kallam textiles limitedkallam textiles limited (formerly known as “kallam spinning mills...

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

CIN -L18100AP1992PLC013860

Chowdavaram, GUNTUR - 522 019. A.P., INDIA.

Ph: 0863-2344016: Fax:0863-2344000

E-mail: [email protected]: 37AAACK9363M1ZY

Ref: KTL/CS/Annual report 2018-19 Datez26-08-2019

The Corporate Relationship Department

Bombay Stock Exchange Limited,

Phiroze Jeejeeboy Towers,

Dalal Street,Mumbai- 400 001.

Ph : 022—22721233-34

Scrip Code: 530201

Dear Sir/Madam,

In terms of provisions of Regulation 34 (l) of SEBI (Listing Obligations and Disclosure Requirements)

Regulations, 2015, we enclose the Twenty Seventh (27fl‘)Annual Report for the FY 2018- 19 along with the

Notice of 27th Annual General Meeting of the Company to be held on Saturday, 21St September 2019 at 03.00

PM. at registered office of the Company, Chowdavaram, Guntur(i

The same will also be made available on the Company's website www.ksml.in

Kindly take the same on record

Thanking you,

Yours Sincerely,For Kallam Textiles Limited,

Nam/am Eu 0"»

Nandan Bisoi

Company Secretary & Compliance . lcer

M.No: ACS 54169

27th Annual Report 2018-19

Towards Excellence in Spinning, Yarn Dyeing and WeavingTowards Excellence in Spinning, Yarn Dyeing and Weaving

KALLAMKALLAM KALLAM TEXTILES LIMITEDFormerly known as “Kallam Spinning Mills Limited”

KALLAM TEXTILES LIMITED 26th ANNUAL REPORT 2017-18

GINNING SPINNING OPEN END DYEING WEAVING HYDEL

1

CORPORATE OVERVIEW 01 - 16

CorporateInformation

LetterfromJMD&CEO

EmpowermentandSocialInitiative

STATUTORY REPORTS

17 - 75

Board’sReport&Annexures

ManagementDiscussion&AnalysisReport

AnnualReportonCSRActivities

SecretarialAuditReport

ReportonCorporateGovernance

FINANCIAL STATEMENTS &

AGM NOTICE

76 - 132

IndependentAuditor’sReport

FinancialStatements

AGMNotice

Proxyform

AttendanceSlip

RouteMap

WHAT IS INSIDE

Date : 21-09-2019

Time : 3p.m.

Venue : RegisteredOfficeoftheCompany,NH-5, Chowdavaram,GunturDist.-522019.

Forward-looking statements Statements in the Annual Report detailing the Company’s objectives, projections, estimates, expectations or predictions may be forward looking statements within the meaning of applicable securities laws and regulations. Since these statements are based on certain assumptions and expectations of future events, the actual results could differ materially from those expressed or implied. The important factors that Could make a deference to the Company’s operations include the economic conditions affecting the domestic demand supply conditions, prices of finished goods, the changes in government regulations because of the tax regime etc, The Company assumes no responsibility to publicly amend, modify or revise any forward-looking statements on the basis of Subsequent developments, information or events.

27thAnnual General Meeting

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Kallam Textiles Limited

27th ANNUAL REPORT 2018-192

BOARD OF DIRECTORS

EXECUTIVE DIRECTORS

Sri P.Venkateswara Reddy Managing Director

Sri G.V. Krishna Reddy Joint Managing Director & CEO

Sri M.V. Subba Reddy Whole Time Director & CFO

NON EXECUTIVE DIRECTORS

Sri Ajeya Kallam (Retd. IAS) Independent Director

Sri V.Ramgopal ED in Indian Bank (Rtd.) Independent Director

Sri S. Pulla Rao JC of Income Tax (Rtd.) Independent Director

Sri VSN Murthy CGM APIDC (Rtd.) Nominee Director From IREDA

Smt. V. Bhargavi Chartered Accountant, Independent Woman Director

COMPANY SECRETARY & COMPLIANCE OFFICER

Sri Nandan Bisoi

AUDITORS

STATUTORY AUDITORS

M/s Chevuturi Associates Chartered Accountants, Vijayawada.

COST AUDITORS

Sri P. Srinivas Cost Accountant, Hyderabad

SECRETARIAL AUDITORS

M/s K.Srinivasa Rao & Co., Company Secretaries, Guntur

INTERNAL AUDITORS

M/s Mastanaiah & Co., Chartered Accountants, Guntur.

LISTING

Bombay Stock Exchange Ltd Scrip Code - 530201 Scrip ID - KALLAM ISIN: INE629F01025

REGISTRARS AND SHARE TRANSFER AGENT

Big share Services Pvt. Ltd 306, 3rd Floor, Right Wing, Amrutha Ville, Opp. Yashodha Hospital, Raj Bhavan Road, Somajiguda, Hyderabad – 500 082. Ph No.040-23374967. E-mail : [email protected]

BANKERS

Andhra Bank Indian Bank Bank of Baroda

Registered and Corporate Office : Chowdavaram,Guntur-522019,A.P.,India.Phones:0863-2344016/10.E-mail:[email protected]:www.ksml.in

CINNo.:L18100AP1992PLC013860

Ginning, Spinning, Open End Plants : Chowdavaram,Guntur-522019,A.P.,India.

Weaving and Dyeing Plants : Kunkupadu-523264,Addanki,Prakasam(Dist.),A.P.,India.

Hydel Plants : Nelakondapalli(M)-507160,Khammam(Dist.),Telangana,India

Works :

CORPORATE INFORMATION

Financial Statements &

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otice 76 - 132Statutory Reports

17 - 75Corporate overview

01 - 16

HYDEL PLANTS Nelakondapalli, Khammam Dist.

DYEING, WEAVING PLANTS & WEAVING

TOWNSHIP Kunkupadu, Prakasam Dist.

GINNING, SPINNING, OPEN END PLANTS

& SPINNING TOWNSHIP Chowdavaram, Guntur Dist.

REGISTERED AND CORPORATE

OFFICE Chowdavaram,

Guntur Dist.

MANUFACTURING FACILITIES IN AP & TELANGANA STATES

Andhra Pradesh

Andhra PradeshTelangana

SRIKAKULAM

VISAKHAPATNAM

KHAMMAM

EAST GODAVRI

WEST GODAVRI

KRISHNA

GUNTUR

PRAKASAM

NELLORE

CHITTOR

ANANTAPUR

KURNOOL

Y.S.R.

(PUNDUCHERRY)

VIZIANAGARAM

SrikakulamVizianagaram

Visakhapatnam

KainadaEluru

Vijayawada

Nelakondapalli

Machilipatnam

Ongole

Kavali

NelloreKadapa

KurnoolGooty

Rajampet

Anantapur

Hindpur

Raydurg

Chittor

MarkapurDornal

Guntur

Yanam

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DearFellowShareholders,

FinancialYear2018-19wasatoughyearforthecompany,we

havemaintained sales but themargins effected as Chinese

textilemanufactures stoppedor severely restrictedpurchase

ofcottonyarnfromIndiaduetoongoingimportrestrictionsby

USAonChina.ThisisimpactingTextileIndustryduetoChinese

manufacturerssubstantiallyreducingimportoftheirRawmaterial

inventorycottonyarnlevelsasUS-China‘tradewar’comesinto

play.

Risingcottonpricesarehittingprofitmarginsoftextileplayers

due to their inability topasson thehigh rawmaterial cost to

Customers.Yarnand fabricprices remainedsubduedthereby

impactingmarginsoftextileindustry.InadditionUSD/INRratio

remainedvolatilewithlargefluctuations.

Procurement of Raw Material:

Duringthe1stquarterofFY2018-2019cottonpriceshadgone

upfromRs38,000toRs47,500/candy.Howeverthefinished

product costs remained stagnant.Wehave covered cotton in

initialmonths,duetowhichwehavesomewhatinsulatedfrom

cottonpriceincrease.

GovernmenthadincreasedMSPofKapasfromRs4400to5500

perQuintal.Presentcottonprocurementseasondidnotsupport

thequalityandpriceofKapas.

ThecottonpriceisaroundRs.48000toRs.49000percandy.Dueto

failureofmonsoonthequalitycottonisnotavailableinthemarket.

Generallyweuse32mmcottonfortheNE60count.Nowgetting

30mmcottonisdifficult.Droughtinthemajorgrowingstatesof

Maharashtra,Telangana,GujaratandAndhraPradeshlastyearhas

resultedinloweroutputthisyear.Overandabove,thequalityof

latepickedcropispoorduetothepaucityofmoistureinthefield.

Following are someof themile stones achievedduring year

underReview.

Progress of Works:

1. Ginning Unit : Weare addednewginning Shed. Thiswill

increaseourpresentcapacityofginning.

2. Spinning & OE Units : WehaveaddedaLapformerandcomber

forincreasingcombedyarncapacityinspinningdivision.The

wastebeingautomaticallytransportedfromspinningtoOE

byinstallingautomaticevacuationmachineryfromVXL,this

savedmanpowerofpressingthecottonwastesandphysically

transportingthesame.Thisreducedthemanpower.Wehave

installedspindlemonitoringsystemon12,240spindlesasfirst

phase.Thisishelpingtoincreasetheproductivityandreduce

manpower.

3. Laying of underground water pipeline from Gundlakamma River to weaving unit: Installationofwaterpipe line from

Gundlakammariver toweavingunit iscompleted.Thecivil

constructionofpumphouse is inprogress.Whichresult in

betterperformanceofdyingunit.

4. Bank Facilities: Thelongtermcreditratingofthecompany

wasupgradedbyRatingagency“BrickWorksLtd.”from-BBBto

BBBwhichrecognizesitscomfortableposition,strongbusiness

model,comfortableasset,qualityparameters.

LETTER FROM JMD & CEO

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01 - 16

An outlook for 2019

1. Captive power: Clean/Green Energy

We areworking on reducing electricity

cost.SITRAreportonEnergymonitoringis

submitted.OperationalCostOptimization

—Electricityisoneofourbiggestcostsby

addingcaptivepowergenerationwillreduce

our operational costs.We are actively

looking into possibility of adding Solar

plantsforcaptiveconsumption.Increasing

ourcaptivepowergenerationwillhelpus

strengthenourPATinthefuture.

Wehavetotalrequirementof40MWsolar

powertofeedalltheunits.AsfirstPhasewe

are lookingatdifferentoptionsofadding

15MWofSolarpowerinasustainableway.

Wemaytapcapitalmarketforfinancingthis

project.OurfabricmadeoforganicorBCI

cotton in combinationwith cleanenergy

willmakeourfabricmoresustainableand

attractclothingbrandsinthefuture.

2. Rights Issue :

TheBoardofDirectorshasrecommended

forrightsissueuptoRs.99.5Million.After

ourinitialIPOin1995weareapproaching

capitalmarketnow.

Yourcompanyisdividendpayingcompany

with growingearnings canbe rewarding

shareholders

Wewould liketotakethisopportunityto

thankouremployees, suppliers,business

partners.Wearetrulyblessedtohavethe

loyal shareholders andwe look forward

tomeetyouintheensuingshareholder’s

meeting.

Sincerely

TheManagementBoardofKTL

G.V Krishna Reddy JMD & CEO

Date:11-05-2019

Place:GUNTUR

inthelongterm.Thisyearalsotheboard

recommendedadividendof10%

Since2012onwardsweareprovidingmore

usefulinformationinyourAnnualReports.

TheCompanyhadbeenputting its best

effortstogivemaximuminformationtoits

shareholders.Forexample,in2018Annual

reportwehavegivenlast25yearsglories

historyandhasenumeratephotosofallthe

pastdirectors.

Thesuccessachievedinthisglorieshistory

was literally a team effort.We stand

committedtodeliveringonourlong-term

valuepropositionforshareholders:togrow

revenue in linewith or faster than the

market;growthadjustednetincomefaster

thanrevenue;maketargeted,value-added

investments; and returnexcess capital to

Our Green Initiative is keeping the area around the plants clean and healthy, while our sustainable business practices encouraging the Farmers in boosting the quality of their produce, While concurrently ensuring sustainable sourcing for the Company.

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OUR BUSINESSKallam Textiles Ltd. was founded in 1992, by Sri Kallam Haranadha Reddy, the founder promoter, with a desire to build a high quality yarn manufacturing company.

Kallam Textiles Limited is one of the largest producers of spun yarn for the knitting and weaving industries in the Andhra Pradesh. Offering a diverse product line to fulfil demands of customers worldwide, we have perfected our spinning processes by applying state-of-the-art automated technology and innovation to every phase of our yarn manufacturing process. We are recognized worldwide as the industry leader for spun yarns due to our continued focus on product quality and our commitment to extraordinary customer service.

Since cotton sourcing is 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

lasting relationship with our suppliers. Our international relationship gives us the

advantage to source instantly from the global market

We have over two decades of experience in the industry segment, though, Kallam textiles is a relatively young company in terms of textile firms, the management team of Kallam Spinning has many years of experience in the yarn manufacturing field. Starting with one open-end spinning facility in Guntur, the company, since its inception.

