Cr.




42

3024

1209

4

1209

4

1209

4 1814

4

1814

4

1814

4

1814

4

2004

0

2124

0

2260

8

2481

6

4137

6

4471

2 5025

6

5200

0

5455

0

5640

0

5640

0

5640

0

5640

0

5640

0

5928

0

1 9 9 4 1 9 9 5 1 9 9 6 1 9 9 7 1 9 9 8 1 9 9 9 2 0 0 0 2 0 0 1 2 0 0 2 2 0 0 3 2 0 0 4 2 0 0 5 2 0 0 6 2 0 0 7 2 0 0 8 2 0 0 9 2 0 1 0 2 0 1 1 2 0 1 2 2 0 1 3 2 0 1 4 2 0 1 5 2 0 1 6

KALLAM TEXTILES LIMITED

0

50006624

8832

15456

22080

27849

31485

10000

15000

20000

25000

30000

35000

2006 2007 2008 2009 2010 2011

1248

2080

2912

0500

100015002000250030003500

2009 2010 201122

23

24

25

26

27

28

29

21020102

24

28

CAPEXRING SPINNING

COMPACT SPINNING

OPEN END SPINNING GINNING




43


CAPEX

Weaving Commissioned 248 looms2014 - 15

Dyeing Dyeing of Cotton Yarn 5000 kgs per day production

2015 - 16

Hydro Power Generating Capacity of 2.4 MW2001 - 02

Hydro Power Generating Capacity increased to 4.0 MW 2010 - 11

Hydro Electric

Power Plant

Energy Conservation

Measures

Energy Audit by SITRA on regular basis.

Proper regular preventive maintenance of Machinery.

Use of LED lamps where ever possible.

Use of IE3 motors in all places.

All employees are trained in energy conservative measures.

Frequent testing and tuning of equipment by OEM manufactures.

Correct use of belts and transmission equipment

Optimizing performance of steam boilers

Reduction of compressed air pressure in looms from 6 bar to 4 bar there by reducing power cost by 7.5 lakhs / month.

Use of correct grade of lubricating oils and greases.




44Corporate Presentation



46

STRATEGIC PLANT LOCATIONS

Our Company : We are one of biggest texile mills in andhra pradesh with ginning, spinning, weaving

and hydel power plans.

Our VisionTo become india's most profitable and sustainable textile

company.

Our MissionImprove profitablity

through valueaddition.




47

Apart from in process inspection system, mill has adopted very stringent final inspection procedure before dispatching yarn to its customers.

We maintain regional quality test center, do extensive testing of cotton yarn for mills in and around Guntur. The quality testing department is a profit center on its own.

Spinning and Weaving units are certified since - 2016

Certified since - 2017

QUALITY - ACCREDITATIONS

Spinning Certified Since - 1999

Weaving & Dyeing unit since - 2017

Certified since 2018




48

Before

After

Before

After

Company had spend 2% of the profit in CSR activity as per the Govt of India policy.Following activities are taken1) Giving scholarships to poor children

in the neighbourhood villages of weaving plant.2) Providing bituminous roads in the villages3) Provide RCC benches in village for gathering and

relaxing of villagers.4) Construct bus shelter for waiting for persons from sun

and rain.5) Educating villagers on cleanliness.6) Conducting Medical camps in the village.7) Helping villagers in plantation activities.

SWACHH BHARAT




49

TOWN SHIPS HAVING FAMILIES ACCOMMODATIONThe Company's beautiful, self-contained and cosmopolitan township provides residential facilities for our employees and their families. Along with its lush green environment and lush green parks, employee cooperative society, ATM facility, Kindegarden School, Bus facility for school children.

The Spinning town ship is accommodating appx 300 families by no. of apartments and quarters at Chowdavaram.

The Weaving town ship is accommodating appx 300 families by no.of apartments. The Hydel Town ship is accommodating 10 families.

ENRICHING HUMAN CAPITALEmployees are your company’s most valuable resource. Your Company continues to create a favorable environment at work place. Your Company has various welfare measures both government sponsored and privately envisaged. The Company is providing good accommodation facilitates by constructing new quarters / apartments.

The company also recognizes the importance of training and consequently deputes its work force in 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.




50

"A HEALTHY EMPLOYEE IS A PRODUCTIVE EMPLOYEE" "SAFETY TRAINING AWARENESS PROGRAMME"




51

"FUN GAMES AT TOWNSHIP" "TALENT WINS GAMES BUT TEAMWORK AND INTELLIGENCE WINS CHAMPIONSHIP"





AWARDING CEREMONY OF SCHOLARSHIPS TO EMPLOYEES CHILDREN OF KALLAM TEXTILES LTD.



53

Land For Future ExpansionIn order to Improve operational efficiencies We have been investing in infrastructure at our manufacturing facilities

and over the years. We have been able to maintain a high level of quality. Enhancing existing capacities and improving operational efficiencies, we have continuously invested in infrastructure at our manufacturing facilities so that high level of quality can be maintained over the years and increased the level of backward integration. We have large land bank in Kunkupadu to accommodate our future expansion.




54

“We are committed to meet customer expectation by providing consistent yarn quality, through training, technology up gradation, timely delivery, team work and ensuring continual improvement of quality management system and applicable requirements.”

Mr. P Venkateswara ReddyManaging Director (DIN: 00018677)

v Mr. P Venkateswara Reddy aged 67 years and he was appointed as Managing Director with effect from 28th September, 2002. Mr.PV Reddy hails from Agricultural family from Ramanayapalem, Prakasam Dist., A.P.

v Mr. PV Reddy is Brother-In-Law of Mr.K.Haranadha Reddy, Chairman Emeritus and he joined Ginning Business in the year 1973. He had been instrumental in developing Ginning Business from the scratch. He was partner in Chandra Sekhara Ginning Mill and Siddhardha Cotton Pressing Unit.

v Prior to Joining M/s. Kallam Textiles Limited, he was Managing Director of M/s.Kallam Agro Products & Oils Ltd. He has in depth knowledge in selection of Kappas and Cotton Lint. He is very conservative by nature. After Joining in M/s Kallam Textiles Limited, he was actively

involved in civil construction works. He is highly dedicated, hard working and a much disciplined personality.

v Mr. PV Reddy handles purchase of Raw cotton, Ginning, Civil Construction, Administration of Spinning Unit at Chowdavaram.

Mr GVK ReddyJoint Managing Director & CEO (DIN: 00018713)

v Mr GVK Reddy is the Joint Managing Director of Kallam Spinning Mills Limited and aged 60 Years. He is a graduate in Mechanical Engineering with Distinction and 1st Rank holder from Andhra University, Visakhapatnam. He did his M.Sc (Engg) (Marine Engineering) from Royal Naval Engineering College, Plymouth, UK. He is also 1st Rank holder in UK and awarded Medal by Her Majesty the “Queen of England”.

v He was commissioned in Indian Navy in 1977. He served in various Indian Naval Ships namely INS Udaygiri, INS Kiltan, INS Kavarathi and INS Rana. He served in shore establishments like INS Shivaji and IAT Pune. He served in Gas Turbine Research establishment, Bangalore from 1990 to 1993 and instrumental in conceptualizing Kaveri Gas Turbine

Directors Profile



55

Engine for Marine applications. He took premature retirement as commander to start the Spinning Mill in 1993. In the same year he extensively toured in India with Mr. Kallam Haranadha Reddy to select suitable Machinery for Spinning Unit.

v He took the lead role in design, construction of Spinning Unit and erection of machinery in a record time of 9 months. He organized Public Issue of the Company in 1995.

v He is actively involved in day to day running of the Company, Financial Management, Liasioning with Financial Institutions, Banks, Government Departments, Selection of Machinery and Marketing of Finished Products.

v In 1999, He had surveyed extensively with Mr N.Prabhakara Rao, Ex Director of the Company, for locating Hydel Plants. AP Govt that time had allowed Hydro electric plants under Private Management. Three Hydro Electric plants were constructed under his leadership from selection of Plant and Machinery, Erection to Commissioning.

v He is a long term and strategic visionary. At Spinning Unit all the Land of 22 acres was filled up by 2010. It was envisaged to have at least 100 acres at one place to meet all the future requirements. Suitably 120 acres of Land was purchased at Kunkupadu near Addanki and Weaving and Dyeing Units were Commissioned.

v Mr GVK Reddy looks after day to day administration of Weaving and Dyeing Units. In addition to the above, he also looks after the Marketing and Finance Management of entire company.

v Being a Highly Qualified Engineer, he goes minutely in selection of Machinery. He is Fellow Institute of Engineers and Fellow Institute of Marine Engineers.

Mr. MV Subba Reddy Whole Time Director & CFO (DIN: 00018719)

v Mr. MV Subba Reddy, age 60 years is the Whole Time Director of Kallam Textiles Limited. He hails from Agricultural family and native of Modukuru Village, Guntur Dist.

v He is associated with the Company since 1996. He is Post Graduate in Commerce from Andhra University, Visakhapatnam. He assists Managing Director in purchase of cotton. He gained excellent knowledge in procurement of Raw material and sale of Cotton Waste.

v He is also having experience in accounts and looking after day to day administration at Spinning Unit at Chowdavaram.

v He also looks after Accounts Department and Ginning Unit. He is also Chief Financial Officer (CFO) of the Company.

Mr.V Ramgopal Non-Executive & Independent Director (DIN: 02889497)

v Mr. V Ramgopal is aged 65 years. He has a Masters Degree in Bio-Chemistry. He joined as Probationary Officer in Indian bank in 1973, before moving to Andhra Bank in 1976.

v In senior positions he served as Zonal Manager (DGM) in Zonal Office, Kolkata and Guntur besides other assignments in Andhra Bank. On promotion to General Manager, he was General Manager in- charge of Investments and International Banking Division in Andhra Bank. He also served as General Manager in Head office, Andhra Bank.

v Mr.Ramgopal was appointed as Executive Director of Indian Bank and served from December 7, 2009 to December 31, 2011. He was Nominated as Chairman and Director of Indian Bank Housing Ltd., and Indian Bank Merchant Banking Services Ltd., subsidiaries of Indian Bank during his tenure as ED in the years 2010 and 2011.

Directors Profile



56

v During 2011, he was Nominee Director by Indian Bank on the Board of Reliance Asset Management Company Ltd. Mr.Ramgopal was nominated as member of Risk Management Committee of Indian Banks Association during 2010 and 2011.

Mr. VSN MurthyNominee Director, IREDA (DIN: 00021952)

v Mr. VSN Murthy, 79 Years is a Nominee Director by IREDA. He is a Post Graduate in Commerce with distinction from Andhra University, Visakhapatnam.

v He joined Singareni Collieries Limited in the year 1963 as Junior Officer and worked for seven years in various departments like Internal Audit, Main Accounts and Compilation.

v In the Year 1970, He joined APIDC Ltd as Accountant and was promoted as Deputy Manager in 1976 in Finance and Accounts Department.

v He was promoted as Senior Deputy Manager in 1978 and as Manager (Accounts) in 1980.

v He was shifted to Refinance & Monitoring Division in 1983 where he performed various activities like Disbursement of Term Loans under IDBI Refinance Scheme and Monitoring the units under implementation. Apart from disbursements, he was also responsible for obtaining refinance sanctions to Term Loans and drawl of refinance from IDBI, preparation of Business Plan and Resource Forecast (BPRF) and relevant correspondence with IDBI and the review of BIFR on a periodical basis.

v He was designated as Manager (Finance) in 1986 and in the same year, While continuing in the Finance Department, he was promoted as Deputy General Manager (Finance), he was transferred to the Monitoring & Recoveries Division in the 1989. He was also involved in drawing up relevant measures for reviewing potentially viable sick units.

v He was promoted as General Manager (Finance & Accounts) in 1992.

v He was promoted as Head of Financial Services Division in 1994. He actively associated in various diversification programmes of APIDC such as Bill Discounting, Merchant Banking etc. In November 1997, He retired as Chief General Manager (Finance & Accounts).

v He is Nominated as Director by IREDA on the Boards of Kallam Spinning Mills Limited and Janapadu Hydro Power Project Limited.

Mr. S Pulla Rao Non- Executive & Independent Director (DIN: 02360239)

v S Pulla Rao, 73 Years is a graduate in B.Com from Andhra University and B.L. from Nagarjuna University. He joined in income tax Department in 1966. Categorizing his performance as “outstanding” he was promoted from the post of Income tax Inspector to income tax Officer overlooking 75 seniors in 1984.

v He worked in various places in Andhra Pradesh. During his tenure as Income Tax Officer his performance was rated as “outstanding” and conferred IRS in 1993 and was promoted as Assistant Commissioner Of Income Tax. He worked as Assistant Commissioner Of Income in Chennai, Vijayawada and Rajahmundry. He got promotion as Deputy Commissioner Of Income Tax in 1998 and worked as Deputy Commissioner Of Income Tax in Guntur and Khammam.

v He got promotion as Joint Commissioner Of Income Tax in 2003 and retired as Joint Commissioner Of Income Tax in June 2005 on super annuation because of his sincerity and dedication in work, his service in Income Tax Department. He was rated all through as “outstanding”. He has got very good knowledge in Income Tax laws and allied laws.

Directors Profile



57

v After retirement S. Pulla Rao registered himself as an advocate in the composite Andhra Pradesh High Court. As an advocate he is rendering legal services to the Income tax assessees. This also he has taken up more as social service. Seeing the plight of handloom weavers he promoted the idea of starting a ‘Non Governmental Organization (NGO)’ and became the founder of “Padmasali International Welfare Association”.

v Till now, this NGO has got a Corpus Fund of Rs. 120 lakhs and the NGO did help to the extent of Rs.150 lakhs by way of giving scholarships, books, medical help and monetary help to the poor weavers who are in distress. S. Pulla Rao is the President of this organization.

v He was also elected as president of “Taxation Bar Association”, Vijayawada twice and worked as president for 9 years. He participated in many seminars on taxation.

Mr.Ajeya Kallam Non- Executive & Independent Director (DIN: 00278595)

v Mr Ajeya Kallam, IAS, Retired as Chief Secretary to the Govt of Andhra Pradesh. He is a 1983 batch IAS officer and a post graduate in Agriculture with a Masters in Business Administration from Australia had put in 34 years in Indian Administrative Service.

v Mr Kallam had handled many important assignments in his career both in State and Central governments. He worked as Sub collector and PO, ITDA in Nalgonda and Khammam Districts.

v He was District Collector & Magistrate for West Godavari and Vizag Districts.

v He spent nearly 7 years in Agriculture sector as Head of the departments of Horticulture and Agriculture besides working as principal secretary, Agriculture. He was instrumental in building horticulture department as its

first HOD. He gave a new direction to Agriculture extension with farming situation specific strategies. He was also Vice-chancellor of the Agriculture university.

v He was Commissioner of Endowments and later posted as Executive Officer, Tirumala Tirupathi Devastanam Board. During his tenure in TTD, he brought significant reforms. In the Infrastructural sector, he worked as CMD, Transco as well as Chairman, Vizag Port Trust.

v He was principal secretary to the then Chief Minister. Subsequently, he handled the State's Finance and Revenue departments as Special Chief Secretary. On 31st March, 2017, He retired as Chief Secretary to Government of AP during 2017.

Mrs. Bhargavi Vangala Non- Executive & Independent Director (DIN: 06950741)

v Mrs. Bhargavi Vangala, B.Com, F.C.A, DISA is a Independent and Woman Director of Kallam Spinning Mills Limited and aged 31 years. She is a practicing Chartered Accountant . Mrs. Bhargavi qualified as a CA in the year 2011 and started practicing in Guntur, in the intricate areas of Taxation, Auditing & Banking.

v She is a Gold Medalist and awarded as a “ Best Out Going Student” at her College Level. She is a faculty with various CA institutions for Both Direct and Indirect Taxes and has guided many students in tackling the subject of taxation.

v Her Area of Specialization is Indirect Taxes and She is one amongst the best advisors in Guntur for the GST. She addresses in many trade and professional associations , including Government Organizations regarding tax issues and latest GST matters. She is a Managing Committee member for the Guntur Branch of SIRC of ICAI.

v She is the member of Audit Committee in M/s KTL. She gives suggestion during the Board Meetings in the areas related to both Direct and Indirect Taxes.

Directors Profile



58

To the members of the Kallam Textiles Ltd., Your directors are pleased to present their Twenty-Sixth Annual Report of the Company together with the Audited Financial Statements for the year ended 31st March 2018.1. CORPORATE OVERVIEW : W.e.f 09th April, 2018, your company name has been

changed from “KALLAM SPINNING MILLS LIMITED” To “KALLAM TEXTILES LIMITED (“Your Company”). Your company is a leading Textile Company and has its corporate office at Chowdavaram, Guntur - 522019 Andhra Pradesh.

2. REVIEW OF OPERATIONS: The financial results for the year ended 31st March 2018

are summarized below :

S.No. Particulars 2017-18

(`in Lakhs)2016-17

(`in Lakhs)

01 Revenue from operations 31,264.27 28,863.17

02 Other income 113.23 101.23

03 Profit before Interest, Depreciation & Tax 5,714.63 5,681.57

04 Depreciation (1,419.46) (1,364.89)

05 Interest (2,188.33) (2,198.67)

06 Profit before tax 2,106.84 2,118.01

07 Provision for income tax

i) Current year Tax 460.26 500

ii) Deferred Tax 79.27 339.01

08 Profit after tax 1,567.30 1,278.99

09 Earnings per share (`2/-) 3.66 2.99

Transfers & appropriations from the profit are as detailed below:

10 Net Profit after tax 1,567.30 1,278.99

11 Balance brought forward from previous year

12 Profit for appropriations 1,567.30 1,278.99

APPROPRIATIONS

13 Transfer to General Reserve 0 0

14 Proposed Equity Dividend 85.63 68.51

15 Tax on Proposed Equity Dividend 17.43 13.95

16 Balance carried forward 0 0

3. FINANCIAL PERFORMANCE: Your Company recorded net revenue from operations of

`31,071.21 Lakhs with a increase of 8.33% over `28,681.13 Lakhs of the last financial year. The Company recorded a net profit after tax of `1567.30 Lakhs, with a increase of 22.54% over net profit of `1278.99 Lakhs of the last financial year.

4. DIVIDEND AND RESERVES: Considering the profits for the year under review and

also the capital expenditure requirements of the Company, Your Directors are pleased to recommend a dividend of 10% i.e. ̀ 0.20 per equity share of face value of ̀ 2/- each aggregating to ̀ 85.64 Lakhs for the financial year ended March 31, 2018.

During the year under review, no amount from profit was transferred to General Reserve.

The amount lying in the Unpaid Dividend Account of the company in respect of the last five years as on March 31, 2018 is as follows :

Dividend Year

Date of Declaration of Dividend

Due date for transfer to

IEPF

Amountin `

2010-11 27-08-2011 01-10-2018 3,17,865

2013-14 27-09-2014 01-11-2021 3,13,099

2014-15 26-09-2015 31-10-2022 2,39,365

2015-16 28-09-2016 02-11-2023 2,53,374

2016-17 29-09-2017 03-11-2024 2,63,827

During the year 2017-18, Unclaimed Dividend of Rs.3,32,125/- for the year 2009-10 was transferred to Investor Education and Protection Fund (IEPF). Pursuant to the provision of rule 3 of the Investor Education and Protection Fund (Awareness and Protection of Investor) Rules, 2001, necessary e-form (Form 1 INV) which contains the Statement of amounts credited to IEPF was filed to Registrar of Companies (ROC).

5. MANAGEMENT DISCUSSION AND ANALYSIS: The Management Discussion and Analysis forms an

integral part of Annexure [I] to this report and gives details of the overall industry structure, economic developments, performance and state of affairs of your Company’s various businesses viz., Textiles and power business, internal controls and their adequacy, risk management systems and other material developments during the financial year 2017-18.

6. BONUS ISSUE OF SHARES : During the year under review, the company has issued

and allotted 85,63,875 fully paid new equity shares of ` 2/- each to the shareholders of the Company in the ratio of 1:4 (i.e One Bonus Share for every Four (4) existing equity shares held.) Consequently, the issued,

KALLAM TEXTILES LIMITEDDIRECTORS’ REPORT

Directors Report



59

subscribed and paid up equity share capital of the Company after bonus issue of Equity Shares has increased from `6,85,11,000 to `8,56,38,750 and number of shares increased from 3,42,55,500 to 4,28,19,375 of ` 2/- each.

7. EXTRAORDINARY GENERAL MEETING (EGM) : The Board of Directors had sought approval of the

Shareholders of the Company by process of Extraordinary General Meeting (EGM) in respect of the Special Resolutions set out in the EGM Notice dated on 12th February, 2018. The detailed voting results are given in the “Report on Corporate Governance” forming part of this Annual Report.

8. CORPORATE GOVERNANCE: As per Regulation 34 (3) read with Schedule V of the

SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, a separate section on corporate governance practices followed by the Company, together with a certificate from the Company’s Statutory Auditors confirming compliance forms an integral part of this Report.

9. NUMBER OF MEETINGS HELD OF THE BOARD: During the year, Seven Board Meetings were held, with

a gap between not exceeding the period of 120 days as prescribed under the Act. Details of the Board and Board Committee meetings held during the year are given in the Corporate Governance Report.

10. PUBLIC DEPOSITS : During the year under review, your Company has not

accepted any deposit within the meaning of Sections 73 and 74 of the Companies Act, 2013 read with the Companies (Acceptance of Deposits) Rules, 2014 (including any statutory modification(s) or re-enactment(s) for the time being in force).

11. DIRECTORS AND KEY MANAGERIAL PERSONNEL Retirement by rotation and subsequent re-appointment : Pursuant to Section 196, 197, 203 and other applicable

provisions of Companies Act, 2013 read with Schedule V to the said act, the shareholders at their 23rd Annual General Meeting held on 26th September, 2015 appointed Sri P. Venkateswara Reddy as a Managing Director and Sri G.V. Krishna Reddy as a Joint Managing Director of the Company for a period of Three years with effect from 29th June, 2015.The Term of their appointment would come to an end on 28th June, 2018. It is necessary to Re-appointment them for another period of Three years. Hence the Board at their meeting held on 28th May, 2018 decides to Re-appoint Sri P.Venkateswara Reddy as a Managing Director and Sri G.V.Krishna Reddy as a Joint Managing Director & CEO of the Company for another period of Three years on the recommendations of the Nomination and Remuneration Committee.

Pursuant to Section 196, 197, 203 and other applicable provisions, if any, of Companies Act, 2013 read with Schedule V to the said act and Subject to the approval

of the shareholders in Annual General Meeting, Sri P.Venkateswara Reddy and Sri G.V.Krishna Reddy be proposed to re-appoint as a Managing Director and Joint Managing Director & CEO of the Company for a period of Three years with effect from and including 29th

June, 2018. Sri M.V.Subba Reddy, Whole Time Director retire by

rotation at the ensuing AGM pursuant to the provisions of Section 152 of the Companies Act, 2013 read with the Companies (Appointment and Qualification of Directors) Rules, 2014 and the Articles of Association of your Company and being eligible has offered himself for reappointment. Appropriate resolution for his re-appointment is being placed for your approval at the ensuing AGM.

Mr M.Prasanna Kumar (ACS: 49713) has appointed as a Company Secretary w.e.f 01st April, 2017 and he has resigned from the post of Company Secretary as well as Compliance Officer w.e.f 31st May, 2017.

The Independent Directors Mr. S.Pulla Rao and Smt V.Bhargavi of your Company hold office upto 26th September, 2019 and Mr Ajeya Kallam and V.Ramgopal of your Company hold office upto 28th September, 2022 and they are not liable to retire by rotation.

All Independent Directors have given declarations that they meet the criteria of independence as laid down under Section 149(6) of the Companies Act, 2013 and Regulation 16 (b) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

During the year, Pursuant to the Provisions of Section 149(1) of the Companies Act, 2013 read with Rule 3 of the Companies (Appointment and Qualification of Directors) Rules, 2014 and also as per Regulation 16(1)(b) of the SEBI (LODR) Regulations, 2015, the Company, with the approval of shareholders at AGM, has appointed Mr. Ajeya Kallam and V.Ramgopal, as Independent Directors of the company on 29th September, 2017.

During the year, Non-Executive and Independent Directors of the Company, Mr M.R.Naik and Mr A.Krishna Murthy have submitted their resignations to the Board on the Board Meeting held on 29th September, 2017.

The Board has accepted their resignations and relieved them as Directors of the Company with effect from the same Board Meeting where they submitted their resignations and Board placed on record its sincere appreciation of services rendered by them as Directors of the Company during their tenure.

Pursuant to Regulation 30 of SEBI (LODR) Regulations, 2015 of the Listing Agreement, We informed the same to Bombay Stock Exchange, where the shares of the company were listed and also as per Section 168 of the Companies Act, 2013 the Board of Directors also took the note of their resignations and intimate to the Registrar of Companies, Hyderabad for the States of Andhra Pradesh and Telangana.

Disclosure Relating to Remuneration of Directors, Key Managerial Personnel and particulars of Employees:

The remuneration paid to the Directors is in accordance

Directors Report



60

with the Nomination and Remuneration Policy formulated in accordance with Section 178 of the Companies Act, 2013 and Regulation 19 of the Listing Regulations (including any statutory modification(s) or re-enactment(s) for the time being in force). The salient aspects covered in the Nomination and Remuneration Policy has been outlined in the Corporate Governance Report which forms part of this report.

The information required under Section 197 of the Companies Act, 2013 read with Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of Directors/ employees of your Company is set out in Annexure [II] to this report.

Directors Responsibility Statement: Pursuant to Section 134(3)(c) of the Companies Act,

2013 (including any statutory modification(s) or re-enactment(s) for the time being in force), the Directors of your Company confirm that:

(a) in the preparation of the annual accounts for the financial year ended 31st March, 2018, the applicable Accounting Standards and Schedule III of the Companies Act, 2013 (including any statutory modification(s) or re-enactment(s) for the time being in force), have been followed and there are no material departures from the same;

(b) for the financial year ended 31st March, 2018, the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of your Company as at 31st March, 2018 and of the profit and loss of the Company for the financial year ended 31st March, 2018;

(c) proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 (including any statutory modification(s) or re-enactment(s) for the time being in force) for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

(d) financial statements have been prepared on a “going concern” basis;

(e) proper internal financial controls laid down by the Directors were followed by your Company and that such internal financial controls are adequate and operating effectively; and

(f) proper systems to ensure compliance with the provisions of all applicable laws were in place and that such systems were adequate and operating effectively.

12. EXTRACT OF THE ANNUAL RETURN: The details forming part of the extract of the Annual

Return as on 31st March, 2018 in Form MGT - 9 in accordance with Section 92(3) of the Companies Act, 2013 read with Companies (Management and Administration) Rules, 2014, are set out herewith as Annexure [III] to this report. This Annexure is also posted on the website of the Company (www.ksml.in).

13. A STATEMENT ON DECLARATION GIVEN BY INDEPENDENT DIRECTORS:

During the year under review, one meeting of Independent Directors was held on 12th February, 2018 in compliance with the requirements of Schedule IV of the Companies Act, 2013.

All the Independent Directors of the Company have declared that they meet the criteria of Independence in terms of Section 149(6) of the Companies Act, 2013 and that there is no change in the status of Independence.

14. EVALUATION OF BOARD’S PERFORMANCE: Pursuant to the provisions of the Companies Act, 2013

read with the Rules issued thereunder and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, (including any statutory modification(s) or re-enactment(s) for the time being in force), the process for evaluation of the annual performance of the Directors/ Board/ Committees was carried out. The criteria applied in the evaluation process are detailed in the Corporate Governance Report which forms part of this report.

i. Observations of board evaluation carried out for the year - NILii. Previous year’s observations and actions taken - NILiii. Proposed actions based on current year observations- NIL15. COMMITTEES OF THE BOARD: The Board of Directors has the following Committees: 1. Audit Committee 2. Nomination and Remuneration Committee 3. Stakeholders’ Relationship Committee 4. Corporate Social Responsibility Committee. 5. Share Transfer Committee The details of the Committees along with their composition,

number of meetings and attendance at the meetings are provided in the Corporate Governance Report.

16. DISCLOSURE UNDER SECRETARIAL STANDARDS ON MEETING OF BOARD OF DIRECTORS (SS-1):

During the year under review, the company has complied with all the applicable Secretarial Standards.

17. STATUTORY AUDITORS AND AUDITORS’ REPORT: M/s. Chevuturi Associates., Chartered Accountants

(Firm Reg No : 000632S), were appointed as the statutory auditors at the Annual General Meeting held on September 29, 2017 for a term of five (5) years from the conclusion of the 25th annual general meeting till the conclusion of 30th annual general meeting. As per the provisions of Section 139 of the Companies Act, 2013, the appointment of Auditors is required to be ratified by Members at every Annual General Meeting.

But, in accordance with the Companies Amendment Act, 2017, enforced on 7th May, 2018 by the Ministry of Corporate Affairs, the appointment of Statutory Auditors is not required to be ratified at every Annual General Meeting.

The Statutory Auditors of the Company have not reported any fraud as specified under the second proviso of Section 143(12) of the Companies Act, 2013

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(including any statutory modification(s) or re-enactment(s) for the time being in force). The Auditors’ Report for the financial year ended 31st March, 2018, does not contain any qualification, reservation or adverse remark.

18. COST AUDITOR: The Board of Directors of your Company, on the

recommendations made by the Audit Committee at its meeting held on 28th May, 2018 has approved the appointment of Mr. P.Srinivas, Cost Accountant, (Membership No. 21170) as the Cost Auditor of your Company for FY 2018-19 and recommends ratification of his remuneration by the Members at the ensuing Annual General Meeting. The Company has maintained the cost records and there are no qualifications in the report of the cost auditor for the financial year 2017-18.

19. SECRETARIAL AUDITORS: The Company has appointed M/s. K. Srinivasa Rao &

Co, a firm of Company Secretaries in Practice, Guntur to conduct the Secretarial Audit for the financial year ended March 31, 2019, as required by Section 204 of the Companies Act, 2013 and rules made thereunder.

The Secretarial Audit Report furnished by M/s. K. Srinivasa Rao & Co, for the financial year ended March 31, 2018 is annexed to this report as Annexure [IV].

Board reply on the Qualification of Secretarial Auditor : The Board has made an utmost effort for the appointment of the Company Secretary as KMP but unable to appoint a Company Secretary due to lack of suitability of the Candidate to the profile of the Company in terms of work location, job profile and remuneration.

20. INTERNAL AUDITORS: The Board of Directors has appointed M/s Mastanaiah

& Co.,(Firm Reg No: 002039S) Chartered Accountants, Guntur, as Internal Auditors for the period of 1 (one) year up to 31st March, 2019 under Section 138 of the Companies Act, 2013 and they have completed the internal audit as per the scope defined by the Audit Committee.

21. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS BY THE COMPANY

During the year, there were no Loans, Guarantees, Investments and securities given/made/provided by the Company under the provisions of Section 186 of the Companies Act, 2013.

22. RELATED PARTY TRANSACTIONS: During the financial year 2017-18, your Company has

entered into transactions with related parties as defined under Section 2(76) of the Companies Act, 2013 read with Companies (Specification of Definitions Details) Rules, 2014, all of which were in the ordinary course of business and on arm’s length basis and in accordance with the provisions of Section 188 of the Companies Act, 2013, read with the Rules issued thereunder and the Listing Regulations. Further, there were no transactions with related parties which qualify as material transactions under the Listing Regulations. All Related Party Transactions are placed before the Audit

Committee as also to the Board for approval. Prior omnibus approvals are granted by the Audit Committee for related party transactions which are of repetitive nature, entered in the ordinary course of business and are on arm’s length basis in accordance with the provisions of Companies Act, 2013 read with the Rules issued thereunder and the Listing Regulations. The policy on Related Party Transactions as approved by the Board of Directors has been uploaded on the website of the Company. The web-link of the same has been provided in the Corporate Governance Report.

The details of the related party transactions as per Accounting Standard 18 are set out in point 35 of the Notes on Accounts to the Financial Statements forming part of this report. The Form AOC - 2 pursuant to Section 134(3)(h) of the Companies Act, 2013 read with Rule 8(2) of the Companies (Accounts) Rules, 2014 is set out as Annexure [V].

23. VIGIL MECHANISM / WHISTLE BLOWER POLICY: The Company has adopted Vigil Mechanism / Whistle

Blower Policy as per the provisions of Section 177 of the Companies Act, 2013 and Regulation 22 of the Listing Regulations. Employees can raise concerns regarding any discrimination, harassment, victimization, any other unfair practice being adopted against them or any instances of fraud by or against your Company. Any incidents that are reported are investigated and the suitable action taken in line with the whistle blower policy. The details of the Vigil Mechanism is explained in the Report on Corporate Governance and also posted on the website of the Company (www.ksml.in).

24. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS

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

25. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO:

The information on the conservation of energy, technology absorption and foreign exchange earnings and outgo as stipulated under Section 134 of the Companies Act, 2013 read with Rule 8 (3) of the Companies (Accounts) Rules, 2014, is set out herewith as Annexure [VI] to this report.

26. UNSECURED LOANS RECEIVED FROM DIRECTORS DURING THE YEAR 2017-18:

During the year 2017-18, The Company has received Loans from Three Executive Directors.

S.No Name of the Director Amount Received

During the year (in `)

1) Sri.P.Venkateswara Reddy 83,50,000

2) Sri G.V.Krishna Reddy 20,00,000

3) Sri M.V.Subba Reddy 2,00,000

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All the Directors were, at the time of giving the money, furnished their declaration in writing to the effect that the amount is not being given out of funds acquired by them by borrowing or accepting loans or deposits from others.

27. RISK MANAGEMENT: The Company has implemented an integrated risk

management approach through which it reviews and assesses significant risks on a regular basis to help ensure that there is a robust system of internal controls in place. Your Company believes that managing risks helps in maximizing returns. The Company’s approach to addressing business risks is comprehensive and includes periodic review of such risks and a framework for mitigating controls and reporting mechanism of such risks. The risk management framework is reviewed periodically by the Board and the Audit Committee. The company has put in place response mechanisms that mitigate environmental, operational and business risks and minimise the impact on business.

28. CORPORATE SOCIAL RESPONSIBILITY (CSR) The CSR expenditure incurred by your Company during

the financial year 2017-18 was ` 29.36 Lakhs which was higher than the statutory requirement of 2% of the average net profits for the last three financial years. (Which amounted to ` 28.18 Lakhs)

The CSR initiative of your Company was under the area(s) Development of rural areas / Social Business Projects.

Your Company’s CSR Policy statement and annual report on the CSR activities undertaken during the financial year ended 31st March, 2018, in accordance with Section 135 of the Companies Act, 2013 and Companies (Corporate Social Responsibility Policy) Rules, 2014 is annexed to this report as Annexure [VII].

29. DETAILS ON INTERNAL FINANCIAL CONTROLS RELATED TO FINANCIAL STATEMENTS

Your Company has put in place adequate internal financial controls with reference to the financial statements and the Company has effective risk-mitigation system. Your Company has adopted accounting policies which are in line with the Accounting Standards prescribed in the Companies (Accounting Standards) Rules, 2006 that continue to apply under Section 133 and other applicable provisions, if any, of the Companies Act, 2013 read with Rule 7 of the Companies (Accounts) Rules, 2014 and relevant provisions of the Companies Act, 1956, to the extent applicable. These are in accordance with generally accepted accounting principles in India. Changes in policies, if any, are approved by the Audit Committee in consultation with the Statutory Auditors.

The main thrust of internal audit is to test and review controls, appraisal of risks and business processes, besides benchmarking controls with best practices in the industry. The Internal Audit is entrusted to M/s Mastanaiah & Co., Chartered Accountants, Guntur, who submit their reports to the Joint Managing Director & CEO and has direct access to the Audit Committee and they participated in the meetings of the Audit Committee

of the Board of Directors of your Company. The Audit Committee of the Board of Directors actively

reviews the adequacy and effectiveness of the internal control systems and suggests improvements to strengthen the same. The Audit Committee of the Board of Directors and Statutory Auditors are periodically apprised of the internal audit findings and corrective actions taken. Audit plays a key role in providing assurance to the Board of Directors. Significant audit observations and corrective actions taken by the management are presented to the Audit Committee of the Board. To maintain its objectivity and independence, the Internal Audit function reports to the Chairman of the Audit Committee.

30. ENVIRONMENT AND SAFETY: The Company is conscious of the importance of

environmentally clean and safe operations. The Company’s policy requires the conduct of operations in such a manner, so as to ensure the safety of all concerned, compliances of environmental regulations and preservation of natural resources for future Generations.

31. PREVENTION OF SEXUAL HARASSMENT OF WOMEN AT WORKPLACE :

As per the requirement of The Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013 (‘Act’) and Rules made there under, the Company has formulated and implemented a policy on prevention of sexual harassment at workplace with a mechanism of lodging complaints. For that purpose, Company has constituted Internal Complaints Committees (ICC). During the year under review, no complaints were received in this regard.

32. REGISTRARS AND SHARE TRANSFER AGENTS: Your Registrar and Share Transfer Agents of the Company

M/s Big share Services Private Limited, 306, 3rd Floor, Right Wing, Amrutha Ville, Opp. Yashodha Hospital, Raj Bhavan Road, Somajiguda, Hyderabad - 500 082.

33. APPRECIATIONS AND ACKNOWLEDGEMENTS: Your Directors sincerely convey their appreciation for

the unbelievable commitment, support, dedication, hard work, enthusiasm and significant contribution made by employees in ensuring sustained growth of the Company. The Directors also take this opportunity to thank all shareholders, Clients, Vendors, Bankers, Government and Regulatory Authorities and Stock Exchanges for their continued support.

For and on behalf of Board of DirectorsP.Venkateswara Reddy

Managing DirectorDIN : 00018677

G.V. Krishna ReddyJoint Managing Director

DIN : 00018713

Place : Chowdavaram, GunturDate : 09-08-2018

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1. FORWARD LOOKING STATEMENTCertain statements made in this report may not be based on historical information or facts and may be "forward-looking statements" based on the currently held beliefs and assumptions of the management of the Company, which are expressed in good faith and in their opinion reasonable, including those relating to the Company's general business plans and strategy, its future financial condition and growth prospects and future developments in its industry and its competitive and regulatory environment.The Company disclaims any obligation to update these forward looking statements, except as may be required by law. 2. TEXTILES SECTOR OVERVIEWThe Indian textile sector had all the tailwinds the businesses needed, over the last two to three years, to grow and become more profitable. Right from higher export demand to lower cotton prices to falling interest rates to favorable exchange rates, the companies had everything going in their favor.The industry employs about 40 million workers directly and 60 million indirectly. India's targeted textile exports for financial year 2017-18 is US$ 45 billion. However, this target is unlikely to be achieved.As per the Ministry of Textiles, the Indian textile industry contributed about 14% to industrial production, 4% to the country's GDP and 13% to the country's export earnings in 2017.According to the Ministry of Textiles, the domestic textile and apparel industry in India is estimated to reach US$ 223 bn by 2021 from US$ 108 bn in 2015. India enjoys a significant lead in terms of labor cost per hour over developed countries like US and newly industrialized economies like Hong Kong, Taiwan, South Korea and China.As per data from National Bureau of Statistics, due to steep wage inflation, the average monthly wage cost in China stood at US$ 230 per month in 2013 as against US$ 80 per month in India. Also, India is rich in traditional workers adept at value-adding tasks, which could give Indian companies significant margin advantage. However, India's inflexible labor laws have been a hindrance to investments in this segment. Unlike in home textiles, garment capacities are highly fragmented and leading Indian textile companies have been slow to ramp up their apparel capacities, despite strong order flows from overseas buyers who are trying to diversify out of China.The textile industry aims to double its workforce over the next 3 years. As a thumb rule, for every Rs 1 lac invested in the industry, an average of 7 additional jobs is created. 3. THE TEXTILES SECTOR (KEY POINTS)l Supply Despite some pick-up in demand from both global and

domestic markets, most new capacities in the apparel and home textile segments are not operating at full capacities.

l Demand High for premium and branded products due to increasing

per capita disposable income.l Barriers to entry Superior technology, skilled and unskilled labour,

distribution network, access to global customers.

l Bargaining power of suppliers Because of oversupply in the unorganized market like

that of denim, suppliers have little bargaining power. However, premium products and branded players continue to garner higher margins.

l Bargaining power of customers Domestic customers - Low for premium and branded

product segments. Global customers- High due to presence of alternate low cost sourcing destinations.

l Competition Very high fragmented industry. Competition from other low cost

producing nations is likely to intensify. workforce over the next 3 years. 4. FINANCIAL YEAR '17Operating profit margins of textiles exporters were under pressure on account of lower export realizations. A shift in the dynamics of US retail, and a reduction in incentives after the implementation of the Goods and Services Tax (GST) led to the pricing pressure.In FY18, the textile export sector was undergoing a sea-change. Many brick & mortal retailers in the US have pruned inventories and downsized stores to offset profitability pressures caused by the e-retail boom. To cushion the consequent fall in utilization levels, Indian exporters have been enhancing their share of the business with US e-retailers, but at lower realizations. Domestic home textile firms have had a good run since FY12, with India's share of US imports of cotton bed sheets and terry towels increasing from 34% to about 40% in FY17 because of cost competitiveness compared with peers in China and Pakistan. US accounts for a third of global home textiles market worth US$ 16 billion.Almost 47% of India's home textile exports of US$ 5.3 billion last fiscal was to the US. Additionally, competitiveness continues to be impacted in Europe - an equally large consumer of home textiles as the US – with levies up to 10% duty on Indian products compared with free access to Bangladesh and Pakistan firms. 5. PROSPECTS:Debt being raised for capacity expansion (net of repayments) and lower operating margins (due to higher raw material costs) are expected to result in lower profitability for the sector in the near term.The demand for Indian home textiles will continue to grow at 8% seen in the recent past, helped by exports to traditional markets and better penetration in non-traditional markets such as Asia, Australia, South America and Canada.The Trans-Pacific-Partnership (TPP) a duty-free trade agreement between 12 nations may impact the Indian textile and garment export sector negatively and put Indian textile exports of around US$ 40 bn at risk over the medium term.The TPP member nations led by the US account for 40% of world trade and the deal gives them duty free access to each other, and makes imports from other countries uncompetitive.Source : https://www.equitymaster.com/research-it/sector-info/textiles/Textiles-Sector-Analysis-Report.asp#top

ANNEXURE-IMANAGEMENT DISCUSSION AND ANALYSIS

Annexure I to Directors' Report



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COTTON PROCUREMENT

Kallam Textile Ltd is situated in Guntur, Which is one of the best quality cotton growing areas in India.

Guntur district produces MCU5 which is long staple cotton and is suited for fine counts.

Kallam group is in cotton Business for more than four decades.

Mr P.V Reddy Managing director was instrumental in development of M/S Chandra Sekhara Ginning Mill In late 70's and 80‘s.

Mr PV.Reddy used to purchase cotton on day by day basis.

The farmers bring kapas by tractors to chowdavaram spinning cum ginning plant. The best quality kappas is procured from farmers. Farmers prefer on the spot payment. which yields reduction on market price. In spot payment process the kapas quality is checked and weighment is done immediately. Once truck is unloaded farmer gets payment on the same day by evening hours. on the spot payment not only helps in cost reduction but also gets best quality kapas to ginning unit.

cotton cultivation is started in July every year with on set of monsoon. Cotton packing from the fields start in November and continues till February. Best quality kapas is procured in the months of Nov - March only. 80% of the entire cotton procurement completes by march every year. Since there is pressure on the farmers and ginners to sell the products due to heavy arrivals the cotton lint is at lowest in these cotton procurement months.

The company had perfected cotton procurement over the years and it helped us producing best and consistent quality yarn. it also contributed to bottom line of the company.

KALLAM TEXTILES LTD - GINNING DIVISION

The Ginning Division has 28 high production Ginning Machines. The Division has modernized Automatic bale pressing unit. This is one of the modern TMC units in Andhra Pradesh. In near future, we are going to expand the Ginning Division by improving the storage capacity of Raw Cotton.

Machinery Infrastructure: Roller Ginning : Nipha Auto Seed Boosting & Collection : Auditya Quality Automatic Bale Press : Karunanand Online Cody Cleaner : Global Engineers Pvt Ltd Lint Pre Cleaner : Govind & sons Raw Cotton Storage hot box : Rank one company

Plant Capacity

The Ginning Division has capacity to press 200 bales /day.

BCI (Better Cotton Initiative)

Our Company has been BCI (Known as “Better Cotton Initiative”) certified in December, 2015 for procuring of Better Cotton from the farmers who have been certified by the BCI as a Registered Farmers. The Better Cotton Initiative exists to make global cotton production better for the people who produce it, better for the environment it

6. DIVISION WISE ANALYSIS




65

grows in and better for the sector’s future. BCI aims to transform cotton production worldwide by developing Better Cotton as a sustainable mainstream commodity. BCI brings together farmers, ginners, spinners, weavers, processors, garments, cut & sew, manufacturers, retailers, brands and grassroots organizations in a unique global community committed to developing Better Cotton as a sustainable mainstream commodity. The farmers are educated to grow cotton by conserving water and soil. The farmers are then BCI certified. We procure these kappa's from them and gin in our ginning unit and then spin the yarn from the kappas in our spinning unit. We also weave the fabric and then it is sold as fabric.

Advantages of procuring of BCI Cotton : v Yarn produced from BCI Cotton has high market demand

when compare to yarn produced from other cotton.v By 2018, most of the brands preferring to buy BCI fabricv Our company trying to be on Higgs internationalv Our company is preparing for organic cotton certification

KALLAM TEXTILES LTD - SPINNING DIVISION

Spinning is a major part of the textile industry. In simple words, spinning is a process in which we convert fibers by passing through certain processes like Blow room, Carding, Drawing, Combing, Simplex, Ring Frame and finally winding into yarns. These yarns are then wound onto the cones.

Our Company started its Commercial production on 22nd March 1995 with 12096 spindles. Our Company is an ISO 9001-2008 Certified Company by TUV NORD since 2010. The Company today operates 59,280 spindles of Ring Spinning out of which 34,416 compact & 24,864 Non-Compact. We are mainly focused on production of Premium quality of cotton and dyed yarn. The premium quality yarn is exported to number of customers across the world. The company relies on consistent supply of international standard quality yarn. Having clear vision, well placed systems, guided by a team of professionals & steered by an enterprising management, your company always tries to diversify its range of products in order to reach the large number of customers across the globe.

Product Range :

Ring Spinning Yarn : Ne.30s to Ne.80s combed warp / compact.

TFO Yarn : Ne.30/2 to Ne.80/2 combed warp/ compact.

Production : Ring Spinning Yarn, 420 tons per Month

KALLAM TEXTILES LTD - OPEN END DIVISIONKallam Textile Ltd. established its Open End unit in the year 2009-10 with an initial capacity of 1248 Rotors. The total Rotors capacity of Open End Unit was increased to 2912 by 2011 - 12.

Kallam Textile Ltd. has proved its OE yarn quality in the international market and has continuous demand in the market. Repeated orders are getting continuously. The premium quality yarn is exported to number of customers across the world. The company relies on consistent supply of international standard quality. Having clear vision, well placed systems, it is guided by a team of professionals and steered by an enterprising management. Kallam Textile Ltd. continues to diversity its products and extends its customer reach.

59,280Spindles




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Product Range :OE Yarn Ne10s to Ne20sTFO Yarn Ne OE 20s/2Production Capacity 500 Tons / Month.

Consistent commitment to high quality standards and innovations has been the secret of success. Superior open end unit ensure the supply of consistent quality yarn to manufacture the cloth.

KALLAM TEXTILES LTD - WEAVING DIVISIONOur plant capacity of production is Eighty thousand meters per day of woven fabric including 70% yarn dyed shirting and 30% of bottom weight fabric. We have the state of art machineries in weaving preparatory, weaving loom shed and sophisticated testing equipment and instruments aimed at continuing to be a market leader in quality during the future years. We, Kallam Textile Limited is one of the leading textile manufacturers. Our possibilities of fabrics are boundless, such as Dobby yarn dyed shirting, fabrics with cotton 100% and blended with lycra stretch, polyester, nylon, Linen and viscose fabrics. Our name guarantees perfect workmanship at all time. The weaving industry is professionally managed with technical Managers at the helm of affairs.We have the state of art machinery from various leaders of manufacturers around the world. We are procuring from Switzerland, Belgium, Japan, Spain, Germany, Italy and China.

v Weaving preparatory, - Karlmayer v Weaving machines - Picanol, Air-Jet & Rapier looms,

Toyota airjet looms v Full equipped testing and research laboratory v Yarn dyeing – Fongs v Automatic dye dispensing system - Tecnorama v Zero discharge effluent treatment plant. v Confident v Humidification system – LUWA.

KALLAM TEXTILES LTD - DYEING DIVISIONThe Company has commenced the Commercial Production of Yarn Dyeing unit on 23rd September, 2015 with a capacity of 5000 kgs per day.

2,912Rotors




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Our Products Range : Yarn Dyed ShirtingCount range - Ring spun Ne 20’s to 80’s Ring spun Blends 2/40’s to 2/120’s Open end – 20’s Blends - 100% Cotton, Polyester Cotton, Organic Cotton Cotton Stretch DowXLA, Cotton Tencel, Cotton Modal Cotton Bamboo, Linen.Dyed Cone Rewinding After to the R.F.(Radiofrequency) Dyeing, the yarn cones are bundled, weighed and checked for evenness of dyeing on Schlafhorst auto-coners, so that it is ready for warping or for weft insertion in weaving section. We have 5 machines of 60 spindles each for our capacity and segregate each machine in order to avoid fluff contamination from one shade onto the other. It is helpful if humidification air changes are provided, so that fluff is going into the return trench and not flying around in the winding area.

KALLAM TEXTILES LTD - HYDEL POWER DIVISION

4.0 MW 3 Plants

Our company has three hydro electric plants with a total capacity of 4.0 MW capacity at Nelakondapally Mandal, Khammam District of Telangana. These plants are on 16th & 17th branch canal of Nagarjuna Sagar project left main canal. The canal flows for 7 to 8 months in a year. Typically the canal is opened in Aug/Sep and closed by end April. The first two projects of 0.8 MW and 1.6 MW were commissioned in Jan 2002 and third hydro electric plant of 1.6 MW was commissioned in March 2011. We have installed Hydro Electrical equipments from Boving Fouress, France.

All the generators produce electricity at 6.6 KV voltage level. The generated voltage is enhanced to 33 KV by a power transformer and fed to the state electricity grid. The hydel power generation solely dependent on the canal water flow. The 0.8 MW hydro electric project is financed by IREDA, New Delhi and remaining two Nos. of 1.6 MW hydro electric projects are financed by Andhra Bank. We have good electrical and mechanical engineering team at the hydro electric plants. They ensure the availability of plant by more than 98% when water is flowing in the canal. During the financial year 2017-18, due to short fall of rains and water flow, we have generated 25,27,700 Units only. Out of the generation, 70% of the units are sold to Sagar Cements Ltd. and 30% of the units are sold to TSNPDCL.




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MAINTENANCE OF MACHINESWe follow machine maintenance based on SITRA norms and our experience.We buy spare parts directly from machine manufacturers in order to ensure our quality requirements. We also follow life cycle management for our machines in order to achieve best possible combination between price and technology advancements.

QUALITY CONTROLQuality of our Yarn and Fabric is one of the most important factor in our manufacturing process. We believe this will be one of the most success factor of our organisation in the future. We have always placed emphasis on quality since our inception. Our customers are willing to pay a higher price for our products due to our product quality.

Towards Excellence in Spinning, Yarn Dyeing and WeavingQuality is of prime importance in any aspect of business. As the quality product depends on the raw material quality, so we must be provided with the best quality raw material with an economical consideration. We carry raw material inspection on Uster HVI Spectrum and Uster Afis Pro -2 for 2.5% SL, uniformity, MIC, Strength, Short fiber content % and neps /grm. Bale management system is followed for consistent superior yarn quality, and for this, cotton stock is maintained for 5 – 6 months. Carding and combing process optimized for NRE of 75% to 85% and 65% to 70% respectively. RIETER D35 / D40 / D45 draw frames are maintained for less than 0.50%. In ring frame breakages are maintained below 5 to 6 breaks per 100 spindle hour. In auto coner utmost care is taken for achieving 85% splice strength with defect-free packages.

PRESERVING THE NATURESelected Zero discharge effluent treatment plant to maintain ecological balance and reduce pollution.Effluent Treatment Plant consists biological system, ultra filtration, reverse osmosis in 2 stages, nano filtration. The above process ensures 90% water recovery for reuse and saves water which is precious resource. Received pollution control clearances from Government authorities.

EFFLUENT TREATMENT PLANT (ETP) – TECHNICAL FACTSYarn Dyeing Production:

Dyed Yarn 2.5 Ton/ DayBleached Yarn 2.5 Ton/Day

Based on the above Dyeing production effluent generation178Kl/Day LTDS

2.5 Ton/Day90 Kl/Day HTDS

2 Kl/DayTotal 270 Kl/Day

LTDS effluent process : Through trench, Bar screen, collection tank, Biological aeration, clarifier, sand filter and final clear water used of on land for our own gardening as per APCB Norms.HTDS effluent process : Through trench, Bar screen, collection tank, Biological aeration, clarifier Electro coagulation, HRSSC, Sand filter, UF, RO three stages including Nano filtration, Multistage evaporator and centrifuge and will get three out put using as follows :+ Out put of permeate water reused for dyeing process+ RO reject water used in dyeing as salt water so that

fresh salt consumption less daily+ MEE salts disposing to TSDF as per APCB norms




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QUALITY CONTROL

QUALITY CONTROL - GINNING DIVISIONKallam has HVI instrument from Uster Inc, Switzerland.Every bale is checked for the following.+ 2.5% Span Length+ Uniformity Ratio+ Microniere+ Color Grade+ G TexThe above properties recorded for each and every bale.

Uster HVI specimen cotton testing

QUALITY CONTROL - SPINNING & OEIn bale management system average microniere is maintained throughout the year. Due to the bale management system yarn produced in the Mill throughout the year is uniform. The dyeability of the fabric is maintained consistent.The bale management system is consist of taking min of 10 lots of 100 bales each at any given time. Only two bale from each lot issued. When one bale lot is exhausted a fresh lot of 100 bales is introduced.

Tenso jet Tenso Rapid

Cascade TPI Tester

Trash analyzer Bursting Strength Tester

Cartoon & Cone collapsing tester

USTER AFIS Fiber Testing

QUALITY - DYEING DIVISIONl Tecnorama Sample Dyeing l Data Color l Washing Fastness Tester l Rubbing Fastness Tester l Sax Knitting l Perspiration testerl Color Matching Cabinet l Infrared Color Machine l Water Bath l Woven




70

QUALITY - WEAVING DIVISIONl Sampling Cutter l GSM Tester l TPI Tester l Warp Reel l Washing Tester l Micro woven

Fabric Inspection Machine

USTER TENSOJET - 4 For Yarn Testing

Computerized CSP Testing Machine




71

7. OPPORTUNITIES AND THREATS :

i) OPPORTUNITIES :

The textile sector plays a key role in the Indian economy by way of significant contribution to GDP, manufacturing output, employment generation and export earnings. Its share in the nation’s GDP is 6% and in exports, 13%. In India, the sector is the second-largest employer after agriculture. India has most liberal and transparent policies in Foreign Direct Investment (FDI) amongst emerging countries. India is a promising destination for FDI in the textile sector. 100% FDI is allowed in the textile sector under the automatic route. The fundamental strength of Indian textile industry is its strong production base with wide range of fibers/yarns. Indian Textile and Apparel Industry will continue to grow rapidly. India can achieve higher growth rates of finished products such as apparel, home furnishing, and technical textiles. An important development in the global textile trade is the fall in China’s predominance, which presents an opportunity for Indian textiles sector to grab the market share of China in the developed world.

ii) THREATS :

The Cotton textile industry in India is suffering from many serious problems. Following are some of the problems faced by the industry.

v India deals in cotton based textiles. So, high volatility in cotton prices has an adverse impact on complete supply chain.

v Manufacturing is a labour intensive process, whereas in the inflation ridden economy of India, there is a constant demand for rising wages for workers. So, increasing labour cost is also a major challenge before the industry.

v Shortage of Power is another major problem faced by Textile Industry.

v There has been an increase in seasons per year which has resulted in shortening of the fashion cycle.

8. RISKS & CONCERNS :

The Key factor in determining a company’s performance is the company’s ability to manage the risks in it business/environment effectively. Many risks exist in a company’s operating environment and they emerge on a regular basis,. Viz Currency Risk, Commodity price Risk and Human Resource Risk. Risk management is embedded in operating framework of your Company. The risk management framework defines the risk management approach of the Company and also includes the periodical review of such risks. Your Company believes that managing risks helps in maximizing returns. The risk management framework is reviewed periodically by the Board and the Audit Committee.

9. DISCLOSURE OF ACCOUNTING TREATMENT :

Disclosure of Accounting Treatment in the preparation of the financial statements, the Company has followed the Accounting Standards referred to in Section 133 of the Companies Act, 2013. The significant accounting policies which are consistently applied are set out in the Notes to the Financial Statements.

10. FUTURE OUTLOOK OF THE COMPANY :

The Company is projecting gross sales from ` 540 Crores to ` 600 Crores during the year 2018-19. The Weaving, Dyeing and Power divisions are expected to add bottom line to the financial performance of the Company.

11. STRENGTHS :v Abundant raw material availability helps control costs

and reduces lead-times across operations.v There is easy availability of low cost and proficient

manpower that contributes extensively in the growth of the industry.

v The industry has an added advantage of having numerous segments which help in the provision of a huge variety of products.

v India is one of the largest exporters of yarn in international market.

v The cultural diversity and rich heritage of the country offers good inspiration base for designers.

12. WEAKNESSES :v The textile industry of India is one of the highly

disintegrated industries.v Fabric Processing is the weakest link in the Indian

textile value chain, adversely affecting its ability to compete in exports.

v There is a huge dependency of the industry on cotton.v Productivity levels for manufacturing various apparel

items are far lower in India in comparison with its competitors.

13. CAUTIONARY STATEMENT :

Statements in the Directors’ Report and Management Discussion and Analysis describing the Companies objectives, projections, estimates, expectations may be “forward looking statements” within the meaning of applicable security laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could make difference to the company’s operations include, among others, economic conditions effecting demand / supply and price conditions in the domestic and overseas markets in which the Company operates, changes in the Government regulations, tax laws and other statutes and incidental factors.




72

ANNEXURE-IIDETAILS PERTAINING TO REMUNERATION AS REQUIRED UNDER SECTION 197(12) OF THE COMPANIES ACT, 2013 READ WITH RULE 5(1) OF THE COMPANIES (APPOINTMENT AND REMUNERATION OF MANAGERIAL PERSONNEL) RULES, 2014

I) The ratio of the remuneration of each Director to the median remuneration of the employees of the Company for the financial year 2017-18 and the comparison of remuneration of each Key Managerial Personnel (KMP) against the performance of the Company are as under :

S.No. Name of the Director / KMP and Designation

Remuneration of Director During the F.Y 2017-18

(Amount In `)

Ratio of remuneration of each Director/to median remunera-

tion of employees1 P. Venkateswara Reddy, Managing Director 47,21,131 34.1912 G.V.Krishna Reddy, Joint Managing Director 47,17,140 34.1623 M.V.Subba Reddy, Whole Time Director 9,86,852 7.147

4 S.Pulla Rao, Non Executive and Independent Director 1,00,000 0.724

5 M.R. Naik*, Non Executive and Independent Director 30,000 0.2176 V.S.N Murthy, Non Executive and Nominee Director 1,00,000 0.724

7 A. Krishna Murthy**, Non Executive and Independent Director 30,000 0.217

8 Ajeya Kallam#, Non Executive and Independent Director 60,000 0.435

9 V.Ramgopal##, Non Executive and Independent Director 30,000 0.217

10 V. Bhargavi, Non Executive and Independent Director 1,00,000 0.72411 M.Prasanna Kumar, Company Secretary$ 42,000 0.304

II) Details of percentage increase in the Remuneration of each Director in the Financial Year 2017-18 are as follows

S. No.

Name of the Director / KMP and Designation

Remuneration of Director During the F.Y 2017-18 (Amount In `)

Remuneration of Director During the F.Y 2016-17 (Amount In `)

% Increase /(Decrease) in Remuneration in the Financial Year 2017-18

1 P. Venkateswara Reddy, Managing Director 47,21,131 48,21,068 -2.072 G.V.Krishna Reddy, Joint Managing Director 47,17,140 48,15,593 -2.043 M.V.Subba Reddy, Whole Time Director 9,86,852 8,77,403 12.47

4 S.Pulla Rao, Non Executive and Independent Director 1,00,000 80,000 25.00

5 M.R. Naik*, Non Executive and Independent Director 30,000 60,000 -50.00

6 V.S.N Murthy, Non Executive and Nominee Director 1,00,000 80,000 25.00

7 A. Krishna Murthy**, Non Executive and Independent Director 30,000 50,000 -40.00

8 Ajeya Kallam#, Non Executive and Independent Director 60,000 0 -

9 V.Ramgopal##, Non Executive and Independent Director 30,000 0 -

10 V. Bhargavi, Non Executive and Independent Director 1,00,000 80,000 25.00

11 M.Prasanna Kumar, Company Secretary$ 42,000 0 -

Annexure II to Directors' Report

*&** They were resigned from the board w.e.f. 29th September, 2017.#&## They became the members of the boards w.e.f. 26th August, 2017$ Mr. M.Prasanna Kumar has resigned w.e.f 31-05-2017

*&** They were resigned from the board w.e.f. 29th September, 2017.#&## They became the members of the boards w.e.f. 26th August, 2017$ Mr. M.Prasanna Kumar has resigned w.e.f 31-05-2017



73

III) Percentage increase in the median remuneration of all employees in the financial year 2017-18

Particulars 2017-18 2016-17 % Increase/(Decrease) in the Financial Year 2017-18

Median Remuneration of all the Employees 1,38,082 1,40,271 -1.56IV) There were 662 permanent employees on the rolls of the Company as on 31st March, 2018.V) Comparison of Remuneration of the Key Managerial Personnel(s) against the performance of the Company: The total

remuneration of Key Managerial Personnel increased by 0.488% from 108.64 Lakhs in 2016-17 to 109.17 Lakhs in 2017-18 whereas the Profit before Tax decreased by 0.5273% from 2118.01 Lakhs in 2016-17 to 2106.84 Lakhs in 2017-18.

VI) Details of Share price and market capitalization :

The details of variation in the market capitalization and price earnings ratio as at the closing date of the current and previous financial years are as follows:

Particulars 31-03-2018 31-03-2017 Increase/(Decrease) (%)1. P.E Ratio 8.21 6.09 34.81

2. Market Captialisation (` in Cr) 128.67 77.42 66.20VII) There were no employees in the Company as per Rule 5(2) of Chapter XIII, the Companies (Appointment and Remu-

neration of Managerial Personnel) Rules,VIII) The ratio of the remuneration of the highest paid director to that of the employees who are not directors but receive

remuneration in excess of the highest paid director during the year - Not Applicable : andIX) The key parameters for the variable component of remuneration availed by the directors are considered by the Board

of Directors based on the recommendations of the Human Resources, Nomination and Remuneration Committee as per the Remuneration Policy for Directors, Key Managerial Personnel and other Employees.

X) It is hereby affirmed that the remuneration paid is as per the as per the Remuneration Policy for Directors, Key Man-agerial Personnel and other Employees.

Annexure II to Directors' Report



74

ANNEXURE III TO THE DIRECTORS' REPORTFORM NO. MGT-9

EXTRACT OF ANNUAL RETURNas on financial year ended on 31-03-2018

Pursuant to Section 92 (3) of the Companies Act, 2013 and rule 12(1) ofthe Company (Management & Administration) Rules, 2014.

I. REGISTRATION & OTHER DETAILS :

i CIN L18100AP1992PLC013860

ii Registration Date 18-02-1992

iii Name of the Company KALLAM TEXTILES LIMITED

iv Category/Sub-category of the Company Company Limited by Shares / Indian Non Government Company

v Address of the Registered office & contact details

CHOWDAVARAM, GUNTUR-522019PH No : 0863-2344016

vi Whether listed company YES

vii Name, Address & contact details of the Registrar & Transfer Agent, if any.

Big Share Services Pvt.Ltd.,306, 3rd Floor, Right wing, Amrutha Ville,

Opp.Yashodha Hospital, Raj Bhavan Road, Somajiguda,Hyderabad-500082. Ph No. 040-23374967

II. PRINCIPAL BUSINESS ACTIVITIES OF THE COMPANY :(All the business activities contributing 10% or more of the total turnover of the company shall be stated)

SL.No Name & Description of main products/services "NIC Code of the Product /service"

"% to total turnover of the company"

1 Manufacturing of Cotton and Dyed Yarn 13111 39.63

2 Manufacturing of Cotton and Dyed Fabric 13121 59.99

III. PARTICULARS OF HOLDING , SUBSIDIARY & ASSOCIATE COMPANIES :

SL.No

Name & Address of the Company CIN / GLN

HOLDING / SUBSIDIARY / ASSOCIATE

% OF SHARES

HELD

APPLICABLE SECTION

1 Nil

2 Nil

Annexure III to Directors' Report



75

IV. SHAREHOLDING PATTERN :(Equity Share capital Break up as % to total Equity)

(i) Category-Wise Shareholding

Category of Shareholders

No. of Shares held at the beginning of the year*

No. of Shares held at the end of the year # %

change during

the year Demat Physical Total % of Total Shares Demat Physical Total

% of Total

Shares

A. Promoters

(1) Indian - - - - - - - -

a) Individual / HUF 1,20,47,660 - 1,20,47,660 35.17 1,49,73,765 - 1,49,73,765 34.97 (0.20)

b) Central Govt. or State Govt. - - - - - - -

c) Bodies Corporates 43,72,035 - 43,72,035 12.76 54,65,043 - 54,65,043 12.76 -

d) Bank/FI - - - - - - -

e) Any other - - - - - - - -

SUB TOTAL : (A) (1) 1,64,19,695 - 1,64,19,695 47.93 2,04,38,808 - 2,04,38,808 47.73 (0.20)

(2) Foreign

a) NRI- Individuals - - - - - - - - -

b) Other Individuals - - - - - - - - -

c) Bodies Corp. - - - - - - - - -

d) Banks/FI - - - - - - - - -

e) Any other… - - - - - - - - -

SUB TOTAL (A) (2) - - - - - - - - -

Total Shareholding of Promoter (A) = (A)(1) +(A)(2)

1,64,19,695 - 1,64,19,695 47.93 2,04,38,808 - 2,04,38,808 47.73 (0.20)

B. Public shareholding

(1) Institutions

a) Mutual Funds - 50,000 50,000 0.15 - 62,500 62,500 0.15 -

b) Banks/FI - - - - - - - - -

C) Cenntral govt - - - - - - - - -

d) State Govt. - - - - - - - - -

e) Venture Capital Fund - - - - - - - - -

f) Insurance Companies - - - - - - - - -

g) FIIS - - - - - - - - -




76

Category of Shareholders

No. of Shares held at the beginning of the year*

No. of Shares held at the end of the year # %

change during

the year Demat Physical Total % of Total Shares Demat Physical Total

% of Total

Shares

h) Foreign Venture Capital Funds - - - - - - - - -

i) Others (specify) - - - - - - - - -

SUB TOTAL (B)(1): - 50,000 50,000 0.15 - 62,500 62,500 0.15 -

(2) Non Institutions -

a) Bodies corporates 4,95,836 89,500 5,85,336 1.71 5,59,520 1,11,875 6,71,395 1.57 (0.14)

i) Indian - - - - - - - - -

ii) Overseas - - - - - - - - -

b) Individuals - - - - - - - - -

i) Individual shareholders holding nominal share capital upto ` 1 lakhs

60,00,399 18,17,200 78,17,599 22.82 83,18,935 20,21,997 1,03,40,932 24.25 1.43

ii) Individuals shareholders holding nominal share capital in excess of ` 1 lakhs

82,99,573 8,36,500 91,36,073 26.67 96,83,851 10,26,875 1,07,10,726 25.01 (1.66)

c) Others (specify) :

1. Clearing Members 1,88,987 - 1,88,987 0.55 2,42,958 - 2,42,958 0.57 0.02

2. Non Resident Indians (NRI's) 57,810 - 57,810 0.17 2,34,648 - 2,34,648 0.55 0.38

Foreign Portfolio Investor - - - - 1,17,408 - 1,17,408 0.27 0.27

SUB TOTAL (B)(2): 1,50,42,605 27,43,200 1,77,85,805 51.92 1,91,57,320 31,60,747 2,23,18,067 52.22 0.02

Total Public Shareholding (B) = (B)(1)+(B)(2)

1,50,42,605 27,93,200 1,78,35,805 52 1,91,57,320 32,23,247 2,23,80,567 52.37 0.02

" C. Shares held by Custodian for GDRs & ADRs "

- - - - - - - - -

Grand Total (A+B+C) 3,14,62,300 27,93,200 3,42,55,500 100 3,95,96,128 32,23,247 4,28,19,375 100 (0.18)

NOTE : During the Year 2017-18, Bonus Shares were issued in the ratio of 1:4 (i.e For every 4 shares held, One (1) Bonus Share was issued.