Installed Capacities :

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01 - 16

EMPOWERING INNOVATIVE LEADERSHIP

OUR APPROACH TOWARDS BUSINESS

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Employee empowerment is at the core of our Human Resource (HR) philosophy, and we remain committed to pursuing the best practices in talent management and growth. During FY19, we took various initiatives in line with this commitment. With our new initiative, we have embarked on the journey of further empowering our people through identification of their strengths, core skill-sets and areas of development. Based on this understanding, we are evolving individualized development plans for their training interventions and mentoring sessions. The exercise is aimed at helping employees grow in their own roles, while also facilitating their evolution as great leaders and superior human beings

Training Intervention – Our training interventions during the year were executed through Winning Through People - The objective of this program was to learn the difference between leadership & management, and empowering, motivating and inspiring the team members by effectively managing work & personal life.

We give our employees the authority and responsibility to make decisions affecting their work. Our employees takes responsibility and accountability for their actions and work free from the petty bureaucratic environment. To empower is to give power, open up and to release the potential of people; embracing job involvement.

Human capital

Employee empowerment is at the core of our Human Resource (HR) philosophy, and we remain committed to pursuing the best practices in talent management and growth. During FY19, we took various initiatives in line with this commitment. With our new initiative, we have embarked on the journey of further empowering our people through identification of their strengths, core skill-sets and areas of development. Based on this understanding, we are evolving individualized development plans for their training interventions and mentoring sessions. The exercise is aimed at helping employees grow in their own roles, while also facilitating their evolution as great leaders and superior human beings Training Intervention – Our training interventions during the year were executed through Winning through People - The objective of this program was to learn the difference between leadership & management, and empowering, motivating and inspiring the team members by effectively managing work & personal life. We give our employees the authority and responsibility to make decisions affecting their work. Our employees takes responsibility and accountability for their actions and work free from the petty bureaucratic hassles that diminish value and waste time To empower is to give power, open up and to release the potential of people; embracing job involvement, job enrichment and participation of people in various forms

Employee empowerment is at the core of our Human Resource (HR) philosophy, and we remain committed to pursuing the best practices in talent management and growth. During FY19, we took various initiatives in line with this commitment. With our new initiative, we have embarked on the journey of further empowering our people through identification of their strengths, core skill-sets and areas of development. Based on this understanding, we are evolving individualized development plans for their training interventions and mentoring sessions. The exercise is aimed at helping employees grow in their own roles, while also facilitating their evolution as great leaders and superior human beings Training Intervention – Our training interventions during the year were executed through Winning through People - The objective of this program was to learn the difference between leadership & management, and empowering, motivating and inspiring the team members by effectively managing work & personal life. We give our employees the authority and responsibility to make decisions affecting their work. Our employees takes responsibility and accountability for their actions and work free from the petty bureaucratic hassles that diminish value and waste time To empower is to give power, open up and to release the potential of people; embracing job involvement, job enrichment and participation of people in various forms

IMPACTS Health

Education

Skill development

Accommodations

Sports & Ethnicity

Other Facilities, Amenities & Drinking Water

Our focus is on driving financial inclusion,

underlined by our strong commitment to achieve

socio-economic progress of our employees

We recognize the importance of employee engagement and welfare

to the organization’s long-term growth and

value accretion. A series of events and celebrations were done during the year

to further nurture our employee relationships

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01 - 16

We regularly organize health check-up camps along with campaigns focusing on health and hygiene concerns of the Employees who work for us. During the FY 2018-19 two health check-up camps was organized inside the plant premises. On an average, around 400-600 employees attended each of these camps and benefitted from free health examination and medical care provided by expert doctors.

HEALTH CHECK-UP CAMPS

Eye Health Camp was organised for Employees of spinning & ginning plants

Regular Health Checkup Camp was organised for Employees of spinning & ginning plants

Eye Health Camp was organised for Employees of weaving & dyeing plants

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EDUCATION

We invest in employee education, the primary aim is that our employees who work for company betterment should be happy for the better future of their children “a win-win for everyone”.

In order to protect the interests of our Staffs children, we provide transportation Facilities for school children. We take every possible measure to ensure that our students have access to a learning environment that is safe, secure and enjoyable.

We Also Provide Scholarships to meritious/desirable Children’s of our employees every year.Transport facility for

School children from Kallam Township

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01 - 16

SKILL DEVELOPMENT

The Company is accredited under “Pradhan Mantri Kaushal Vikas Yojana.

All the workers are given training for skill development under this programme.

Skill development Training programme in progress at Weaving and dyeing division

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Employees Coming from different parts of India for employment, we Provide accommodation at our Township as per the enrollment procedures

We Have following Accommodation Facilities

• Bachelor Boys Accommodation with Capacity of 400 Members with Canteen

• Family Accommodation for 300 employees

• Ladies Hostel with capacity of 100 members with canteen

ACCOMMODATION FACILITIES

Ladies Hostel facility with Canteen Bachelor accomdation with Canteen

Areal view of Kallam Township

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01 - 16

Kallam Textiles engages employees, their families in sporting activities. Kallam Textiles has been promoting sports Activities like –football, , athletics, badminton, etc.

SPORTS & ETHNICITY

Sports & recreation facilities for employees Children

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All Employees accommodations are provided with RO water Points.

ATW(Any Time Water )Kiosk System available in side the township.

Inside the Mill cooled RO Drinking Water is Available for the Employees.

OTHER FACILITIES

• Co-operative stores• Mini Vegetable Market• Fruits & flower Shop• Bakery & milk Shop• Saloon & Tailoring Shops etc• Library• ATM• Cloth store

OTHER FACILITIES & AMENITIES

R.O. Water Plant

Fancy & Milk Shop

Indian Bank ATM for employees

Girls CanteenDepartmental Store

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01 - 16

CORPORATE SOCIAL RESPONSIBILITY

In order to maintain our commitment for socially, economically and environmentally sustainable development objective. We have formulated a CSR policiy that safegaurds the communities and eco-system, we work in.

We give 2% (of the average net profits of the company made during the three immediately preceding financial years) back to the community for improvements of roads and improvement in local communication around weaving division.

We also help to develop educational programmes for schools in support of non profitable organizations.

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STAKEHOLDERS VALUE CREATION

Investors

Vendors

Customers

Govt. and Regulatory Bodies

Most of our customers are repeat customers. This is testimony to our product quality and standardization.

Kallam Textiles has always been conscious of being compliant with laws and regulations. We have been constantly striving to perform better than the regulatory requirements.

The Company is committed to excellence in governance and in creating long-term sustainable value for investors. The company usually organise investor and analyst meetings on case to case basis or at Annual General Meeting.

The Company ensures a strong relationship with the suppliers across the value chain by engaging with them through satisfaction surveys and ethical practices.

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01 - 16

TO THE MEMBERS OF THE KALLAM TEXTILES LTD, (Formerly known as Kallam Spinning Mills Ltd.,)

Your directors are pleased to present the 27th Annual Report of the Company together with the Audited Financial Statements for the financial year ended 31st March 2019.

1. FINANCIAL RESULTS : The financial results for the year ended 31st March 2019 are summarized below :

Net Sale/Revenue from operation 31,073.59 31,264.26

Other income 140.73 113.23

Total 31,214.32 31,377.49

Operating Expenditure 28,450.48 27,851.19

Profit before Depreciation and amortization expense 2,763.84 3,526.30

Depreciation and amortization expense 1,568.36 1,419.46

Profit before Exceptional Items and tax 1,195.48 2,106.84

Exceptional items - -

Profit before tax 1,195.48 2,106.84

Provision for income tax

i) Current year Tax 261.20 460.27

ii) Deferred Tax 268.85 79.28

Profit after tax 665.42 1,567.30

Earnings per share (` 2/-) 1.55 3.66

Particulars 2018-19 2017-18 (`in Lakhs) (`in Lakhs)

Transfers & appropriations from the profit are as detailed below :

12 Net Profit after tax 665.42 1,567.30

13 Balance brought forward from previous year - -

14 Profit for appropriations 665.42 1,567.30

APPROPRIATIONS15 Transfer to General Reserve - -

16 Proposed Equity Dividend 85.63 85.63

17 Tax on Proposed Equity Dividend 17.60 17.43

18 Balance carried forward - -

2. FINANCIAL PERFORMANCE, STATE OF COMPANY’S AFFAIRS AND FUTURE OUTLOOK

For the period under review (FY 2018-19), the turnover of the company was Rs 312.14 Crores as compared to Rs 313.77 Crores for the previous Financial Year (FY 2017-18).

Your Company intends to step up efforts to diversify revenue sources by increasing the sale and better Quality products. Your Company got the in principle approval from BSE for the proposed rights issue for an amount not

exceeding Rs 995 Lacs. We are also working on reducing Operational Cost Optimization - Electricity is one of our biggest cost, by adding captive power generation, we will be able to reduce our operational cost. Technology will continue to be at the helm of operations and will be leveraged to enhance business effectiveness and impact.

Please refer the Management Discussion and Analysis Report for more information annexed as Annexure-I to this report.

BOARD’S REPORT

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3. MANAGEMENT DISCUSSION AND ANALYSIS:

Management Discussion & Analysis Report in line with Regulation 34(3) read with Schedule-V of the SEBI (LODR) Regulations, 2015 is placed at Annexure-I to this report.

4. DIVIDEND :

Considering the profits for the year under review and also 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 Rs 2/- each aggregating to ` 85.64 Lacs. The dividend, if approved by the members, would result in cash outflow of ` 103.24 Lacs including Dividend Distribution Tax (“DDT”).

The dividend track record of your Company for previous financial years is given on page No. 65 to this report

5. AMOUNTS TRANSFERRED TO RESERVES

The Board of Directors of your company has decided not to transfer any amount to the Reserves.

6. EXTRACT OF THE ANNUAL RETURN:

Extract of Annual Return of the Company pursuant to Section 92(3) of the Companies Act, 2013 read with Companies (Management and Administration) Rules, 2014, in the prescribed Form MGT-9, is annexed as Annexure-II to this report.

7.. NUMBER OF MEETINGS HELD OF THE BOARD:

The Board of Directors met 5 (Five) times during the financial year 2018-19. The gap between two consecutive meetings was not exceeded the period of 120 days as prescribed under the companies Act, 2013.

The details of the Board Meetings and the attendance of the Directors are provided in the Report on Corporate Governance

8. DIRECTORS AND KEY MANAGERIAL PERSONNEL

(i) Appointment under Retirement by rotation:

Mr. GV Krishna Reddy, Joint Managing Director, who is liable to 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

(ii) Appointment of KMP :

Mr. Nandan Bisoi was appointed as Company secretary and Compliance Officer of the Company with effect from 29.09.2018

(iii) Resignation

Mr. Suryanarayana Murty Vaddadi,(Non Executive Nominee Director –IREDA), having more than age

of 75 years, resigned from the directorship of the Company, with effect from the close of business hours on 31st March, 2019, pursuant to regulation 17(1A) of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Amendment Regulations, 2018, which came into force w.e.f 01.04.2019, regarding age limit to 75 years for Non Executive Directors (Re-appointment subject to approval of shareholder by passing of special resolution).

(iv) Proposed appointment in the ensuing AGM

The Board of Directors in their meeting held on 11.05.2019 have recommended the appointment of Mr.VSN Murty ,as Non Executive /Independent Director of the company subject to approval of shareholder by passing of special resolution at the ensuing Annual General Meeting Pursuant to the Provisions of regulation 17(1A) of the SEBI (Listing Obligations and Disclosure Requirements) Amendment Regulations, 2018 read with 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. More details on the same are given in the Report on Corporate Governance

(v) Proposed Re-appointments in the ensuing AGM

Mrs. V Bhargavi, current term of appointment as (Non Executive/Independent Women Director) of the Company expires on 26th September 2019. The Board of Directors in their meeting held on 11th May 2019, have recommended to re-appointed her for a second consecutive term of 5 years, with effective from 26th September 2019, subject to the approval of the Shareholders through Special resolution.

(vi) Statement on Declaration by the Independent Directors of the Company.

All the Independent Directors of the Company have given declarations under Section 149(7) of the Companies Act, 2013 that they meet the criteria of independence as laid down under Section 149(6) of the Companies Act, 2013 and Regulation 25 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The terms and conditions of appointment of the Independent Directors were posted on the website of the Company www.ksml.in.

(vii) Key Managerial Personnel (KMP):

The following managerial personnel are Key Managerial Personnel (KMP):

Mr P Venkateswara Reddy as Managing Director

Mr. GV Krishna Reddy,(Joint Managing Director ) as Chief Executive Officer (CEO)

Mr. MV Subba Reddy (Whole Time Director) as as Chief Financial Officer (CFO); and

Mr. Nandan Bisoi, as Company Secretary w.e.f 29.09.2018

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(viii) Performance Evaluation of the Board, its Committees and Separate meeting of Independent Directors:

In compliance with the provisions of the Companies Act, 2013 and Regulation 17(10) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the performance evaluation of the Board was carried out during the year under review.

During the year one separate meeting of Independent Directors were held on 2-11-2018, to consider various aspects of Management of the Company as well as to review the performance of the Board and Non-Independent Directors.