* No. of shares before the bonus issue# No. of shares after the bonus issue




77

(ii) SHARE HOLDING OF PROMOTERS Sale : '+'Purchase : '-'

Sl.No. Shareholder's Name Shareholding at the

begginning of the year *Shareholding at the

end of the year #

% changein share holding during

the year

No of shares

"% of total shares of the

company"

" % of shares pledged

encumbered to total

shares "

No of shares

" % of total shares of the

company"

% of shares pledged

encumbered to total shares

1 KALLAM AGRO PRODUCTS AND OILS LTD 43,72,035 12.7631 Nil 54,65,043 12.7631 Nil -

2 GURRAM VENKATA KRISHNA REDDY ^ 27,75,325 8.1018 Nil 35,13,723 8.2000 Nil (0.0982)

3 KALLAM HARINADHA REDDY 17,96,500 5.2444 Nil 22,45,625 5.2444 Nil

4 KALLAM MOHAN REDDY 15,57,500 4.5467 Nil 19,46,875 4.5467 Nil

5 PRATHYUSHA KALLAM 9,50,500 2.7747 Nil 11,88,125 2.7747 Nil

6 POLURI VENKATESHWARA REDDY 9,21,000 2.6886 Nil 11,51,250 2.6886 Nil

7 KALLAM VENKATA SUBBAYAMMA 6,67,000 1.9471 Nil 7,32,750 1.7113 Nil 0.2358

8 NAGIREDDY KALLAM 5,89,000 1.7194 Nil 7,36,250 1.7194 Nil

9 UMASANKARA REDDY MOVVA ^ 5,34,120 1.5592 Nil 6,70,651 1.5592 Nil

10 KALLAM ANNAPURNA 5,15,000 1.5034 Nil 6,43,750 1.5034 Nil

11 KALLAM HARINADHA REDDY (HUF) 3,89,500 1.1370 Nil 4,86,875 1.1370 Nil

12 MOVVA VENKATA SUBBA REDDY 3,42,500 0.9998 Nil 4,28,125 0.9998 Nil

13 PRABHAKARA RAO NALLI 1,38,415 0.4041 Nil 1,73,018 0.4041 Nil

15 NALLI PRATHIBHA RANI 1,50,000 0.4379 Nil 1,87,500 0.4379 Nil

16 ANUMULA RANGA REDDY 1,02,000 0.2978 Nil 1,27,500 0.2978 Nil

17 N USHA 1,00,000 0.2919 Nil - - Nil 0.2919

18 N RAJENDRA PRASAD 2,74,500 0.8013 Nil 4,78,750 1.1181 Nil (0.3168)

19 POLURI SIVANAGENDRAMMA ^ 1,50,000 0.4379 Nil 2,44,631 0.4379 Nil

20 MOVVA KAVITHA 62,000 0.1810 Nil 77,500 0.1810 Nil

22 NAGENDRAMMA POLURI 32,000 0.0935 Nil - - Nil 0.0935

24 SUBBAYAMMA POLURI 430 0.0013 Nil 537 0.0013 Nil

25 SUREDDY MALLESWARI 370 0.0011 Nil 462 0.0011 Nil

Note : The Company has allotted bonus shares on 14th October, 2017 in the ratio of 1 (One) new equity share of Rs 2/- each for every 4 (Four) existing equity shares of Rs 2/- each. * No. of shares before the Bonus Issue. # No. of shares after the Bonus Issue. ^ Shareholding is consolidated based on Permanent Account Number (PAN) of the Promoter




78

(iii) Change in Promoter's Shareholding (Please Specify, if there is no change)

Sl.No. Particulars

Share holding at thebeginning of the Year

Cumulative Share holding during the year

No. ofShares

% of total shares of the company No of shares % of total shares

of the company 1 GURRAM VENKATA KRISHNA REDDY

At the beginning of the year 27,75,325 8.1018 27,75,325 8.1018

14th July, 2017 - Bonus Shares (1:4) 6,93,831 - 34,69,156 8.1018

Market Purchase on 02nd February, 2018 41,567 0.097 35,10,723 8.1988

Market Purchase on 09th February, 2018 3,000 0.0012 35,13,723 8.2000

At the end of the year 35,13,723 8.2000

2 KALLAM VENKATA SUBBAYAMMA


14th July, 2017 - Bonus Shares (1:4) 1,66,750 0.00001 8,33,750 1.9471

Market Sale on 12th January, 2018 (1,000) 0.00230 8,32,750 1.9494

Market Sale on 02nd February, 2018 (1,00,000) (0.2335) 7,32,750 1.7159

At the end of the year - - 7,32,750 1.7159

3 N.USHA


Interse Transfer to N.Rajendra Prasad on 05-05-2017 (1,00,000) (0.2919) - -

At the end of the year - -

4 N.RAJENDRA PRASAD


Market Purchase on 04th April, 2017 8,500 0.0248 2,83,000 0.8261

Inter-se Transfer from N.Usha on 05-05-2017 1,00,000 0.2919 3,83,000 1.1180

14th July, 2017 - Bonus Shares (1:4) - - 95,750 0.0001

At the end of the year - - 4,78,750 1.1181

5 NAGENDRAMMA POLURI

At the beginning of the year 32,000 0.0935 32,000 0.0935

14th July, 2017 - Bonus Shares (1:4) 8,000 0.0001 40,000 0.0936

Market Sale on 16th February, 2018 (5,500) (0.0128) 34,500 0.0808

Market Sale on 23rd February, 2018 (13,000) (0.0304) 21,500 0.0504

Market Sale on 02nd March, 2018 (21,500) (0.0504) - -

At the end of the year - - - -

Note 2) : Since the shares of the Company are traded on daily basis, the dates of above sale / purchase have been derived from the Beneficiary Position Statements received from Depositories.




79

(iv) Shareholding Pattern of top ten Shareholders (other than Direcors, Promoters & Holders of GDRs & ADRs)LIST OF SHARE HOLDING OF TOP 10 SHAREHOLDERS

(v) Shareholding of Directors & KMP

Sl.No. Shareholder's Name

Shareholding at the begginning of the year *

Shareholding at the end of the year #

No. ofShares

% of total shares of the company No of shares % of total shares

of the company

1 LAKSHMINARAYANAN T $ 26,56,873 7.75 19,65,819 4.59

2 POLURI GOVARDHAN REDDY $ 8,74,765 2.55 10,93,455 2.55

3 VECHA SAI NAGA PADMASREE 8,00,975 2.34 10,01,218 2.34

4 VENUGOPALA REDDY POLURI $ 7,80,260 2.32 9,71,183 2.27

5 GURRAM NITIN $ 5,49,000 1.61 7,39,645 1.72

6 KALLAM HARA MOHAN MADHUR $ 4,17,500 1.22 6,22,875 1.45

7 P KINNERA 4,54,575 1.33 5,68,218 1.33

8 DEVIKA ANAND $ & $$ - 0.00 4,40,250 1.03

9 JYOTHI BHUKYA 3,56,415 1.04 4,40,081 1.02

10 MAHENDRA GIRDHARILAL 2,26,745 0.66 2,83,431 0.66

Sl.No. Name of the Director(s) Directorship

No.of Shares at the Beginning of

the Year *

Changes Made during the Year

2017-18

No.of Shares held at the end of

the Year #

1 P.Venkateswara Reddy Managing Director 9,21,000 - 11,51,250

2 G.V.Krishna Reddy Joint Managing Director 27,75,325 44,567 35,13,723

3 M.V.Subba Reddy Whole Time Director & CFO 3,42,500 - 4,28,125

4 V.S.N.Murthy Nominee Director - - -

5 M.R.Naik Independent Director - - -

6 S.Pulla Rao Independent Director - - -

7 A.Krishna Murthy Independent Director - - -

8 V.Bhargavi Independent Director - - -

Note : The Company has allotted bonus shares on 14th October, 2017 in the ratio of 1 (One) new equity share of Rs 2/- each for every 4 (Four) existing equity shares of Rs 2/- each.

* No. of shares before the Bonus Issue. # No. of shares after the Bonus Issue.

Note : The Company has allotted bonus shares on 14th October, 2017 in the ratio of 1 (One) new equity share of Rs 2/- each for every 4 (Four) existing equity shares of Rs 2/- each.

* No. of shares before the Bonus Issue. # No. of shares after the Bonus Issue. $ Shareholding is consolidated based on Permanent Account Number(PAN) of the shareholder $$ Not in the list of Top 10 Shareholders as on 01st April, 2017 but were one of the Top 10 shareholders as on 31st

March, 2018




80

(vi) Shareholding Pattern of top ten Shareholders (other than Direcors, Promoters & Holders of GDRs & ADRs)

Sl.No. For Each of the Top 10 Shareholders



No. ofShares

% of total shares of the company

No of shares


1 LAKSHMINARAYANAN T*At the beginning of the yearChanges Made during the Year 2017-18 26,56,873 7.7560 26,56,873 7.7560

07-04-2017 Sale (16,250) (0.0474) 26,40,623 7.709

14-04-2017 Sale (11,756) (0.0343) 26,28,867 7.674

21-04-2017 Sale (19,915) (0.0581) 26,08,952 7.616

28-04-2017 Sale (15,614) (0.0456) 25,93,338 7.571

05-05-2017 Sale (19,945) (0.0582) 25,73,393 7.512

12-05-2017 Sale (54,064) (0.1578) 25,19,329 7.355

19-05-2017 Sale (31,090) (0.0908) 24,88,239 7.264

26-05-2017 Sale (30,003) (0.0876) 24,58,236 7.176

02-06-2017 Sale (59,213) (0.1729) 23,99,023 7.003

09-06-2017 Sale (47,922) (0.1399) 23,51,101 6.863

16-06-2017 Sale (69,200) (0.2020) 22,81,901 6.661

23-06-2017 Sale (30,941) (0.0903) 22,50,960 6.571

30-06-2017 Sale (84,750) (0.2474) 21,66,210 6.324

07-07-2017 Sale (36,978) (0.1079) 21,29,232 6.216

14-07-2017 Sale (30,178) (0.0881) 20,99,054 6.128

21-07-2017 Sale (41,307) (0.1206) 20,57,747 6.007

28-07-2017 Sale (25,498) (0.0744) 20,32,249 5.933

04-08-2017 Sale (7,910) (0.0231) 20,24,339 5.910

11-08-2017 Sale (18,404) (0.0537) 20,05,935 5.856

18-08-2017 Sale (11,640) (0.0340) 19,94,295 5.822

25-08-2017 Sale (79,782) (0.2329) 19,14,513 5.589

01-09-2017 Sale (20,000) (0.0584) 18,94,513 5.531

08-09-2017 Sale (20,806) (0.0607) 18,73,707 5.470

15-09-2017 Sale (1,08,800) (0.3176) 17,64,907 5.152

22-09-2017 Sale (13,575) (0.0396) 17,51,332 5.113

29-09-2017 Sale (60,689) (0.1772) 16,90,643 4.935

06-10-2017 Sale (87,000) (0.2540) 16,03,643 4.681

13-10-2017 Sale (38,000) (0.1109) 15,65,643 4.570

20-10-2017 Sale (8,110) (0.0237) 15,57,533 4.547

14-10-2017 Bonus Shares Allotted (1:4) 3,90,410 0.000 19,47,943 4.547

03-11-2017 Sale (552) (0.001) 19,47,391 4.546

19-01-2018 Sale (631) (0.001) 19,46,760 4.544




81




No. ofShares


No of shares


26-01-2018 Sale (30,726) (0.072) 19,16,034 4.472

09-02-2018 Purchase 24,838 0.058 19,40,872 4.530

16-02-2018 Purchase 11,200 0.026 19,52,072 4.556

23-02-2018 Purchase 18,747 0.044 19,70,819 4.600

23-03-2018 Sale (5,000) (0.012) 19,65,819 4.589 At the end of the year (or on the date of separation, if separated during the year) 19,65,819 4.589

* Shareholding is consolidated based on Permanent Account Number(PAN) of the shareholder




No. ofShares


No of shares


2 POLURI GOVARDHAN REDDYAt the beginning of the yearChanges Made during the Year 2017-18 8,74,765 2.55 8,74,765 2.55

Bonus Shares Allotted on 14-10-2017 (1:4) 2,18,690 0.00 10,93,455 2.55 At the end of the year (or on the date of separation, if separated during the year) 10,93,455 2.55




No. ofShares


No of shares


3 VECHA SAI NAGA PADMASREEAt the beginning of the yearChanges Made during the Year 2017-18 8,00,975 2.34 8,00,975 2.34

Bonus Shares Allotted on 14-10-2017 (1:4) 2,00,244 0 10,01,218 0.00 At the end of the year (or on the date of separation, if separated during the year) 10,01,218 2.34




No. ofShares


No of shares


4 VENUGOPALA REDDY POLURIAt the beginning of the yearChanges Made during the Year 2017-18 7,80,260 2.32 7,80,260 2.32

Bonus Shares Allotted on 14-10-2017 1,95,065 9,75,325

Market Purchase on 16,250 9,91,575

Market Sale on 09-03-2018 (15,001) 0.035 9,76,574 At the end of the year (or on the date of separation, if separated during the year) 7,80,260 2.32

5 GURRAM NITINAt the beginning of the yearChanges Made during the Year 2017-18 5,49,000 1.61 5,49,000 1.61

Bonus Shares Allotted on 14-10-2017 (1:4) 1,37,250 0.000 6,86,250 1.61




82




No. ofShares


No of shares


Market Purchase on 02-02-2018 1,427 0.003 6,87,677 1.61 Market Purchase on 09-02-2018 8,042 0.018 6,95,719 1.63 Market Purchase on 16-02-2018 43,926 0.102 7,39,645 1.73 At the end of the year (or on the date of separation, if separated during the year) 7,39,645 1.73




No. ofShares


No of shares


6 P KINNERAAt the beginning of the yearChanges Made during the Year 2017-18 4,54,575 1.33 4,54,575 1.33

Bonus Shares Allotted on 14-10-2017 (1:4) 1,13,643 0.0000 5,68,218 1.33 At the end of the year (or on the date of separation, if separated during the year) 5,68,218 1.33




No. ofShares


No of shares


7 KALLAM HARA MOHAN MADHURAt the beginning of the yearChanges Made during the Year 2017-18 4,17,500 1.22 4,17,500 1.22

Bonus Shares Allotted on 14-10-2017 (1:4) 1,04,375 0.00 5,21,875 1.22 Market Purchase on 12-01-2018 1,000 0.0023 5,22,875 1.221 Market Purchase on 02-02-2018 1,00,000 0.23 6,22,875 1.45 At the end of the year (or on the date of separation, if separated during the year) 6,22,875 1.45




No. ofShares


No of shares


8 DEVIKA ANANDAt the beginning of the yearChanges Made during the Year 2017-18 - 0.00 - 0.00

Market Purchase on 09-02-2018 21,553 0.05 21,553 0.05

Market Purchase on 16-02-2018 611 0.0014 22,164 0.051

Market Purchase on 23-02-2018 93,972 0.22 1,16,136 0.27



Market Purchase on 16-03-2018 1,79,440 0.42 3,90,250 0.91

Market Purchase on 16-03-2018 50,000 0.12 4,40,250 1.03 At the end of the year (or on the date of separation, if separated during the year) 4,40,250 1.03




83

` in Lakhs

Indebtedness of the Company including interest outstanding/accrued but not due for paymentSecured Loans

excluding deposits

Unsecured Loans Deposits Total

Indebtedness

Indebtedness at the beginning of the financial year

i) Principal Amount 32,687.95 203.05 0.00 32,891.00

ii) Interest due but not paid 152.59 0.00 0.00 152.59

iii) Interest accrued but not due 0.00 0.00 0.00 0.00

Total (i+ii+iii) 32,840.54 203.05 0.00 33,043.59

Change in Indebtedness during the financial year

Additions 768.68 139.50 0 908.18

Reduction 2,122.18 0 0 2,122.18

Net Change -1,353.50 139.5 0 -1,214

Indebtedness at the end of the financial year

i) Principal Amount 31,357.53 342.55 0 31,700.08

ii) Interest due but not paid 129.51 0 0 129.51

iii) Interest accrued but not due 0 0 0 0.00

Total (i+ii+iii) 31,487.04 342.55 0 31,829.59




No. ofShares


No of shares


9 JYOTHI BHUKYAAt the beginning of the yearChanges Made during the Year 2017-18 3,56,415 1.04 3,56,415 1.04

Market Sale on 21-04-2017 -800 -0.0023 3,55,615 1.038

Market Sale on 22-09-2017 -500 -0.0014 3,55,915 1.039

Market Sale on 29-09-2017 -250 -0.0007 3,55,665 1.038

Bonus Shares Allotted on 14-10-2017 (1:4) 88,916 0.00 4,44,581 1.038

Market Purchase on 09-03-2018 3500 0.008 4,48,081 1.046At the end of the year (or on the date of separation, if separated during the year) 4,48,081 1.046




No. ofShares


No of shares


10 MAHENDRA GIRDHARILALAt the beginning of the yearChanges Made during the Year 2017-18 2,26,745 0.66 2,26,745 0.66

Bonus Shares Allotted on 14-10-2017 (1:4) 56,686 0.00 2,83,431 0.66At the end of the year (or on the date of separation, if separated during the year) 2,83,431 0.66

(V) INDEBTEDNESS




84

(VI) REMUNERATION OF DIRECTORS AND KEY MANAGERIAL PERSONNEL


(VII) PENALTIES/PUNISHMENT/COMPOUNDING OF OFFENCES :

Type Section of the

Companies Act

Brief Description

Details of Penalty / Punishment / Compounding fees imposed

Authority (RD/NCLT/

Court)

Appeal madeif any

(give details) A. COMPANY

NIL

Penalty Punishment Compounding B. DIRECTORS Penalty Punishment Compounding C. OTHER OFFICERS IN DEFAULT Penalty Punishment Compounding

A. Remuneration to Managing Directors, Whole time director and/or Manager: ` in Lakhs

S.No. Particulars of Remuneration

Name of the MD/WTD/Manager Total Amount P.Venkateswara Reddy

Managing Director G.V.Krishna Reddy

Joint Managing Director M.V.Subba Reddy

Whole Time Director1 Gross salary

(a) Salary as per provisions contained in section 17(1) of the Income Tax. 1961.

25.04 25.00 8.53 58.57

(b) Value of perquisites u/s 17(2) of the Income tax Act, 1961(c ) Profits in lieu of salary under section 17(3) of the Income Tax Act, 1961

2 Stock option - - - 3 Sweat Equity - - -4 Commission 22.17 22.17 - 44.34

as % of profit 1.00 1.00 - others - Incentive - - 1.330 1.330

5 Others, please specify - - - Total (A) 47.21 47.17 9.86 104.24 Ceiling as per the Act

B. Remuneration to Other Directors : in `

S.No.

Particulars of Remuneration Name of the Directors Total Amount Independent Directors Sri

S.Pulla Rao Sri

M.R. Naik Sri

A.Krishna Murthy Sri

Ajeya Kallam Sri

V.Ramgopal Smt

V.Bhargavi

1 Fee for attending Board / Committee Meetings 1,00,000 30,000 30,000 60,000 30,000 1,00,000 3,50,000

in `

S. No. Particulars of Remuneration Name of the Director

Total Amount Nominee Director (IREDA) Sri V.S.N. Murthy

2 Fee for attending Board / Committee Meetings 1,00,000 1,00,000

C. Remuneration to Company Secretary (KMP) : in `

Company Secretary Mr. M.Prasanna Kumar* Rs.42,000/-*Mr. M.Prasanna Kumar has resigned w.e.f 31-05-2017



85

ANNEXURE IVFORM NO. MR-3

SECRETARIAL AUDIT REPORT FOR THE FINANCIAL YEAR ENDED ON 31st MARCH, 2018

[Pursuant to section 204(1) of the Companies Act, 2013 and Rule No. 9 of the Companies (Appointment and Remuneration Personnel) Rules, 2014]

To

The Members, M/s. Kallam Textiles Limited,(Formerly known as Kallam Spinning Mills Ltd)Chowdavaram, Guntur

We have conducted the secretarial audit of the compliance of applicable statutory provisions and the adherence to good corporate practices by M/s. Kallam Textiles Limited(Formerly known as Kallam Spinning Mills Ltd) (hereinafter called the Company). Secretarial Audit was conducted in a manner that provided us a reasonable basis for evaluating the corporate conducts/ statutory compliances and expressing our opinion thereon.

Based on our verification of the Company’s books, papers, minute books, forms and returns filed and other records maintained by the Company and also the information provided by the Company, its officers, agents and authorized representatives during the conduct of secretarial audit, We hereby report that in our opinion, the company has, during the audit period covering the financial year ended on 31st March, 2018 complied with the statutory provisions listed hereunder and also that the Company has proper Board-processes and compliance- mechanism in place to the extent, in the manner and subject to the reporting made hereinafter:

We have examined the books, papers, minute books, forms and returns filed and other records maintained by the Company for the financial year ended on 31st March, 2018 according to the provisions of :

(i). The Companies Act, 2013 (the Act) and the rules made thereunder;

(ii). The Securities Contracts (Regulation) Act, 1956 (‘SCRA’) and the rules made thereunder;

(iii). The Depositories Act, 1996 and the Regulations and Bye-laws framed thereunder;

(iv). Foreign Exchange Management Act, 1999 and the rules and regulations made thereunder to the extent of Foreign Direct Investment, Overseas Direct Investment and External Commercial Borrowings;

(v). The Following Regulations and Guidelines prescribed under the Securities and Exchange Board of India Act, 1992 (‘SEBI Act’) viz.:-

(a) The Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011;

(b) The Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015;

(c) The Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009

(d) The Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999/ The Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014 – (Not applicable to the Company during the Audit Period);

(e) The Securities and Exchange Board of India (Issue and Listing of Debt Securities) Regulations, 2008 (Not applicable to the Company during the Audit Period);

(f) The Securities and Exchange Board of India (Registrars to an Issue and Share Transfer Agents) Regulations, 1993 regarding the Companies Act and dealing with client;

(g) The Securities and Exchange Board of India (Delisting of Equity Shares) Regulations, 2009; (Not applicable to the Company during the Audit Period) and

(h) The Securities and Exchange Board of India (Buyback of Securities) Regulations, 1998 (Not applicable to the Company during the Audit Period);

(vi). The Company has identified the following laws as specifically applicable to the Company :

1. The Textiles Committee Act, 1963 and the rules made thereunder;

2. The Textiles (Development and Regulation) Order, 2001

3. The Textiles (Consumer Protection) Regulations, 1988

Annexure IV to Directors' Report



86

We have also examined compliance with the applicable clauses of the following :

(i) Secretarial Standards issued by the Institute of Company Secretaries of India.

(ii) The Listing Agreement entered into by the Company with Bombay Stock Exchange Limited and the Uniform Listing Agreement entered with the said stock exchange pursuant to the provisions of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (applicable with effect from 01st December, 2015).

During the period under review the Company has complied with the provisions of the Act, Rules, Regulations, Guidelines, Standards, etc. mentioned above except to the extent as mentioned below :

1. Whereas in terms of the provisions of Section 203 of the Companies Act, 2013, the Company was required to have certain Key Managerial Personnel (KMP). Whereas in terms of the provisions of Regulation 6. (1) A of the SEBI (Listing Obligations And Disclosure Requirements) Regulations, 2015 listed entity shall appoint a qualified company secretary as the compliance officer. The Company has not appointed a Company Secretary in terms of the provisions of Section 204 of the Companies Act, 2013 and Regulation 6. (1) A of the SEBI (Listing Obligations And Disclosure Requirements) Regulations, 2015

2. Whereas in terms of the provisions of Section 203 (4) of the Companies Act, 2013, if the office of any whole-time key managerial personnel is vacated, the resulting vacancy shall be filled up by the Board at a meeting of the Board within a period of six months from the date of such vacancy. During the year the Company Secretary has submitted his resignation and the board has approved the said resignation w.e.f 1st June 2017 but the resulting vacancy shall not be filled up by the Board at a meeting of the Board within a period of six months from the date of such vacancy

We further report that

The Board of Directors of the Company is duly constituted with proper balance of Executive Directors, Non-Executive Directors and Independent Directors. The changes in the composition of the Board of Directors that took place during the period under review were carried out in compliance with the provisions of the Act.

Adequate notice is given to all directors to schedule the Board Meetings, agenda and detailed notes on agenda were sent at least seven days in advance and a system exists for seeking and obtaining further information and clarifications on the agenda items before the meeting and for meaningful participation at the meeting.

Majority decision is carried through while the dissenting members’ views are captured and recorded as part of the minutes.

We further report that there are adequate systems and processes in the company commensurate with the size and operations of the company to monitor and ensure compliance with applicable laws, rules, regulations and guidelines.

We further report that during the audit period, except the following there are no specific events/ actions having a major bearing on the Company’s affairs in pursuance of the laws, rules, regulations, guidelines, standards, etc, referred to above.

1. The members of the Company in its Annual General Meeting for the financial year 2016-17 held on September 29, 2017 have approved issue and allotment of Equity Shares not exceeding 85,63,875 Equity Shares of Rs.2/- each, as Bonus shares in the ratio of 1:4 (i.e One Bonus Share for every Four (4) existing equity shares held.) credited as fully Paid-up, to members of the company and allotted by the Board at their Meeting held on 14th October, 2017. Consequently, the issued, subscribed and paid up equity share capital of the Company after bonus issue of Equity Shares has increased from Rs.6,85,11,000/- to Rs.8,56,38,750/- and number of shares increased from 3,42,55,500 to 4,28,19,375 of Rs.2/- each.

2. The members of the Company in its Extra-Ordinary General Meeting held on March 13, 2018 have given their consent by way of special resolution for Change of Name of the company from “Kallam Spinning Mills Limited” to “Kallam Textiles Limited” and the Company filed e-form INC-24 on 23.03.2018

This report is to be read with our letter of even date which is annexed as Annexure A and forms an integral part of this report.

Place : GunturDate : 09-08-2018

For K. Srinivasa Rao & Co.,Company Secretaries.,

K. Srinivasa Rao, PartnerFCS. No. 5599/ C. P. No: 5178




87


For K. Srinivasa Rao & Co.,Company Secretaries.,

K. Srinivasa Rao, PartnerFCS. No. 5599/ C. P. No: 5178

‘Annexure A’

ToThe Members, M/s. Kallam Textiles Limited,(Formerly known as Kallam Spinning Mills Ltd)Chowdavaram, Guntur

Our report of even date is to be read along with this letter.

1. Maintenance of secretarial record is the responsibility of the management of the company. Our responsibility is to express an opinion on these secretarial records based on our audit.

2. We have followed the audit practices and processes as were appropriate to obtain reasonable assurance about the correctness of the contents of the Secretarial records. The verification was done on test basis to ensure that correct facts are reflected in secretarial records. We believe that the processes and practices, we followed provide a reasonable basis for our opinion.

3. We have not verified the correctness and appropriateness of financial records and Books of Accounts of the company.

4. Where ever required, we have obtained the Management representation about the compliance of laws, rules and regulations and happening of events etc.

5. The compliance of the provisions of Corporate and other applicable laws, rules, regulations, standards is the responsibility of management. Our examination was limited to the verification of procedures on test basis.

6. The Secretarial Audit report is neither an assurance as to the future viability of the company nor of the efficacy or effectiveness with which the management has conducted the affairs of the company.




88

ANNEXURE VFORM AOC - 2

(Pursuant to Section 134(3)(h) of the Companies Act, 2013 and Rule 8(2) of the Companies (Accounts) Rules, 2014)

Form for disclosure of particulars of contracts/arrangements entered into by the Company with related parties referred to in Section 188(1) of the Companies Act, 2013 including certain arm’s length transactions under the third proviso thereto1) There are no contracts/arrangements entered into by the Company with related parties which are not at arms length

basis.2) There are no material contracts/arrangements entered into by the Company with related parties referred to in sub-

section (1) of Section 188 of the Companies Act, 2013 which are at arms length basis.3) There were no materially pecuniary relationships or transactions of the non-executive directors' vis-à-vis the Company.4) Details of non-material contracts/arrangements at arm length basis with related parties for the year ended 31st March,

2018 are as follow :-

S.No Name of the related party

Nature of Contracts

/ arrangements / transactions

Duration of the contracts / arrangements /

transactions

Salient terms of the contracts or arrangements or transactions including

the value ; if any

Date of approval by the Board,

if any

Justification For entering

into Contract /Arrangement

1 Kallam Brothers Cottons Pvt Ltd Rendering of services : 5 Years

10% of Total Turnover of the Company or 100 Crores Which ever is lower

13-08-2016 Rs 2,45,777/- Per Annum

2 Kallam Agro Products and Oils Pvt. Ltd

Sale of Goods and Services 5 Years


13-08-2016 Rs 10,32,54,114/- Per Annum

3 Kallam Brothers Cottons Pvt Ltd Services Received : 5 Years


13-08-2016 Rs 1,42,728/- Per Annum

4 Kallam Brothers Cottons Pvt Ltd Sale of Goods and Services 5 Years


13-08-2016 Rs 20,619/- Per Annum

5 P.Govardhan Reddy Son of Managing Director

Appointment to office or place

of profit:

Appointed on a Monthly remuneration not exceeding Rs 2,50,000/- Per Month

Commensurate with qualification

and experience an amount of Rs

42,000 Per Month is being paid

6 M.Srinivasa Nagarjuna ReddySon of Whole Time Director

Appointment to office or place

of profit:

Appointed on a Monthly remuneration not exceeding Rs 2,50,000/- Per Month

Commensurate with qualification

and experience an amount of Rs

21,500 Per Month is being paid

For and on behalf of BoardP.Venkateswara Reddy

Managing Director


Annexure V to Directors' Report



89

ANNEXURE VIConservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo

The information under Section 134 (3) (m) of the Companies Act, 2013 read with Rule 8 (3) of the Companies (Accounts) Rules, 2014 for the year ended 31st March, 2018 is given below and forms part of the Directors’ Report.A. CONSERVATION OF ENERGY:1. ENERGY CONSERVATION MEASURES TAKEN DURING THE YEAR: Company continues its efforts to reduce and optimise the energy consumption at all manufacturing facilities, including

corporate office at Chowdavaram, Guntur -522019. All the manufacturing units continued their efforts to reduce the specific energy consumption. Specific and total energy

consumption is tracked on a daily basis at individual factory / block level and also at consolidated manufacturing level. Energy conservation initiatives are being planned and implemented across manufacturing locations Apart from regular practices and measures for energy conservation, many new initiatives were driven across the units. The measures taken in all the manufacturing units of your Company have been briefly enumerated as below:

i) Electricity Consumption reduction by daily monitoring and control ii) Efforts have been put consistently year on year to optimize energy consumption in production processes and

operation of utilities. iii) Implemented changes in processing methods which reduced cycle time resulting in lower power consumption. iv) Installation of energy efficient lighting fixtures such as Compact Fluorescent Light Bulbs (CFLs) and Battery

Charging Systems at all Manufacturing Divisions.. v) Eliminating the steam leakages in steam generation boiler operation. vi) Optimised usage of Captive compressors. vii) Saving in diesel consumption for steam generation boiler operation. viii) Optimising Plant Power load to match the demand. ix) Employees have been trained in energy conservation measures. x) Implemented RO plant for Recycling & reuse of Water.2. IMPACT OF ENERGY CONSERVATION MEASURES: The Energy Conservation Measures which were undertaken in the Company have resulted in Quality consistency and

product improvement, cost reduction, product development, reduction in power consumption, fuel consumption and improves the overall production performance of the Company.

3. TECHNOLOGY ABSORPTION: Continuous efforts are being made by the Company towards technology absorption. The revision in Standard Operating

Procedures resulted in improved yields. The Company has taken effective technical measures to enhance the quality of the products in order to compete with the international quality standards. Aligning the Company’s processes with International Quality & Safety requirements.