The criteria applied in the evaluation process are detailed in the Corporate Governance Report which forms part of this report

i. Observation of Board evaluation carried out for the year -NIL

ii. Previous year Observations and action Taken -NIL

iii. Proposed actions based on current Observations -NIL

(ix) Company’s policy on directors’ appointment and remuneration including criteria for determining qualifications, positive attributes, independence of a director and other matters provided under sub-section (3) of section 178;

Your Company has formulated the Nomination and Remuneration Committee in accordance with Section 178 of the Companies Act, 2013 and Regulation 19 of the LODR Regulations, 2015. 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 Nomination and Remuneration Committee is responsible for formulating the criteria for determining qualifications, positive attributes and independence of a director and recommendation of directors, Key Managerial Personnel and other employees. More details on the same are given in the Report on Corporate Governance.

(x) Managerial Remuneration

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 -III to this report.

9. TRANSFER TO INVESTOR EDUCATION AND PROTECTION FUND :

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, have been transferred by the Company to the Investor Education and Protection Fund (IEPF) established by the Central Government.

During the year 2018-19, Unclaimed Dividend for the year 2010-11 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.

2010-11 27-08-2011 01-10-2018

2013-14 27-09-2014 01-11-2021

2014-15 26-09-2015 31-10-2022

2015-16 28-09-2016 02-11-2023

2016-17 29-09-2017 03-11-2024

2017-18 22-09-2018 27-10-2025

Dividend Year Date of Declaration of Dividend Due date for transfer to IEPF

Disclosure with respect to Demat suspense account / unclaimed suspense account :

Your Company does not have any Unclaimed Shares

10. COMMITTEES OF THE BOARD:

The Board of Directors has the following Committees:

A. Audit Committee

The Company has an Audit Committee in accordance with the provisions of section 177 of the Companies Act, 2013 and in accordance with Regulation 18 of SEBI (LODR) Regulations, 2015 and as per other applicable laws. All members of the Committee are financially literate.

B. Nomination and Remuneration Committee

C. Stakeholders’ Relationship Committee

D. Corporate Social Responsibility Committee.

E. 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.

11. RISK MANAGEMENT :

The Company has implemented an integrated risk management framework, through which the Board and Audit Committee periodically reviews and assesses significant risk on a regular basis to help ensure that there is a robust system of internal controls in place. Your Company believes that managing risk helps in maximizing returns. The Company’s approach to address business risk is comprehensive and includes

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periodic review of such risk and for mitigation through control and reporting of such risk. More details on the same are given in the Report on Corporate Governance.

12. DETAILS OF ADEQUACY 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 keeping in view the size and nature of the business. Your company has adopted accounting policies which are in line with the Accounting Standards prescribed in the Companies (Accounting Standards) Rules, 2006 and other applicable provisions, if any, of the Companies Act, 2013 read with Rule 7 of the Companies (Accounts) Rules, 2014. These are in accordance with generally accepted accounting principles in India. Changes in policies, if any, were timely approved by the Audit Committee in consultation with the Statutory Auditors.

The main objective of internal control system and process is to test and review controls, appraisal of risks in business processes, and benchmarking controls with best practices in the industry. The Internal Audit function 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. The Internal Audit plays a key role in providing assurance to the Board of Directors. Significant audit observations and corrective actions taken by the management, if any, were presented before the Audit Committee of the Board to maintain its objectivity and independence of the Internal Audit function.

13. VIGIL MECHANISM / WHISTLE BLOWER POLICY:

In accordance with the provisions of Section 177(9) of the Companies Act, 2013 and the Rules made there under and also SEBI (LODR) Regulations, 2015, your Company has in place a vigil mechanism termed as Whistle Blower Policy, for directors and employees to report concerns about unethical behavior, actual or suspected fraud or violation of the Company’s Code of Conduct or Ethics Policy, which also provides for adequate safeguards against victimization of director(s)/employee(s), who avail the mechanism and also provide for direct access to the Corporate Governance Officer/Chairman of the Audit Committee. The Whistle Blower Policy is also available on your

Company’s website (www.ksml.in).

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

The Company has duly complied with the provision of Section 186 of the Companies Act, 2013 and Rules made there under. Details on loans or investment are provided in financial statements section of this Annual Report. The Company has not given any guarantees to any body corporate on behalf of a third party.

15. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES

During the year under review, no transaction of material nature has been entered into by the Company with its Promoters, the Directors or or relatives, etc., that may have a potential conflict with the interests of the Company. All related party transactions were placed before the Audit Committee and the Board for thier approval. Prior omnibus approval of the Audit Committee is obtained on a yearly basis for the transactions which are of unforeseen or repetitive nature and entered in the ordinary course of business and are on arm’s length basis.

A Statement giving details of the transactions entered into with the related parties, pursuant to the omnibus approval so granted, were placed before the Audit Committee and the Board of Directors for their approval/ratification on a quarterly basis.

The Register of Contracts containing transactions, in which directors are interested, if any, were placed before the Audit Committee/Board regularly. The Board of Directors of the Company, on the recommendation of the Audit Committee, adopted a policy on Related Party Transactions, to regulate the transactions between the Company and its Related Parties, in compliance with the applicable provisions of the Companies Act, 2013 and the SEBI (LODR) Regulations, 2015.

The Policy as approved by the Board was uploaded on the Company’s website at www.ksml.in.

The details of the related party transactions as per Accounting Standard-18 are set out in Notes to Accounts (Note No: 35 ) of the Financial Statements, forming part of this report.

The details of the Related Party Transactions in prescribed 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 placed as Annexure - IV to this Report.

16. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARN-INGS AND OUTGO

The information on conservation of energy, technology absorption and foreign exchange earnings and outgo as stipulated under Section 134 of the Companies Act,

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2013 read with Rule 8 (3) of the Companies (Accounts) Rules, 2014, is set out herewith as Annexure -V to this report.

17. CORPORATE SOCIAL RESPONSIBILITY (CSR)

As per the provisions of Section 135 of the Companies Act, 2013 and the Rules made thereunder, your Company has in place a Corporate Social Responsibility Committee which comprises of Mr. G.V. Krishna Reddy, as Chairman and Mr. Varanasi Ramagopal, Mr M.V.Subba Reddy, as Members.The Corporate Social Responsibility (CSR) Policy enumerating the CSR activities to be undertaken by the Company, in accordance with Schedule VII to the Companies Act, 2013 as adopted by the Board is available on the website of the Company www.ksml.in.

The Annual Report under CSR Activities is annexed to this report as Annexure -VI to this Report.

The details relating to the meetings convened, etc. are furnished in the Report on Corporate Governance.

18. AUDITORS

(i) Statutory Auditors And Their’ 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. However 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.

(ii) Cost Auditor:

As per the requirement of Central Government and pursuant to Section 148 of the Companies Act, 2013 read with the Companies (Cost Records and Audit) Rules, 2014, as amended from time to time, your Company has been carrying out audit of cost records relating to Textile and Power Divisions every year.

The Board of Directors of your Company, on the recommendations made by the Audit Committee at its meeting held on 28th May, 2018, had appointed Mr. P. Srinivas, Cost Accountant, (Membership No. 21170) as the Cost Auditor of your Company to conduct the audit of cost records for the financial year 2018-19.

For the financial Year 2019-20, on the recommendation of the Audit Committee, The Board has approved the appointment of M/s. SAIRAM & ASSOCIATES, Cost Accountants (Membership No-41948), as Cost Auditor of the Company, to carry out audit of cost records

relating to Textile and Power Divisions As required under the Companies Act, 2013, at a remuneration of ` 20,000/-, plus applicable taxes and out of pocket expenses, if any.

Your Company has received consent from M/s. SAIRAM & ASSOCIATES, Cost Accountant, to act as the Cost Auditor to carry out the audit of the cost records for the Financial Year 2019-20., a resolution seeking member’s approval for the remuneration payable to the Cost Auditor forms part of the Notice convening the Annual General Meeting for their ratification.

MAINTENANCE OF COST RECORDS:

Cost Audit is applicable to the Company. The Company is required to maintain cost records as specified by the Central Government under sub-section (1) of Section 148 of the Act and the rules framed thereunder, and accordingly, the Company has made and maintained such cost accounts and records

EXPLANATIONS OR COMMENTS BY THE BOARD ON EVERY QUALIFICATION, RESERVATION OR ADVERSE REMARK OR DISCLAIMER MADE BY THE COST AUDITOR IN HIS REPORT:

The Cost Auditor’s in their report for the financial year ended 31.03.2019 has not made any qualification, reservation or adverse remark or disclaimer in his report

(iii) Secretarial Auditors:

In terms of Section 204 of the Companies Act, 2013, read with Rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014, the Board of Directors had appointed M/s. K. Srinivasa Rao & Co, practicing company secretaries to carry out secretarial audit for FY 2018-19.

The Board of Directors of your Company at its meeting held on 11th May 2019, has appointed M/s. K. Srinivasa Rao & Co, a firm of Company Secretaries in Practice, Guntur (C.P.No: 5178) as Secretarial Auditors to carry out an audit of the secretarial records, for the financial year 2019-20.Your Company has received consent from M/s.K.Srinivasa Rao & Co, to act as the auditor for conducting audit of the Secretarial records for the financial year ending 31st March, 2020.

The Secretarial Audit Report furnished by M/s. K. Srinivasa Rao & Co, for the financial year ended March 31, 2019 is annexed to this report as “Annexure -VII”.

BOARD’S REPLY ON QUALIFICATIONS OF SECRETARIAL AUDITOR

The Board had put utmost effort for appointment of the Company Secretary as KMP but unable to appoint a Company Secretary from 01.04.2018 to 28.09.2018,due to lack of suitability of the Candidate to the profile of the Company in terms of work location,

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job profile and remuneration and finally the board has appointed a Company Secretary with effect from 29.09.2018.

(iv) Reporting of Frauds by Auditors

During the year under review, the Statutory Auditors, Cost Auditors and Secretarial Auditors have not reported any instances of frauds committed in the Company by its Officers or Employees, to the Audit Committee under Section 143(12) of the Companies Act, 2013.

19. MATERIAL EVENT RECORDED SUBSEQUENT TO THE DATE OF FINANCIAL STATEMENTS

There are no material changes and commitments affecting the financial position of the Company, which has occurred between the end of the financial year of the Company i.e. March 31, 2019 and the date of the Directors’ Report.

20. CHANGES IN SHARE CAPITAL

During the current year, there has been no change occurred in the capital Structure of the company.

21. DISCLOSURE UNDER SECTION 62 OF THE COM-PANIES ACT, 2013 AND RULE 14 OF SECURITIES EXCHANGE BOARD OF INDIA (SHARE BASED EMPLOYEE BENEFITS) REGULATIONS,2014

In order to create a sense of ownership and participation amongst the employees of ginning,

spinning, weaving & dyeing divisions, to reward long term employee loyalty towards the Company, to motivate the employees with incentives, 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 their meeting held on 28th May, 2018 had Approved Kallam Textiles Limited, Employee Stock Option Plan- I and II 2018. Subsequently the shareholders of the Company at their Annual General Meeting held on 22nd September 2018, approved the said plan. As per ESOP plans an employees, who comply with certain eligibility criteria, would be granted stock options 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.

During the year under review, there have been no issue of grants under the scheme and there have been no changes in the scheme as approved by the Shareholders.

A description of each ESOP that existed at any time during the year, including the general terms and conditions of each ESOP

Sl. No. Particulars Employee Stock Option Plan - I 2018 Employee Stock Option Plan - II 2018

Date of shareholders’approval

Total number of optionsapproved under ESOS

Maximum number of options to be issued per employee and in aggregate

22-09-2018

(i) The maximum aggregate number of shares that may be granted under the pro-posed plan is 1 % of the total issued capital i.e 4,28,194 equity shares of the face value of Rs. 2 / -each.

(ii) One option entitles the hold-er of the options to apply for one equity share of the company subject to corpo-rate action

(i) The maximum number of options to be granted to each employee will depend upon the rank/designation of the employee as on the date of grant of options. However no employee shall

22-09-2018

--Do---

--Do---

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Eligibility criteria for the employ-ees to participate

Parameters/Process for deter-mining the eligibility of employ-ees to the ESOP Scheme

be entitled to more than such number of options ex-ceeding the limit fixed by the SEBl or any other relevant regulation as is applicable to such options.

(ii) The maximum aggregate number of shares that may be granted under the pro-posed plan is 1 % of the to-tal issued Share Capital i.e 4,28,194 shares.

(iii) The Nomination & Remuner-ation Committee shall decide upon the number of options to be granted to each employee within this limit

The following are eligible to

participate in the proposed plan of the Company :

(i) a permanent employee of the company who has been working in India or outside India; or

(ii) a director of the company whether a whole time direc-tor or not but excluding an independent director; or

(iii) an employee as defined in clauses (i) or (ii) of a subsid-iary, in India or outside In-dia, or of a holding company of the company but does not include—

(a) an employee who is a pro-moter or a person belonging to the promoter group; or

(b) a director who either himself or through his relative or through any body corporate, directly or indirectly, holds more than ten percent of the outstanding equity shares of the company

(i) Employees would be grant-ed stock options based on their tenure in the Company or such other parameters as may be decided by the

--Do---

--Do---

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Vesting Requirements/Conditions

Exercise price or pricingformula

Exercise Period and the Pro-cess of Exercise

Nomination & Remunera-tion Committee from time to time.

(ii) The Nomination & Remuner-ation Committee may at its discretion extend the ben-efits of the proposed plan to a new entrant or any exist-ing employee on such other basis as it may deem fit.

There shall be a minimum period of one year between the grant of options and vesting of options. However, in case where options are granted by a company un-der the proposed plan in lieu of options held by the em-ployee under an ESOP plan in another company which has merged or amalgam-ated with that company, the period during which the op-tions granted by the trans-feror company were held by him shall be adjusted against the minimum vest-ing period of one year. The vesting shall happen in one or more tranches as may be decided by the Nomination & Remuneration Commit-tee and communicated to the employee at the time of grant.

The exercise price for the conversion of one option into one equity share shall be as decided by the Nomi-nation & Remuneration Committee

(i) Exercise period shall be Three years from the date of vesting of the options.

(ii) If an eligible employee’s em-ployment with the company terminates otherwise than due to ”Cause”, the eligible employee shall be eligible to exercise all the vested options within 30 days of his termination of employment with the company or such

--Do---

--Do---

(i) Exercise period shall be Five years from the date of vest-ing of the options.

(ii) If an eligible employee’s em-ployment with the company terminates otherwise than due to”Cause”, the eligible employee shall be eligible to exercise all the vested options within 30 days of his termination of employment with the company or such

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Mode of Implementation and Administration of Scheme

extended period as de-cided by the Nomination & Remuneration Committee. ”Cause” for the purpose of the Plan shall mean, as de-termined by the Nomination & Remuneration Committee and shall include.

(a) the engaging by the eligible employee in wilful, reckless or grossly negligent con-duct which is determined by Nomination and Remu-neration Committee to be detrimental to the interest of the Company or any of its affiliates, monetarily or oth-erwise.

(b) fraud, misfeasance, breach of trust or wrongful disclo-sure of any secret or con-fidential information about the Company.

(c) the eligible employee plead-ing guilty to or conviction of a felony.

(d) violation of any terms of em-ployment contract.

(iii) If an eligible employee’s em-ployment with the company terminates due to Death or Permanent disability, the eligible employee / nominee shall be eligible to exercise all the options within 30 days or such period as de-cided by the Nomination & Remuneration Committee.

(iv) The options will be exercis-able by the employees by a written application to the Nomination &Remuneration Committee to exercise the options, in such manner and on execution of such docu-ments as may be prescribed by the Nomination &Remu-neration Committee under theproposed plan.

(v) The options will lapse if not exercised within the speci-fied exercise period.

The scheme shall be di-rectly implemented and ad-ministrated by the Company

extended period as decided by the Nomination & Remu-neration Committee.

”Cause” for the purpose of the Plan shall mean, as de-termined by the Nomination & Remuneration Committee and shall include,

(a) the engaging by the eligible employee in wilful, reckless or grossly negligent con-duct which is determined by Nomination & Remunera-tion Committee to be det-rimental to the interest of the Company or any of its affiliates, monetarily or oth-erwise.

(b) fraud, misfeasance, breach of trust or wrongful disclo-sure of any secret or con-fidential information about the Company.

(c) the eligible employee plead-ing guilty to or conviction of a felony.

(d) violation of any terms of em-ployment contract.

(iii) If an eligible employee’s em-ployment with the company terminates due to Death or Per-manent disability, the eligible employee / nominee shall be eligible to exercise all the op-tions within 30 days or such period as decided by the Nomi-nation & Remuneration Com-mittee.

(iv) The options will be exercisable by the employees by a written application to the Nomination & Remuneration Committee to exercise the options, in such manner and on execution of such documents as may be prescribed by the Nomination & Remuneration Committee under the proposed plan.

(v) The options will lapse if not exercised within the specified exercise period.

--Do---

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Source of Shares (primary,secondary or combination

Variation in Terms of Options

Method used to account for ESOS

Method of Valuation of the Options

Options Movement During the Year (For each ESOS)

through the Nomination & Remuneration Committee.

The company shall issue fresh shares as and when application for exercise of options are received by the Company from the employ-ees.

Not Appliacable. The Company shall confirm

to the accounting policies specified in the SEBI Guide-lines and/ or such other guidelines as may be appli-cable from time to time.

The Company shall use the prescribed method for valu-ation of the options.

Not Applicable

--Do---

Not Applicable

--Do---

--Do---

Not Applicable

22. CORPORATE GOVERNANCE:

A report on Corporate Governance in line with Regulation 34 read with Schedule-V of SEBI (LODR) Regulations, 2015 is appended and annexed as a separate section to this report.

The Statutory Auditors of the Company have issued a certificate on Corporate Governance which is appended to the Corporate Governance Report.

23. DETAILS OF SUBSIDIARY, JOINT VENTURE OR ASSOCIATES

Our Company does not have any material Subsidiary Company in terms of Regulation 16(1)(c) of SEBI (LODR) Regulations, 2015. Accordingly, the financial statements of our Company are not required to be consolidated in accordance with the applicable Indian Accounting Standards

Company has neither any Associates nor any Joint Ventures as on March 31, 2019

24. 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).

During the year 2018-19 there is no change in outstanding balances of unsecured loans from

Directors, as compared to previous financial year 2017-18.

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

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

There is no material order passed by the regulators or courts or tribunals impacting the going concern status and Company’s operations in future.

26. ENVIRONMENT AND SAFETY:

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

27. OBLIGATION OF YOUR COMPANY UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013:

To prevent sexual harassment of women at work place, The central government notified “The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013”. Under the said Act every Company is required to set up an Internal

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Complaints Committee to look into complaints relating to sexual harassment at work place of any women employee.

Your Director’s hereby confirm that they have adopted a policy for prevention of Sexual Harassment of Women at Workplace and has constituted Internal Complaints Committees (ICC).

During the year 2018-19, there were no complaints.

28. 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), your Directors hereby confirm that:

(a) in the preparation of the annual accounts for the financial year ended 31st March, 2019, 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, 2019, 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, 2019 and of the profit and loss of the Company for the financial year ended 31st March, 2019;

(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.

29. 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.

Your Directors also take this opportunity to thank all shareholders, Clients, Vendors, Bankers, Government and Regulatory Authorities and Stock Exchanges for their continued co-operation.

Sd/-

P. Venkateswara Reddy

Managing Director

DIN : 00018677

Sd/-

G.V. Krishna Reddy

Joint Managing Director

DIN: 00018713

Date : 11-05-2019

Place : Chowdavaram, Guntur

For and on behalf of Board of Directors


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A) INDUSTRY STRUCTURE & DEVELOPMENTS :

i) Textile Industry Overview In India :

The Indian Textile Industry is one of the largest in the world in terms of raw material base and manufacturing strength across the value chain. The uniqueness of the industry lies in its strength both in the hand-woven sector as well as in the Capital-intensive mill sector. The mill sector, with 3,400 textile mills having installed capacity of more than 50 million spindles and 8,42,000 rotors is the second largest in the world. Traditional sectors like handloom, handicrafts and small scale power-loom units are the biggest source of employment for millions of people in rural and semi urban area. The Indian textile industry has inherent linkage with agriculture, culture and traditions of the country making for its versatile spread of products appropriate for both domestic and the export markets. The close linkage of the textile industry to agriculture (for raw materials such as cotton) and the ancient culture and traditions of the country in terms of textiles make the Indian textiles sector unique in comparison to the industries of other countries

India’s textiles sector is one of the oldest industries in Indian economy dating back several centuries. India’s overall textile exports during FY 2017-18 stood at US$ 39.2 billion in FY18-19 and US$ 31.65 billion are expected to increase to US$ 82.00 billion by 2021.

The textile industry contributes to 7% of industry output in value terms, 2% of India’s GDP with over 45 million people employed directly. The textile industry is labor intensive and is one of the largest sources of employment generation in the country.

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.

ii) Industry Structure

The major sub section of the Indian textile Industry are- Silk, Cotton, Woolen, Jute and Man-made.

The textile industry in India is highly fragmented. The organized sector consists of spinning mills and composite mills. The unorganized sector consists of handlooms and power looms.

MANAGEMENT DISCUSSION AND ANALYSIS ANNEXURE - I


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iii) Cotton Industry in India

Cotton is one of the most important cash crops and accounts for around 25% of the total global fiber production

India is world’s largest producer of cotton. The production of raw cotton in India grew from 28.0 million bales in FY 07-08 to 35.1 million bales in FY17-18, at a CAGR of 2.3 per cent. As per Cotton Association of India (CAI), in FY 18-19, Cotton production (including loose) in India was 36.5 million bales, while estimated cotton production for FY 19-20 is 34.3 million bales, as per October 2018 estimate released by CAI.

Cotton yarn accounts for the largest share in total yarn production; in FY18-19, the segment’s share amounted to 71.52 per cent of total yarn production of 5,676 million Kgs. While in the total domestic fabric production of 66,514 million square metres in FY 18-19, the cotton yarn fabric constituted 59.98 per cent of total fabric production in India.

Exports have been a core feature of India’s textile and apparel sector. In FY 18-19, export of textile from India was US$ 39.20 billion of which cotton export had a share of 54.36 %.(Source: IBEF, Ministry of Textiles)

Some of the major investments in the Indian textiles industry are as follows:

The Cabinet Committee on Economic Affairs (CCEA), Government of India has approved a new skill development scheme named ‘Scheme for Capacity Building in Textile Sector (SCBTS)’ with an outlay of Rs 1,300 crore (US$ 202.9 million) from FY 2017-18 to FY 2019-20.

Iv) Government Initiatives:

The Indian government has come up with a number of export promotion policies for the textiles sector. It has also allowed 100 per cent FDI in the Indian textiles sector under the automatic route.

Initiatives taken by Government of India are:

Enhancement of Rates under MEIS : The Directorate General of Foreign Trade (DGFT) has revised rates for incentives under the Merchandise Exports from India Scheme (MEIS) for two subsectors of Textiles Industry - Readymade garments and Made ups - from 2 per cent to 4 per cent.

Scheme for Integrated Textile Parks : The scheme provides financial support up to 40% of the project cost subject to a ceiling of Rs. 40 Crores to develop common infrastructure and common facilities for the Textile manufacturing units.

Labor Law Reforms : Government is now bearing 3.67 percent of Employee Provident Fund (EPF) contribution for new workmen in addition to existing reimbursement of 8.33 percent employer contribution under Pradhan mantra Rojgar Protsahan Yojana for three years. In order to boost investment, employment, and exports in the garments and made-up sector, the government launched a special package of ` 6000Cr. for Textiles and Apparel sector in June 2016 and December 2016

Minimum Support Price (MSP) : Further to provide remunerative prices to cotton cultivators in the country, Cotton Corporation of India (CCI) has been nominated

The following diagram shows the structure of textile industry in India.


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by the Government of India for undertaking MSP operations in the event when kapas prices of seed cotton (kapas) touch MSP level for procuring entire quantity of kapas offered by the cotton farmers. For cotton season 2018-19, Ministry of Agriculture & Farmers welfare had fixed MSPs of Cotton at ` 5150/-per quintal for medium staple and ` 5350/- per quintal for long staple cotton.

Amended Technology Up-gradation Fund scheme (A-TUFS) : The Government of India has taken several measures including Amended Technology Up- gradation Fund Scheme (A-TUFS), scheme is estimated to create employment for 35 lakh people and enable investments worth Rs 95,000 crore (US$ 14.17 billion) by FY 2022.

As of August 2018, the Government of India has increased the basic custom duty to 20 per cent from 10 per cent on 501 textile products, to boost Make in India and indigenous production.

The Government of India announced a Special Package to boost exports by US$ 31 billion, create one crore job opportunity and attract investments worth Rs 80,000 crore (US$ 11.93 billion) during FY 2018-2020. As of August 2018, it generated additional investments worth Rs 25,345 crore (US$ 3.78 billion) and exports worth Rs 57.28 billion (US$ 854.42 million).

The Cabinet Committee on Economic Affairs (CCEA), Government of India has approved a new skill development scheme named ‘Scheme for Capacity Building in Textile Sector (SCBTS)’ with an outlay of Rs 1,300 crore (US$ 202.9 million) from 2017-18 to 2019-20.

The Government has been implementing Cotton Development Programme with a focus on cropping system approach under National Food Security Mission (NFSM) in major cotton growing states since FY 2014-15, to enhance production and productivity. Thrust has been given on transfer of technology through frontline demonstrations and training in order to extend benefits to farmers. In addition, States can support Cotton Development Programme under Rashtriya Krishi Vikas Yojna.

B) OPPORTUNITIES & THREATS [SWOT ANALYSIS ]

(i) Opportunities

OUR COMPETITIVE STRENGTHS:

Record of accomplishment of operations in the spinning industry with manufacturing operations spanning across the textile value chain.

We have over two decades of experience in the spinning industry, delivering steady growth over a period of time. We have gradually expanded our operations to cover the textile value chain from manufacturing of yarn to woven fabric using yarn produced in-house. The manufacturing operations were commenced from Cotton ginning. Thereafter, we had set up spinning division in 1995, open-end division in 2009, weaving division in 2014, and dyeing division in 2015. As on date, our operations include ginning, spinning (ring spinning and open-end

spinning), weaving and dyeing in the textile segment. Our longstanding presence has enabled us to understand the changing needs and demands of the textile industry and our customers, both in India and internationally. This has helped us in getting repeat business from our customers.