4. BENEFITS DERIVED AS A RESULT OF THE ABOVE EFFORTS: Improved quality of the product. Productivity also has been increased. Products are available at more competitive price.5. PARTICULARS OF IMPORTED TECHNOLOGY IN THE LAST 3 YEARS : a) Technology Imported : Nil b) the year of import; Not Applicable c) whether the technology been fully absorbed; Not Applicable d) if not fully absorbed, areas where absorption has not taken place, and the reasons thereof; Not Applicable.6. FUTURE PLAN OF ACTION: 1. Development of more specialized grades for specific applications in conjunction with customers. 2. Improved processes for higher yield. 3. More focus on customized grade development aligning strategic business partner's manufacturing and product requirements. 4. Enhancement of innovative facilities for customer development. 5. Improving the process operation, equipment and quality related issues. 6. Increased technical expertise to support customers and market development.

Annexure VI to Directors' Report



90

7. TOTAL ENERGY CONSUMPTION AND ENERGY CONSUMPTION PER UNIT OF PRODUCTION : Form A (Form For Disclosure Of Particulars With Respect To Conservation Of Energy) a) POWER AND FUEL CONSUMPTION :

S. No Particulars 2017-18 2016-171 Electricity a) Purchased units (KWH) 6,55,10,929 6,96,35,948 Total amount in ` 37,07,29,880 40,21,27,841 Rate per unit in ` 5.66 5.77 b) Own Generation i) Through Diesel Generator Units generated – KWH 0 0 Total Amount in ` 0 0 Cost per unit in ` 0 0 ii) Through Steam Generation iii)Through Hydel Generation Units generated – KWH 25,27,700 16,25,900 Units consumed – KWH 0 0 Total Cost in ` - - Cost per KWH in ` - -2 Coal - -3 Furnace Oil - -4 Other Internal Generation - -

b) CONSUMPTION PER UNIT OF PRODUCTION (NO.OF UNITS/KG.)1 Electricity -2 Coal - -3 Furnace oil - -4 Hydel - -

8. STEPS TAKEN BY THE COMPANY FOR UTILISING ALTERNATE SOURCES OF ENERGY : None9. CAPITAL INVESTMENT ON ENERGY CONSERVATION EQUIPMENT : NoneB. TECHNOLOGY ABSORPTION, ADAPTAION AND INNOVATION : Efforts, in brief made towards technology absorption, adaptation and innovation Continuous efforts are being made

towards technology absorption, adaptation and innovation. Quality being the thrust area, the company has taken effective steps to continue to improve quality to compete with international quality standards.LED lights are installed in place of regular tube lights in plant to reduce energy consumption. Installation of Energy Monitoring System for greater accuracy of energy consumption

1. Efforts in brief, made towards Technology absorption, adaptation and innovation :

The Company is continuously taking steps to improve the product and process technology in an effort to provide superior quality and cost effective products to consumers

2. Imported Technology: --- Nil ---

3. Expenditure incurred on Research and Development: NIL

C. FOREIGN EXCHANGE EARNINGS AND OUTGOINGS: Foreign exchange earnings during the year under review amounted to ` 91.157 Crores. The foreign exchange utilized

during the year amounted to ` 47.03 Lakhs.

Annexure VI to Directors' Report



91

ANNEXURE - VIIReport on Corporate Social Responsibility (CSR) :

1. CSR policy of the Company is posted on the website of the Company at www.ksml.in.

2. Composition of CSR Committee:

Mr. G.V. Krishna Reddy - Chairman

Mr. Mr. M.R. Naik* - Member

Mr. V.Ramgopal** - Member

Mr. M.V. Subba Reddy - Member

During the Year under review, Due to Resignation of Mr M.R.Naik, Non-Executive and Independent Director, the Committee was reconstituted with Mr V.Ramgopal, who is newly appointed as Non-Executive and Independent Director.

* Mr M.R.Naik resigned from the Board from 29th September, 2017

** Mr V.Ramgopal appointed as Independent Director from 26th August, 2017

3. Average net profit of the Company for last three financial years: ` 14.09 Crore

4. Prescribed CSR Expenditure (two per cent of the amount as in item 3 above): The Company is required to spend ` 28.18 Lakhs towards CSR.

5. Details of CSR spent during the financial year 2017-18 :

(a) Total amount spent during the financial year: ` 29.36 Lakhs

(b) Amount unspent, if any: None

(c) Manner in which the amount spent during the financial year is detailed below :

S.No. CSR Activity Sector Location

Amount Spentin Rs.

Amount SpentDirect / through

implementing agency

1 IMPROVEMENT OF ROADS Social Business projects & Rural Development

Addanki,Andhra Pradesh 29,36,681 Direct

29,36,681

6. The Corporate Social Responsibility Committee of the Company hereby confirms that the implementation & monitoring of CSR policy, is in compliance with CSR objectives & policy of the Company.

P.Venkateswara ReddyManaging Director

DIN : 00018677

G.V. Krishna ReddyJoint Managing Director

DIN : 00018713

For and on behalf of the Corporate Social Responsibility Committee

of Kallam Textiles Limited

G.V.Krishna ReddyChairman of the Corporate Social Responsibility Committee

Annexure VII to Directors' Report



92

REPORT ON CORPORATE GOVERNANCECORPORATE GOVERNANCE REPORT FOR THE PERIOD 01-04-2017 TO 31-03-2018.

The Corporate Governance Report, for the FY 2017-18, which forms a part of Board’s Report, is prepared pursuant to Regulation 34(3) read with Schedule V of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“the Listing Regulations”). A report on Corporate Governance is as under :

1. COMPANY’S PHILOSOPHY ON CORPORATE GOVERNANCE:

Your Company is committed to the highest standards of Integrity, ethical values, transparency, fairness, professionalism and accountability across all levels of the Organisation in the conduct of its business. Your Company believes in adopting and adhering to the best standards of corporate governance to all the stakeholders. Your Company keeps its corporate governance policies under constant review to conform with best practices and principles.

GOVERNANCE STRUCTURE

The Corporate Governance structure at Kallam Textiles Ltd is as follows:

1. Board of Directors : The Board is entrusted with an ultimate responsibility of the management, directions and performance of the Company. As its primary role is fiduciary in nature, the Board provides leadership, strategic guidance, objective and independent view to the Company’s management while discharging its responsibilities, thus ensuring that the management adheres to ethics, transparency and disclosures.

2. Committees of the Board: The Board has constituted the following Committees viz, Audit Committee, Nomination and Remuneration Committee, Corporate Social Responsibility (CSR) Committee, Stakeholders’ Relationship Committee) and Share Transfer Committee.

Each of the said Committee has been mandated to operate within a given framework.

2. BOARD OF DIRECTORS :

a) Composition and Category of Directors :

The Company has an optimum combination of executive and Non executive Directors in accordance with the provision of Regulation 17(1) of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015.

As on 31-03-2018 the Board consists of Eight Directors out of which 3 Directors are Executive Directors and 4 Directors are Non – Executive and Independent Directors including a Woman Director and the Remaining one director is a Nominee Director from IREDA. All Directors are competent and experienced personalities in their respective fields.

During the year under review, there was a change in the composition of the Board.

During the year, Pursuant to Sections 160 & 161 of the Companies Act,2013 and any other applicable provisions if any, Mr. Ajeya Kallam (DIN : 00278595) and V.Ramgopal (DIN : 02889497) were appointed as an Additional Directors of the Company by the Board of Directors at its meeting held on 26th August, 2017 to hold office for a term of five years w.e.f 29th September, 2017.

During the year, Pursuant to the provisions of Section 168 of Companies Act, 2013, Non-Executive and Independent Directors of the Company, Mr M.R.Naik (DIN:01628537) and Mr A.Krishna Murthy(DIN:00018725) have submitted their resignations, due to Pre-occupation, at the Board Meeting held on 29th September, 2017.

The Board has accepted their resignations and relieved them as a Directors of the Company with effect from the same Board Meeting where they submitted their resignations and Board placed on record its sincere appreciation of services rendered by them as Directors of the Company during their tenure.

Pursuant to Regulation 30 of SEBI (LODR) Regulations, 2015, We informed the same to Bombay Stock Exchange, where the shares of the Company were listed and also as per section 168 of the Companies Act, 2013, the Board of Directors took the note of their resignations and intimate to the Registrar of Companies, Hyderabad.

All the Directors have periodically and regularly informed the Company about their Directorship and Membership on the Board/Committees of the Board of other companies. As per the disclosure received, none of the directors on the board is a member of more than 10 Board level committees or chairperson of more than 5 committees across all the listed and unlisted public companies in which he/she is a director.

Report on Corporate Governance



93

b) The composition of the Board, details of other directorships, committee positions as on 31st March, 2018 and attendance of Directors at the Board Meetings are given in the table below :

The composition of the Board, details of other directorships, committee positions as on 31st March, 2018 and attendance of Directors at the Board Meetings are given in the table below :

S. No

Name of the Director

Category ofDirectorship

Board Meetings held During the year 2017-18

AnnualGener-

al Meet-

ing(AGM)

Numb

er of

Dire

ctorsh

ips he

ld in

other

co

mpan

ies (#

)

Number of Committees in Position held

in other Limited

Companies (##)

01-0

4-20

17

27-0

5-20

17

26-0

8-20

17

29-0

9-20

17

14-1

0-20

17

14-1

2-20

17

12-0

2-20

18

29-0

9-20

17

Cha

irman

Mem

ber

1 P.Venkateswara Reddy Executive Director Nil Nil Nil

2 G.V.Krishna Reddy Executive Director Nil Nil Nil

3 M.V.Subba Reddy Executive Director Nil Nil Nil

4 V.S.N. Murthy Nominee Director, IREDA 2 Nil 2

5 S.Pulla Rao Independent Director Nil Nil Nil

6 M.R.Naik* Independent Director - Nil Nil Nil

7 A.Krishna Murthy* Independent Director - Nil Nil Nil

8 Ajeya Kallam$ Independent Director - - - 5 Nil Nil

9 V.Ramgopal$ Independent Director - - - - - Nil Nil Nil

10 V.Bhargavi Independent Director Nil Nil Nil

- Attended - Leave of Absence

(#) In pursuance with the Regulation 26(1)(a) of SEBI (LODR) Regulations, 2015, While considering the Limit of Directorships, Directorship in Kallam Textiles Limited was Excluded and also excludes directorship in Private Companies, Foreign Companies, Companies incorporated under Section 8 of the Companies Act, 2013 and alternate directorships.(##) In pursuance with the Regulation 26(1)(b) of SEBI (LODR) Regulations, 2015, While considering the limit of Committee Memberships and Chairmanships of a Director, Audit Committee and Stakeholders Relationship Committee of Public Companies have been considered and also excludes the Memberships & Chairmanships in Kallam Spinning Mills Limited.*During the Year, Pursuant to the provisions of Section 168 of Companies Act, 2013 our companys' Independent and Non Executive Directors, Sri M.R.Naik and Sri A.Krishna Murthy have submitted their resignations, due to pre-occupation, at the Board Meeting held on 29th September, 2017. The Board accepted their resignations and placed on record its sincere appreciation of services rendered by them as a Directors during their tenure. $ Sri Ajeya Kallam and V.Ramgopal, became the Members of Board of Directors on 26th August, 2017.




94

c) Number of meetings of the Board of Directors held and dates on which held:

During the financial year 2017-18, 7 (Seven) meetings of the Board of Directors were held and the maximum time gap between two meetings did not exceed one hundred and twenty (120) days. The Board meets at least once in every quarter to review the quarterly financial results and other items on the Agenda.

Dates on which Board Meetings Were held : 1) 01-04-2017

2) 27-05-2017 3) 26-08-2017 4) 29-09-2017

5) 14-10-2017 6) 14-12-2017 7) 12-02-2018

d) Inter-se relationship among directors:As on 31st March, 2018, there is no inter-se relationship among the Directors. e) Number of Shares and convertible instruments held by Non-Executive Directors:Non-Executive Directors does not have any Shares and convertible instruments of the Company. f) Independent directors :The Independent Directors Mr. S.Pulla Rao and Smt V.Bhargavi have been appointed for a tenure of 5 (five) years upto 26th September, 2019. Their appointment was approved by the shareholders of your Company at their AGM held on 27th September, 2014. Mr Ajeya Kallam and V.Ramgopal hold office upto 28th September, 2022. Their appointment was approved by the shareholders of your Company at their AGM held on 29th September, 2017. The Independent Directors have submitted declarations that they meet the criteria of Independence laid down under Section 149 of the Companies Act, 2013 and Regulation 16(1)(b) of the SEBI (LODR) Regulations, 2015. They have also confirmed that they do not hold directorship in more than seven listed entities as per Regulation 25 (1) of SEBI Listing Obligations and Disclosure Requirements (LODR) Regulations, 2015.Independent Directors’ Meeting : As per the Regulation 25 (3) of SEBI Listing Obligations and Disclosure Requirements (LODR) Regulations, 2015, during the year under review, the Meeting of the Independent Directors was held on 12th February, 2018, without the attendance of Non-Independent Directors and members of the management, inter alia, to discuss on the following:v To review the performance of the Non-Independent

Directors and the Board as a whole;v Review the performance of the Chairperson of your

Company, taking into account views of Executive / Non- Executive Directors; and

v Assess the quality, quantity and timeliness of flow of information between your Company’s management and the Board that was necessary for the Board to effectively and reasonably perform their duties.

The Details of Familiarization Programme for Independent Directors were disclosed on the Company’s website www.ksml.in

3) AUDIT COMMITTEE:a) Brief Description of Terms of Reference:The Main objectives of the Audit Committee are monitoring and effective supervision of the financial reporting, audit process, determining the adequacy of internal controls, evaluating and approving the transactions with related parties, ensuring of accurate and timely disclosures of financial reporting with high level of integrity, quality and transparency and recommendation of the appointment of Statutory Auditors. The composition of the Audit Committee is in compliance with provisions of Section 177 of the Companies Act, 2013 and Regulation 18 of SEBI (LODR) Regulations, 2015. The members of the Audit Committee are financially literate and have experience in financial management. The Committee invites the Managing Director, Joint Managing Director, CFO, Statutory Auditor and Chief Internal Auditor to attend the meetings of the Committee. The Audit Committee met the Statutory Auditors and the Chief Internal Auditor independently without the management in all the Audit Committee meetings which were held during the year 2016-17.b) The composition of the Audit Committee of the Company:

AuditCommittee

S.Pulla Rao V.S.N.Murthy V.Bhargavi

Chairman

Non-Executiveand Independent

Director


DirectorNomineeDirector

Member Member

c) Details of the Audit Committee Meetings held and attended during the financial year 2017-18 is detailed below:

S. No

Name of the Member

Audit Committee Meetings held during the year 2017-18

27-05-2017 26-08-2017 14-12-2017 12-02-2018

1 S.Pulla Rao

2 V.S.N. Murthy

3 V.Bhargavi

- AttendedThe Audit Committee is empowered, pursuant to its terms of reference and its role, inter alia, includes the following:

1. Reviewing with the management quarterly, half-yearly, nine months and annual financial statements, standalone as well as consolidated before submission to the Board for approval;

2. Oversight of the Company’s financial reporting process and the disclosure of its information to ensure that the financial statements are correct, sufficient and credible;

3. Reviewing the Management Discussion and Analysis of the financial condition and results of operations;




95

4. Reviewing, with the management, the annual financial statements and auditor’s report thereon before submission to the Board for approval, with particular reference to:

a. Matters required to be included in the Directors’ Responsibility Statement to be included in the Board’s Report as per Sec 134(3)(c) of the Companies Act, 2013;

b. Changes in the accounting policies and practices and the reasons for the same;

c. Compliance with the Listing Regulations and other legal requirements relating to financial statements;

d. Disclosure of any related party transactions.

e. Qualifications in the draft audit report, if any;

5. Reviewing and considering the following with respect to appointment of auditors before recommending to the Board:

a. qualifications and experience of the individual/ firm proposed to be considered for appointment as auditor;

b. whether such qualifications and experience are commensurate with the size and requirements of the company.

6. Recommending to the Board, the appointment, reappointment and, if required, the replacement or removal of the statutory auditor, fixing of audit fees and approving payments for any other service;

7. Discussion with the statutory auditors before the audit commences, about the nature and scope of audit as well as post-audit discussion to ascertain any area of concern;

8. Reviewing and monitoring the auditor’s independence and performance, and effectiveness of audit process;

9. Reviewing the adequacy of internal audit function, if any, including the structure of the internal audit department, staffing and seniority of the official heading the department, reporting structure coverage and frequency of internal audit;

10. Reviewing the appointment, removal and terms of remuneration of the Chief Internal Auditor of the Company;

11. Formulating in consultation with the Internal Auditor, the scope, functioning, periodicity and methodology for conducting the internal audit;

12. Evaluating the internal financial controls and risk management policies system of the Company;

13. Discussion with the internal auditors on internal audit reports relating to internal control weaknesses and any other significant findings and follow-up thereon;

14. Reviewing the internal investigations by the internal auditors into matters where there is a suspected fraud or irregularity or failure of internal control systems of a material nature and reporting the matter to the Board;

15. Review and comment upon the report made by the statutory auditors (before submission to the Central Government) with regard to any offence involving fraud committed against the company by its officers/employees;

16. Approval or subsequent modification of transactions of the Company with related parties including appointment and revision in remuneration of related parties to an office or place of profit in the Company, its subsidiary company or associate company;

17. Reviewing the statements of significant related party transactions submitted by the management;

18. Review of the Whistle Blower mechanism of the Company as per the Whistle Blower Policy. Overseeing the functioning of the same;

19. Approval of appointment of Chief Financial Officer after assessing the qualifications, experience and background, etc. of the candidate;

20. Approving the auditors (appointed under the Companies Act 2013) to render any service other than consulting and specialised services;

21. Recommending to the Board of Directors, the appointment, remuneration and terms of appointment of Cost Auditor for the Company;

22. Review the cost audit report submitted by the cost auditor on audit of cost records, before submission to the Board for approval;

23. Reviewing, with the management, the statement of uses / application of funds raised through an issue (public issue, rights issue, preferential issue, etc.), the statement of funds utilized for purposes other than those stated in the offer document / prospectus / notice and the report submitted by the monitoring agency monitoring the utilization of proceeds of a public or rights issue, and making appropriate recommendations to the Board to take up steps in this matter;

24. Any other matter specified by the Board of Directors from time to time. The Audit Committee, during the financial year 2016-17, has approved related party transactions along with granting omnibus approval in line with the Policy of dealing with Related Party Transactions and the applicable provisions of Section 188 of the Companies Act, 2013 and the Listing Regulations (including any statutory modification(s) or re-enactment(s) thereof for the time being in force).

4) Nomination and Remuneration Committee :

a) Brief Description of Terms of Reference :

The Nomination and Remuneration Committee is empowered with the following terms of reference and responsibilities in accordance with the provisions of law and the Nomination and Remuneration Policy:

The terms of reference of the Nomination and Remuneration Committee interalia, includes:

1. Formulate a criteria for determining qualifications, positive attributes and independence of a director and recommend to the Board of Directors a policy, relating to, the remuneration of the directors, key managerial personnel and other employees;

2. Formulate a criteria for evaluation of performance of




96

independent directors and the board of directors and review the term of appointment of Independent Directors on the basis of the report of performance evaluation of Independent Directors;

3. To recommend to the Board, appointment, removal of Directors, Senior Management Personnel and KMP in accordance with the criteria laid down.

4. Recommendation to the Board on remuneration of Managing Director/Executive Directors/KMP and also revision in remuneration.

5. Devise a policy on Diversity of Board of Directors;

6. Undertake any other matters as the Board may decide from time to time.

b) Composition, Name of members and Chairperson :

The composition of Nomination and Remuneration Committee is in compliance with the provisions of Section 178 of the Companies Act, 2013 and Regulation 19 of the SEBI (LODR) Regulations, 2015.

The Composition of Committee is as follows:

During FY 2017-18, Due to Resignations of Mr A.Krishna Murthy and Mr M.R.Naik, the Nomination and Remuneration Committee was Reconstituted with the New members of the Board viz,. Mr V.Ramgopal and Mr Ajeya Kallam.

Nomination andRemuneration Committee

V.Ramagopal V.S.N.Murthy Ajeya Kallam

Chairman


Director


DirectorNomineeDirector

Member Member

c) Meeting and Attendance during the year :During FY 2017-18, the Nomination and Remuneration Committee met one (1) time i.e. on 12th February, 2018.

S. No

Name of the Director

Meeting held during the year 2017-1812-02-2018

1 V.Ramgopal

2 V.S.N.Murthy

3 Ajeya Kallam

- Attended5) Remuneration of Directors:v Policy on Director’s appointment and remuneration:The Nomination and Remuneration Policy provides for appropriate composition of Executive, Non-Executive and Independent Directors on the Board of Directors of your Company along with criteria for appointment and remuneration

including determination of qualifications, positive attributes, independence of Directors and other matters as provided under sub-section (3) of Section 178 of the Companies Act, 2013. The remuneration paid to the Directors is as per the terms laid out in the Nomination and Remuneration Policy of your Company.v Remuneration to the Managing Director & Joint Managing Director:The shareholders of your Company at the 23rd AGM held on 26th September, 2015 approved the re-appointment of Sri P.Venkateswara Reddy as Managing Director and Sri G.V.Krishna Reddy as Joint Managing Director of your Company for a period of three (3) years commencing from 29th June, 2015 to 28th June, 2018. The terms and conditions of their appointment including remuneration payable to them was approved which was in accordance with the provisions of Section 197, 203, Schedule V and other applicable provisions, if any, of the Companies Act, 2013 read with Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 (including any statutory modification(s) or re-enactments thereof, for the time being in force). The details of the Remuneration paid to Managing Directors & Joint Managing Director are stated in the Form MGT- 9 – Extract of the Annual Return which forms part of the Board’s Report in this report.v Remuneration to Whole Time Director:The shareholders of your Company at the 25th AGM held on 29th September, 2017 approved the re-appointment of Sri M.V.Subba Reddy as a Whole Time Director of your Company for a period of Five (5) years commencing from 01st June, 2017 to 31st May, 2022. The terms and conditions of his appointment including remuneration payable to him was approved which was in accordance with the provisions of Section 197, 203, Schedule V and other applicable provisions, if any, of the Companies Act, 2013 read with Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 (including any statutory modification(s) or re-enactments thereof, for the time being in force). The details of the Remuneration paid to Whole Time Director are stated in the Form MGT- 9 – Extract of the Annual Return which forms part of the Board’s Report in this report.v Remuneration to Non-Executive and Independent Directors :The Committee has formulated Policy for Remuneration payable to Non Executive and Independent Directors. As per the Policy, remuneration to Non-executive Independent Directors includes:i) Sitting Fees for attending meetings of the Board as well as

Committees of the Board has decided by the Board within the limits prescribed under the Companies Act.

ii) Travelling and other expenses they incur for attending to the Company’s affairs, including attending Committee and Board Meetings of the Company

The Non-Executive Directors are paid remuneration by way of Sitting Fees. Company paid the sitting fees to all the Non-Executive Directors at the rate of ` 10,000/- for attending each meeting of the Board and ` 5,000/- for attending each Audit Committee meeting upto first three Board meetings i.e (01-04-2017, 27-05-2017 and 26-08-2017) and from 29th September, 2017, Company paid the




97

sitting fees to all the Non-Executive Directors at the rate of ` 15,000/- for attending each meeting of the Board and other Committees.Review of Performance and Compensation to Senior Management :The Nomination and Remuneration Committee reviews the performance of the senior management of your Company. The Committee ensures that the remuneration to the Key Managerial Personnel and Senior Management involves a balance between fixed and incentive pay reflecting short and long term performance objectives appropriate to the working of your Company and its goals.Mr M.Prasanna Kumar (ACS: 49713) has appointed as a Company Secretary w.e.f 01st April, 2017 and he has resigned from the post of Company Secretary as well as Compliance Officer w.e.f 31st May, 2017. Details of remuneration paid to Directors during the year 2017-18 as follows :

Name of Directors Salary Benefits Commis-

sion Sitting Fees Total

Sri.P.Venkateswra Reddy 24,00,000 1,03,688 22,17,443 - 47,21,131Sri.G.V.Krishna Reddy 24,00,000 99,697 22,17,443 - 47,17,140Sri.M.V.Subba Reddy 9,86,852 - - - 9,86,852Sri.MR.Naik - - - 30,000 30,000Sri.V.S.N.Murthy - - - 1,00,000 1,00,000Sri.A.Krishna Murthy - - - 30,000 30,000Sri.S.Pulla Rao - - - 1,00,000 1,00,000Sri.Ajeya Kallam - - - 60,000 60,000Sri.V.Ramgopal - - - 30,000 30,000Smt.V.Bhargavi - - - 1,00,000 1,00,000Your Company has not granted any stock options to any of its Directors.6) STAKEHOLDERS’ RELATIONSHIP COMMITTEE:The composition of the Stakeholder Relationship Committee is in compliance with the provisions of Section 178 of the Companies Act, 2013 and Regulation 20 of SEBI (LODR) Regulations, 2015.The terms of reference of the Committee includes enquiring into and redressing complaints of shareholders and to resolve the grievances of the Investors of your Company.During the year, The Committee was Reconstituted functioning under the Chairmanship of Mr. Ajeya Kallam, a Non-executive and Independent Director. The other members of the Committee are Mr. G.V.Krishna Reddy and Mr.M.V.Subba Reddy.Details pertaining to the number of complaints received and responded and the status thereof during the financial year 2017-18 are given below :

No. of complaints received during the year 38No. of complaints resolved during the year 38No. of complaints pending at the end of the year NilDuring the Year, Due to Resignation of Mr A.Krishna Murthy, a Non-executive and Independent Director, the Committee was reconstituted with Mr.Ajeya Kallam, who is also a Non-executive and Independent Director.

Name, Designation and address of the Compliance officer:Mr. P. Venkateswara Reddy, Managing Director, Kallam Textiles Ltd, Chowdavaram, GUNTUR, Andhra Pradesh-5220197) SHARE TRANSFER COMMITTEE:v Composition of Share Transfer Committee: Sri G.V.Krishna Reddy - Chairman Sri P.Venkateswara Reddy - Member Sri M.V.Subba Reddy - Memberv The terms of reference of the Shareholders’ Committee

are as follows:• To issue duplicate share certificates as and when the

requests are received by the Company;• To approve the register of members as on the record

date(s) and/or book closure date(s) for receiving dividends and other corporate benefits;

• To review correspondence with the shareholders vis-a-vis legal cases and take appropriate decisions in that regard; and

• To authorise affixing of the Common seal of the Company from time to time on any deed or other instrument requiring authentication by or on behalf of the Company.

Further, Share Transfers approved by the Committee were placed before the Board of Directors at their meetings from time to time. During the period under review 50,750 shares were transferred.There were no pending Share Transfers as on date of this report.8) CORPORATE SOCIAL RESPONSIBILITY COMMITTEE:The composition of the CSR Committee is in compliance with the provisions of Section 135 of the Companies Act, 2013.• Composition of Corporate Social Responsibility Committee:Sri G.V.Krishna Reddy - ChairmanSri V.Ramgopal - MemberSri M.V.Subba Reddy - MemberThe Committee met one time During the Financial year 2017-18.During the Year, Due to Resignation of Mr M.R.Naik, a Non-executive and Independent Director, the Committee was reconstituted with Mr.V.Ramgopal, who is also a Non-executive and Independent Director.The CSR Committee is empowered, pursuant to its terms of reference, inter alia, to:1. Specifying the amount of expenditure to be incurred on the

CSR activities;2. Monitoring the CSR Policy of the Company from time to time;3. Prepare a transparent monitoring mechanism for ensuring

implementation of the projects/programmes/activities proposed to be undertaken by the Company; and

4. Such other activities as the Board of Directors may determine from time to time.

9) RELATED PARTY TRANSACTIONS:All transaction entered into by your Company with related parties, during the Financial Year 2017–18, were in ordinary course of business and on arm’s length basis. The details of




98

the related party transactions are set out in the Notes to Financial Statements forming part of this Annual Report.Also, the Related Party Transactions undertaken by your Company were in compliance with the provisions of Section 188 of the Companies Act, 2013 and Regulation 23 of SEBI (LODR) Regulations, 2015.The policy on related party transactions has been placed on the Company’s website and can be accessed through the following link: www.ksml.inDetails of Employee(s), who are relatives of the Directors, holding an office or place of profit in the Company pursuant to Section 188 of the Companies Act, 2013 :During the Financial Year 2017-18, Mr. P.Govardhan Reddy, Son of P.Venkateswara Reddy (Managing Director), Received a total Remuneration of ` 5,04,000/- During the Financial Year 2017-18, Mr. M.Srinivasa Nagarjuna Reddy, Son of M.V.Subba Reddy (Whole Time Director), Received a total Remuneration of ` 2,58,000/-In terms, of Section 177, 188 and other applicable provisions, if any, of the Companies Act, 2013 read with the Rules issued thereunder (including any statutory modification(s) or reenactment (s) thereof for the time being in force) the appointment and remuneration payable to the aforesaid is approved by the Audit Committee and noted by the Board of Directors of the Company and are at arm’s length and in ordinary course of business of your Company.Directors with materially significant, pecuniary or business relationship with your Company:There is no pecuniary or business relationship between the Non-Executive/Independent Directors and your Company, except for the sitting fees payable to them for attending the Board meetings and Committee meetings which are in accordance with the applicable laws and with the approval of the shareholders. A declaration to this effect is also submitted by all the Directors at the beginning of each financial year.10) SUBSIDIARY COMPANIESYour Company does not have any material subsidiary companies in terms of Regulation 16 (1) (c) of SEBI (LODR) Regulations, 2015. 11) GENERAL BODY MEETINGS:a) Details of Last Three Annual General Meetings held:

Date of AGM Time Place

26th September, 2015 3.00 P.MRegd. Office at Chowdavaram,GUNTUR – 522 019



b) No Special Resolutions were passed during the previous Three (3) Annual General Meetings.c) Extraordinary General Meeting (EGM):

During the year under review, On 13th March, 2018, One Extraordinary General Meeting was conducted and the following Resolutions were duly passed by the Shareholders with requisite majority :1) Change in Name of the Company (Special Resolution)2) Adoption of New Articles of Association (Special Resolution)Details of EGM Voting results were annexed to this report.The Board of Directors of the Company has appointed M/s K.Srinivasa Rao & Co., Company Secretaries in Practice, as Scrutinizer for conducting the meeting in a fair and transparent manner.12) MEANS OF COMMUNICATION:a) Quarterly, Half Yearly and Annual results: Pursuant to the Provisions of Regulation 33 of SEBI

(LODR) Regulations, 2015, quarterly, half-yearly and annual financial results of the Company were taken on record by the Board of Directors and submitted to the Bombay Stock Exchange, where shares of the Company are listed. Your Company makes timely disclosures of necessary information to BSE Limited in terms of the Listing Regulations and other rules and regulations issued by the SEBI.

b) Publication of Results: Pursuant to the Provisions of Regulation 47 of SEBI

(LODR) Regulations, 2015, Quarterly, half-yearly and annual financial results of the Company were published in national English newspaper viz., Business Standard (Hyderabad Edition) and vernacular language news paper, viz., Andhra Bhoomi (Guntur District Edition), within forty-eight hours of approval thereof. Presently the same are not sent to the shareholders separately.

c) Website and News Releases: In compliance with Regulation 46 of the SEBI (LODR)

Regulations, 2015 All the Details regarding the status of unclaimed dividend, Annual Reports, Quarterly/Half yearly/Nine-months and Annual financial results along with the applicable policies of the Company and also Company’s official news releases and presentations made to the institutional investors are available on the Company’s website viz., www.ksml.in

d) Management Discussion and Analysis forms part of the Annual Report, which is sent to the shareholders of the Company.

e) The quarterly results, shareholding pattern for every quarter, quarterly compliances and all other corporate communication are filed to the Bombay Stock Exchange Limited electronically. The Company has complied with filing submissions through Bombay Stock Exchange Listing Centre.