We believe cotton procurement is crucial for our manufacturing operations and we have gained significant experience in cotton procurement which helps us in producing superior and consistent quality yarn and also increases the efficiency of our operations which in-turn contribute to profitability of our Company. We procure Cotton (Kapas) directly from farmers. Our company is BCI (Better Cotton Initiative) certified for procuring Better Cotton from BCI registered farmers.

Manufacturing facility with locational advantage and state-of-the-art machinery to deliver quality products

We have two manufacturing facilities in the state of Andhra Pradesh and our hydro power plant is located in the state of Telangana. Our manufacturing facility located in Guntur, AP enjoys locational advantage since Guntur is a major and one of the best quality cotton growing areas in India that produces MCU5 which is long staple cotton and is suited for fine counts. It is also a major centre for cotton breeding in southern zone. Our Guntur unit is located on sixth lane NH5, Golden Quadrilateral connecting Chennai and Calcutta and in proximity to Krishnapatanam port and Vishakhapatnam port which helps in saving logistics cost for export operations. Further, our weaving and dyeing units are located near to trijunction with highway access to Chennai, Hyderabad and Calcutta. . All the manufacturing facilities are well equipped to deliver quality products. For further details of machinery.

Implementation of stringent Quality control measures

Our Company has implemented stringent quality control measures to produce superior quality yarn and fabric for our domestic and international customers. As the quality of our products depends on the raw material quality, sowe source the superior quality raw material from farmers/suppliers. We carry raw materialinspection on Uster HVI Spectrum and Uster Afis Pro -2 for2.5% SL, uniformity, MIC, Strength, Short fiber content %and neps /grm.Bale management system is followed for consistent superioryarn quality, and for this, cotton stock is maintained for 5 – 6months. Carding and combing process is 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.

Further, apart from in process inspection system, our mill has adopted stringent final inspection procedure before dispatching yarn to its customers.

Wide range of products across cotton yarn and woven fabrics businesses

We have continuously expanded our range of products to cater to the customized requirements of our customers.


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Our product range includes Ring Spun combed yarn (from Ne.30s to Ne.80s combed warp / compact), TFO ring spun yarn, Open End yarn (from Ne10s to Ne20s), TFO open end yarn,, BCI certified yarn and woven fabric such as yarn dyed shirting and bottom weight fabric. Our yarn dyed shirting includes cotton range and blended products.

Experienced management team with strong industry expertise

Our Managing Director,Mr. PoluriVenkateshwara Reddy, has been instrumental in developing Ginning Business of our Company. He has in depth knowledge in selection of Kapas and Cotton. Mr. Gurram Venkata Krishna Reddy, Joint Managing Director and CEO, has vast experience in Manufacturing of Cotton Yarn.

OUR STRATEGY

Improvement in range of our Products:

We are focusing on development of more specialized and customized grades for specific applications in conjunction with our Customers. For this purpose, we are also focusing on improving our technical expertise to support customers and market development.

Expansion of our operations

We plan to further expand our operations by increasing the number of looms and yarn dyeing capacity substantially. We also plan to set up dye cloth and printing process upto one Lakh meters per day. Alongwith expansion of our operations, our Company is continuously focusing on improving process operations, equipments and quality related issues for higher yield.

Develop and maintain relationships with major domestic and new overseas customers, expand our existing distribution network and increase our export sales

In India, we have been selling our products mainly to customers in South and Western India. Furthermore, our growth also depends on our ability to attract additional fabric and garment manufacturers, and distributors.Accordingly, we intend to continue to focus on developing and strengthening our sales and distribution network, and introducing integrated solutions for the benefit of our customers. As a part of our sales and distribution strategy, we propose to penetrate the domestic market further by appointing new distributors and strengthening our woven fabric sales. At the same time we propose to continue our endeavor to establish a global presence for our products through the export market in the near future by further developing strategic relationships with key clients.

MARKETING APPROACH AND MARKETING SET UP

Our team including Directors through their relevant experience and good rapport with our customers due to the timely delivery of quality products has played an instrumental role in creating and expanding a work platform for our Company. We have a dedicated teams of Marketing Personnel in our Ring Spinning and Open End Division as well as Weaving and Dyeing Division. The Marketing division has well trained team with six officials for spinning division and seven in weaving

division. The marketing division is headed by an official of the rank of Vice President and is directly under control of our executive Directors. The sales and marketing of Yarn and fabric is based on factors such as quality, easy availability and competitive pricing of the products. Our client base includes reputed corporate houses in the India textile industry and in the global markets we export our products to a number of countries as well. Some of our major domestic corporate clients include Universal Cottex, Gimatex Industries Limited to whom we sell our Yarn and Jhakaria Fabrics to whom we sell fabric. We also export our products to Paramount Textiles Limited in Bangladesh, Zhejiang Zhongda Group International Trading Co. and Xiamin ITG Group Co. Ltd. in China. Our Company has loyal and committed customer base who keep buying company products from time to time

(ii) Threats

Industry is dominated by small scale enterprises.

Lack of skilled labour.

Rigid labour laws.

Cotton contamination and quality problem.

Increased pressure on prices.

International quality standard and catering changing fashion needs.

Competition from international brands.

C) MANUFACTURING FACILITIES:

The details of our manufacturing facilities are as given below:

Ginning, Spinning & Open End Plants – Our Ginning, Spinning and Open End plants are located at NH 5, Chowdavaram, Guntur -522 019, Andhra Pradesh, spread in an area of 23.14 acres. We operate 59,280 spindles of Ring Spinning out of which 34,416 are compact & 24,864 are Non-Compact and 2,912 rotors for manufacturing open end yarn. Ginning Division has a capacity to press 6,000 bales per month. Ring Spinning Division has a production capacity of 420 tons per month whereas our Open end Division has a capacity of 500 tons per month.

Weaving & Dyeing Plants – Our weaving and dyeing divisions arelocated atKunkupadu - 523265, Addanki, District – Prakasam, Andhra Pradesh spread in an area of 134.01 acres. Our Weaving division has production capacity of 80,000 metres per day whereas our dyeing division has a capacity of 5,000 kgs per day.

Hydel Plants – Our Company has three hydroelectric plants with a total capacity of 4.0 MW, two with the capacity of 1.6 MW each and one with 0.8 MW.The plants are located atNelakondapalli - 507160, District - Khammam, Telangana spread in an area of 39.06 acres.These plants are on 16th & 17th branch canal of Nagarjuna Sagar project left to main canal.


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OPERATIONS

MANUFACTURING PROCESS:

Ginning

Our operations starts from procurement of cotton. We procure cotton directly from the farmers. The farmers bring kapas to Chowdavaram spinning cum ginning plant. The kapas is first checked for quality, quantity and accounts will prepare the payment slip. Cotton cultivation is started in July every year with onset of monsoon. Cotton packing from the fields start in November and continues till February. Best quality kapas is available in the months of November - March only. Procurement of good quality cotton at economical value is very crucial for our manufacturing operations.

Ginning is the first mechanical process involved in processing cotton. The process involves separating cotton fibers from the seed bolls and dust particles. In this process, Raw seed Cotton undergoes Ginning and Cotton Lints are obtained. These Cotton Lints are processed through Bale Press and Cotton Bales are produced. Cotton seeds separated in Ginning process are sold to oil mills. The Ginning Division has 28 high production Ginning Machines. The Division has modernized Automatic bale pressing unit.

Spinning

Spinning is a process in which fibers is converted 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.

Open End Spinning

Cotton Lint & Spinning waste is used as Raw Material to prepare OE yarn. Around 10% of the OE yarn is used in weaving and yarn dyeing, and approximately 70% of OE yarn is exported.

Weaving

Weaving is a method of textile production in which two distinct sets of yarns or threads are interlaced to form a fabric or cloth. We have the state of art machinery from various leading manufacturers around the world. We use machineries from various recognized vendors such as Karl Mayer for Weaving preparatory, Picanol, Air-Jet and Rapier Looms, Toyota airjet looms for Weaving machines, Fongs for yarn dyeing, Automatic dye dispensing system from Tecnorama and Humidification System from Luwa.

Dyeing

Dyeing is the application of dyes or pigments on textile materials such as fibers, yarns, and fabrics with the objective of achieving desired color.After the


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R.F.(Radiofrequency) Drying, the yarn cones are bundled, weighed and checked for evenness of dyeing and are rewounded as soft packages 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. Humidification air changes are provided, so that fluff is going into the return trench and not flying around in the winding area.

Manufacturing Process Flowchart:

The Manufacturing process flow from Procurement of Seed Cotton to Finished fabric and Garmenting is given below

D) SEGMENT –WISE OR PRODUCT –WISE PERFORMANCE REVIEW AND ANALYSIS

Our Company is primarily engaged in the business of Ginning of cotton, manufacturing of Cotton yarn and weaving of grey and dyed fabrics. We produce cotton yarn through both Ring Spinning and Open End Spinning (with 59,280 spindles and 2,912 rotors respectively). We also have facilities of yarn dyeing with a capacity of around 3000 Kgs per day, and for woven fabric capacity of 80,000 meters per day. Our manufacturing facilities comprising of Ginning, Spinning, Weaving and Dyeing Plants, are located in the state of Andhra Pradesh. We also have three Hydel Power Plants of total capacity of 4 MW located in the state of Telangana..

Our products include Ring Spun combed yarn (from Ne.30s to Ne.80s combed warp / compact), TFO (Two for one twisted yarn) ring spun yarn (from Ne.30/2 to Ne 80/2 combed warp/compact), Open End yarn from Ne10s to Ne20s,


34


TFO open end yarn Ne OE 20s/2, BCI (Better Cotton Initiative) certified yarn and woven fabric such as yarn dyed shirting and bottom weight fabric.

Majority of combed compact yarn produced by us is utilized in-house by our woven fabric unit. In Fiscal 2019 and Fiscal 2018, out of the total quantity of 62, 41,574 Kgs and 64,29,493 Kgs of cotton yarn sold by us, 39,90,555 Kgs and 42,42,926 Kgs of cotton yarn, respectively, was transferred to our woven fabric unit. Further, During the Fiscal 2019, we sold 2,50,84,324 mtrs of grey fabric and 27,40,134 mtrs of dyed fabric as against 2,46,12,847 meters of grey fabric and 33,41,032 mtrs of dyed fabric in Fiscal 2018.

We have received many accreditations such as ISO 9001: 2015 accreditation by TUV Nord CERT GmbH, Germany for management system for manufacture and supply of cotton yarn, BCI (Better Cotton Initiative) certification for our Company units since December 2015 for procuring Cotton from farmers with better cotton practices who have been certified by the BCI as registered farmers. Our Company is a One Star Export House recognized by the Ministry of Commerce, Government of India in accordance with foreign trade policy, 2015-2020 which is valid for a period of five years till August 2022. We export Yarn and Fabric to various countries including Bangladesh, China, Japan, Korea, Sri Lanka, Vietnam etc. we exported our, aggregating Rs 57.88 Crores products In the financial year 2018-19 and, aggregating Rs91.92 Crores in financial year 2017-18, which represented 18.62% and 29.40 % of our revenue for the respective periods.

We started commercial production in 1995 with spinning of cotton yarn. We have chosen vertically integrated value addition so that the raw material fluctuation will have least impact on the finished products and profitability margins of the Company.

In FY 2018-19 and FY 2017-18, our revenue from operations was Rs. 31073.59 lakhs and Rs. 31264.26 lakhs respectively and net profit after extraordinary items and tax of Rs. 665.42 lakhs and Rs. 1567.29 Lakhs respectively. In the FY 2018-19, 40 % of our revenue from operation was from sale of Cotton yarn , Dyed Yarn and 58.95% was from Grey Fabric and Dyed Fabric.

Further, as per audited financial results Financial Year ended 31.03.2019, our income from operation is Rs. 31073.59 lakhs and net profit after tax is ` 665.42.15 lakhs.

The details of sale of our products for FY 2018-19 and 2017-18 is as under:

i) Cotton Yarn (kgs.) 62,41,574 1,51,78,82,661 64,29,493 1,51,08,97,417

ii) OE Yarn(kgs.) 53,55,285 71,33,86,805 60,26,546 78,42,55,542

iii) Cotton Waste (kgs.) 23,00,864 12,85,64,180 2,396,344 155,107,247

iv) OE Waste (kgs.) 11,11,863 1,50,66,145 10,80,815 1,74,97,843

v) Cotton Seed (kgs.) 80,66,756 16,21,94,466 92,91,664 16,03,54,101

vi) Cotton Lint (kgs.) 40,40,225 50,17,62,828 45,19,922 51,50,25,547

vii) Damaged Kappas (kgs.) 2,30,458 5,76,125 52,900 2,18,213

viii) Sale of Gray Fabric (Mtrs) 2,50,85,324 1,57,17,07,953 2,46,12,847 1,53,99,60,020

ix) Sale of Fabric Waste (kgs.) 1,41,524 58,12,032 1,68,248 59,03,630

x) Sale of Dyed Fabric (Mtrs) 27,40,134 26,01,68,150 33,41,032 31,73,05,733

xi) Sale of Dyed Yarn (Kgs) 5,36,681 19,14,61,503 5,59,820 20,79,95,581

xii) Sale of cut pieces cloth and shirts (kgs.) 702 1,61,996 - 7,68,299

xiii) Gray Yarn (kgs.) 13,20,955 34,00,15,284 7,33,538 17,86,76,908

xiv) Sale of Power (Kwh) 38,39,254 1,83,10,472 24,53,066 1,16,57,377

5,42,70,70,600 5,40,56,23,458Less: Total inter-divisional transfer Cotton Yarn (kgs.) 39,90,555 1,07,15,10,087 42,42,926 1,10,95,57,267

OE yarn (kgs.) 7,62,433 10,87,45,464 10,53,411 14,31,56,005

Dyed yarn (kgs.) 5,36,681 19,14,61,503 5,54,920 20,37,82,928

Gray Yarn (kgs.) 13,20,955 34,00,15,284 7,33,538 17,86,76,908

Cotton Waste (kgs.) 19,92,581 12,13,80,157 21,60,973 14,83,03,788

Cotton Lint (kgs.) 40,40,225 50,17,62,828 45,19,922 51,50,25,547

2,33,48,75,323 2,29,85,02,443

Net revenue 3,09,21,95,277 3,10,71,21,015

Year ended 31st March, 2019 Year ended 31st March, 2018 Particulars Quantity Revenue (in Rs.) Quantity Revenue (in Rs.)


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CAPACITY AND CAPACITY UTILISATION:

Ginning Division 28 Gins 50% 28 Gins 50% 28 Gins 50%

Spinning Division 59,280 Spindles 94.79% 58,096 Spindles 95.85% 56,400 Spindles 95.80%

Open End Division 2,912 Rotors 99.62% 2,912 Rotors 99.55% 12,48 Rotors 98.8%

Weaving Division 248 Looms 97.52% 248 Looms 96.35% 248 Looms 96.71%

Dyeing Division 3,000 KG / Day 55.19% 3,000 KG / Day 69.14% 3,000 KG / Day 10.5%

Hydel Plant 4MW 14.67% 4MW 9.43% 4MW 1.76%

Manufacturing Facility

Fiscal 2018-19

Installed capacity Installed capacity Installed capacityCapacity Utilization

Capacity Utilization

Capacity Utilization

Fiscal 2017-18 Fiscal 2016-17

E) FUTURE OUTLOOK:

Global cotton production declined in Financial Year 2018-19 owing to a low acreage and adverse weather conditions in key cotton-growing nations. India’s textile exporters also faced difficulties to get benefit from improved cost competitiveness due to US and China Trade War.

The sector is likely to continue deleveraging gradually in FY20 in view of strong annual growth generation and some moderation in the debt level and improvement in operational cash generation.

Liquidity in the sector may be affected due to higher raw material costs (lower operating margins) and net of repayments (debt rising for capacity expansion) in the near term.

F) RISKS & AREAS OF 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.

Other risks, uncertainties and other factors include:

a) General economic and business conditions in the markets in which we operate and in the local, regional and national economies;

b) Increasing competition in or other factors affecting the industry segments in which our Company operates;

c) Changes in laws and regulations relating to the industries in which we operate;

d) Fluctuations in operating cost and impact on the financial results;

e) Changes in political and social conditions in India or in countries that we may enter, the monetary policies of India and other countries, inflation, deflation, unanticipated turbulence in interest rates, equity prices or other rates or prices;

G) THE DETAILS IN RESPECT OF ADEQUACY OF INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO THE FINANCIAL STATEMENTS AND RISK MANAGEMENT PRACTICES.

The Details regarding adequacy of internal control system is available on Page No. 19.

H) MATERIAL DEVELOPMENTS IN HUMAN RESOURCES/ INDUSTRIAL RELATIONS FRONT, INCLUDING NUMBER OF PEOPLE EMPLOYED

i. Safety, Health And Environment:

Safety, Health and Environment is one of the primary focus areas for your Company. We are conducting our business with respect and care for people and the environment. We have the responsibility towards the utilization of natural resources.

Your Company will always set the objectives and targets that result in continuous improvement of our Safety, health and environmental performance. Your company has Complying with agreed corporate requirements that embrace the duty of care, including compliance with applicable laws.

ii. Human Resources And Industrial Relations:

The Company takes pride in the commitment, competence and dedication shown by its employees in all areas of business. Your Directors wish to convey their gratitude and place on record their appreciation for all the employees at all levels for their hard work, solidarity, cooperation and dedication during the year. Industrial relations were cordial throughout the year.

During the Year under review 662 employees were employed in various activities of the company

I) 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


36


Companies Act, 2013. The significant accounting policies, which are consistently applied, are set out in the Notes to the Financial Statements.

J) KEY FINANCIAL RATIOS

Sd/-


Managing Director

DIN : 00018677

Sd/-

G.V. Krishna Reddy


DIN: 00018713

Date : 11-05-2019

Place : Chowdavaram, Guntur

For and on behalf of Board of Directors

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.

1. Debt Service Ratio: Earning Available for Debt Service 29,87,32,337 39,16,35,124

Interest 7,42,49,065 9,15,67,410

Repayment During the period for long term loans 25,36,66,950 19,49,14,812

0.91 1.37 2. Interest service coverage ratio: Earning before interest and Tax 32,66,26,124 43,04,44,454

Interest Expenses 20,59,90,565 21,88,33,106

Interest service coverage ratio: 1.59 1.97

3. Debt/Equity Ration Total Debt 3762525382 3785048728 Equity 2185495251 2123255244

1.72 1.78 4. Current Ration: Current Assets 1772644202 1626452464

Current Liabilities 1886026734 1637012097

0.94 0.99 5. NetProfitMargin NetProfit 32,66,26,124 43,04,44,454

Revenue 3,10,73,59,121 3,12,64,26,542

0.11 0.14 6. Operating Ratio Revenue 32,66,26,124 43,04,44,454

Sales 3,10,73,59,121 3,12,64,26,542

9.51 7.26

ParticularsSl. No. 31-03-2019 31-03-2018

K) 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


37

Statutory Reports 16 - 74



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I REGISTRATION & OTHER DETAILS:

i CIN L18100AP1992PLC013860

ii Registration Date 18-02-1992

iii Name of the Company KALLAM TEXTILES LTD

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

v AddressoftheRegisteredoffice CHOWDAVARAM,GUNTUR-522019 &contactdetails PHNo:0863-2344016

vi Whetherlistedcompany YES

vii Name,Address&contactdetailsofthe BigShareServicesPvt.Ltd., Registrar&TransferAgent,ifany. 306,3rdFloor,Rightwing, AmruthaVille,Opp.YashodhaHospital, RajBhavanRoad,Somajiguda, Hyderabad-500082. PhNo.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. Name & Description of NIC Code of the % to total turnover No main products/services Product /service of the company

1ManufacturingofCottonandDyedYarn 13111 33.98

2ManufacturingofCottonandDyedFabric 13121 66.02

III PARTICULARS OF HOLDING , SUBSIDIARY & ASSOCIATE COMPANIES

SL. Name & Address of the Company CIN/GLN HOLDING/ % OF APPLICABLE No. SUBSIDIARY/ SHARES HELD SECTION ASSOCIATE

N O T A P P L I C A B L E

ANNEXURE -II TO THE DIRECTORS’ REPORT

FORMNO.MGT-9

EXTRACT OF ANNUAL RETURNas on financial year ended on 31-03-2019

PursuanttoSection92(3)oftheCompaniesAct,2013andrule12(1)oftheCompany (Management&Administration)Rules,2014.


38


A. Promoters(1) Indian - - - - - - - - a)Individual/HUF 1,50,33,897 -1,50,33,897 35.11 1,71,55,501 -1,71,55,501 40.06 4.95b)CentralGovt.or StateGovt. - - - - - - -c)BodiesCorporates 54,65,043 - 54,65,043 12.76 54,65,043 - 54,65,043 12.76 0.00d)Bank/FI - - - - - - -e) Any other - - - - - - - - SUB TOTAL:(A) (1) 2,04,98,940 - 2,04,98,940 47.87 2,26,20,544 - 2,26,20,544 52.83 4.96 (2)Foreign a) NRI- Individuals - - - - - - - - - b)OtherIndividuals - - - - - - - - -c)BodiesCorp. - - - - - - - - -d)Banks/FI - - - - - - - - -e) Any other… - - - - - - - - - SUB TOTAL (A) (2) - - - - - - - - - Total Shareholding of Promoter (A)= (A)(1)+(A)(2) “ 2,04,98,940 - 2,04,98,940 47.87 2,26,20,544 - 2,26,20,544 52.83 4.96 B. PUBLIC SHAREHOLDING (1) Institutions a)MutualFunds - 62,500 62,500 0.15 - 62,500 62,500 0.15 -b)Banks/FI - - - - - - - - -C) Cenntral govt - - - - - - - - - d)StateGovt. - - - - - - - - -e)VentureCapitalFund - - - - - - - - -f) Insurance Companies - - - - - - - - - g)FIIS - - - - - - - - -h)ForeignVenture CapitalFunds“ - - - - - - - - -i)Others(specify) - - - - - - - - -SUB TOTAL (B)(1): - 62,500 62,500 0.15 - 62,500 62,500 0.15 - (2) Non Institutions - a)Bodiescorporates 5,59,520 1,11,875 6,71,395 1.57 5,83,031 79,375 6,62,406 1.55 (0.02)i) Indian - - - - - - - - - ii)Overseas - - - - - - - - -b) Individuals - - - - - - - - - i)Individualshareholders 90,36,177 21,58,872 1,11,95,049 26.14 90,66,697 14,22,716 1,04,89,413 24.50 (1.64) holding nominal share capitaluptoRs.2lakhsii)Individualsshareholders 89,06,477 8,90,000 97,96,477 22.88 79,20,014 1,25,000 80,45,014 18.79 (4.09) holding nominal share capital inexcessofRs.2lakhsc)Others(specify):1.IEPF - - - - 4,94,375 - 4,94,375 1.15 1.152.ClearingMembers 2,42,958 - 2,42,958 0.57 45,003 - 45,003 0.11 (0.46)3.NonResidentIndians(NRI’s) 2,34,648 - 2,34,648 0.55 2,82,712 - 2,82,712 0.66 0.114.ForeignPortfolioInvestor 1,17,408 - 1,17,408 0.27 1,17,408 - 1,17,408 0.27 - SUB TOTAL (B)(2): 1,90,97,188 31,60,747 2,22,57,935 51.98 1,85,09,240 16,27,091 2,01,36,331 47.03 (6.09)“ Total Public Shareholding (B)= (B)(1)+(B)(2) “ 1,90,97,188 32,23,247 2,23,20,435 52.13 1,85,09,240 16,89,591 2,01,98,831 47.18 (6.09)C.SharesheldbyCustodianfor GDRs & ADRs - - - - - - - - - Grand Total (A+B+C) 3,95,96,128 32,23,247 4,28,19,375 100 4,11,29,784 16,89,591 4,28,19,375 100 (1.14)

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 Demat Physical Total % of Total Shares Shares

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


39




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1

KALLAM

AGR

OPR

ODUC

TSAND

OILSLTD

54,65,043

12.76

Nil

54,65,043

12.76

Nil

-

2

NRAJEN

DRAPRA

SAD

4,78,750

1.12

Nil

4,78,750

1.12

Nil

-

3

NALLIPR

ATHIBH

ARAN

I1,87,500

0.44

Nil

1,87,500

0.44

Nil

-

4

PRAB

HAKA

RARAO

NAL

LI

1,73,018

0.40

Nil

1,73,018

0.40

Nil

-

5

ANUM

ULARA

NGARE

DDY

1,27,500

0.30

Nil

1,27,500

0.30

Nil

-

6

GURR

AMVEN

KATA

KRISH

NARED

DY

35,13,723

8.21

Nil

35,13,723

8.21

Nil

-

7

POLU

RIV

ENKA

TESH

WAR

ARED

DY

11,51,250

2.69

Nil

11,51,250

2.69

Nil

-

8

POLU

RIS

IVAN

AGEN

DRAM

MA

2,44,631

0.57

Nil

2,96,205

0.69

Nil

0.12

9

KALLAM

MOH

ANR

EDDY

19,46,875

4.55

Nil

26,79,625

6.26

Nil

1.71

10

NAGIRE

DDYKA

LLAM

7,36,250

1.72

Nil

7,36,250

1.72

Nil

-

11

KALLAM

HAR

INAD

HAR

EDDY

22,45,625

5.24

Nil

27,32,500

6.38

Nil

1.14

12

PRAT

HYUS

HAKAL

LAM

11,88,125

2.77

Nil

11,88,125

2.77

Nil

-

13

SURE

DDYMAL

LESW

ARI

462

0.00

Nil

462

0.00

Nil

-

14

MOV

VAVEN

KATA

SUB

BARED

DY

4,28,125

1.00

Nil

4,28,125

1.00

Nil

-

15

UMAS

ANKA

RARED

DYMOV

VA

6,70,651

1.57

Nil

6,75,651

1.58

Nil

0.01

16

KALLAM

ANN

APUR

NA

6,43,750

1.50

Nil

6,43,750

1.50

Nil

-

17

MOV

VAK

AVITHA

77,500

0.18

Nil

77,500

0.18

Nil

-

18

SUBB

AYAM

MAPO

LURI

537

0.00

Nil

537

0.00

Nil

-

19

KALLAM

VEN

KATA

SUB

BAYA

MMA

7,32,750

1.71

Nil

--

Nil

(1.71)

20

KALLAM

HAR

INAD

HAR

EDDY

(HUF

)4,86,875

1.14

Nil

--

Ni

(1.14)

21.