13) GENERAL SHAREHOLDER INFORMATION :v Annual General Meeting for the Financial Year 2017-18: Date : 22nd September, 2018 Time : 03:00 P.M Venue : Registered Office of the Company,

Chowdavaram, Guntur - 522019.v Financial Year : 01-04-2017 to 31-03-2018




99

Tentative Schedule for declaration of results during the financial year 2018-19First Quarter - On or before 14th August, 2018Second Quarter and Half Yearly - On or before 14th November, 2018Third Quarter and Nine Months - On or before 14th February, 2019Fourth Quarter and Annual - On or before 30th May, 2019v Dividend Payment Date : Within 30 days from the Date of Declaration (Subject to approval of Shareholders)DIVIDEND HISTORY :

Financial Year % of Dividend Amount Paid (`)2004-05 7 47,95,7702005-06 10 68,51,1002006-07 12 82,21,3202007-08 12 82,21,3202008-09 9 61,65,9902009-10 14 95,91,5402010-11 18 1,23,31,9802011-12 Nil Nil2012-13 Nil Nil2013-14 12 82,21,3202014-15 10 68,51,1002015-16 10 68,51,1002016-17 10 68,51,100

v The Shares of the Company are Listed on following Stock Exchange

Bombay Stock Exchange Limited Phiroze Jeejeebhoy Towers, Dalal Street, Mumbai – 400 001. Ph No : 022- 22721233/34v Annual Listing Fees for the Year 2017-18 have been paid to

BSE Limitedv BSE Stock Code : 530201MARKET PRICE DATA:

Month High (`) Low (`) No.of Shares Traded

April 2017 29.85 22.55 773357May2017 33.5 24.4 1201918June2017 32.4 25.45 1068629July2017 30.85 26.25 742588Aug.2017 37.25 25.1 2234664Sept.2017 33.95 27.6 856172Oct 2017 31.8 23 999032Nov 2017 24.9 20.35 522210Dec 2017 24.75 19.55 769752Jan 2018 27.85 21 930347Feb 2018 31.6 19.4 1601344Mar 2018 33.25 30.1 548654

v Performance in Comparison to broad-based indices : The Chart below shows the comparison of Company’s

share price movement on BSE vis-à-vis the movement of the BSE Sensex for the year 2017-18 (based on month end closing) :

KTL V/S BSE SENSEX

0

5000

10000

15000

20000

25000

30000

35000

40000

Apr-17

May-17

Jun-17

Jul-17

Aug-17

Sep-17

Oct-17

Nov-17

Dec-17

Jan-18

Feb-18

Mar-18

MONTH

BS

E S

EN

SE

X

0

5

10

15

20

25

30

35

40

KTL

L

Depository Participation:i) National Securities Depository Ltd, (NSDL) Trade World, 4th Floor, Kamala Mills Compound, Senapati Bapat Marg, Lower Parel, Mumbai – 400 013. Ph. No: 022 - 2499 4200

ii) Central Depository Services (India) Ltd, (CDSL) Phiroze Jeejeebhoy Towers, 17th Floor, Dalal Street, Mumbai- 400 001. Ph. No: 022 - 2272 3333 ISIN Number for NSDL & CDSL : INE629F01025Depository Fee : Annual custody fee for the financial year 2017-18 paid to

National Securities Depository Limited (NSDL) and Central Depository Services India Limited (CDSL).

v Registrars & Share Transfer Agents: Big share Services Pvt. Ltd., 306, 3rd Floor, Rigt Wing, Amrutha Ville, Opp. Yashodha Hospital, Raj Bhavan Road, Somajiguda, Hyderabad – 500082 Ph No : 040-23374967 Website : www.bigshareonline.comv Share Transfer System: The Company has appointed M/s. Bigshare Services

Private Limited as Registrars & Share Transfer Agents for both electronic and physical transfers. The shares lodged for transfer are processed and share certificates duly endorsed are returned within 15 days from the date of lodgment, subject to documents being valid and complete in all respects. The Board of Directors of your Company have delegated the authority to approve the transfer of shares, transmission of shares or requests for deletion of name of the shareholder, etc., to the designated officials of




100

your Company. The transactions requiring issuance of new share certificates are approved by the Shareholder’s Committee of the Board of directors of your Company. A summary of approved transfers, transmissions, deletion requests, etc., are placed before the Board of Directors from time to time as per Listing Regulations.

v Distribution of Shareholding as on 31st March 2018

Range (No. of Shares)

Shareholders Shareholding

No.of Share

holders

% to Total

No.of Share holders

% to Total

1 - 500 1741 33.37 3,13,527 0.73 501 - 1000 1275 24.44 8,72,151 2.04 1001 - 2000 1056 20.24 14,77,821 3.45 2001 - 3000 246 4.72 6,20,683 1.45 3001 - 4000 253 4.85 8,49,639 1.98 4001 - 5000 84 1.61 3,90,375 0.91 5001 - 10000 264 5.06 18,40,190 4.30

10001- 50000000 298 5.71 3,64,54,989 85.145217 100.00 4,28,19,375 100.00

v Categories of Share Holders as on 31st March 2018

Category No.of Share holders

% of share

holding

A Shareholding of Promoters/ Promoters Group(a) Individuals/HUFs 1,49,73,765 34.97(b) Bodies Corporate 54,65,043 12.76Total Shareholding of Promoter and Promoter Group (A) 2,04,38,808 47.73

B Public shareholding1. Institutions - -a) Mutual Funds\UTI 62,500 0.15b) Banks\Financial Institutions - -c) Insurance companies - -d) FIIs - -Sub Total B(1) 62,500 0.152. Non-Institutionsa) Bodies Corporate 6,71,395 1.57b) Individuals(i) Individual shareholders holding nominal share capital up to ` 2 lakh 1,12,55,181 26.29

(ii) Individual shareholders holding nominal share capital in excess of ` 2 lakh

97,96,477 22.88

c) Individual (NRI) 3,52,056 0.82f) Others (Clearing members) 2,42,958 0.57Sub Total B(2)Total Public Shareholding B= B(1)+B(2) Total Shareholding = A+B 4,28,19,375 100.00

v Reconciliation of Share Capital Audit Report and Regulation 40(9) of SEBI(LODR) Regulations, 2015:

As per the Provisions of Regulation 55A of SEBI (LODR) Regulations, 2015, M/s. K.Srinivasa Rao & Co., Company Secretaries in Practice carries out the Secretarial Audit to reconcile the total admitted capital with National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL) and the total issued and Listed Capital. The audit is carried out every quarter and the report thereon is submitted to the Stock Exchange, where the Shares of the Company are listed. The audit confirms that the total Listed and Issued capital is in agreement with the aggregate of the total number of shares in dematerialized form (held with NSDL and CDSL) and the total number of shares in physical form.

During the year 2017-18, In accordance with the Regulation 40(9) of the SEBI (LODR) Regulations,2015, M/s K.Srinivasa Rao & Co., Company Secretaries in Practice, after examined all the share transfer deeds, Memorandum of Transfers, Registers, files and other documents related to Company, gave certificates under Regulation 40(9) of the SEBI (LODR) Regulations,2015,for the Half year 01-04-2017 to 30-09-2017 and For the Half year 01-10-2017 to 31-03-2018.Both the above certificates were submitted to the Bombay Stock Exchange Limited, where the Shares of the Company are Listed, within 24 hours of receipt of the Certificate by the Company.

v Details of your Company’s dematerialized shares as on 31st March, 2018:

Particulars Physical Record

Demat RecordTotal

NSDL CDSLNumber of

Shares 32,23,247 3,31,60,682 64,35,446 4,28,19,375

% of Shares 7.53 77.44 15.03 100.00

v Dematerialization of shares : Shareholders who continue to hold shares in physical

form are requested to dematerialize their shares at the earliest and avail of the various benefits of dealing in securities in electronic/dematerialized form. For any clarification, assistance or information, please contact Big Share Services Pvt. Ltd., Somajiguda, Hyderabad - 500082 Ph No: 040-233 74 967.

v Outstanding GDRs / ADRs / Warrants / Convertible Instruments and their impact on equity:

Your Company does not have any outstanding GDRs /ADRs / Warrants / Convertible Instruments as on 31st March, 2018.

v Transfer of Unpaid and Unclaimed Amount to IEPF: Pursuant to the provisions of section 124 of the

companies Act, 2013, the declared dividends which remained un paid or unclaimed for a period of seven years from the date of transfer to the unpaid dividend account, have been transferred by the company to the Investor Education and Protection Fund (IEPF)




101

established by the Central Government. Shareholders are requested to ensure that they claim the dividend from your Company before transfer of the said amounts to the IEPF.

During the year 2017-18, Unclaimed Dividend For the year 2009-10 was transferred to Investor Education and Protection Fund (IEPF). Pursuant to the provision of rule 3 of the Investor Education and Protection Fund (Awareness and Protection of Investor) Rules, 2001, necessary e-form (Form 1 INV) which contains the Statement of amounts credited to IEPF was filed to Registrar of Companies (ROC).

The following are the details of dividends paid by the Company and respective due dates for transfer of unclaimed dividend to IEPF.

Dividend Declared

Year

Date of Declaration of Dividend

Due date for Transfer to IEPF

2010-11 27th August,2011 01st October,20182013-14 27th September,2014 01st November,20212014-15 26th September,2015 31st October,20222015-16 28th September,2016 02nd November, 20232016-17 29th September, 2017 03rd November, 2024

v National Electronic Clearing System (NECS) for dividend :

The Securities and Exchange Board of India (SEBI) has made it mandatory for all companies to use the bank account details furnished by the Depositories for depositing dividends. Dividend will be credited to the Members’ bank account through NECS wherever complete core banking details are available with the Company. In case where the core banking details are not available, dividend warrants will be issued to the Members with bank details printed thereon as available in the Company’s records. This ensures that the dividend warrants, even if lost or stolen, cannot be used for any purpose other than for depositing the money in the accounts specified on the dividend warrants and ensures safety for the investors. The Company complies with the SEBI requirement.

v Plant Locations: a) Spinning Division : Chowdavaram, Guntur -522019 Andhra Pradesh b) Weaving and Dyeing : Kunkupadu Village, Divisions Addanki Mandal, Prakasam Dist. Andhra Pradesh. c) Power Division : Kotha Kothur Village,

Nelakondapalli Mandal, Khammam Dt.

Andhra Pradesh.

v No. of Employees as on 31st March, 2018: 662

• Address for Correspondence Company : Kallam Textiles Ltd Chowdavaram, Guntur, A.P - 522019.

RTA : Big share services Pvt. Ltd., 306, 3rd Floor, Right Wing, Amrutha Ville, Opp. Yashodha Hospital, Raj Bhavan Road, Somajiguda, Hyderabad – 500 082 Official Website of the Company : www.ksml.in Investors’ E-mail Id : [email protected]) OTHER DISCLOSURES: 1. Disclosure of Related Party Transactions: There are no materially significant related party

transactions of your Company which have potential conflict with the interests of the Company at large.

2. Disclosure of Compliance by the Listed Entity: Your Company has complied with all the requirements

of the Stock Exchange(s) and the SEBI on matters related to Capital Markets. There were no penalties imposed or strictures passed against your Company by the statutory authorities in this regard.

3. Vigil Mechanism and Whistle Blower Policy: In accordance with Regulation 22 of the SEBI (LODR)

Regulations, 2015, your Company has adopted a Whistle Blower Policy which has been posted on the Website of the Company (www.ksml.in). The Objective of framing a policy is to provide its employees and Business Associates a framework and to establish a formal mechanism or process whereby concerns can be raised in line with your Company’s commitment to highest standards of ethical, moral and legal business conduct and its commitment to open communication. The Company believes in conducting its business and working with all its stakeholders, including employees, customers, suppliers, shareholders and business associates in an ethical and lawful manner by adopting highest standards of professionalism, honesty, integrity and ethical behaviour; The Company prohibits any kind of discrimination, harassment, victimization or any other unfair practice being adopted against an employee and/or a business associate. In Appropriate or exceptional cases like the matters are of grave nature, all the employees, without any detention, can make Protected Disclosures directly to the Chairperson of the Audit Committee of the Board of Directors of the Company;




102

4. Disclosure of Accounting Treatment: The financial statements have been prepared in

accordance with Ind ASs notified under the Companies (Indian Accounting Standards) Rules, 2015.

5. Risk Management: Business risk evaluation and management is an ongoing

process within the Company. The assessment is periodically examined by the Board.

6. Commodity price risks and Commodity hedging activities: The Company is exposed to the risk of price fluctuation

of raw materials as well as finished goods. The Company proactively manages these risks through forward booking Inventory management and proactive vendor development practices. The Company’s reputation for quality, products differentiation and service, coupled with existence of powerful brand image with robust marketing network mitigates the impact of price risk on finished goods.

7. Non-mandatory requirements: Adoption of non-mandatory requirements of Listing Regulation

is being reviewed by the Board from time-to time. 8. Code of Conduct for Business & Ethics: In accordance with the Provisions of Regulation 17 (5)

of SEBI (LODR) Regulations, 2015, Your Company has framed a Code of Business Conduct & Ethics which is applicable to the Board of Directors and Senior Management Team (one level below the Board) of the Company. The Code requires Directors and the Employees to act honestly, fairly, ethically and with integrity conduct themselves in professional, courteous and respectful manner. The Code of Conduct has been posted on the website of your Company. All the Board Members and the Senior Management Personnel have affirmed their compliance with the said Code of Conduct for the financial year 2017-18. The declaration to this effect signed by Sri P.Venkateswara Reddy, Managing Director & CEO of the Company forms part of the Report.

9. Audit qualifications: During the year under review, there was no audit

qualification on your Company’s financial statements. 10. Reporting of Internal Auditor: The Internal Auditors M/s Mastanaiah & Co., (Firm Reg

No: 002039S) Chartered Accountants, Guntur had submitted their reports to the Managing Director & CEO and has direct access to the Audit Committee and they participated in the meetings of the Audit Committee of the Board of Directors of your Company and presents their internal audit observations to the Audit Committee.

11. Code of Conduct for Prevention of Insider Trading: The Securities and Exchange Board of India (SEBI) has

promulgated the SEBI (Prohibition of Insider Trading)

Regulations, 2015 (“The PIT Regulations”). The PIT Regulations has come into effect from 15th May, 2015 and replaced the earlier Regulations. The object of the PIT Regulations is to curb the practice of insider trading in the securities of a listed company. The Company has adopted an ‘Internal Code of Conduct for Regulating, Monitoring and Reporting of Trades by Insiders’ (“the Code”) in accordance with the requirements of the PIT Regulations. The Code is applicable to Promoters and Promoter’s Group, all Directors and such Designated Employees who are expected to have access to unpublished price sensitive information relating to the Company. The Managing Director is the Compliance Officer for monitoring adherence to the said Regulations. The Company has also formulated ‘The Code of Practices and Procedures for Fair Disclosure of Unpublished Price Sensitive Information (UPSI)’ in compliance with SEBI (Prohibition of Insider Trading) Regulations, 2015. This Code is displayed on the Official website of the Company viz. http://ksml.in/wp-content/uploads/2016/10/Prevention-of-insider-trading.pdf

CEO/CFO CERTIFICATION: As required under Regulation 17(8) of SEBI (LODR)

Regulations, 2015 the CEO/CFO certificate for the financial year 2017 - 18 signed by Sri P.Venkateswara Reddy, Managing Director and Sri M.V.Subba Reddy, CFO was placed before the Board of Directors of your Company at their meeting held on 28th May, 2018.

Compliance Certificate of the Auditors: The company has complied with the mandatory

requirements of the code of corporate Governance as stipulated in Regulation 17 to 27 and clauses (b) to (i) of sub-regulation (2) of Regulation 46 of SEBI (LODR) Regulations, 2015.The company has submitted the compliance report in the prescribed format to the stock exchanges for the quarters ended June 30, 2017, September 30, 2017, December 31, 2017, and March 31, 2018 (XBRL Filings as per Regulation 27(2) of SEBI (LODR) Regulations,2015). The statutory Auditors have certified that the company has complied with the condition of corporate governance as stipulated in Regulaton 27(2) of SEBI (LODR) Regulaions,2015. The said certificate is annexed to the director’s report and will be forwarded to the stock exchanges along with the Annual report.

DECLARATION Compliance with the Code of Business Conduct

and Ethics As provided under Regulation 26 (3) of the SEBI (Listing

Obligations and Disclosure Requirements) Regulations, 2015, all Board Members and Senior Management Personnel have affirmed compliance with Kallam Textiles Ltd Code of Conduct of board of directors and senior management for the year ended 31st March, 2018.

P.Venkateswara ReddyManaging Director

(DIN: 00018677)





103

DETAILS OF VOTING RESULTS AS PER REGULATION 44 FOR THE YEAR 2016-17Agenda-Wise

IN CASE OF POLL / POSTAL BALLOT / E-VOTING:The Mode of voting for all resolutions was E-voting and poll (Electronically) conducted at the Meeting.Resolution 1: Consider and Adopt Audited Financial Statements, Reports of the Board of Directors and Auditors

(Ordinary Resolution)

Promoters /Public

No.of shares held

No.of votes polled

% of votes polled on

outstandingshares

No.of Votes - in

favour

No.of Votes -against

% of votes in favour on votes

polled

% of Votes against on votes

polled

(1) (2) (3)=[{2}/{1}]* 100 (4) (5) (6)=[{4}/{2}]* 100 (7)=[{5}/{2}]* 100

Promoter and Promoter Group 1,64,28,195 76,62,170 46.64 76,62,170 ---- 100 ----

Public Institutional Holders 10,25,912 ---- ---- ---- ---- ---- ----

Public - Others 1,68,01,393 10,12,015 6.02 10,12,015 ---- 100 ----

Total 3,42,55,500 86,74,185 25.32 86,74,185 ---- 100 ----

Resolution 2: Declaration of Dividend on Equity Shares (Ordinary Resolution)

Promoters /Public

No.of shares held

No.of votes polled


outstandingshares

No.of Votes - in

favour



polled


polled

(1) (2) (3)=[{2}/{1}]* 100 (4) (5) (6)=[{4}/{2}]* 100 (7)=[{5}/{2}]* 100



Public - Others 1,68,01,393 10,12,015 6.02 10,12,015 ---- 100 ----

Total 3,42,55,500 86,74,185 25.32 86,74,185 ---- 100 ----

Resolution 3: Re-appointment of Sri. P.Venkateswara Reddy (DIN : 00018677) who retires by rotation and being eligible, offers himself for re-appointment (Ordinary Resolution)

Promoters /Public

No.of shares held

No.of votes polled


outstandingshares

No.of Votes - in

favour



polled


polled

(1) (2) (3)=[{2}/{1}]* 100 (4) (5) (6)=[{4}/{2}]* 100 (7)=[{5}/{2}]* 100



Public - Others 1,68,01,393 10,12,015 6.02 10,12,015 ---- 100 ----

Total 3,42,55,500 86,74,185 25.32 86,74,185 ---- 100 ----




104

Resolution 4: Appointment of M/s Chevuturi Associates, Chartered Accountants (F.Reg No : 000632S) as Statutory Auditors and fix their Remuneration (Ordinary Resolution)

Promoters /Public

No.of shares held

No.of votes polled


outstandingshares

No.of Votes - in

favour



polled


polled

(1) (2) (3)=[{2}/{1}]* 100 (4) (5) (6)=[{4}/{2}]* 100 (7)=[{5}/{2}]* 100



Public - Others 1,68,01,393 10,12,015 6.02 10,12,015 ---- 100 ----

Total 3,42,55,500 86,74,185 25.32 86,74,185 ---- 100 ----

Resolution 5: Re-appointment of Sri M.V.Subba Reddy as a Whole Time Director of the Company (Ordinary Resolution)

Promoters /Public

No.of shares held

No.of votes polled


outstandingshares

No.of Votes - in

favour



polled


polled

(1) (2) (3)=[{2}/{1}]* 100 (4) (5) (6)=[{4}/{2}]* 100 (7)=[{5}/{2}]* 100



Public - Others 1,68,01,393 10,12,015 6.02 10,12,015 ---- 100 ----

Total 3,42,55,500 86,74,185 25.32 86,74,185 ---- 100 ----

Resolution 6: Ratification of the Remuneration of Mr. P.Srinivas, Cost Accountant for the Financial year ending 31st March, 2018 (Ordinary Resolution)

Promoters /Public

No.of shares held

No.of votes polled


outstandingshares

No.of Votes - in

favour



polled


polled

(1) (2) (3)=[{2}/{1}]* 100 (4) (5) (6)=[{4}/{2}]* 100 (7)=[{5}/{2}]* 100



Public - Others 1,68,01,393 10,12,015 6.02 10,12,015 500 99.95 0.05

Total 3,42,55,500 86,74,185 25.32 86,74,185 500 99.99 0.01




105

Resolution 7: Issue of Bonus Shares (Ordinary Resolution)

Promoters /Public

No.of shares held

No.of votes polled


outstandingshares

No.of Votes - in

favour



polled


polled

(1) (2) (3)=[{2}/{1}]* 100 (4) (5) (6)=[{4}/{2}]* 100 (7)=[{5}/{2}]* 100



Public - Others 1,68,01,393 10,12,015 6.02 10,12,015 ---- 100 ----

Total 3,42,55,500 86,74,185 25.32 86,74,185 ---- 100 ----

Resolution 8: Determination of Fees for Delivery of Documents through a particular mode (Ordinary Resolution)

Promoters /Public

No.of shares held

No.of votes polled


outstandingshares

No.of Votes - in

favour



polled


polled

(1) (2) (3)=[{2}/{1}]* 100 (4) (5) (6)=[{4}/{2}]* 100 (7)=[{5}/{2}]* 100



Public - Others 1,68,01,393 10,12,015 6.02 10,12,015 ---- 100 ----

Total 3,42,55,500 86,74,185 25.32 86,74,185 ---- 100 ----

Resolution 9: Appointment of Sri.Ajeya Kallam (DIN : 00278595) as an Independent Director (Ordinary Resolution)

Promoters /Public

No.of shares held

No.of votes polled


outstandingshares

No.of Votes - in

favour



polled


polled

(1) (2) (3)=[{2}/{1}]* 100 (4) (5) (6)=[{4}/{2}]* 100 (7)=[{5}/{2}]* 100



Public - Others 1,68,01,393 10,12,015 6.02 10,12,015 ---- 100 ----

Total 3,42,55,500 86,74,185 25.32 86,74,185 ---- 100 ----




106

Resolution 10: Appointment of Sri. V.Ramgopal (DIN : 02889497) as an Independent Director (Ordinary Resolution)

Promoters /Public

No.of shares held

No.of votes polled


outstandingshares

No.of Votes - in

favour



polled


polled

(1) (2) (3)=[{2}/{1}]* 100 (4) (5) (6)=[{4}/{2}]* 100 (7)=[{5}/{2}]* 100



Public - Others 1,68,01,393 10,12,015 6.02 10,12,015 ---- 100 ----

Total 3,42,55,500 86,74,185 25.32 86,74,185 ---- 100 ----

Note : All the aforesaid Resolutions were passed with requisite majority.

KALLAM TEXTILES LTD – EGM - VOTING RESULTSDisclosure as Per Regulation 44 SEBI (LODR) Regulations, 2015

Agenda-WiseIN CASE OF POLL/POSTAL BALLOT/E-VOTING:The Mode of voting for all resolutions was E-voting and poll (Electronically) conducted at the Extraordinary General Meeting.Resolution 1: CHANGE IN THE NAME OF THE COMPANY (Special Resolution)

Promoters /Public

No.of shares held

No.of votes polled


outstandingshares

No.of Votes - in

favour



polled


polled

(1) (2) (3)=[{2}/{1}]* 100 (4) (5) (6)=[{4}/{2}]* 100 (7)=[{5}/{2}]* 100



Public - Others 2,14,15,332 20,94,184 9.78 20,94,184 ---- 100 ----

Total 4,28,19,3751,18,28,857 27.61 1,18,28,857 ---- 100 ----

Resolution 2 : ALTERATION OF ARTICLES OF ASSOCIATION (Special Resolution)

Promoters /Public

No.of shares held

No.of votes polled


outstandingshares

No.of Votes - in

favour



polled


polled

(1) (2) (3)=[{2}/{1}]* 100 (4) (5) (6)=[{4}/{2}]* 100 (7)=[{5}/{2}]* 100



Public - Others 2,14,15,332 20,94,184 9.78 20,94,184 ---- 100 ----

Total 4,28,19,3751,18,28,857 27.61 1,18,28,857 ---- 100 ----

Note : All the aforesaid Resolutions were passed with requisite majority.




107

AUDITORS’ CERTIFICATE REGARDING COMPLIANCE OF CONDITIONS OF CORPORATE GOVERNANCE

To the Members of Kallam Textiles Limited (Formerly Kallam Spinning Mills Ltd)We have examined the compliance of conditions of Corporate Governance by Kallam Textiles Limited (‘the Company’),

for the year ended 31st March, 2018, as per the Regulations 17-27, Clauses (b) to (i) of Regulation 46(2) and paragraphs C, D and E of Schedule V of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations 2015, (‘Listing Regulations’)

The compliance of conditions of Corporate Governance is the responsibility of the Company’s management. Our examination was carried out in accordance with the Guidance Note on Certification of Corporate Governance, issued by the Institute of Chartered Accountants of India and was limited to procedures and implementation thereof, adopted by the Company for ensuring the compliance of the conditions of Corporate Governance. It is neither an audit nor an expression of opinion on the financial statements of the Company.

In our opinion and to the best of our information and according to the explanations given to us, we certify that the Company has complied with the conditions of Corporate Governance as stipulated in the SEBI Listing Regulations, 2015.

We further state that such compliance is neither an assurance as to the future viability of the Company nor the efficiency or effectiveness with which the management has conducted the affairs of the Company.

For CHEVUTURI ASSOCIATESChartered AccountantsFirm Regn.no.000632S

(RAGHUNADHA RAO BALINENI)Partner

ICAI Membership No.028105

The Board of DirectorsKallam Textiles Limited(Formerly Known as “Kallam Spinning Mills Limited”)

We hereby certify that on the basis of the review of the financial statements and the cash flow statement for the financial year ended 31st March, 2018 and that to the best of our knowledge and belief:

1. these statements do not contain any materially untrue statement or omit any material fact or contain statements that might be misleading;

2. these statements together present a true and fair view of the Company’s affairs and are in compliance with existing accounting standards, applicable laws and regulations;

We hereby certify that, to the best of our knowledge and belief, no transactions entered into during the year by the Company are fraudulent, illegal or violative of the Company’s Code of Conduct.

We accept responsibility for establishing and maintaining internal controls for financial reporting and have evaluated the effectiveness of internal control systems pertaining to financial reporting and have disclosed to the auditors and the Audit Committee, deficiencies in the design or operation of such internal controls, if any, of which they are aware and the steps they have taken or propose to take to rectify these deficiencies.

We have indicated to the Auditors and the Audit Committee

1. significant changes in internal control over financial reporting during the year;

2. significant changes in accounting policies during the year and that the same have been disclosed in the notes to the financial statements; and

3. instances of significant fraud of which they have become aware and the involvement therein, if any, of the management or an employee having a significant role in the internal control system over financial reporting.

Place : Chowdavarm For Kallam Textiles Ltd For Kallam Textiles Ltd Date : 09-08-2018 P.Venkateswara Reddy M.V.Subba Reddy Managing Director Chief Financial Officer

Auditor Certificate on Corporate Governance

CEO & CFO CERTIFICATION



108

To the Members ofKALLAM TEXTILES LIMITED(Formerly known as Kallam Spinning Mills Limited)Report on the Ind AS financial statements

We have audited the accompanying Ind AS financial statements of KALLAM TEXTILES LIMITED (Formerly known as Kallam Spinning Mills Limited) (‘the Company’) which comprise the Balance Sheet as at March 31, 2018, the Statement of Profit and Loss (including other comprehensive income), the Statement of changes in Equity and the Statement of Cash Flows for the year then ended and a summary of significant accounting policies and other explanatory information.

Management’s Responsibility for the Ind AS Financial Statements

The Company’s Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 (‘the Act’) with respect to the preparation and presentation of these Ind AS financial statements that give a true and fair view of the financial position, financial performance including other comprehensive income, changes in equity and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards (Ind AS) specified under Section 133 of the Act.

This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting of frauds and other irregularities; selection and application of appropriate accounting policies; making judgements and estimates that are reasonable and prudent; design, implementation and maintenance of adequate internal financial controls, that are operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the Ind AS financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditors’ Responsibility

Our responsibility is to express an opinion on these Ind AS financial statements based on our audit. In conducting our audit, we have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and Rules made thereunder.

We conducted our audit of the Ind AS financial statements in accordance with the Standards on Auditing specified under Section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the Ind AS financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the Ind

AS financial statements. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the Ind AS financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Company’s preparation of the Ind AS financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Company’s board of directors, as well as evaluating the overall presentation of the Ind AS financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Ind AS financial statements.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid Ind AS financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at March 31, 2018, its profit, total comprehensive income, the changes in equity and its cash flows for the year ended on that date.

Report on other legal and regulatory requirements

1. As required by the Companies (Auditor’s Report) Order, 2016 (‘the Order’), issued by the Central Government of India in terms of sub-section (11) of section 143 of the Act, we give in the Annexure-A, a statement on the matters specified in paragraphs 3 and 4 of the Order.

2. As required by section 143(3) of the Act, we report that:

a) We have sought and obtained all the information and explanations which, to the best of our knowledge and belief were necessary for the purposes of our audit;

b) In our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination of those books;

c) The Balance Sheet, Statement of Profit and Loss including other comprehensive income, the Statement of changes in equity and the Statement of Cash Flow dealt with by this report are in agreement with the books of account;

d) In our opinion, the aforesaid Ind AS financial statements comply with the accounting standards specified under section 133 of the Act.

e) On the basis of written representations received from the directors as on March 31, 2018 and taken on record by the Board of Directors, none of the

INDEPENDENT AUDITORS' REPORT

Independent Auditors Report



109

directors is disqualified as on March 31, 2018 from being appointed as a director in terms of sub-section (2) of section 164 of the Act;

f) With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate report in Annexure-B. Our report expresses an unmodified opinion on the adequacy and operating effectiveness of the company’s internal financial controls over financial reporting.

g) With respect to the other matters to be included in the Auditor’s Report in accordance with the Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the basis of our information and according to the explanations given to us:

i) The company does not have any pending litigations which would impact its financial position.

ii) The company did not have any long term contracts including derivative contracts for which there were any material foreseeable losses.

iii) There were no amounts which were required to be transferred to the Investor Education Protection Fund by the company.

For Chevuturi Associates Chartered Accountants Firm Registration No.000632S

(Raghunadha Rao Balineni) Partner (Membership No: 028105)

Place:Camp: GunturDate : 28.05.2018

ANNEXURE-A TO THE INDEPENDENT AUDITORS’ REPORTThe Annexure referred to in paragraph 1 under “Report on other legal and regulatory requirements”

section of our report to the members of KALLAM TEXTILES LIMITED (Formerly known as Kallam Spinning Mills Limited) for the year ended March 31, 2018.

We report that :1. In respect of its fixed assets: a) The Company has maintained proper records

showing full particulars including quantitative details and situation of fixed assets.

b) According to the information and explanations furnished to us, the Company has not physically verified its fixed assets during the year. However, the Company has adopted a phased programme of verification which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets.

c) According to the information and explanations given to us and on the basis of our examination of the records of the company, the title deeds of immovable properties are held in the name of the company.

2. In respect of its inventories: a) According to the information and explanations

furnished to us, the Company has physically verified its inventories during the year and no material discrepancies were noticed on such verification. In our opinion, the frequency of verification is reasonable.

3. The Company has not granted any loans, secured or unsecured to companies, firms or other parties covered in the register maintained under section 189 of the Act. Consequently, clauses (iii)(a),(b) and (c) of paragraph 3 of the Order are not applicable.

4. The company has not advanced any loans or made any investments or provided any guarantees during the year. Hence the reporting requirements in terms of

clause (iv) of paragraph 3 of the Order regarding reporting on compliance with the provisions of section 185 and 186 of the Act with respect to the loans, investments and guarantees does not arise.

5. The company has borrowed interest free loans from directors and their relatives in pursuance of the stipulation imposed by Andhra Bank at the time of lending and the amount outstanding against such borrowings on 31st March, 2018 was Rs.320.55 lakhs. Apart from the said amounts, the company has not accepted any deposits from the public or members. Hence the question of compliance with the directives issued by Reserve Bank of India and the provisions of sections 73 to 76 or any other relevant provisions of the Act and the rules framed there under does not apply. According to the information furnished to us, no order has been passed on the Company by the Company Law Board or National Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal for non-compliance with the provisions of sections 73 to 76 of the Act.

6. We have broadly reviewed the books of account and records maintained by the Company pursuant to the rules made by the Central Government for the maintenance of cost records under section 148(1) of the Act and we are of the opinion that prima facie the prescribed accounts and records have been made and maintained. However, we have not carried out a detailed audit of the same.

7. a) According to the information furnished to us, the Company is regular in depositing with appropriate authorities, the undisputed statutory dues including Provident Fund, Employees’ State Insurance, Income-tax, Value added tax, Service




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tax, Customs duty, Excise duty, Cess, GST and any other statutory dues applicable to it. There were no undisputed statutory dues in arrears as at the date of the Balance Sheet under report, for a period of more than six months from the date they became payable.

b) According to the information furnished to us and records of the company examined by us, there were no amounts of Income tax, Value added tax, Customs duty, Excise duty, GST and Service tax etc., have been disputed by the Company, and hence were not remitted to the authorities concerned at the date of the Balance Sheet under report.

8. In our opinion and according to the information and explanations furnished to us by the Company, there were no defaults in repayment of dues to banks or government. However, the company has not borrowed any loans from financial institutions, or raised any funds by way of issue of debentures.

9. The company did not raise any money by way of initial public offer or further public offer (including debt instruments) during the year. In respect of term loans borrowed during the year from banks, the proceeds were applied for the purpose for which the said loans were raised.

10. According to the information and explanations given to us, no fraud by the company or any fraud on the company by its officers or employees has been noticed or reported during the year.

11. According to the information and explanation given to us and based on examination of the records of the company, the company has provided remuneration for managerial personnel in accordance with the requisite approvals mandated by the provisions of section 197 read with schedule V of the Act.

12. The company is not a nidhi company. Accordingly reporting under provisions of para 3(xii) of the Order is not applicable.

13. According to the information and explanations given to us and based on examination of records of the company, transactions with the related parties are in compliance with the provisions of section 177 and 188 of the Act where applicable and details of such transactions have been disclosed in the financial statements as required by the applicable accounting standards.

14. According to the information and explanations given to us and based on our examination of the records of the company, the company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures of the company.

15. According to the information and explanations given to us and based on our examination of the records of the company, the company has not entered into non-cash transactions with directors or persons connected with them. Accordingly paragraph 3(xv) of the Order is not applicable.

16. The company is not required to be registered under section 45-IA of the Reserve Bank of India Act, 1934.


(Raghunadha Rao Balineni) Partner (Membership No: 028105)

Place:Camp: GunturDate : 28.05.2018




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Annexure “B” to the Independent Auditors’ ReportReport on the Internal Financial Controls over Financial Reporting under

Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 ("the Act")

We have audited the internal financial controls over financial reporting of KALLAM TEXTILES LIMITED (Formerly known as Kallam Spinning Mills Limited ("the Company") as of 31st March 2018 in conjunction with our audit of the Ind AS financial statements of the Company for the year ended on that date. Management's Responsibility for Internal Financial Controls The Board of directors of the company is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India ('ICAI'). These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to company's policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Companies Act, 2013. Auditor’s Responsibility Our responsibility is to express an opinion on the internal financial controls over financial reporting of the company based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls over Financial Reporting (the "Guidance Note") issued by ICAI and the Standards on Auditing prescribed under section 143(10) of the Companies Act, 2013, to the extent applicable to an audit of internal financial controls. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects.Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Company's internal financial controls system over financial reporting.

Meaning of Internal Financial Controls over Financial Reporting A company's internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of Ind AS financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal financial control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of Ind AS financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorisations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements. Limitations of Internal Financial Controls Over Financial Reporting Because of the inherent limitations of internal financial controls over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Opinion In our opinion, to the best of our information and according to the explanations given to us, the Company has, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at 31 March 2018, based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India.