POLU

RIGOV

ERDH

ANRED

DY

--

Nil

10,93,455

2.55

Nil

2.55

22.

VENU

GOP

ALARE

DDYPO

LURI

--

Nil

9,71,575

2.27

Nil

2.27

2

,04,

98,9

40

47.

87

2,

26,2

0,54

4

52.8

3

sale

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40


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

Sl. No. Particulars Share holding at the beginning of the Year

and changes made during the year

No. of Shares No. of Shares % of total shares of the company

% of total shares of the company

Cumulative Share holding during the year

1 POLURI SIVANAGENDRAMMA At the beginning of the year 2,44,631 0.57 2,44,631 0.57 Changes made during the year Add: Market Purchases 06.04.2018 3,200 0.0001 2,47,831 0.58 28.05.2018 200 0.0000 2,48,031 0.58 04.06.2018 1,500 0.0000 2,49,531 0.58 05.06.2018 4,000 0.0001 2,53,531 0.59 06.06.2018 2,670 0.0001 2,56,201 0.60 07.06.2018 4,000 0.0001 2,60,201 0.61 11.06.2018 723 0.0000 2,60,924 0.61 15.06.2018 1,800 0.0000 2,62,724 0.61 05.07.2018 3,000 0.0001 2,65,724 0.62 06.07.2018 1,000 0.0000 2,66,724 0.62 18.07.2018 900 0.0002 2,67,624 0.63 19.07.2018 6,916 0.0002 2,74,540 0.64 20.07.2018 3,976 0.0001 2,78,516 0.65 03.08.2018 1,000 0.0000 2,79,516 0.65 10.08.2018 7,000 0.0002 2,86,516 0.67 13.08.2018 500 0.0000 2,87,016 0.67 14.08.2018 421 0.0000 2,87,437 0.67 24.08.2018 1,550 0.0000 2,88,987 0.67 27.08.2018 1,500 0.0000 2,90,487 0.68 28.08.2018 500 0.0000 2,90,987 0.68 29.08.2018 1,503 0.0000 2,92,490 0.68 30.08.2018 1,852 0.0000 2,94,342 0.69 31.08.2018 600 0.0000 2,94,942 0.69 12.09.2018 1,263 0.0000 2,96,205 0.69 At the end of the year 2,96,205 0.69 2 KALLAM MOHAN REDDY At the beginning of the year 19,46,875 4.55 19,46,875 4.55 Changes made during the year InterseTransferasGift 7,32,750 0.01711 19 1.71 At the end of the year - - 26,79,625 6.26 3 UMASANKARA REDDY MOVVA At the beginning of the year 6,70,651 1.57 6,70,651 1.57 Changes made during the year Add: Market Purchase 25.07.2018 188 0.0000044 6,70,839 1.57 26.07.2018 654 0.000015 6,71,493 1.57 27.07.2018 658 0.000015 6,72,151 1.57 10.08.2018 2,000 0.000047 6,74,151 1.57 20.08.2018 1,500 0.000035 6,75,651 1.58 At the end of the year 6,75,651 1.58 4 KALLAM HARINADHA REDDY At the beginning of the year 22,45,625 5.24 22,45,625 5.24 Changes made during the year InterseTransferasGift24.09.2018 4,86,875 1.13704 27,32,500 6.38 At the end of the year 27,32,500 6.38


41




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Note :1 Shareholding is consolidated based on Permanent Account Number(PAN) of the shareholder

Note : 2 Not in the list of Top 10 Shareholders as on 01st April, 2018 but were one of the Top 10 shareholders as on 31st March, 2019

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

LISTOFSHAREHOLDINGOFTOP10SHAREHOLDERS

1 THIRUPATHILAKSHMINARAYANAN 1,965,819 4.59 16,31,610 3.81

2 VECHASAINAGAPADMASREE 1,001,218 2.34 10,01,218 2.34

3 GURRAMNITIN 739,645 1.72 7,70,961 1.80

4 KALLAMHARAMOHANMADHUR 622,875 1.45 6,22,875 1.45

5 PKINNERA 568,218 1.33 5,68,218 1.33

6 DEVIKAANAND 440,250 1.03 5,50,942 1.29

7 IEPFAUTHORITYMINISTRYOF - - 4,94,375 1.15 CORPORATEAFFAIRS

8 JYOTHIBHUKYA 448,081 1.02 4,36,881 1.02

9 MAHENDRAGIRDHARILAL 283,431 0.66 3,83,978 0.90

10 KRISHNASWAMYMOHAN 2,88,711 0.67 2,88,711 0.67

Sl. No.

Shareholding at the begginning of the year *

No. of shares No. of shares



Shareholding at the end of the year #

Shareholder’s Name

Sl. No. Particulars Share holding at the beginning of the Year

and changes made during the year




5 KALLAM VENKATA SUBBAYAMMA At the beginning of the year 7,32,750 1.71 7,32,750 1.71 Changes made during the year Less:Intersetransferasgift 7,32,750 1.71 - - At the end of the year - - 6 KALLAM HARANADHA REDDY (HUF) At the beginning of the year 4,86,875 1.14 4,86,875 1.14 Changes made during the year Less:Intersetransferasgift 4,86,875 1.14 - - At the end of the year - - 7 POLURI GOVARDHAN REDDY At the beginning of the year - - - - Changes made during the year Inclusionofnameinpromotergroup 10,93,455 2.55 10,93,455 2.55 At the end of the year 10,93,455 2.55 8 POLURI VENUGOPAL REDDY At the beginning of the year - - - - Changes made during the year Inclusionofnameinpromotergroup 9,71,575 2.27 9,71,575 2.27 At the end of the year 9,71,575 2.27

Note : 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.


42


2 VECHA SAI NAGA PADMASREE * At the beginning of the year 10,01,218 2.34 Changes Made during the Year 2018-19 - - 10,01,218 2.34 At the end of the year (or on the date of separation, if separated during the year) 10,01,218 2.34

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

Sl. No. Particulars

Share holding at the beginning of the Year and changes made during the year




(v) Shareholding of Directors &KMP

Sl. No . Name of the Director(s)& KMP Designation

No.of Shares at the Beginning

of the Year *

Changes Made during the

Year 2018-19

1 P.VenkateswaraReddy ManagingDirector 11,51,250 - 11,51,250

2 G.V.KrishnaReddy JointManagingDirector 35,13,723 - 35,13,723

3 M.V.SubbaReddy WholeTimeDirector&CFO 4,28,125 - 4,28,125

4 V.S.N.Murthy NomineeDirector - - -

5 M.R.Naik IndependentDirector - - -

6 S.PullaRao IndependentDirector - - -

7 A.KrishnaMurthy IndependentDirector - - -

8 V.Bhargavi IndependentDirector - - -

9 NandanBisoi CompanySecretary - - -

No.of Shares held at the end of the Year #

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

1 LAKSHMINARAYANAN T * At the beginning of the year Changes Made during the Year 2018-19 19,65,819 4.59 Marketsale06-04-2018 -1,30,000 (0.30) 18,35,819

Marketsale13-04-2018 -1,60,000 (0.37) 16,75,819

MarketSale20-04-2018 -34,235 (0.08) 16,41,584

MarketSale27-04-2018 -20,000 (0.05) 16,21,584

marketPurchase18-01-2019 10,026 0.02 16,31,610

At the end of the year (or on the date of separation, if separated during the year) 16,31,610 3.81


Sl. No. Particulars






43




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3 GURRAM NITIN * At the beginning of the year 7,39,645 1.73 7,39,645 1.73 ChangesMadeduringtheYear2018-19

MarketPurchase_27-04-2018 2,000 0.00 7,41,645 1.73

MarketPurchase_01-05-2018 17,577 0.04 7,59,222 1.77

MarketPurchase12-05-2018 13,000 0.03 7,54,645 1.76

Marketpurchase01-06-2018 20,000 0.05 7,79,222 1.82

Marketsale18-01-2019 (21,261) (0.05) 7,33,384 1.71

Marketpurchase22-01-2019 37,577 (0.09) 7,70,961 1.80


Sl. No. Particulars





4 KALLAM HARA MOHAN MADHUR * At the beginning of the year 6,22,875 1.45 6,22,875 1.45 Changes Made during the Year 2018-19 - - 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

5 P KINNERA * At the beginning of the year 5,68,218 1.33 5,68,218 1.33 Changes Made during the Year 2018-19 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



Sl. No.

Sl. No.

Particulars

Particulars



No. of Shares

No. of Shares

No. of Shares

No. of Shares








44


7 JYOTHI BHUKYA * Atthebeginningoftheyear 4,40,081 1.03 4,40,081 1.03

ChangesMadeduringtheYear2018-19 4,36,881 1.02

Mareketsale25-01-2019 (3,200) (0.01) 4,36,881 1.02


8 IEPF Authority (Ministry of Corporate Affairs)* At the beginning of the year - - - - Changes Made during the Year 2018-19 - - 4,94,375 1.15 At the end of the year (or on the date of separation, if separated during the year) 4,94,375 1.15



Sl. No.

Sl. No.

Particulars

Particulars



No. of Shares

No. of Shares

No. of Shares

No. of Shares







6 DEVIKA ANAND * At the beginning of the year 4,40,250 1.03 4,40,250 1.03 Changes Made during the Year 2018-19 MarketPurchase24-08-2018 20,965 0.05 4,61,215 1.08

MarketPurchase07-09-2018 11,448 0.03 4,72,663 1.10

MarketPurchase14-09-2018 4,114 0.01 4,76,777 1.11

Marketpurchase21-09-2018 29,048 0.07 5,05,825 1.18

MarketPurchase28-09-2018 23,328 0.05 5,29,153 1.24

MarketPurchase18-01-2019 21,789 0.05 5,50,942 1.29



Sl. No. Particulars






45




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10 KRISHNASWAMY MOHAN * At the beginning of the year 2,88,711 0.67 2,88,711 0.67 Changes Made during the Year 2018-19 - - - - At the end of the year (or on the date of separation, if separated during the year) 2,88,711 0.67

9 MAHENDRA GIRDHARILAL * At the beginning of the year 2,83,431 0.66 2,83,431 0.66 Changes Made during the Year 2018-19 MarketPurchase18-01-2019 40,331 0.09 3,23,762 0.76

MarketPurchase25-01-2019 34,568 0.08 3,58,330 0.84

MarketPurchase01-03-2019 3,661 0.01 3,61,991 0.85

MarketPurchase16-03-2019 5,871 0.01 3,67,862 0.86

Marketpurchase31-03-2019 16,116 0.04 3,83,978 0.90




Sl. No.

Sl. No.

Particulars

Particulars



No. of Shares

No. of Shares

No. of Shares

No. of Shares







V INDEBTEDNESS

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

Indebtednessatthebeginningofthefinancialyear i)PrincipalAmount 32,687.95 203.05 0.00 32,891.00

ii)Interestduebutnotpaid 152.59 0.00 0.00 152.59

iii)Interestaccruedbutnotdue 0.00 0.00 0.00 0.00

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

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 -1214Indebtedness at the end of the financial year i)PrincipalAmount 31,357.53 342.55 0 31,700.08

ii)Interestduebutnotpaid 129.51 0 0 129.51

iii)Interestaccruedbutnotdue 0 0 0 0.00

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

ParticularsSecured Loans

excluding depositsUnsecured

LoansDeposits Total

Indebtedness

` In Lakhs


46


VI. REMUNERATION OF DIRECTORS AND KEY MANAGERIAL PERSONNEL

A.RemunerationtoManagingDirector,Wholetimedirectorand/orManager:

1 Gross salary(a) Salary as per provisions containedinsection17(1) oftheIncomeTax.1961. 35.58 33.25 10.74

(b) Valueofperquisitesu/s17(2) oftheIncometaxAct,1961 2.35 2.34 1.34

(c)Profitsinlieuofsalaryunder section17(3)ofthe IncomeTaxAct,1961

2 Stockoption - - -

3 SweatEquity - - -

4 Commission 6.57 6.57 -

as%ofprofit 0.5 0.5 -

others - Incentive - -

5 Others,pleasespecify - - -

Total (A) 44.51 42.17 12.08 Ceiling as per the Act

Sl.No Particulars of Remuneration Name of the MD/WTD/Manager P.Venkateswara Reddy G.V.Krishna Reddy M.V.Subba Reddy ManagingDirector JointManagingDirector WholeTimeDirector

` In Lakhs

B.RemunerationtoOtherDirectors:

Sl.No Particulars of Remuneration Name of the Directors 1 Independent Directors Sri S.Pulla Rao Sri Ajeya Kallam Sri V.Ramagopal Ms. V. Bhargavi Feespaidforattending Board/CommitteeMeetings `75,000 `60,000 `60,000 `75,000

Sl.No Particulars of Remuneration Name of the Directors 1 Nominee Director (IREDA) V.S.N. Murthy Feespaidforattending Board/CommitteeMeetings ` 75,000

C. Remunerationtokeymanagerialpersonnel(otherthanMD/Manager/WTD)

Sl.No Particulars of Remuneration Name of the KMP 1 Company Secretary Nandan Bisoi Salary Paid ` 2,00,000


47




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Sd/-


Managing Director

DIN:00018677

Sd/-

G.V. Krishna Reddy


DIN:00018713

Date:11-05-2019

Place:Chowdavaram,Guntur

ForandonbehalfofBoardofDirectors

VII. PENALTIES/PUNISHMENT/COMPOUNDING OF OFFENCES

Brief Description

Authority (RD/NCLT/Court)

Appeall made if any (give

details)

Type Section of the

Companies Act, 2013

Details of Penalty/ Punishment/

Compounding fees imposed

A. COMPANY Penalty

Punishment

Compounding

B. DIRECTORS Penalty

Punishment

Compounding

C. OTHER OFFICERS IN DEFAULT Penalty

Punishment

Compounding

N I LN I L


48


ANNEXURE -III TO THE DIRECTORS REPORT

Tdetails 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. TheratiooftheremunerationofeachDirectortothemedianremunerationoftheemployeesoftheCompanyforthefinancialyear2018-19andthecomparisonofremunerationofeachKeyManagerialPersonnel(KMP)againsttheperformanceoftheCompanyareasunder:

Remuneration of Director During the F.Y 2018-19

(Amount In `)

Ratio of remuneration of each Director/to median remuneration

of employeesS. No.