(Raghunadha Rao Balineni) Partner (Membership No: 028105)Place:Camp: GunturDate : 28.05.2018




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KALLAM TEXTILES LIMITED(Formerly known as Kallam Spinning Mills Limited)

BALANCE SHEET AS AT 31ST MARCH, 2018 (Amount in Rs.)

Particulars Note No. As at 31st March, 2018

As at 31st March, 2017

As at 1st April, 2016

ASSETS1 Non-Current Assets

(a) Property, Plant and Equipment 4 4,15,68,45,036 3,57,37,55,113 3,56,49,33,448 (b) Capital Work-in-progress 4 5,90,36,453 4,48,31,391 4,60,36,613 (c) Financial Assets

(i) Loans 5 6,45,05,945 6,25,02,865 4,91,18,983 (ii)Other financial assets 6 - - -

(d) Other Non-current Assets 7 14,64,073 2,24,60,945 8,02,296 Total Non-Current assets 4,28,18,51,507 3,70,35,50,314 3,66,08,91,340

2 Current Assets(a) Inventories 8 92,87,11,656 87,21,84,599 75,70,79,176 (b) Financial Assets

(i) Trade Receivables 9 22,77,96,003 31,06,24,716 24,34,57,242 (ii) Cash and cash equivalents 10 75,99,878 78,14,521 17,89,545 (iii) Other Bank balances 10 54,01,676 55,29,125 29,61,514 (iv) Loans 5 5,12,161 19,03,078 22,73,994 (v) Other financial assets 6 4,500 17,390 17,390

(c) Other Current assets 7 45,64,26,590 29,56,40,549 16,11,92,349 Total Current assets 1,62,64,52,464 1,49,37,13,978 1,16,87,71,210 Total Assets 5,90,83,03,971 5,19,72,64,292 4,82,96,62,550 EQUITY AND LIABILITIES

1 Equity(a) Equity Share Capital 11 8,56,38,750 6,85,11,000 6,85,11,000 (b) Other Equity 12 2,03,76,16,494 1,40,15,12,462 1,28,20,96,483

2,12,32,55,244 1,47,00,23,462 1,35,06,07,483 Liabilities

2 Non-current liabilities(a) Financial Liabilities

(i) Long-term borrowings 13 1,75,60,68,613 1,94,30,40,847 1,84,14,49,995 (ii) Other financial liabilities 14 - - -

(b) Provisions 15 1,24,81,130 1,03,49,650 71,41,210 (c ) Deferred Tax Liabilities (Net) 16 28,38,06,725 15,80,40,824 12,41,39,662 (d) Other non-current liabilities 17 8,74,37,870 9,80,86,333 9,00,49,460

Total Non-current liabilities 2,13,97,94,338 2,20,95,17,654 2,06,27,80,327 3 Current liabilities

(a) Financial Liabilities(i) Short-term borrowings 18 1,16,05,40,476 1,15,28,17,033 1,06,25,27,641 (ii) Trade payables 19 8,38,55,898 2,80,45,069 5,60,91,310 (iii) Other financial liabilities 14 35,08,37,434 28,50,43,044 26,92,36,305

(b) Other current liabilities 17 1,81,56,070 1,06,79,980 97,82,392 (c ) Provisions 15 6,32,691 41,322 31,027 (d) Current tax Liabilities (Net) 20 3,12,31,820 4,10,96,728 1,86,06,065

Total Current liabilities 1,64,52,54,388 1,51,77,23,176 1,41,62,74,740 Total Liabilities 3,78,50,48,728 3,72,72,40,830 3,47,90,55,067 Total Equity and Liabilities 5,90,83,03,971 5,19,72,64,292 4,82,96,62,550 Corporate Information 1Significant accounting policies 2Note on Adoption of IND AS 3

Balance Sheet

As per our report of even dateFor CHEVUTURI ASSOCIATES.,Chartered AccountantsFirm Regn no.000632S

RAGHUNADHA RAO BALINENIPartnerMembership No: 028105


For and on behalf of Board of Directors

P.VENKATESWARA REDDYManaging Director

G.V. KRISHNA REDDYJoint Managing Director

M.V.SUBBA REDDYChief Financial Officer




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STATEMENT OF PROFIT AND LOSS FOR THE YEAR ENDED 31ST MARCH, 2018(Amount in Rs.)

Particulars NoteNo.

Year ended 31st March, 2018


I Revenue from Operations 21 3,12,64,26,542 2,88,63,17,329 II Other Income 22 1,13,22,728 1,01,23,693 III Total Income (I+II) 3,13,77,49,270 2,89,64,41,022 IV Expenses

Cost of Material Consumed 23 1,70,28,44,603 1,58,01,38,922 Purchases of Stock-in-Trade 24 - - Changes in inventories of Finished goods and work-in-progress 25 (3,84,98,189) (11,81,21,634) Employee benefits expense 26 20,86,36,897 18,04,95,661 Finance costs 27 21,88,33,106 21,98,66,793 Depreciation and Amortization expense 28 14,19,46,320 13,64,89,377 Other expenses 29 69,33,02,560 68,57,71,056 Total Expenses (IV) 2,92,70,65,297 2,68,46,40,175

V Profit before exceptional items and tax (III-IV) 21,06,83,973 21,18,00,847 VI Exceptional Items - - VII Profit before tax (V-VI) 21,06,83,973 21,18,00,847 VIII Tax expense: 20

Current tax 4,60,26,739 5,00,00,000 Deferred tax (Net of MAT Credit Entitlement) 79,27,680 3,39,01,162

IX Profit for the year (VII-VIII) 15,67,29,554 12,78,99,685 X Other Comprehensive Income

A. Items that will not be re-classified to statement of Profit and loss (Net of tax) a) Remeasurement of land at fair value 28,44,38,715 - b) Revaluation surplus on measurement of buildings at fair value 33,72,20,182 - c) Remeasurement of defined employee benefit plans 9,27,375 (2,37,883)d) Deferred Tax charge on above (11,78,38,220) - Total Other comprehensive income 50,47,48,052 (2,37,883)

XI Total Comprehensive Income for the year (IX+X) 66,14,77,606 12,76,61,802 XII Earnings per Share - Basic and Diluted 43 3.66 2.99

(Profit after tax and before OCI/Wt. average number of shares)

Statement of Profit & Loss











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CASH FLOW STATEMENT FOR THE YEAR ENDED 31st MARCH 2018

PARTICULARS 2017-18Rs.

2016-17Rs.

CASH FLOW FROM OPERATING ACTIVITIESNet Profit before tax 21,06,83,973 21,18,00,847 Add/Less: Adjustments forDepreciation 14,19,46,320 13,64,89,377 Interest expense 21,88,33,106 21,98,66,793 Interest income (42,73,465) (32,24,480)Amortisation of Govt. grants (45,91,242) (44,05,796)Remeasurement of employee defined benefit plans 9,27,375 (2,37,883)Profit on sale of assets - (1,43,785)Loss on sale of assets 4,64,465 3,42,081 Operating profit before working capital changes 56,39,90,532 56,04,87,154 Add/Less: Adjustments for working capitalInventories (5,65,27,057) (11,51,05,423)Trade and other receivables (5,75,59,729) (23,62,87,289)Trade and other payables 6,24,22,697 (3,99,71,955)Cash generated from operations 51,23,26,443 16,91,22,487 Less: Direct taxes paid 5,98,64,908 2,75,09,337 Net cash from operating activities 45,24,61,535 14,16,13,150

CASH FLOW FROM INVESTING ACTIVITIESPurchase of fixed assets and Capital WIP (Net of subsidy) (11,61,28,193) (13,91,92,436)Proceeds from sale of fixed assets 26,26,683 76,17,770 Margin Money deposit with banks and other balances 1,27,449 (25,67,611)Interest received 42,73,465 32,24,480 Net cash used in Investing activities (10,91,00,596) (13,09,17,797)

CASH FLOW FROM FINANCING ACTIVITIESProceeds from/(Repayment of) borrowings (12,04,96,653) 22,34,42,238 Dividend and tax paid (82,45,823) (82,45,823)Interest and finance charges (21,48,33,106) (21,98,66,793)Net cash from/(Used in) financing activities (34,35,75,582) (46,70,378)

Net Increase/(Decrease) in cash and cash equivalents (2,14,643) 60,24,975

Cash and cash equivalents at the beginning of the Year 78,14,521 17,89,545 Cash and cash equivalents at the end of the Year (Refer Note.10) 75,99,878 78,14,521 Net increase in cash and cash equivalents (2,14,643) 60,24,975

PARTICULARS Opening balance as on 1st April 2017 Cash inflow /(Out flow) Non-Cash

changes (forex) Closing balance as on

31st March 2018 Long term borrowings (Refer Note 13) 2,13,79,55,659 (12,82,20,096) - 2,00,97,35,563 Short term borrowings (Refer Note 18) 1,15,28,17,033 77,23,443 - 1,16,05,40,476

Cash Flow Statement









Changes in Liability arising from Financing activities



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STATEMENT OF CHANGES IN EQUITY AS AT 31ST MARCH, 2018A. Equity share capital Particulars No’s INR As at 1st April, 2016 68,51,100 6,85,11,000 Changes in equity during the year:- Sub-division of 1 equity of Rs.10/ each into 5 equity of Rs.2/- each 3,42,55,500 - As at 31st March, 2017 3,42,55,500 6,85,11,000 Changes in equity during the year:- Bonus shares issued during the year 85,63,875 1,71,27,750 As at 31st March, 2018 4,28,19,375 8,56,38,750

Statement of Changes in Equity



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B. Other Equity

Particulars

Reserves and Surplus Items of Other Comprehensive Income

Total Investment

Subsidy General Reserve

Retained Earnings

Revaluation surplus

Revaluation surplus

Actuarial Gains/

(Losses)

Balance at the beginning of reporting period - 1st April, 2016 - as per IGAAP

1,47,00,000 1,60,36,486 64,52,08,955 - - - 67,59,45,441

Ind AS adjustments as per Ind AS 101:-

Investment subsidy treated as Government grant -1,47,00,000 - 44,18,617 - - -1,02,81,383

Proposed Dividend and Dividend tax - - 82,45,823 - - 82,45,823

Increase in carrying value of land on adoption of revaluation model on transition date transfered to retained earnings

- - - 60,81,86,602 - - 60,81,86,602

Balance at the beginning of reporting period - 1st April, 2016 - As per Ind AS

- 1,60,36,486 65,78,73,395 60,81,86,602 - - 1,28,20,96,483

Add: Profit for the year 16-17 - - 12,78,99,685 - - 12,78,99,685

Other Comprehensive Income - - - - -2,37,883 -2,37,883

Total Comprehensive Income for the year 12,78,99,685 - - -2,37,883 12,76,61,802

Less: Appropriations:

Final Dividend for the year 2015-16 68,51,100 - 68,51,100

Dividend Distribution tax 13,94,723 - 13,94,723

Balance at the end of reporting period - 31st March, 2017 - 1,60,36,486 77,75,27,257 60,81,86,602 - -2,37,883 1,40,15,12,462

Add: Profit for the year 17-18 - - 15,67,29,554 0 15,67,29,554

Other Comprehensive Income - 62,16,58,897 9,27,375 62,25,86,272

Less: Deferred tax on OCI -11,78,38,220 -11,78,38,220

Total Comprehensive Income for the year 15,67,29,554 50,38,20,677 9,27,375 66,14,77,606

Less: Appropriations

Utilised for issue of bonus shares 1,71,27,751 1,71,27,751

Proposed Dividend and Dividend tax for the year 2016-17

82,45,823 82,45,823

Transfer to General Reserve - - - 0 -

Balance at the end of reporting period - 31st March, 2018 - 1,60,36,486 90,88,83,237 60,81,86,602 50,38,20,677 6,89,492 2,03,76,16,494

Statement of Changes in Equity



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COMPANY OVERVIEW AND SIGNIFICANT ACCOUNTING POLICIES

Note no.1I. CORPORATE INFORMATION Kallam Textiles Limited (Formerly known as "Kallam Spinning Mills Limited") incorporated on 18th February, 1992. It is a leading textile company engaged in the business of Manufactuirng of Cotton Yarn, Dyed Yarn, Grey Fabric and Dyed Fabric. The Company has its Corporate office at Chowdavaram, Guntur.Note No : 2 II. BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING POLICIESi) Basis of preparationa) Statement of compliance In accordance with the notification issued by the

Ministry of Corporate affairs, the company has adopted Indian Accounting Standards (referred to as “Ind AS”) notified under the Companies (Indian Accounting Standards) Rules, 2015 and Companies (Indian Accounting Standards) Amendment Rules, 2016 w.e.f 1st April, 2017. Previous periods financial statements have been restated to Ind AS. In accordance with Ind AS 101 “First time adoption of Indian Accounting Standards”, the company has presented a reconciliation from the presentation of financial statements under Accounting standards notified under the Companies (Accounting Standards) Rules, 2006 (“Previous GAAP”) to Ind AS of Shareholders’ equity as at 1st April, 2016 and 31st March, 2017 and Statement of Profit and loss account for the year ended 31st March, 2017. These financial statements have been prepared in accordance with Ind AS as notified by Ministry of Corporate Affairs pursuant to section 133 of the Companies Act, 2013 read with Rule 3 of the Companies (Indian Accounting Standards) Rules, 2015 and Companies (Indian Accounting Standards) Amendment Rules, 2016.

b) Basis of measurement These financial statements are prepared in accordance

with the Indian Accounting Standards (Ind AS) under historical cost convention on accrual basis of accounting except for certain financial instruments which are measured at fair values, the provisions of the Companies Act, 2013 (‘the Act’) and guidelines issued by the Securities and Exchange Board of India (SEBI). Historical cost is generally based on the fair value of the consideration given in exchange for goods and services. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

Accounting policies have been consistently applied except a newly issued accounting standard is initially adopted or a revision to an existing accounting standard requires a change in the accounting policy hitherto in use.

c) Use of estimates The preparation of the financial statements in

conformity with Ind AS requires management of the Company to make judgments, estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses and disclosures relating to the contingent liabilities and commitments. The management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods.

The following are the critical judgements and estimates that have been made in the process of applying the company’s accounting policies that have the most significant effect on the amounts recognized in the financial statements.

i) Depreciation and useful lives of property, plant and equipment and intangible assets:

Property, Plant and Equipment represent a significant proportion of the asset base of the Company. The charge in respect of periodic depreciation is derived after determining an estimate of an asset’s expected useful life and the expected residual value at the end of its life. The useful lives and residual values of Company’s assets are determined by the management at the time the asset is acquired and reviewed periodically, including at each financial year end. The lives are based on historical experience with similar assets as well as anticipation of future events, which may impact their life, such as changes in technical or commercial obsolescence arising from changes or improvements in production or from a change in market demand of the product or service output of the asset. The Company also engages third party qualified valuers to ascertain the fair value of the Property, plant and equipment which requires estimation and judgment in determining the fair values which can be subject to change.

ii) Recoverability of trade receivable: Judgements are required in assessing the recoverability

of overdue trade receivables and determining whether a provision against those receivables is required. Factors considered include the credit rating of the counterparty, past history of receivables, the amount and timing of anticipated future payments and any possible actions that can be taken to mitigate the risk of non-payment.

iii) Fair value measurement of financial instruments: Some of the Company's assets and liabilities are

measured at fair value for financial reporting purposes. In estimating the fair value of an asset or liability, the Company uses market-observable data to the extent available. Where Level 1 inputs are not available, the fair value is measured using valuation techniques, including the discounted cash flow model, which involves various judgments and assumptions. The Company also engages third party qualified valuers to perform the valuation in certain cases. The

Statement on Accounting Policies



118

appropriateness of valuation techniques and inputs to the valuation model are reviewed by the Management.

iv) Provisions: Provisions and liabilities are recognized in the period

when it becomes probable that there will be a future outflow of funds resulting from past operations or events and the amount of cash outflow can be reliably estimated. The timing of recognition and quantification of the liability require the application of judgement to existing facts and circumstances, which can be subject to change. The carrying amounts of provisions and liabilities are reviewed regularly and revised to take account of changing facts and circumstances.

v) Impairment of non-financial assets: The Company assesses at each reporting date whether

there is an indication that an asset may be impaired. If any indication exists, the Company estimates the asset’s recoverable amount. An asset’s recoverable amount is the higher of an asset’s or Cash Generating Units (CGU’s) fair value less costs of disposal and its value in use. It is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or a groups of assets. Where the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their present value using pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs of disposal, recent market transaction are taken into account, if no such transactions can be identified, an appropriate valuation model is used.

vi) Impairment of financial assets: The impairment provisions for financial assets are

based on assumptions about risk of default and expected cash loss rates. The Company uses judgement in making these assumptions and selecting the inputs to the impairment calculation, based on Company’s past history, existing market conditions as well as forward looking estimates at the end of each reporting period.

vii) Income Taxes: The Company’s tax jurisdiction is India. Significant

judgments are involved in estimating budgeted profits for the purpose of paying advance tax, determining the provision for income taxes, including amount expected to be paid/ recovered for uncertain tax positions.

viii) Defined benefit obligations: The Company uses actuarial assumptions viz.,

discount rate, mortality rates, salary escalation rate etc., to determine such employee benefit obligations.

ix) Other estimates: The preparation of financial statements involves

estimates and assumptions that affect the reported amount of assets, liabilities, disclosure of contingent liabilities at the date of financial statements and the

reported amount of revenues and expenses for the reporting period. Specifically, the Company estimates the probability of collection of accounts receivable by analysing historical payment patterns, customer concentrations, customer credit-worthiness and current economic trends. If the financial condition of a customer deteriorates, additional allowances may be required.

The judgments, estimates and underlying assumptions are made with the management's best knowledge of the business environment and are reviewed on an on going basis. Accounting estimates could change from period to period. Actual results could differ from these estimates. Changes in estimates are reflected in the financial statements in the period in which changes are made and, if material, their effects are disclosed in the notes to the financial statements.

ii) Significant accounting policiesa) PROPERTY, PLANT AND EQUIPMENT An item of Property, Plant and Equipment that qualified

as an asset is measured at initial recognition at Cost. Property, plant and equipment are stated at cost/fair values less accumulated depreciation and impairment, if any. Costs directly attributable to acquisition are capitalized until the property, plant and equipment are ready for use, as intended by the management.

The company, as per the option given under Ind AS-101 “First time adoption of Indian Accounting Standards” elected to continue with the carrying value of all its fixed assets arrived under previous GAAP as on 1st April, 2016 as deemed cost at the date of transition for all the items of Property, plant and equipment except in case of land where the company opted for fair value measurement. The excess amount of fair value over its carrying value as per books of account amounting to Rs.60.82 crores is credited to revaluation surplus and shown under reserves and surplus.

The residual values of the assets as estimated by the management at the time of capitalization continues be the same as on 1st April, 2016.

Subsequent to the measurement of assets at deemed cost on date of transition, the company, based on Independent technical valuers report, revalued its assets of Land and buildings on 31.3.2018 and excess of carrying value of land Rs.28.45 crores and of buildings Rs.33.72 crores is recognized in Other comprehensive income and accumulated under equity under the head Revaluation surplus. The fair values of land has been arrived out by technical valuer based on prevailing market rates by considering the existing market conditions and in case of buildings under replacement model.

The company identifies and determines cost of each part of PPE separately, if the part has a cost which is significant to the total cost of that items of PPE and has useful life that is materially different from that of the remaining items.

Advances paid for acquisition of Property, plant and equipment outstanding at each balance sheet date is classified as capital advances under other non-current




119

assets. Cost of the assets not put to use before such date are disclosed under ‘Capital Work-in-progress’. Any subsequent expenditure relates to property, plant and equipment is capitalized only when it is probable that future economic benefits associated with these will flow to the company and the cost of the item can be measured reliably. Repairs and maintenance costs are recognized in the statement of profit and loss when incurred. Items of spare parts are recognized as Property, plant and equipment when they meet the definition of Property, plant and equipment. The cost and related depreciation are eliminated from the property, plant and equipment upon sale or retirement of the asset and the resultant gain or losses are recognized in statement of profit and loss.

b) BORROWING COSTS Borrowing Costs, that are directly attributable to the

acquisition or construction of assets, that necessarily take a substantial period of time to get ready for its intended use, are capitalised as part of the cost of qualifying asset when it is possible that they will result in future economic benefits and the cost can be measured reliably.

c) DEPRECIATION The company has computed depreciation on fixed assets

based on the useful lives as specified in Schedule II of Companies Act, 2013 under straight line method.

Depreciation methods, useful lives and residual values are reviewed periodically at the end of each financial year with the effect of any change in estimate accounted for on a prospective basis.

d) GOVERNMENT GRANTS Government grants are not recognized until there is

reasonable assurance that the company will comply with the conditions attaching to them and that the grants will be received.

Government grants related to revenue are recognized on a systematic basis in the Statement of Profit and Loss over the periods necessary to match them with the related costs which they are intended to compensate. When the grant relates to an asset, it is recognized as deferred revenue in the Balance sheet and transferred to the statement of Profit and Loss on a systematic and rational basis over the useful lives of the related assets.

e) IMPAIRMENT OF ASSETSi) Financial assets (other than at fair value) The company assesses at each balance sheet date

whether a financial asset or a group of financial assets is impaired. Ind AS 109 requires expected credit losses to be measured through a loss allowance. The company recognizes lifetime expected losses for all trade receivables that do not constitute a financing transaction. For all other financial assets, expected credit losses are measured at an amount equal to the 12 month expected credit losses or at an amount equal to the life time expected credit losses if the credit risk on the financial asset has increased significantly since initial recognition.

ii) Non financial assets Property, plant and equipment and intangible assets

with finite life are evaluated for recoverability whenever there is any indication that their carrying amount may not be recoverable. If any such indication exists, the recoverable amount (i.e higher of the fair value less cost of sale and value in use) is determined on an individual asset basis unless the asset does not generates cash flows that are largely independent of those from other assets. In such cases, the recoverable amount is determined for the cash generating unit (CGU) to which the asset belongs. If the recoverable amount of an asset or CGU is estimated to be less than its carrying amount, the carrying amount of the asset or CGU is reduced to its recoverable amount. An impairment loss is recognized in the statement of profit and loss.

An impairment loss is reversed in the statement of profit and loss if there has been a change in the estimates used to determine the recoverable amount and the carrying amount of the asset is increased to its revised recoverable amount subject to maximum of carrying amount.

f) INVENTORIESi. Textile division : Finished stocks are valued at cost or net realizable

value which ever is lower. Cotton Waste is valued at Net realizable Value. Work-in-progress, Raw materials, stores and spares

are valued at cost except where net realizable value of the finished goods they are used in is less than the cost of finished goods and in such an event, if the replacement cost of such materials etc., is less than their book values, they are valued at replacement cost.

ii. Power Division : a) Stock of power (Banked with APTRANSCO) is

valued at cost or net realizable value whichever is lower.

g) REVENUE RECOGNITION Revenue is recognized to the extent that it is probable

that the economic benefits will flow to the company and the revenue can be reliably measured.

i)Revenue from sale of products is recognised when the goods are delivered and titles have passed i.e time when the risks and rewards of ownership are transferred to the buyer under the terms of the contract and the company retains no effective control over the goods sold. Revenue is measured at the fair value of the consideration taking into account contractually defined terms of payment. Revenue is reduced for discounts, rebates and other similar allowances.

When there is any uncertainty as to the measurement or collectability of consideration, revenue recognition to the extent of amount of uncertainty is postponed until such uncertainty is resolved.

ii) GST and other taxes is not received by the company on its own account as it is collected on behalf of government. Accordingly it is excluded from revenue.




120

iii) Inter unit transfer of goods is accounted at market price at which the similar goods are purchased from external party.

iv) Interest income is recognized using effective interest method.

h) TAXES ON INCOME Income tax expense comprises the sum of tax currently

payable and deferred tax. Income tax expense is recognized in net profit in the statement of profit and loss except to the extent that it relates to items recognized directly in equity, in which case it is recognized in other comprehensive income.

Current tax is determined at the amount expected to be paid to or recovered from the tax authorities, using the tax rates and tax laws that have been enacted or substantively enacted by the balance sheet date.

Deferred income tax assets and liabilities are recognized for all temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. The carrying amount of deferred tax assets is reviewed at the end of each year and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the assets to be recovered.

Deferred income tax assets and liabilities are measured using tax rates and tax laws that have been enacted or subsequently enacted by the balance sheet date and are expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect of changes in tax rates on deferred income tax assets and liabilities are recognized as income or expense in the year of enactment. A deferred income tax asset is recognized to the extent that it is probable that future taxable profit will be available against which the deductible temporary differences and tax losses can be utilized.

Minimum Alternate Tax (MAT) paid in accordance with the tax laws, which gives future economic benefits in the form of adjustment to future income tax liability, is considered as deferred tax asset if there is convincing evidence that the company will pay normal Income Tax. Accordingly, MAT is recognized as an asset in the balance sheet when it is probable that future economic benefits associated with it will flow to the Company.

i) SEGMENT REPORTING The operating segments of the entity are identified based

on the revenues earned and expenses incurred whose operating results are regularly reviewed by the entity’s decision maker to make decisions about resources to be allocated to the segment and assess its performance for which discrete financial information is available.

The accounting policies adopted for segment reporting are in line with the accounting policies of the Company.

Inter segment revenue has been accounted for based on the market related prices.

Revenue and expenses have been identified to segments on the basis of their relationship to the operating activities of the segment. Revenue and

expenses which relate to the enterprise as a whole and are not allocable to segments on a reasonable basis, have been included under “Unallocated expenses”.

j) RETIREMENT BENEFITS The company provides retirement benefit in the form of

provident fund and group gratuity. Contributions to the Provident Fund, a defined contribution scheme, is made at the prescribed rates to the provident fund commissioner and is charged to the Profit and Loss account. There is no other obligation other than the contribution payable.

The Liability for group gratuity, which is unfunded, is provided based on actuarial valuation as per the Projected Unit Credit Method at the end of the each year.

The Liability for Leave encashment being short term benefits, is accounted on accrual of said liability.

k) FOREIGN EXCHANGE TRANSACTIONS The functional currency of the company is the Indian

rupee and the financial statements are presented in Indian rupee.

Transactions in foreign currency are initially accounted at the exchange rate prevailing on the date of the transaction, and adjusted appropriately, with the difference in the rate of exchange arising on actual receipt/payment during the year.

At each Balance Sheet datei) Foreign currency denominated monetary items are

translated into the relevant functional currency at exchange rate at the balance sheet date. The gains and losses resulting from such translations are included in net profit in the statement of profit and loss.

ii) Foreign currency denominated non-monetary items are reported using the exchange rate at which they were initially recognized.

Transaction gains or losses realized upon settlement of foreign currency transactions are included in statement of profit and loss.

l) PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS

Provisions are recognised when there is a present obligation as a result of past event, it is probable that the company will be required to settle the obligation and a reliable estimate of the amount of obligation can be made. Where the effect of time value of money is material, the amount of provision is the present value of the expenditure to be required to settle the obligation. These estimates are reviewed at each reporting date and adjusted to reflect the current best estimates.

Contingent liability is disclosed for (i) Possible obligation which will be confirmed only by future events not wholly within the control of the Company or (ii) Present obligations arising from past events where it is not probable that an outflow of resources will be required to settle the obligation or a reliable estimate of the amount of the obligation cannot be made. The company does not recognise contingent liabilities but the same are disclosed in the notes.




121

Contingent assets are not recognized in the financial statements since this may result in the recognition of income that may never be realized.

m) FINANCIAL INSTRUMENTS Initial recognition: The company recognizes financial assets and liabilities

when it becomes a party to the contractual provisions of the instruments. All financial assets and liabilities are recognized at fair value on initial recognition. Transaction costs that are directly attributable to the acquisition or issue of financial assets and liabilities (other than the financial assets and liabilities at fair value through profit and loss) are added to or deducted from the fair value of financial assets and liabilities, as appropriate, on initial recognition. Transaction costs that are directly attributable to the acquisition or issue of financial assets and liabilities at fair value through profit or loss are recognized immediately in profit or loss.

Subsequent measurement: i) Financial assets carried at amortized cost: A financial asset is subsequently measured at

amortized cost if it is held within a business model whose objective is to hold the asset in order to collect contractual cash flows, and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

(ii) Financial assets at fair value through other comprehensive income.

A financial asset is subsequently measured at fair value through other comprehensive income if it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. Further, in cases where the Company has made an irrevocable election based on its business model, for its investments which are classified as equity instruments, the subsequent changes in fair value are recognized in other comprehensive income.

(iii) Financial assets at fair value through profit or loss A financial asset which is not classified in any of the

above categories is subsequently fair valued through profit or loss.

De-recognition of financial asset The company de-recognises financial assets when the

contractual right to the cash flows from the asset expires or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party.

(iv) Financial liabilities Financial liabilities are subsequently carried at

amortized cost using the effective interest method. The effective interest method is a method of calculating the amortization cost of a financial liability and of allocating interest expense over the relevant period. The effective

interest is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability to the net carrying amount on initial recognition.

De-recognition of financial liability The company de-recognises financial liabilities when

the company’s obligations are discharged, cancelled or expired. The difference between the initial carrying amount of the financial liabilities and their redemption value is recognized in the statement of profit and loss over the contractual terms using the effective interest method.

n) EARNING PER EQUITY SHARE Basic earning per equity share is computed by dividing the

net profit attributable to the equity shareholders of the company by the weighted average number of equity shares during the period. The company did not have any potentially dilutive securities in any of the years presented.

The number of equity shares are adjusted retrospectively for all periods presented for any share splits and bonus shares issues including for changes effected prior to the approval of financial statements by the board of directors.

o) CASH FLOW STATEMENT Cash flows are reported using indirect method whereby

the profit for the period is adjusted for the effects of transactions of a non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments and items of income or expenses associated with investing or financing cash flows. The cash flows from operating, investing and financial activities of the company are segregated.

p) DIVIDENDS Final dividends on shares are recorded as a liability on

the date of approval by the shareholders i.e the year in which the dividends are approved and interim dividends are recorded as a liability on the date of declaration by the company’s board of directors.

III. Standards Issued but not effective On March 28, 2018, the Ministry of Corporate Affairs

(MCA) has notified Ind AS 115 – Revenue from Contract with Customers and certain amendments to existing Ind AS. These amendments shall be applicable to the company from April 01, 2018.

a) Issue of Ind AS 115 – Revenue from Contracts with Customers

Ind AS 115 will supersede the current revenue recognition standard Ind AS-18 Revenue, Ind AS-11 Construction Contracts and the related interpretations. Ind AS-115 provides a single model of accounting for revenue arising from contracts with customers based on the identification and satisfaction of performance obligations.

b) Amendment to Existing Ind AS The MCA has also carried out amendments in some of

the existing standards but application of said standards are not expected to have any significant impact on the Company’s Financial Statements.




122


Note no:3FIRST TIME ADOPTION OF IND AS:

The company has adopted Indian Accounting Standards (Ind AS) as notified by the Ministry of Corporate Affairs with effected from 1st April, 2017 with transition date of 1st April, 2016. These financial statements for the year ended 31st March, 2018 are the first Ind As financial statements. For all periods upto and including the year ended 31st March, 2017, the company prepared its financial statements in accordance with the accounting standards notified under section 133 of the Companies Act, 2013 read together with paragraph 7 of the Companies (Accounts) Rules, 2014 (Previous GAAP).

The adoption of Ind AS has been carried out in accordance with Ind AS 101, First time adoption of Indian Accounting Standards requires that all Ind AS standards and interpretations that are issued and effective for the first Ind AS financial statements be applied retrospectively and consistently for all financial years presented. Accordingly, the company has prepared financial statements which comply with Ind AS for the year ended 31st March, 2018 together with the comparative information as at and for the year ended 31st March, 2017 and the opening Ind AS balance sheet as at 1st April, 2016, the date of transition to Ind AS.

In preparing these Ind AS financial statements, the company has availed certain exemptions and exceptions in accordance with Ind AS 101. The resulting difference between the carrying values of the assets and the liabilities in the financial statements as at the transition date under Ind AS and previous GAAP have been recognized directly in equity.

A. Exceptions from retrospective application.

(i) Estimates exception: Upon an assessment of the estimates made under Previous GAAP, the Company has concluded that there was no necessity to revise such estimates under Ind AS except where estimates were required by Ind AS and not required by Previous GAAP.

(ii) Classification and measurement of financial assets: The Company has determined the classification of financial assets in terms of whether the meet the amortised cost creteria or the fair value through other comprehensive income creteria based on the facts and circumstances that existed as of the transition date.

(iii) Deemed cost for property, plant and equipment and intangible assets: The Company has elected to continue with carrying value of all its property plant and equipment, and intangible asets recognised as of April 1, 2016 (transition date) measured as per the previous GAAP and use that carrying value as its deemed cost as of the transition date except in case of land where fair value was adopted. The excess amount of fair value over its carrying amount was transfered to revaluaton surplus and grouped under Reserves and Surplus.

(iv) Interest free loans from Government: The requirements of Ind AS 20- Accounting for Government Grants and Disclosure of Government Assistance and Ind AS 109- Financial Instruments, in respect of recognition and measurement of interest free loans from government authorities is opted to be applied prospectively to all grants received after the date of transition to Ind AS. Consequently, the carrying amount of such interest free loans as per the financial statements of the Company prepared under Previous GAAP is considered for recognition in the opening Ind AS Balance Sheet.

B. Transition to Ind AS - Reconciliations.

The following reconciliations provide a quantification of the effect of significant differences arising from the transition from Previous GAAP to Ind AS in accordance with Ind AS 101:

(i) Adjustments made by the company in restating the financial statements prepared under previous GAAP, including the balance sheet as at 1st April, 2016 and the financial statements as at and for the year ended 31st March, 2017.

(ii) Reconciliation of Equity as at 1st April, 2016 and 31st March, 2017

(iii) Reconciliation of Total Comprehensive Income for the year ended 31st March, 2017

Notes on Accounts



123

ParticularsIGAAP as at 31st March,

2017

Ind AS adjustments

Ind AS as at 31st March, 2017

IGAAP as at 1st April, 2016

Ind AS adjustments

Ind AS as at 1st April, 2016

Assets1 Non-Current Assets

(a) Property, Plant and Equipment 3,56,14,24,713 1,23,30,400 3,57,37,55,113 2,95,67,46,846 60,81,86,602 3,56,49,33,448 (b) Capital Work-in-progress 4,48,31,391 - 4,48,31,391 4,60,36,613 - 4,60,36,613 (c) Financial Assets

(i) Loans 6,25,02,865 - 6,25,02,865 4,91,18,983 - 4,91,18,983 (ii) Other financial assets - - - - - -

(d) Other Non-current Assets 2,24,60,945 - 2,24,60,945 8,02,296 - 8,02,296 3,69,12,19,914 1,23,30,400 3,70,35,50,314 3,05,27,04,738 60,81,86,602 3,66,08,91,340

2 Current Assets(a) Inventories 87,21,84,599 - 87,21,84,599 75,70,79,176 - 75,70,79,176 (b) Financial Assets

(i) Trade Receivables 31,06,24,716 - 31,06,24,716 24,34,57,242 - 24,34,57,242 (ii) Cash and cash equivalents 78,14,521 - 78,14,521 17,89,545 - 17,89,545 (iii) Other Bank balances 55,29,125 - 55,29,125 29,61,514 - 29,61,514 (iv) Loans 19,03,078 - 19,03,078 22,73,994 - 22,73,994 (v) Other financial assets 17,390 - 17,390 17,390 - 17,390

(c) Other Current assets 39,72,18,101 -10,15,77,552 29,56,40,549 22,37,57,058 -6,25,64,709 16,11,92,349 1,59,52,91,530 -10,15,77,552 1,49,37,13,978 1,23,13,35,919 -6,25,64,709 1,16,87,71,210

Total Assets 5,28,65,11,444 -8,92,47,152 5,19,72,64,292 4,28,40,40,657 54,56,21,893 4,82,96,62,550 EQUITY AND LIABILITIESEquity

(a) Equity Share Capital 6,85,11,000 - 6,85,11,000 6,85,11,000 - 6,85,11,000 (b) Other Equity 1,41,11,11,114 -95,98,652 1,40,15,12,462 67,59,45,441 60,61,51,042 1,28,20,96,483

1,47,96,22,114 -95,98,652 1,47,00,23,462 74,44,56,441 60,61,51,042 1,35,06,07,483 Liabilities

1 Non-current liabilities(a) Financial Liabilities

(i) Long-term Borrowings 1,94,30,40,847 - 1,94,30,40,847 1,84,14,49,995 - 1,84,14,49,995 (ii) Other financial liabilities - - - - - -

(b) Provisions 1,03,49,650 - 1,03,49,650 71,41,210 - 71,41,210 (c ) Deferred Tax Liabilities (Net) 25,96,18,376 -10,15,77,552 15,80,40,824 18,67,04,371 -6,25,64,709 12,41,39,662 (d) Other non-current liabilities 9,80,86,333 - 9,80,86,333 9,00,49,460 - 9,00,49,460

2,31,10,95,206 -10,15,77,552 2,20,95,17,654 2,12,53,45,036 -6,25,64,709 2,06,27,80,327 2 Current liabilities

(a) Financial Liabilities(i) Short-term Borrowings 1,15,28,17,033 - 1,15,28,17,033 1,06,25,27,641 - 1,06,25,27,641 (ii) Trade payables 2,80,45,069 - 2,80,45,069 5,60,91,310 - 5,60,91,310 (iii) Other financial liabilities 28,50,43,044 - 28,50,43,044 26,92,36,305 - 26,92,36,305

(b) Other current liabilities -1,12,49,072 2,19,29,052 1,06,79,980 -4,98,991 1,02,81,383 97,82,392 (c ) Provisions 41,322 - 41,322 82,76,850 -82,45,823 31,027 (d) Current tax Liabilities (Net) 4,10,96,728 - 4,10,96,728 1,86,06,065 - 1,86,06,065

1,49,57,94,124 2,19,29,052 1,51,77,23,176 1,41,42,39,180 20,35,560 1,41,62,74,740 Total Liabilities 3,80,68,89,330 -7,96,48,500 3,72,72,40,830 3,53,95,84,216 -6,05,29,149 3,47,90,55,067 Total Equity and Liabilities 5,28,65,11,444 -8,92,47,152 5,19,72,64,292 4,28,40,40,657 54,56,21,893 4,82,96,62,550

Notes on Accounts

RECONCILIATION OF EQUITY AS PREVIOUSLY REPORTED UNDER IGAAP TO IND AS



124

RECONCILIATION OF STATEMENT OF PROFIT AND LOSS REPORTED UNDER IGAAP TO IND AS

Particulars

IGAAP for the year ending 31st March,

2017

Ind AS adjust-ments

Ind AS for the year ending 31st March,

2017

I Revenue from Operations 2,88,63,17,329 2,88,63,17,329

II Other Income 90,41,912 10,81,781 1,01,23,693

III Total Income (I+II) 2,89,53,59,241 10,81,781 2,89,64,41,022

IV Expenses

Cost of Material Consumed 1,58,01,38,922 1,58,01,38,922

Purchase of Stock in Trade - -

(Increase)/Decrease in Inventories of Finished goods, Stock-in-Trade and Work-in-progress

-11,81,21,634 -11,81,21,634

Employee benefits expense 18,07,33,544 -2,37,883 18,04,95,661

Finance costs 21,98,66,793 21,98,66,793

Depreciation and Amortization expense 13,60,90,327 3,99,050 13,64,89,377

Other expenses 68,57,71,056 68,57,71,056

Total Expenses (IV) 2,68,44,79,008 1,61,167 2,68,46,40,175

V Profit before exceptional items and tax (III-IV) 21,08,80,233 9,20,614 21,18,00,847

VI Exceptional Items - -

VII Profit before tax (VII-VIII) 21,08,80,233 9,20,614 21,18,00,847

VIII Tax expense:

Current tax 5,00,00,000 - 5,00,00,000

Deferred tax charge ( Net of MAT Credit ) 3,39,01,162 - 3,39,01,162

IX Profit for the year (VII-VIII) 12,69,79,071 9,20,614 12,78,99,685

X Other Comprehensive Income *

A. Items that will not be re-classified to

statement of Profit and loss (net of tax)

a) Acturial Loss on remeasurementof defined employee benefit plans

- -2,37,883 -2,37,883

Total Other comprehensive income - -2,37,883 -2,37,883

XI Total Comprehensive Income for the year (IX+X) 12,69,79,071 6,82,731 12,76,61,802

* Under the previous GAAP, there was no concept of Other Comprehensive Income . Under Ind As, specified items of Income, expense, gains or losses are required to be presented in Other Comprehensive Income .

Notes on Accounts



125

RECONCILIATION BETWEEN PREVIOUS GAAP AND IND AS Note No.3(i) Reconciliation of Equity

Particulars NoteAs at

31st March, 2017


Total Equity as per Previous GAAP (A) 1,47,96,22,114 74,44,56,441

a) Treatment of Investment subsidy as per Ind AS 20 1 -1,02,81,383 -1,02,81,383

b) Amortisation of Deferred government grant over the useful life of the asset to which such grant is sanctioned

10,81,781 -

c) Depreciation on assets for which grant is treated as per Ind AS 20 -3,99,050 -

d) Proposed Dividend and tax 2 - 82,45,823

e) Revaluation of Land on adoption of fair value model on first time adoption of Ind AS transition provisions under Ind AS-101

4 - 60,81,86,602

Total adjustment to Equity (B) -95,98,652 60,61,51,042

Total Equity as per Ind AS (C=A+B) 1,47,00,23,462 1,35,06,07,483

(ii) Reconciliation for Total Comprehensive Income

Particulars Note Year ended 31st March, 2017

Net Profit after tax under Previous GAAP 12,69,79,071

a) Amortisation of Deferred government grant over the useful life of the asset. 1 10,81,781

b) Depreciation on assets for which grant is treated as per Ind AS 20 -3,99,050

c) Remeasurement benefits on defined benefit obligations 3 2,37,883

Net Profit after tax before OCI as per Ind AS 12,78,99,685

Other Comprehensive Income

a) Remeasurement benefits on defined benefit obligations 3 -2,37,883

Total Comprehensive Income for the year as reported under Ind AS 12,76,61,802

Notes on Accounts



126

Notes to Reconciliation between previous GAAP and Ind AS 1. Deferred Government grants Under previous GAAP, government grants received in the nature of EPCG and other subsidies are deducted in the value of the asset and the net amount is capitalised in the books of accounts. Under Ind AS, government grants received have been recognised separately in the financial statements with the name Deferred Government grants under Other current liabilities. The deferred grant is recognised in the Statement of Profit and Loss in proportion of depreciation charged on such assets.2. Dividend and Tax on DividendUnder previous GAAP, dividend payable is recorded as a liability in the period to which it relates and under Ind AS dividend is recognised as a liability in the period in which the obligation to pay is established.3.Remeasurement of net defined benefit plans :Under previous GAAP, actuarial gains and losses were recognised in the statement of profit and loss. Under Ind AS, the actuarial gains and losses form part of re-measurement of net defined benefit liability which is recognised in other comprehensive income in respective years. However, such a change does not have any effect on total comprehensive income or total equity.4. Cost of Property, plant and equipmentThe company has elected to measure all its property, plant and equipment and intangible assets at the previous GAAP carrying amount as its deemed cost at the date of transition to Ind AS except in case of land where fair value was adopted.The excess amount of fair value over its carrying amount

was transferred to revaluation surplus and grouped under Reserves and Surplus .5. Interest free sales tax loanIn the financial statements prepared under Previous GAAP, the carrying value of Interest free loan was recognised at the principal amounts payable by the company. Under Ind AS, Interest free borrowing being a financial liability is required to be recognised initially at fair value and subsequently measured at amortised cost using the effective interest method. The difference between such fair value and the carrying value is recognised as deferred income disclosed under Other liabilities.On the date of transition, there is no change in the amount of Interest free loan since the Company has opted for exemption from retrospective application for fair valuation of such financial instruments. However, the company has not received any such loans subsequent to the date of transition.6. Deferred Tax : Under previous GAAP, deferred tax was accounted using the income statement approach, on the timing differences between the taxable profit and accounting profits for the period. Under IND AS, deferred tax is recognized following balance sheet approach on the temporary differences between the carrying amount of asset or liability in the balance sheet and its tax base. In addition, various transitional adjustments has also lead to recognition of deferred taxes on new temporary differences.Minimum Alternate Tax (MAT) paid in accordance with the tax laws, which gives future economic benefits in the form of adjustment to future income tax liability, is considered as deferred tax asset if there is convincing evidence that the company will pay normal Income Tax.

Notes on Accounts



127


Notes to the Financial StatementsPROPERTY, PLANT AND EQUIPMENT AND CAPITAL WORK-IN-PROGRESS Note No.4

Particulars As at 31st March, 2018



Carrying Amounts of:

Land 925,640,141 641,092,626 639,930,301

Factory Buildings 700,853,553 492,989,030 512,916,558

Office Buildings 510,784,199 378,964,721 375,555,619

Plant and Equipment 1,924,731,015 1,949,412,810 1,916,655,561

Electrical and Electronic Equipment 80,110,877 93,922,887 105,841,659

Borewells and Water pumps 1,055,801 1,490,831 1,576,153

Office and Other equipment 4,954,778 6,327,334 5,836,537

Furniture and Fixtures 811,207 982,571 1,153,935

Vehicles 7,903,465 8,572,303 5,467,125

4,156,845,036 3,573,755,113 3,564,933,448

Capital Work-in-progress 59,036,453 44,831,391 46,036,613

Notes on Accounts



128

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-

49,

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- -

- 2

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- -

- -

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t 31st

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ch, 2

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64,

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8

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- -

- -

- -

- -

28,

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-

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- -

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- -

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- -

3,8

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4 -

- -

- 7

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7,04

9 As

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, 201

8 9

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70,7

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51,

27,0

8,46

2 2,

10,8

3,24

,160

1

0,99

,59,

388

20,

19,0

59

99,

91,4

45 1

1,53

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1,0

4,41

,461

4,3

8,77

,68,

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umul

ated

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reci

atio

n

As a

t 1st A

pril,

201

6 -

- -

- -

- -

- -

- D

epre

ciat

ion

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ge fo

r the

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r -

1,9

9,27

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7

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8

,90,

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1,5

2,20

,135

5

,28,

228

25,

44,5

25

1,7

1,36

4 1

3,21

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1

3,64

,89,

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disp

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s -

- -

5,8

79

- -

- -

83,

528

89,

407

As a

t 31st

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ch, 2

017

- 1

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27,5

28

77,

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98

8,9

0,48

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1

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20,1

35

5,2

8,22

8 2

5,44

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1

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364

12,

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48

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63,9

9,97

0 D

epre

ciatio

n ch

arge

for t

he y

ear

- 1

,79,

86,8

91

1,00

,89,

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9,4

6,43

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1

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76

4,3

5,03

0 2

4,92

,142

1

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With

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As

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8 -

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8 9

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70,0

8,53

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6 6

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ms

Loan

s ta

ken

by th

e C

ompa

ny fr

om IR

EDA,

And

hra

Bank

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ian

Bank

and

Ban

k of

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oda

are

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f firs

t cha

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ts o

f the

com

pany

. 2)

Ref

er S

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t Acc

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r the

hea

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ipm

ent .

Notes on Accounts



129

Unallocated Capital Expenditure *

Nature of Expenditure Interest on Borrowings Bank Charges Total

As at 1st April, 2016 42,411 15,15,700 15,58,111

Additions 57,184 - 57,184

Capitalised during the year - 15,15,700 15,15,700

As at 31st March, 2017 99,595 - 99,595

Additions - - -

Capitalised during the year 99,595 - 99,595

As at 31st March, 2018 - - -

*Note : The above expenditure was included under capital work in progress in respective years.

Capital Work-in-Progress Particulars Amount

Carrying value - At Cost/Deemed Cost

As at 1st April, 2016 4,60,36,613

Additions 14,03,97,658

Capitalised during the year 14,16,02,880

As at 31st March, 2017 4,48,31,391

Additions 10,87,60,647

Capitalised during the year 9,45,55,585

As at 31st March, 2018 5,90,36,453

LOANS Note No.5

Particulars Non-Current Current

As at 31st March,

2018

As at 31st March,

2017

As at 1st April,

2016

As at 31st March,

2018

As at 31st March,

2017

As at 1st April,

2016

Unsecured, Considered Good

a) Security deposits with Govt. authorities and others

6,45,05,945 6,25,02,865 4,91,18,983 - - -

b) Employee related advances - - 4,80,965 8,24,637 19,76,945

c) Other advances - - 31,196 10,78,441 2,97,049

Total 6,45,05,945 6,25,02,865 4,91,18,983 5,12,161 19,03,078 22,73,994

Note: 1) No loans are due from directors or other officers of the company either severally or jointly with any other person nor any other loans are due from firms in which any director is a partner, a director or a member.

Notes on Accounts



130


Notes to the Financial StatementsOTHER FINANCIAL ASSETS Note No.6


As at 31st March,

2018

As at 31st March,

2017

As at 1st April,

2016

As at 31st March,

2018

As at 31st March,

2017

As at 1st April,

2016

a) Deposits Recoverable - - - 17,390 17,390

b) Other receivables 4,500 - -

Total - - - 4,500 17,390 17,390

OTHER ASSETS Note No.7


As at 31st March,

2018

As at 31st March,

2017

As at 1st April,

2016

As at 31st March,

2018

As at 31st March,

2017

As at 1st April,

2016


a) Advances for Capital goods 14,64,073 2,24,60,945 8,02,296 - - -

b) Advances to creditors against supplies

- - 1,23,53,859 1,40,20,430 87,28,087

c) Prepaid expenses - - 33,74,830 24,74,026 10,11,539

d) Balances with Statutory Authorities:

Excise Duty receivable (Tran-1) 24,43,758 - -

IGST receivable 16,00,352 - -

CGST Receivable 69,58,444 - -

SGST receivable 1,59,54,700 - -

VAT Credit - - - - 1,21,759

e) EPCG Terminal Excise Duty refund receivable

- - 87,38,420 95,26,129 67,34,554

f) Duty draw back refund receivable

- - 37,47,661 38,90,645 29,11,727

g) Interest rebate receivable under TUFscheme

- - 3,63,29,591 4,18,01,799 7,52,15,617

h) Interest subsidy receivable from AP government

- - 16,91,77,796 8,65,41,396 -

i) Power Subsidy receivable - - 19,11,24,397 13,44,58,665 6,32,06,459

j) Accrued Interest - - 46,22,782 29,27,459 32,62,607

Total 14,64,073 2,24,60,945 8,02,296 45,64,26,590 29,56,40,549 16,11,92,349

Notes on Accounts



131

INVENTORIES Note No.8




Spinning/Power:

Raw materials 41,43,20,340 39,71,75,447 41,55,09,427

Work-in-progress 8,78,10,939 8,08,05,273 5,13,88,693

Finished goods 6,54,19,600 10,26,39,629 7,25,09,156

Stores and spares 3,75,69,590 3,23,12,043 2,69,29,333

Weaving/Dyeing unit:

Raw materials 99,93,202 1,33,50,974 96,92,750

Work-in-progress 20,79,69,574 16,77,73,412 8,71,25,590

Finished goods 8,57,75,191 6,00,19,583 7,93,32,042

Stores and spares 1,98,53,220 1,81,08,238 1,45,92,185

Total 92,87,11,656 87,21,84,599 75,70,79,176

Note :(i) The mode of valuation of inventories has been stated in significant accounting Policies.(ii) The cost of inventories recognised as an expense for the year ended 31st March, 2018 was Rs. 1,88,20,92,825/- (for the year ended 31st March, 2017: Rs. 1,77,27,93,287/-)(iii) All the above inventories are offered as security in respect of working capital loans availed by the company from all the banks.(iv) There are no inventories expected to be recovered after more than twelve months.

TRADE RECEIVABLES Note No.9





Outstanding for a period exceeding six months 10,248 8,69,867 3,52,97,819

Others 22,77,85,755 30,97,54,849 20,81,59,423

22,77,96,003 31,06,24,716 24,34,57,242

Unsecured, Considered Doubtful

Outstanding for a period exceeding six months - 1,33,519 1,33,519

Less: Provision for expected Credit Losses - 1,33,519 1,33,519

Total 22,77,96,003 31,06,24,716 24,34,57,242

Note :a) The average credit period of trade receivables varies from 15-45 days. b) The above does not include any amount due from related parties.c) The company has used practical expedient by computing the expected credit loss for doubtful trade receivables based

on the ageing of receivables, history of recoverability from the customers, credit worthiness of the customers etc.,d) During the year, the company has recognised loss allowance of Rs.Nil under 12 months expected credit loss model.

Notes on Accounts



132

CASH AND CASH EQUIVALENTS Note No.10




i) Balances with banks in Current accounts a. In Current accounts 23,75,637 48,27,326 3,52,255 ii) Cash on hand 52,24,241 29,87,195 14,37,290 Total 75,99,878 78,14,521 17,89,545

OTHER BANK BALANCES Note No.10




a. Earmarked balances with banks held as margin money against LC and guarantees falls due for maturity within 12 months from the date of Balance sheet.

40,00,881 40,70,196 14,83,462

b. Earmarked balances with banks towards unclaimed dividends 14,00,795 14,58,929 14,78,052

Total 54,01,676 55,29,125 29,61,514

AUTHORISED SHARE CAPITAL Note No.11

Particulars Equity

No’s INR

As at 1st April, 2016 1,00,00,000 10,00,00,000

Changes during the year (Refer note) - -

As at 31st March, 2017 5,00,00,000 10,00,00,000

Changes during the year - -

As at 31st March, 2018 5,00,00,000 10,00,00,000

Note: During the year 2016-17, the company has sub divided one equity share of Rs.10/- each into 5 equity shares of Rs.2/- each.

ISSUED SHARE CAPITAL Particulars No’s INR

As at 1st April, 2016 68,51,100 6,85,11,000

Sub-division of one Equity shares of ` 10/- each into 5 Equity shares of ` 2/- each 2,74,04,400 -

As at 31st March, 2017 3,42,55,500 6,85,11,000

Bonus shares issued during the year 85,63,875 1,71,27,750

As at 31st March, 2018 4,28,19,375 8,56,38,750

Note: During the year 2016-17, the company has sub divided one equity share of Rs.10/- each into 5 equity shares of Rs.2/- each. During the year 2017-18, the company has issued and alloted Nos.85,63,875 of Equity shares as fully paid up bonus shares in the ratio of 1:4 one (1) equity share for every four (4) equity shares held by capitalizing retained earnings.Rights, Preferences and restrictions attached to Equity sharesThe Company has only one class of Equity shares having a face value of Rs.2/- each. Each holder of equity share is entitled to one vote per share on poll and have one vote on show of hands. In the event of liquidation of Company, the equity share holders are eligible to receive the remaining assets of the company in proportion to their shareholding after distribution of payments to preferential creditors.

Notes on Accounts



133

SHARE CAPITALDetails of share holders holding more than 5% of total number of shares

Name of the Share Holder

As at 31st March, 2018 As at 31st March, 2017 As at 1st April, 2016

No of Shares held

% out of total number

of shares of the

Company

No of Shares

held


of shares of the

Company

No of Shares

held


of shares of the

Company

Kallam Haranadha Reddy 22,45,625 5.24% 17,96,500 5.24% 3,59,300 5.24%

Gurram Venkata Krishna Reddy 35,13,723 8.21% 27,75,325 8.10% 5,55,065 8.10%

Kallam Agro products and Oils Pvt. Ltd 54,65,043 12.76% 43,72,035 12.76% 8,74,057 12.76%

T. Lakshminarayanan 19,65,819 4.59% 26,56,873 7.76% 7,80,125 11.39%

1,31,90,210 30.80% 1,16,00,733 33.87% 25,68,547 37.49%

Out of last five financial years, during the financial year 2017-18, the company has issued bonus shares Nos.85,63,875 in ratio of 1:4 i.e one equity share for every four shares held by capitalizing part of retained earnings. None of the shares were alloted in pursuant to contract without payment being received in cash.

Notes on Accounts

OTHER EQUITY Note No.12INVESTMENT SUBSIDY

Particulars Amount

As at 1st April, 2016 as per IGAAP 1,47,00,000

Add/(Less): Ind AS adjustments

Investment subsidy received on fixed assets transferred to Deferred Govt. grant as per Ind AS 20 -1,47,00,000

As at 1st April, 2016 as per Ind AS -

Changes during the year -

As at 31st March, 2017 -


As at 31st March, 2018 -

GENERAL RESERVE

Particulars Amount

As at 1st April, 2016 1,60,36,486

Transfers during the year -

As at 31st March, 2017 1,60,36,486

Transfers during the year -

As at 31st March, 2018 1,60,36,486



134Notes on Accounts

REVALUATION RESERVE

Particulars Amount

As at 1st April, 2016 as per IGAAP -

Add/(Less): Ind AS adjustments

Measurement of land at fair value on 1st time adoption of Ind AS 60,81,86,602

As at 1st April, 2016 as per Ind AS 60,81,86,602


As at 31st March, 2017 60,81,86,602

Changes during the year

- Remeasurement of land at fair value 28,44,38,715

- Measurement of buildings at fair value 33,72,20,182

- Deferred tax on above -11,78,38,220

As at 31st March, 2018 1,11,20,07,279 Note : a) The above amount includes Rs. 60,81,86,602/- being measurement of Land at fair value and the value represents

excess of fair value over its carrying amount. The fair value model was adopted for land on 1st time adoption of Ind AS on 1.4.2016 and the difference amount was adjusted against Reserves and surplus.

b) The company subsequent to the adoption of Ind AS, remeasured its land and revalued its buildings on 31.3.2018 and the difference amount of Rs. 503,820,677/- (Net of deferred tax) was recognised under Other comprehensive Income.

RETAINED EARNINGS Particulars Amount As at 1st April, 2016 - As per IGAAP 64,52,08,955 Adjustments made as per Ind AS 101 Add: Amortisation of Deferred grant to the extent of useful life of assets already completed 44,18,617 Add: Dividend proposed for the FY 2014-15 to be accounted in the year of payment 82,45,823As at 1st April, 2016 after making necessary Ind AS adjustments 65,78,73,395 Add: Total comprehensive income for the year transferred from statement of profit and loss 12,76,61,802 Less: Final Dividend for the Financial year 2015-16 proposed & paid during the year 68,51,100 Dividend Distribution tax on Dividend paid during the year 13,94,723As at 31st March, 2017 77,72,89,374 Add: Total comprehensive income for the period transferred from statement of profit and loss 15,76,56,929 Less: Utilised for issue of bonus shares 1,71,27,751 Final dividend and dividend distribution tax for the year 2016-17 82,45,823As at 31st March, 2018 90,95,72,729

SUMMARY OF OTHER EQUITY




Revaluation surplus 1,11,20,07,279 60,81,86,602 60,81,86,602 General Reserve 1,60,36,486 1,60,36,486 1,60,36,486 Retained Earnings 90,95,72,729 77,72,89,374 65,78,73,395

2,03,76,16,494 1,40,15,12,462 1,28,20,96,483



135

Nature of reserves:a) Revaluation surplusThe revaluation surplus represents revaluation of land by the company as at 1st April, 2016 at its fair market value and the resultant excess amount over its book value was transferred to other equity as Revaluation Surplus. During the year ended on 31.3.2018, the company keeping in view of changes in fair value of land, remeasured the land at fair value and differential amount was transferred to revaluation surplus through other comprehensive income.During the year ended on 31.3.2018, subsequent to recognition of buildings at deemed cost on 1st April, 2016, being the date of transition to Ind AS, the company adopted

revaluation model for its buildings and consequent to that decision, valued its buildings at their fair value. The resultant increase over its carrying value was transferred to Revaluation surplus through other comprehensive income.b) General reserve The general reserve is created by way of tranfer of part of the profits before declaring dividend pursuant to the provisions of Companies Act, 1956. Mandatory transfer to general reserve is not required under the Companies Act, 2013. c) Retained EarningsRetained earnings are the profits that the company has earned till date less transfers to general reserves and dividends paid to share holders.

Notes on Accounts

LONG TERM BORROWINGS Note No.13

Particulars

Non-Current Current As at

31st March, 2018

As at 31st March,

2017As at

1st April, 2016As at

31st March, 2018

As at 31st March,

2017As at

1st April, 2016

A. Secured

i. Term loans

a) From Financial Institutions :

i) IREDA 32,39,670 48,59,178 53,00,534 16,19,252 16,19,252 23,55,792

b) From banks :

i) Andhra Bank 55,60,78,043 58,18,65,959 42,33,21,663 5,80,00,000 3,24,45,000 3,48,38,595

ii) Indian Bank 1,08,56,95,900 1,24,97,32,899 1,30,34,38,718 18,77,43,798 15,54,19,291 12,08,20,000

iii) Bank of Baroda 7,90,00,000 8,60,00,000 9,10,00,000 60,00,000 40,00,000 30,00,000

Total (a) 1,72,40,13,613 1,92,24,58,036 1,82,30,60,915 25,33,63,050 19,34,83,543 16,10,14,387

B. Unsecured

a) Deferred payment liabilities

i) Interest free Sales tax Deferrment - 2,77,811 17,09,080 3,03,900 14,31,269 23,38,431

b) Other Loans

i) Loans from Promoters and their relatives 25,10,000 13,10,000 13,10,000 - - -

ii) Loans from Directors 2,95,45,000 1,89,95,000 1,53,70,000 - - -

Total (b) 3,20,55,000 2,05,82,811 1,83,89,080 3,03,900 14,31,269 23,38,431

Total (a+b) 1,75,60,68,613 1,94,30,40,847 1,84,14,49,995 25,36,66,950 19,49,14,812 16,33,52,818



136

I) HYDEL POWER PLANT :i) IREDA : a) Term loan from IREDA is secured by first charge on all

the movable and immovable assets of the company’s power division of 0.8 MW small hydro project at 16th & 17th branch canal at mile # 3, Nela kondapalli Village & Mandal, Khammam Dist., Telangana. Further guaranteed by six promoter directors of the company and corporate guarantee of two companies.

b) The above loan carry interest @10%.c) The above loan is repayable in following manner. 2019-20 ` 16,19,252/- ; 2020-21: ` 16,20,418/- d) There are no defaults in repayment of above loan.

ii) ANDHRA BANK :a) Term loan from Andhra Bank is secured by way of

charge on movable and immovable assets of power plant at Nelakondapalli and Bhairavanipalli of Khammam Dist., Telangana., excluding those assets specifically charged to IREDA which are exclusively created out of said loan. The said loan is further guaranteed by two directors in their personal capacities.

b) The above loan carry interest @ 12.25%c) The above loan is repayable in following manner. 2019-20: ` 3,11,00,000/- d) There are no defaults in repayment of above loan.

(II) SPINNING UNIT :i) ANDHRA BANK :a) Term loans from Andhra Bank are secured on pari

passu basis by way of first charge on all the movable and immovable assets of spinning division (all units at Chowdavaram, Guntur Dist.) of the company. Further guaranteed by two directors in their personal capacities.

b) The above loans carry interest @ 12.25%, 11.50%, 11.00%, 11.50%, 11.25%, 12.25% and 10.4%.

c) The above loans are repayable in following manner. 2019-20 ` 4,98,00,000/- ; 2020-21: ` 9,93,00,000/- ;

2021-22: ` 10,82,67,030/- ; 2022-23: ` 7,89,65,500/- ; 2023-24: ` 9,28,19,805 ; 2024-25 : ` 2,01,86,589/- ; 2025-26 : ` 7,56,39,119/-

d) There are no defaults in repayment of above loans.

ii) INDIAN BANK :a) Term loans from Indian Bank are secured on pari passu

basis by way of first charge on all the movable and

immovable assets of spinning division (all units at Chowdavaram, Guntur Dist.) of the company. Further guaranteed by two directors in their personal capacities.

b) The above loans carry interest @ 12.70% and 10%.c) The above loans are repayable in following manner. 2019-20 ` 5,00,00,000/- ; 2020-21: ` 6,25,00,000/-d) There are no defaults in repayment of above loans.

III. WEAVING UNIT : i) INDIAN BANK : a) Term loans from Indian Bank are secured by exclusive

charge on all the movable and immovable assets of weaving division at Kunkupadu Village, Addanki Mandal, Prakasam Dist. of the company. Further guaranteed by two directors in their personal capacities.

b) The above loans carry interest @10.00%, 10.00%, 10.00% and 11.10%.

c) The above loans are repayable in following manner. 2019-20 : ` 16,80,00,000/-; 2020-21: ` 21,00,00,000/-;

2021-22 ` 14,90,00,000/- ; 2022-23 : `18,00,00,000/-; 2023-24: ̀ 20,31,95,900/- and 2024-25: ̀ 6,30,00,000/-

d) There are no defaults in repayment of above loans.

IV. DYEING UNIT : i) BANK OF BARODA : a) Term loan from Bank of Baroda is secured by way of

first charge on fixed assets of Company’s Dyeing Unit at Kunkupadu Village, Addanki Mandal, Prakasam Dist. of the company. Further guaranteed by two directors in their personal capacities.

b) The above loan carry interest @11.80%.c) The above loan is repayable in following manner. 2019-20: ` 2,00,00,000/- ; 2020-21: ` 2,75,00,000/-

and 2021-22 ` 3,15,00,000/- d) There are no defaults in repayment of above loan.

V. INTEREST FREE SALES TAX LOAN :a) The Company availed interest free sales tax loan for

the period from 1995-96 to 2008-09 aggregating to ` 2,54,75,992/-. The said loan is repayable within a period of 10/14 years from each year of availment. The Company has to pay an amount of ` 3,03,900/- as on 31-03-2018 and entire amount is due for payment during financial year 2018-19.

VI. Loans accepted from promoters, directors and their relatives are interest free and are accepted as per the conditions of sanction of term loans from banks and shall not be repayable during the currency of term loans.

Notes on Accounts



137

OTHER FINANCIAL LIABILITIES Note No.14

Particulars


31st March, 2018

As at 31st March,

2017

As at 1st April,

2016

As at 31st March,

2018

As at 31st March,

2017As at

1st April, 2016

a) Current maturities of long-term debt (Refer note no.13)

- - - 25,36,66,950 19,49,14,812 16,33,52,818

b) Creditors for capital goods - - - 27,58,617 40,59,245 1,03,21,977

c) Interest accrued and due - - - 1,29,51,142 1,52,58,972 2,05,80,580

d) Unclaimed dividend - - - 14,01,425 14,58,929 14,78,252

e) Employee related payments - - - 2,57,71,830 2,10,00,447 1,97,88,806

f) Other Liabilities - - - 5,42,87,470 4,83,50,639 5,37,13,872

Total - - - 35,08,37,434 28,50,43,044 26,92,36,305

PROVISIONS Note No.15

Particulars


31st March, 2018

As at 31st March,

2017

As at 1st April,

2016

As at 31st March,

2018

As at 31st March,

2017

As at 1st April,

2016

a) Provision for employee benefits

- Group gratuity (Unfunded) 1,24,81,130 1,03,49,650 71,41,210 5,92,967 - -

- Leave Encashment (Unfunded) - - - 39,724 41,322 31,027

Total 1,24,81,130 1,03,49,650 71,41,210 6,32,691 41,322 31,027

Notes on Accounts

EMPLOYEE BENEFITS a. Defined contribution plans : The Company makes Provident Fund and Employees’ State Insurance Scheme contributions which are defined contribution plans, for qualifying employees. The Company recognised Rs.41,53,321/- (Year ended March 31, 2017: Rs.29,56,720/- ) for provident fund contributions, and Rs. 7,00,980/- (Year ended March 31, 2017: Rs. 5,37,453/-) towards Employees’ State Insurance Scheme contributions in the Statement of Profit and Loss.b. Defined benefit plans : The Company provides to the eligible employees defined benefit plans in the form of gratuity.The gratuity plan provides for a lump sum payment to vested employees at retirement, death while in employment or on termination of employment of an amount equivalent to 15 days’ salary payable for each completed year of service. Vesting occurs upon completion of five continuous years of service. The measurement date used for determining retirement benefits for gratuity is March 31.(i) Balance Sheet : The assets, liabilities and surplus / (deficit) position of the defined benefit plans at the Balance Sheet date were :




Present value of obligation 1,30,74,097 1,03,49,650 71,41,210

Fair Value of plan assets - - -

(Asset)/Liability recognised in the Balance Sheet 1,30,74,097 1,03,49,650 71,41,210



138

(ii) Movements in Present Value of Obligation and Fair Value of Plan Assets Particulars Plan Obligation As at 1st April, 2016 71,41,210 Current service cost 24,02,571 Interest cost 5,67,986 Interest Income - Actuarial (gain)/loss arising from experience adjustment 2,37,883 Contributions by employer - Benefit payments - Return on plan assets, excluding interest income - As at March 31, 2017 1,03,49,650 Current service cost 28,23,850 Interest cost 8,27,972 Interest Income - Actuarial (gain)/loss arising from experience adjustment -9,27,375 Contributions by employer - Benefit payments - Return on plan assets, excluding interest income - As at March 31, 2018 1,30,74,097

(III) Statement of Profit and LossThe charge to the Statement of Profit and Loss comprises:

Particulars Year ended 31st March, 2018


Employee Benefit Expenses Current service cost 28,23,850 24,02,571 Past Service cost - Interest cost 8,27,972 5,67,986 Interest Income - Net impact on profit before tax 36,51,822 29,70,557 Remeasurement of the net defined benefit plans: Actuarial (gain)/loss arising due to experience adjustments (9,27,375) 2,37,883 Return on plan assets, excluding interest income - - Net impact on other comprehensive income before tax (9,27,375) 2,37,883

(IV) Assets The major categories of plan assets as a % of the total plan assets



Unfunded 0% 0%

(V) Assumptions With the objective of presenting the plan assets and plan obligations of the defined benefits plans at their fair value on the Balance Sheet, assumptions under Ind AS 19 are set by reference to market conditions at the valuation date.




Discount rate 8.00% 8.00% 7.90%

Salary escalation rate 12.00% 12.00% 10.00%

Notes on Accounts



139

DEFERRED TAX Note No.16The following is the analysis of deferred tax (assets)/liabilities presented in the Balance Sheet

Particulars Components




Liability:

Towards depreciation 58,29,97,323 42,55,90,487 38,84,47,126

Asset:

On allowances under Income-tax (3,96,11,612) (36,28,015) (25,21,239)

Unabsorbed losses as per Income tax Act (11,82,84,899) (16,23,44,096) (19,92,21,516)

MAT Credit Entitlement (14,12,94,087) (10,15,77,552) (6,25,64,709)

Total 28,38,06,725 15,80,40,824 12,41,39,662

(VI) Sensitivity Analysis :Discount Rate, Salary Escalation Rate and Withdrawal Rate are significant actuarial assumptions. The change in the Present Value of Defined Benefit Obligation for a change of 100 Basis Points from the assumed assumption is given below :

Scenario DBO % ChangeUnder Base Scenario 1,30,74,097 0.00%Salary Escalation - Up by 1% 1,44,12,220 10.23%Salary Escalation - Down by 1% 1,19,10,539 -8.90%Withdrawal Rates - Up by 1% 1,27,25,924 -2.66%Withdrawal Rates - Down by 1% 1,34,67,920 3.01%Discount Rates - Up by 1% 1,19,46,891 -8.62%Discount Rates - Down by 1% 1,43,99,134 10.13%Actuarial (gain)/loss arising due to experience adjustments (9,27,375) 2,37,883 Return on plan assets, excluding interest income - - Net impact on other comprehensive income before tax (9,27,375) 2,37,883

(VII) Discontinuance LiabilityAmount payable upon discontinuance of all employment is Rs.79,62,547/-(VIII) Best Estimate of Contribution During the Next YearThe Best Estimate Contribution for the Company during the next year would be Rs. Nil , Since the company is not contributing to any fund.(IX) Expected Cash Flow for Following Years Maturity Profile of Defined Benefit Obligations

Year Amount (Rs.) 1 24,15,122 2 5,21,556 3 5,89,269 4 6,47,144 5 6,99,348 6 10,56,595 7 6,93,481 8 8,40,015 9 6,91,500 10 9,21,269

Notes on Accounts



140

OTHER LIABILITIES Note No.17

Particulars


31st March, 2018

As at 31st March,

2017

As at 1st April,

2016

As at 31st March,

2018

As at 31st March,

2017

As at 1st April,

2016

a) Advances received from customers against supplies 10,21,800 19,60,786 18,25,246

b) Statutory Liabilities 42,30,329 41,45,154 36,69,887

c) Teak Plantation Deposits 58,500 58,500 58,500

d) Deferred government grants (Refer note) 8,74,37,869 9,80,86,333 9,00,49,460 1,28,45,441 45,15,540 42,28,759

Total 8,74,37,869 9,80,86,333 9,00,49,460 1,81,56,070 1,06,79,980 97,82,392

Note : The company received government grants in the nature of export incentives. During the year, the company re-ceived incentives under EPCG Schemes and same is utilised against import of capital goods and capitalised to Property, plant and equipment.

The deferred government grant will be recognised in statement of profit and loss over the period in proportion in which depreciation expense on the assets is recognised.

SHORT TERM BORROWINGS Note No.18




A. Secured Loans repayable on demand : Working Capital Loans : a) Cash Credit from banks i) From Andhra Bank 59,69,13,211 59,93,83,064 59,37,67,924 ii) From Indian Bank 51,19,98,903 52,08,30,478 46,87,59,717 III) From Bank of Baroda 4,94,28,362 - - b) Buyers Credit Facilites: i) From Andhra Bank - 1,74,19,468 - ii) From Indian Bank - 1,51,84,023 - B. Unsecured: Loans repayble on demand: From a Director 22,00,000 - - Total 1,16,05,40,476 1,15,28,17,033 1,06,25,27,641

Notes on Accounts

Movement in Deferred Tax Assets/Liabilities

ComponentAs at

1st April, 2016

Charge/(Credit) in

Statement of P&L

As at 31st March,

2017

Charge/(Credit) in

Statement of P&L

As at 31st March,

2018

Deferred tax liabilities/(assets) in relation to:

Depreciation 38,84,47,126 3,71,43,361 42,55,90,487 15,74,06,836 58,29,97,323

Expenses allowable under Income tax when paid (25,21,239) (11,06,776) (36,28,015) (3,59,83,597) (3,96,11,612)

Unabsorbed Depreciation as per Income Tax Act (19,92,21,516) 3,68,77,420 (16,23,44,096) 4,40,59,197 (11,82,84,899)

MAT Credit Entitlement (6,25,64,709) (3,90,12,843) (10,15,77,552) (3,97,16,535) (14,12,94,087)

TOTAL 12,41,39,662 3,39,01,162 15,80,40,824 12,57,65,901 28,38,06,725



141

Note :

A.Secured

a) Working Capital Loan from Andhra Bank is secured by way of exclusive charge on current assets of spinning division of all units at Chowdavaram Village , Guntur Dt. This loan carries interest @ 9.5%.

b) Working Capital loan from Indian Bank is secured by way of Hypothecation of stocks of cotton, stock in process, Finished Goods, Stores and Spares , Book Debts , Goods in Transit .This loan is also secured by way of Extension of EM/ Secondand exclusive charge by way of EM of Land admeasuring AC 25.72 at Weaving Division of the Company at kunkupadu and Hypothecation of Plant&Machinery, Spares and Other assets Acquired ( Existing and Future).This Loan carries interest @ 9%.

c) Working Capital Loan from Bank of Baroda is secured by way of Hypothecation of Stocks and Book debts and further secured by way of personal guarantee of 2 Directors .This Loan carries interest @ 11.80%.

B. Unsecured

a) Loan from Directors is Interest free and no specific terms of repayment were defined for the same , hence categorised as short term.

TRADE PAYABLES Note No.19




Dues to : Small and Micro Enterprises - 1,46,363 -

: Other than Small and Micro Enterprises 8,38,55,898 2,78,98,706 5,60,91,310

Total 8,38,55,898 2,80,45,069 5,60,91,310

Disclosure required under the Micro, Small and Medium Enterprises Development Act, 2006.Based on and to the extent of information obtained and available with the Company, with regard to the status of their suppliers under Micro, Small and Medium Enterprises Development Act, 2006 (MSMED ACT), on which the auditors have relied, the disclosure requirement with regard to the payment made/ due to Micro, Small and Medium Enterprises are given below :




1. Amount remaining unpaid, beyond the appointed / agreed day at the end of the year

- - -

(a) Principal amount of bills to be paid - - -

(b) Interest due there on - - -

2. (a) Payment made to suppliers, during the year, but beyond appointed / agreed date Interest there on in terms of Sec 16 of the Act

- - -

(b) Interest paid along with such payments during the year

- - -

3. Amount of Interest for the year u/s 16 of the Act accrued and remaining un-paid at the end of the year

- - -

4. Total amount of interest u/s 16 of the Act including that arising in earlier years, accrued and remaining unpaid at end of the year.

- - -

Notes on Accounts



142

REVENUE FROM OPERATIONS Note No.21

PARTICULARS Year ended 31st March, 2018


Revenue from Operations

Sale of goods 3,10,71,21,015 2,86,81,12,822

Other Operating Revenue

Job work charges 3,19,000 1,64,973

Export Incentive 1,89,86,527 1,80,39,534

3,12,64,26,542 2,88,63,17,329

Notes on Accounts

The current income- tax expense for the year can be reconciled to the accounting profit as follows :



Profit before tax 21,06,83,973 21,18,00,847

Enacted Tax Rates in India ( Under MAT) 21.3416% 21.3416%

Computed Tax expense 4,49,63,331 4,52,01,690

Add: Tax effects of expenses which are not deductible in determining taxable profit

- Depreciation difference - -

- Expenses(net of Income) not deductible for tax purposes - -

- Interest on Income Tax 10,36,669 49,94,784

Tax on Ind AS adjustments - -1,96,474

Excess provision of income tax relating to earlier years 26,739 -

Current Tax Provision (A) 4,60,26,739 5,00,00,000

Increase of Deferred tax liability on account of Fixed Assets 15,74,06,836 3,71,43,361

Increase of Deferred tax Asset on account of expenses and losses 80,75,600 3,57,70,644

MAT Credit Entitlement -3,97,16,535 -3,90,12,843

Deferred Tax Charge ( Including Charge to OCI) (B) 12,57,65,901 3,39,01,162

Total Tax Expense (A+B) 17,17,92,640 8,39,01,162

CURRENT INCOME-TAX LIABILITIES (NET) Note No.20

Particulars As at 31st March, 2018 As at 31st March, 2017 As at 1st April, 2016

Provision for Income-tax 18,81,60,000 13,81,60,000 8,81,60,000

Less: Advance Income-tax and TDS 15,69,28,180 9,70,63,272 6,95,53,935

Total 3,12,31,820 4,10,96,728 1,86,06,065



143

REVENUE FROM OPERATIONS INCLUDE:

PARTICULARS Year ended 31st March, 2018 Year ended 31st March, 2017

Qty(kgs.) Revenue Qty(kgs.) Revenue

i) Cotton Yarn 64,29,493 1,51,08,97,417 59,53,917 1,38,84,78,419

ii) OE Yarn 60,26,546 78,42,55,542 56,70,818 65,37,29,286

iii) Cotton Waste 2,396,344 155,107,247 2,261,114 135,639,075

iv) OE Waste 10,80,815 1,74,97,843 9,25,247 1,43,18,866

v) Cotton Seed 92,91,664 16,03,54,101 64,90,059 15,13,05,433

vi) Cotton Lint 45,19,922 51,50,25,547 33,43,138 39,08,00,371

vii) Damaged Kappas 52,900 2,18,213 - -

viii) Sale of Gray Fabric (Mtrs) 2,46,12,847 1,53,99,60,020 2,53,84,238 1,52,64,34,706

ix) Sale of Fabric Waste 1,68,248 59,03,630 1,56,601 42,53,183

x) Sale of Dyed Fabric (Mtrs) 33,41,032 31,73,05,733 29,78,595 26,77,59,165

xi) Sale of Dyed Yarn (Kgs) 5,59,820 20,79,95,581 2,32,310 7,85,45,173

xii) Sale of cut pieces cloth and shirts - 7,68,299 - 5,46,129

xiii) Gray Yarn 7,33,538 17,86,76,908 - -

xiv) Sale of Power (KWH) 24,53,066 1,16,57,377 15,71,728 73,95,506

5,40,56,23,458 4,61,92,05,312

Less: Inter divisional transfers

Cotton Yarn 42,42,926 1,10,95,57,267 43,32,211 1,09,07,40,136

OE yarn 10,53,411 14,31,56,005 6,10,460 7,69,20,191

Dyed yarn 5,54,920 20,37,82,928 2,30,561 7,80,75,413

Gray Yarn 7,33,538 17,86,76,908 - -

Cotton Waste 21,60,973 14,83,03,788 19,14,779 12,57,97,659

Cotton Lint 45,19,922 51,50,25,547 32,59,444 37,95,59,091

2,29,85,02,443 1,75,10,92,490

TOTAL 3,10,71,21,015 2,86,81,12,822

Notes on Accounts



144

OTHER INCOME Note No.22 PARTICULARS Year ended 31st March, 2018 Year ended 31st March, 2017

Interest from banks and others 42,73,465 32,24,480 Deferred Govt. grants credited back 45,91,242 44,05,796 Credit Balances Written back 52,633 23,847 Profit on sale of assets - 1,43,785 Gain on exchange fluctuations 5,57,577 - Miscellaneous receipts 18,47,811 23,25,785 Total 1,13,22,728 1,01,23,693

COST OF MATERIALS CONSUMED Note No.23 PARTICULARS Year ended 31st March, 2018 Year ended 31st March, 2017

Opening Stock 41,05,26,421 42,52,02,177 Add: Purchase of Raw Material 1,71,66,31,724 1,56,54,63,166

2,12,71,58,145 1,99,06,65,343 Less : Closing Stock 42,43,13,542 41,05,26,421 TOTAL 1,70,28,44,603 1,58,01,38,922

CHANGES IN INVENTORIES OF WORK -IN- PROGRESS Note No.25 PARTICULARS Year ended 31st March, 2018 Year ended 31st March, 2017

Opening work-in-progress 24,48,99,557 13,85,14,283 Opening Finished goods 16,35,77,558 15,18,41,198

40,84,77,115 29,03,55,481 Closing work-in-progress 29,57,80,513 24,48,99,557 Closing Finished goods 15,11,94,791 16,35,77,558

44,69,75,304 40,84,77,115 Increase in inventories 3,84,98,189 11,81,21,634

EMPLOYEE BENEFIT EXPENSES Note No.26 PARTICULARS Year ended 31st March, 2018 Year ended 31st March, 2017

Salaries and Wages 19,91,80,914 16,93,06,371 Contribution to provident and other funds 48,54,301 34,94,173 Staff welfare expenses 13,38,824 49,49,929 Contribution towards group gratuity 32,62,858 27,45,188 TOTAL 20,86,36,897 18,04,95,661

FINANCE COSTS Note No.27 PARTICULARS Year ended 31st March, 2018 Year ended 31st March, 2017

Interest paid to banks and others 36,51,45,966 36,90,17,259 Other Borrowing Costs 59,64,533 83,89,168 Total Interest Cost 37,11,10,499 37,74,06,427 Less: Subsidy under TUF Scheme 6,96,40,993 7,42,35,008 Interest subsidy from AP Government 8,26,36,400 8,33,04,626 TOTAL 21,88,33,106 21,98,66,793

PURCHASE OF STOCK-IN-TRADE Note No.24

PARTICULARS Year ended 31st March, 2018 Year ended 31st March, 2017

Qty(Kgs) Amount Qty(Kgs) Amount OE yarn - - - - TOTAL - - - -

Notes on Accounts



145

DEPRECIATION AND AMORTISATION Note No.28

PARTICULARS Year ended31st March, 2018

Year ended31st March, 2017

Depreciation and Amortization 14,19,46,320 13,64,89,377

TOTAL 14,19,46,320 13,64,89,377

OTHER EXPENSES Note No.29

PARTICULARS Year ended 31st March, 2018


Consumption of Stores and Spares 17,92,48,222 19,26,54,365

Processing charges paid 26,55,720 2,71,555

Power and Fuel (Net of power subsidy) 34,47,29,085 32,82,27,082

Repairs and Maintenance: Buildings 13,58,036 22,01,499

Machinery 5,50,02,614 6,83,96,636

Others 10,70,606 41,080

Insurance 40,23,651 39,64,786

Loading and Unloading charges 3,34,77,707 2,69,18,797

Commission on Sales 3,07,38,838 2,54,69,693

Rents - Office 1,33,910 47,800

Rates and taxes 76,56,767 47,44,620

Payments to auditors towards

- Statutory audit 2,75,000 2,58,750

- Tax audit and taxation matters 50,000 64,500

- Cost audit 30,000 34,500

Directors Sitting Fee 4,50,000 7,05,198

Donations 35,000 26,116

CSR expenses 29,36,681 32,74,929

Miscellaneous expenses 2,89,58,078 2,81,16,203

Loss on sale of assets 4,64,465 3,42,081

Debit Balances writtenoff 8,180 10,866

TOTAL 69,33,02,560 68,57,71,056

Notes on Accounts



146

NOTES FORMING PART OF THE ACCOUNTS30. CIF VALUE OF IMPORTS MADE DURING THE YEAR: (Amount in Rs.)

Year ended31-03-2018


i) Stores & Spares 2,64,06,803 3,21,10,180ii) Capital goods 1,27,92,938 33,32,545

31. COMPARISION BETWEEN CONSUMPTION OF IMPORTED AND INDIGENOUS RAW MATERIALS SPARES AND COMPONENTS DURING THE YEAR:

Year ended31-03-2018 % Year ended

31-03-2017 %

a) Raw material:

Imported 2,32,19,631 1.36 5,73,54,121 3.63Indigenous 167,96,24,972 98.64 152,27,84,801 96.37Total 170,28,44,603 100 158,01,38,922 100b) Spares & Components:

Imported 2,03,07,805 11.33 2,75,13,168 14.28Indigenous 15,89,40,417 88.67 16,51,41,197 85.72Total 17,92,48,222 100 19,26,54,365 100

32. EXPENDITURE INCURRED IN FOREIGN CURRENCY DURING THE YEAR:Year ended31-03-2018


a) Commission On Yarn & Fabric Sales 39,64,067 55,53,580b) Foreign Travel 7,38,687 4,84,590

33. CONTINGENT LIABILITIES NOT PROVIDED FOR:As at

31-03-2018As at

31-03-2017a) Estimated amounts of contracts remaining to be Executed on Capital accounts, and not provided for 6,45,300 0.00

b) State Levies on Electricity 37,20,543 99,67,810c) Income-tax 0.00 15,21,758

34. Balances in personal accounts of various parties are subject to confirmation by and reconciliation with the said parties. 35. RELATED PARTY DISCLOSURES: A) List of Related Parties: 1) Key Managerial Personnel: 1. P.Venkateswara Reddy, Managing Director 2. G.V.Krishna Reddy, Joint Managing Director 3. M.V.Subba Reddy, Whole Time Director 2) Relatives of Key managerial Personnel: 1. Kallam Venkata Subbayamma Sister of P.Venkateswara Reddy 2. Poluri Siva Nagendramma Wife of P.Venkateswara Reddy 3. Movva Uma Sankara Reddy Brother of M.V.Subba Reddy 4. Poluri Govardhana Reddy Son of P.Venkateswara Reddy 5. Poluri Venugopal Reddy Son of P.Venkateswara Reddy 6. Gurram Nitin Son of G.V.Krishna Reddy 7. Movva Kavitha Wife of M.V.Subba Reddy 8. M.Srinvivasa Nagarjuna Reddy Son of M.V.Subba Reddy 9. M.Murali Sairam Krishna Reddy Son of M.V.Subba Reddy




147

3) Companies controlled by Key managerial personnel/Relative of Key Managerial Personnel: 1. Kallam Agro products & Oils Private Limited, Guntur 2. Kallam Brothers Cottons Pvt Ltd, Guntur B) Transactions with the related parties:

Nature of TransactionKey

ManagerialPersonnel2017-18

Key ManagerialPersonnel2016-17

Relative of Key

Managerial personnel2017-18

Relative of Key


Companies controlled by key Managerial

personnel / Relative of Key Managerial personnel

2017-18



2016-17I. Details of Transaction :a. Remuneration Paid:1. P.Venkateswara Reddy, MD 49,33,911 (48,21,068)2. G.V.Krishna Reddy, JMD 49,29,920 (48,15,593)3. M.V.Subba Reddy,WTD 10,35,417 (8,77,403)Total 1,08,99,248 (1,05,14,064)b. Remuneration Paid:P. Govardhan Reddy 4,99,845 (4,86,000)M. Srinivas Nagarjuna Reddy 1,91,132 (1,20,000)c. Sale of Goods and Services:1. Kallam Brothers Cottons Pvt Ltd- Testing & Sale of Fabric 2,66,396 (3,78,298)2. Kallam Agro products and Oils Pvt. Ltd Seed 10,32,54,115 (9,28,95,055)d. Purchases of Goods and Services:1. Kallam Brothers Cottons Pvt Ltd- Lint & Waste purchase 44,35,895 (-)II. Balance as at 31-03-2018:a) Share Capital of the Company held by:1. P.Venkateswara Reddy, MD 23,02,500 (18,42,000)2. G.V.Krishna Reddy, JMD 70,27,446 (55,50 650)3. M.V.Subba Reddy,WTD 8,56,250 (6,85,000)Total 1,01,86,196 (80,77,650)1. K.Venkata Subbayamma Sister of P.Venkateswara Reddy 14,65,500 (13,34,000)2. P.Siva Nagendramma, W/o. P.Venkateswara Reddy 3,75,000 (3,00,000)3. P.Govardhan Reddy, S/o. P.Venkateswara Reddy 21,86,910 (17,49,530)4. M.Uma Sankar Reddy, Brother of M.V.Subba Reddy 13,35,300 (10,68,240)5. P.Venugopal Reddy, S/o. P.Venkateswara Reddy 19,42,366 (15,86,520)6. G.Nitin, S/o. G.V.Krishna Reddy 14,79,290 (10,98,000)7. Movva Kavitha, W/o. M.V.Subba Reddy 1,55,000 (1,24,000)8. M.Srinvivasa Nagarjuna Reddy S/o. M.V.Subba Reddy 2,18,750 (1,75,000)9. M.Murali Sairam Krishna Reddy S/o. M.V.Subba Reddy 1,25,000 (1,00,000)Total 92,83,116 (73,35,290)

1. Kallam Agro Products and Oils Pvt Ltd Guntur 1,09,30,086 (87,44,070)b) Unsecured loans from:1. P.Venkateswara Reddy, MD 1,71,55,000 (88,05,000)2. G.V.Krishna Reddy, JMD 85,40,000 (65,40,000)3. M.V.Subba Reddy,WTD 38,50,000 (36,50,000)Total 2,95,45,000 (1,89,95,000)1. P.Siva Nagendramma 10,000 (10,000)Total 10,000 (10,000)




148

Nature of TransactionKey

ManagerialPersonnel2017-18

Key ManagerialPersonnel2016-17

Relative of Key


Relative of Key




2017-18



2016-17c) Amount Due to:1. P.Venkateswara Reddy, MD 22,61,107 (22,26,621)2. G.V.Krishna Reddy, JMD 22,61,107 (22,67,498)3. M.V.Subba Reddy,WTD 1,85,440 (1,45,635)Total 47,07,654 (46,39,754)d)Trade dues from:1. Kallam Brothers cottons pvt Ltd., Guntur 36,992 (52,478)2. Kallam Agro Products and Oils pvt Ltd., Guntur 83,37,109 (1,00,15,569)

36. Segment Information: (Amount in Rs.)Particulars Year 2017-18 Year 2016-17

Segment Revenue:1. Spinning 24,782.25 22,266.722. Weaving 18654.10 18,010.713. Dyeing 3869.91 1092.834. Power 116.67 73.95

47,423.03 41,444.21Less: Inter segment Revenue 16351.72 12,763.08Net Revenue from Operation 31071.21 28,681.13Segment Results (Profit before Tax and Interest)

1. Spinning 2655.36 2861.232. Weaving 1618.51 1498.993. Dyeing 33.84 17.874. Power -12.55 -61.41

4,295.16 4,316.68Less: Interest (net) 2,188.33 2,198.67Net Profit Before Tax 2,106.83 2,118.01Capital Employed : (Segment Assets-Segment Liabilities)

1. Spinning 25460.89 22,986.862. Weaving 15883.63 12324.793. Dyeing 1270.65 852.044. Power 1432.32 1,647.31Total 44047.49 37,811.00Capital Expenditure:1. Spinning 611.10 661.072. Weaving 425.83 738.733. Power 0.00 2.464. Dyeing 3.86 1.71Depreciation:1. Spinning 618.47 587.342. Weaving 663.77 640.463. Dyeing 63.34 61.974. Power 73.87 75.12




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37. Dividend: The Board of directors at its meeting held on 28.05.2018 have recommended a dividend Rs. 0.20/ share of face value

of Rs. 2/- each (ie 10% dividend) for the financial year ended 31.03.2018. The above is subject to approval at the ensuing Annual general meeting of the company and hence not recognised as a liability.

38. Corporate Social Responsibilities:31.03.18 31.03.2017

Amount required to spent during the year 28,18,112 28,28,957Amount actually spent 29,36,681 32,74,929Short Fall NIL NIL

39. Foreign exchange earnings on exports during the year calculated on FOB basis Rs.89,04,12,531/- (Previous year Rs.41,79,26,429/-


40. Categories of Financial Instruments The Carrying amounts and fair value of financial instruments by categories as at 31st March, 2018 ,31st March, 2017

and 1st April, 2016 are as follows :

PARTICULARS

Carrying value Fair value

As at 31st March,

2018

As at 31st March,

2017

As at 1st April,

2016

As at 31st March,

2018

As at 31st March,

2017

As at 1st April,

2016

Financial assets

Measured at Amortised cost

(i) Other financial assets 4,500 17,390 17,390 4,500 17,390 17,390

(ii) Loans and advances 6,50,18,106 6,44,05,943 5,13,92,977 6,50,18,106 6,44,05,943 5,13,92,977

Total assets 6,50,22,606 6,44,23,333 5,14,10,367 6,50,22,606 6,44,23,333 5,14,10,367

Financial liabilities

Measured at amortised cost

(i) Borrowings (including current maturities of Long term borrowings) 2,00,97,35,563 2,13,79,55,659 2,00,48,02,813 2,00,97,35,563 2,13,79,55,659 2,00,48,02,813

(ii) Other financial liabilities 9,71,70,484 9,01,28,232 10,58,83,487 9,71,70,484 9,01,28,232 10,58,83,487

Total liabilities 2,10,69,06,047 2,22,80,83,891 2,11,06,86,300 2,10,69,06,047 2,22,80,83,891 2,11,06,86,300

41. FAIR VALUE HIERARCHY The fair value of financial instruments as referred to above note have been classified into three categories depending on the inputs used in the valuation technique. The hierarchy gives the highest priority to quoted prices in active markets for identified assets or liabilities [Level 1 measurements] and lowest priority to unobservable inputs [Level 3 measurements]The categories used are as follows: Level 1 : Quoted prices for identified instruments in an active market. Level 2 : Directly or indirectly observable market inputs, other than Level 1 inputs; and Level 3 : Inputs which are not based on observable market data.This note provides information about how the Company determines fair values of various financial assets and financial liabilities. Fair value of the Company's financial assets and financial liabilities that are measured at fair value on a recurring basis. Some of the Company's financial assets are measured at the fair value at the end of each reporting period.The Company has disclosed financial instruments such as cash and cash equivalents, other bank balances, trade receivables, trade payables and Short Term Borrowings at carrying value because their carrying amounts approximate the fair value because of their short term nature. Difference between carrying amounts and fair values of bank borrowings, other financial assets and financial liabilities subsequently measured at amortised cost is not significant in each of the years presented.



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The carrying amounts of the company's foreign currency denominated monetary items are as follows : (Amounts in Rs.)

PARTICULARS As on

31.03.2018 As on 31.03.2017 As on 01.04.2016

$ $ CHF $ CHF €

Assets :

Trade Receivables 7,70,16,192 1,15,12,278 - 2,23,84,197 - -

Cash and Cash Equivalents - - - - - -

Total assets 6,50,22,606 6,44,23,333 5,14,10,367 6,50,22,606 6,44,23,333 5,14,10,367

Liabilities :

Trade and Other Payables 6,92,656 3,40,09,239 41,25,689 10,03,972 1,98,111 25,71,631

Net Assets / (Liabilities) 7,63,23,536 -2,24,96,961 -41,25,689 2,13,80,225 -1,98,111 -25,71,631

42. FINANCIAL RISK MANAGEMENTThe Company financial liabilities comprise mainly of borrowings, trade payables and other payables. The Company financial assets comprise mainly of cash and cash equivalents, trade and other receivables.The Company's business activities are exposed to a variety of financial risks namely credit risk, liquidity risk and foreign currency risk. The Company's senior management has the overall responsibility for establishing and governing the Company's risk management framework. The Company's risk management policies are established to identify and analyse the risks faced by the Company, to set and monitor appropriate risk limits and controls, periodically review the changes in market conditions and reflect the changes in the policy accordingly. The key risks and mitigating actions are also placed before the Board of Directors of the Company.A. Credit Risk Credit risk is the risk of financial loss to the Company if a customer fails to meet its contractual obligation. To manage this, the company periodically assesses the financial reliability of customers, taking into account the financial condition, current economic trends and analysis of historical bad debts and ageing of the account receivables. Individual risk limits are set accordingly.Receivables from customersConcentration of credit risk with respect to trade receivables are limited, due to Company's customer base being large and diverse. All trade receivables are reviewed and assessed for default on a monthly basis.On historical experience of collecting receivables is that credit risk is low. Hence, trade receivables are considered to be a single class of financial assets.Other financial assets The Company maintains exposure in cash and cash equivalents and margin money deposits with banks. The Company's maximum exposure of credit risk as at March 31, 2018, March 31, 2017 and April 1, 2016 is the carrying value of each class of financial assets.B. Foreign currency risk managementForeign currency risk is the risk that the Fair value or Future cashflows of an exposure will fluctuate due to changes in foreign currency rates. Exposures can arise on account of various assets and liabilities which are denominated in currencies other than indian rupee. The Company has not entered into any forward exchange contract to hedge against currency risk.The Company manages currency exposures within prescribed limits. The aim of the Company's approach to management of currency risk is to leave the Company with no material residual risk.

Foreign currency sensitivity analysis A 5% strengthening of the INR against key currencies to which the Company is exposed would have led to approximately an additional Rs. 38,09,998/- gain in the Statement of Profit and Loss (2016-17: Rs.19,23,043/- Loss ). A 5% weakening of the INR against these currencies would have led to an equal but opposite effect.




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44. General: Previous year figures have been regrouped where ever necessary.45. Paise have been rounded off to the nearest rupee.

C. Liquidity risk Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they become due. The objective of liquidity risk management is to maintain sufficient liquidity and ensure that funds are available for use as per requirements. The Company manages its liquidity risk by ensuring, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due. Also, the Company has availed credit limits with banks. The Company maintained a cautious liquidity strategy, with a positive cash balance throughout the year ended March 31, 2018 , March 31, 2017 and on 01st April 2016 . Cash flow from operating activities provides the funds to service the financial liabilities on a day to day basis.The Company regularly maintains the rolling forecasts to ensure it has sufficient cash on an on-going basis to meet operational needs. Any short-term surplus cash generated, over and above the amount required for working capital management and other operational requirements, is retained as cash and cash equivalents (to the extent required) and any excess if any, is invested in interest bearing term deposits.The company is repaying its borrowings as per the schedule of repayment and no amount was pending for remittance beyond its due date. All the amounts due to trade payables falls due within one year and the company is able to meet its obligations within the due dates. In case of borrowings from banks, the maturity pattern has been given under Note no. 13.D. Capital ManagementEquity share capital and other equity are considered for the purpose of Company’s capital management.The Company manages its capital so as to safeguard its ability to continue as a going concern and to optimise returns to shareholders. The capital structure of the Company is based on Management’s judgment of its strategic day-to-day needs with a focus on total equity so as to maintain investor, creditors and market confidence.The Management and the Board of Directors monitors the return on capital as well as the level of dividends to shareholders. The Company may take appropriate steps in order to maintain, or is necessary, adjust its capital structure.43. Calculation of Earnings per Share : Sl.No 2017-18 2016-17

1) Basic and Diluted Earning per share a No. of shares at the beginning of the year 3,42,55,500 68,51,100 b New shares upon conversion of Shares of Rs. 10/- each to Rs.2/-each - 2,74,04,400 c Increase on account of Bonus Issue 85,63,875 - d Change in equity during the year - - e Total Weighted average number of shares at the end of the Year 4,28,19,375 3,42,55,500 f Total Weighted average number of shares used as denominator for calculat-

ing Basic and Diluted EPS ( Post Bonus Issue in last Year) 4,28,19,375 4,28,19,375

g Net Profit after tax before OCI as per Statement of Profit and Loss 15,67,29,554 12,78,99,685 h Basic and diluted Earning per share 3.66 2.99




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