Name of the Director and Designation

1. P.VenkateswaraReddy, ManagingDirector 44,51,162 31.667

2 G.V.KrishnaReddy, IointManagingDirector 42,17,690 30.006

3 M.V.SubbaReddy, WholeTimeDirector“ 12,08,438 8.597

4 S.PullaRao, NonExecutiveandIndependentDirector 75,000 0.534

6 V.S.NMurthy, NonExecutiveandNomineeDirector“ 75,000 0.534

8 AjeyaKallam, NonExecutiveandIndependentDirector 60,000 0.427

9 V.Ramagopal, NonExecutiveandIndependentDirector 60,000 0.427

10 V.Bhargavi, NonExecutiveandIndependentDirector 75,000 0.534

II. DetailsofpercentageincreaseintheRemunerationofeachDirectorintheFinancialYear2018-19isasfollows:


(Amount In `)


(Amount In `)

% Increase/(Decrease) in Remuneration in the

Financial Year 2017-18S. No.

Name of the Director / KMP and Designation

1. P.VenkateswaraReddy, ManagingDirector 44,51,162 47,21,131 (5.72)

2 G.V.KrishnaReddy, IointManagingDirector 42,17,690 47,17,140 (10.59)

3 M.V.SubbaReddy, WholeTimeDirector“ 12,08,438 9,86,852 22.45

4 S.PullaRao, NonExecutiveandIndependentDirector 75,000 1,00,000 (25.00)

6 V.S.NMurthy, NonExecutiveandNomineeDirector“ 75,000 1,00,000 (25.00)

8 AjeyaKallam, NonExecutiveandIndependentDirector 60,000 60,000 0.00

9 V.Ramagopal, NonExecutiveandIndependentDirector 60,000 30,000 100.00

10 V.Bhargavi, NonExecutiveandIndependentDirector 75,000 1,00,000 (25.00)

11 NandanBisoi CompanySecretary 2,00,000 - -


49




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01 - 16


III. Percentageincreaseinthemedianremunerationofallemployeesinthefinancialyear2018-19

Particulars 2018-19 2017-18 % Increase/(Decrease) in the Financial Year 2018-19Median Remuneration of alltheEmployees 1,40,561 1,40,271 0.21

IV. Therewere662permanentemployeesontherollsoftheCompanyason31stMarch,2019.

V. Comparison of Remuneration of the Key Managerial Personnel(s) against the performance of the Company:

ThetotalremunerationofKeyManagerialPersonneldecreasedby4.17%from108.57Lakhsin2017-18to104.22Lakhsin2018-19whereastheProfitbeforeTaxdecreasedby43.25%to1195.48Lakhsin2018-19from2106.83Lakhsin2017-18.

VI.DetailsofSharepriceandmarketcapitalization:

Thedetailsofvariationinthemarketcapitalizationandpriceearningsratioasattheclosingdateofthecurrentandpreviousfinancialyearsareasfollows:

Particulars 31-03-2019 31-03-2018 Increase/(Decrease) (%)1.P.ERatio 7.94 8.21 (3.29)

2.MarketCaptialisation (`inCr) 53.74 128.67 (58.23)

VII. TherewerenoemployeesintheCompanyasperRule5(2)ofChapterXIII,theCompanies(AppointmentandRemunerationofManagerialPersonnel)Rules,

VIII. Theratiooftheremunerationofthehighestpaiddirectortothatoftheemployeeswhoarenotdirectorsbutreceiveremunerationinexcessofthehighestpaiddirectorduringtheyear-NotApplicable:and

IX. ThekeyparametersforthevariablecomponentofremunerationavailedbythedirectorsareconsideredbytheBoardofDirectorsbasedontherecommendationsoftheHumanResources,NominationandRemunerationCommitteeaspertheRemunerationPolicyforDirectors,KeyManagerialPersonnelandotherEmployees.

X. ItisherebyaffirmedthattheremunerationpaidisaspertheaspertheRemunerationPolicyforDirectors,KeyManagerialPersonnelandotherEmployees.

Sd/-


Managing Director

DIN:00018677

Sd/-

G.V. Krishna Reddy


DIN:00018713

Date:11-05-2019




50


Formfordisclosureofparticularsofcontracts/arrangementsenteredintobytheCompanywithrelatedpartiesreferredtoinSection188(1)oftheCompaniesAct,2013includingcertainarm’slengthtransactionsunderthirdprovisothereto.

1) Therearenocontracts/arrangementsenteredintobytheCompanywithrelatedpartieswhicharenotatarm’slengthbasis.

2) Therearenomaterialscontracts/arrangementsenteredintobytheCompanywithrelatedpartiesasreferredtoinsubsection(1)ofSection188oftheCompaniesAct,2013.

3) Therewerenomateriallypecuniaryrelationshipsortransactionsofthenon-executivedirectors’vis-à-vistheCompany.

4) Detailsofnon-materialcontracts/arrangementsatarmlengthbasiswithrelatedpartiesfortheyearended31stMarch,2019areasfollow:-

Nature of 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

Amount(In Rs)S. No. Name of the related partyDuration of

the contracts / arrangements /

transactions

1

2

3

4

5

KallamBrothers Cottons Pvt Ltd

Kallam Agro products and OilsPvt.Ltd

KallamBrothers Cottons Pvt Ltd

P.GovardhanReddySon of Managing Director

M.SrinivasaNagarjunaReddySonofWholeTimeDirector

Rendering of services:

Sale of Goods and Services

Purchase of services

Appointment to officeorplaceof

profit:

Appointment to officeorplaceof

profit:

5Years

5Years

5Years

-

-

13-08-16

13-08-16

13-08-16

-

-

Rs2,77880/- Per Annum

Rs87689898/- Per Annum

Rs2,51,57,727/-Per Annum

Commensurate withqualificationand experience an amount of Rs 42,000PerMonthisbeing paid

Commensurate withqualificationand experience an amount of Rs 20,000PerMonthisbeing paid

10% of Total Turnover of the Company or 100 Crores Whicheverislower



Appointed on a Monthly remuneration not exceeding Rs2,50,000/-PerMonth

Appointed on a Monthly remuneration not exceeding Rs2,50,000/-PerMonth

ANNEXURE – IV TO THE DIRECTORS REPORT

FORM AOC – 2

(Pursuant to Section 134(3)(h) of the Companies Act, 2013 and Rule 8(2) of the Companies (Accounts) Rules, 2014)

Sd/-


Managing Director

DIN:00018677

Sd/-

G.V. Krishna Reddy


DIN:00018713

Date:11-05-2019




51




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A. CONSERVATION OF ENERGY:1. Steps taken or impact on conservation of energy :Company continues its efforts to reduce and optimize the energy consumption at allmanufacturing facilities, including corporate office atChowdavaram,Guntur-522019.

Allthemanufacturingunitscontinuedtheireffortstoreducethespecificenergyconsumption.Specificandtotalenergyconsumptionistrackedonadailybasisatindividualfactory/blocklevelandalsoatconsolidatedmanufacturinglevel.EnergyconservationinitiativesarebeingplannedandimplementedacrossmanufacturinglocationsApartfromregularpracticesandmeasuresforenergyconservation,manynewinitiativesweredrivenacrosstheunits.ThemeasurestakeninallthemanufacturingunitsofyourCompanyhavebeenbrieflyenumeratedasbelow:

a) InstallationofenergyefficientlightingfixturessuchasCompactFluorescentLightBulbs(CFLs)

b) OptimizedusageofCaptivecompressors.

c) Saving in diesel consumption for steam generation boiler operation

d) OptimizationofPlantPowerloadtomatchthedailypowerdemand.

e) Dedicatedteamworkingformonitoringthelightingsystemandstafftrainedforpreventionofexcessiveusageofpowerinsidethecampus

f) ImplementedROplantforrecycling&reuseofwater.

g) ReplacingexistingagedinefficientSplitACunitswithenergyefficientunits

h) UseofFloodlightLEDandpowerefficientMetalHalidelampsinsteadofHalogenincampuses

i) Effortshavebeenputconsistentlyyearonyeartooptimizeenergyconsumptioninproductionprocessesandoperationofutilities.

j) Implementedchangesinprocessingmethodswhichreducedcycletimeresultinginlowerpowerconsumption.

Form A (Form For Disclosure Of Particulars With Respect To Conservation Of Energy)

ANNEXURE - V TO THE DIRECTOR’S REPORT FOR THE FINANCIAL YEAR 2018-19Information on Conservation 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

S. No Particulars 2018-19 2017-18 a) POWER AND FUEL CONSUMPTION: 1 Electricity a)Purchasedunits(KWH) 6,26,58,854 6,55,10,929 Totalamountin 39,94,98,693 40,21,27,841 Rateperunitin 6.37 5.77 b)OwnGeneration - - i) Through Diesel Generator - - Unitsgenerated–KWH - - Total Amount in - - Cost per unit in - - ii) Through Steam Generation - - iii)ThroughHydelGeneration - - Unitsgenerated–KWH 39,84,800 25,27,700 Unitsconsumed–KWH - - Total Cost in - - CostperKWHin - - 2 Coal - - 3 FurnaceOil - - 4 OtherInternalGeneration - - b) CONSUMPTION PER UNIT OF PRODUCTION (NO.OF UNITS/KG.) 1 Electricity - 2 Coal - - 3 Furnaceoil - - 4 Hydel - -


52


2. Steps taken by the company for utilising alternate sources of energy:none3. Capital investment on energy conservation equipment : noneB. TECHNOLOGY ABSORPTION, ADAPTAION AND INNOVATION:

Technology Absorption i) theeffortsmadetowardstechnologyabsorption; ii) Benefitsderivedlikeproductimprovement,cost reduction,productdevelopmentorimportsubstitution iii) In case of imported technology (imported during the lastthreeyearsreckonedfromthebeginning ofthefinancialyear): (a) Details of technology imported (b) Yearofimport (c) Whetherthetechnologybeenfullyabsorbed (d) Ifnotfullyabsorbed,areaswhereabsorption hasnottakenplaceandthereasonsthereof (iv) Expenditure incurred on Research and Development

Not Applicable

C. FOREIGN EXCHANGE EARNINGS AND OUTGOINGS :

ForeignexchangeearningsduringtheyearunderreviewamountedtoRs59.40Crores.Theforeignexchangeexpenditureduringtheyearamountedto22.53Crores

i)ActualInflows: Foreign Exchange Earnings : Exports 5,940.38 9,115.70 Total 5,940.38 9,115.70 ii)ActualOutflows: Foreign Exchange Outgo: Imports -RawMaterialsEtc 2,086.60 511.74 -CapitalGoods 43.23 127.92 -Spares 59.14 264.06 Others(Royalty,Consultancy,Commissions) 64.47 47.02 Total 2,253.44 950.74

Foreign Exchange Earnings and Outgo: 2018-19 2017-18

` Lakhs

Sd/-


Managing Director

DIN:00018677

Sd/-

G.V. Krishna Reddy


DIN:00018713

Date:11-05-2019




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ANNEXURE – VI TO THE DIRECTORS’ REPORT ANNUAL REPORT ON CORPORATE SOCIAL RESPONSIBILITY (CSR) ACTIVITIES FOR FY 2018-19

1. AbriefoutlineoftheCompany’sCSRPolicy,includingoverviewofprojectsorprogramsproposedtobeundertakenandareferencetotheweb-linktotheCSRPolicyandprojectsorprograms

KallamTextilesLimited’svisionistobearesponsibleindustryleaderanddemonstrateenvironmental,transparentandethicalbehavioralpracticeswhichwillcontributetotheeconomicandsustainabledevelopmentwithinthecompany,industry,andsocietyatlarge.TheCompany’sCSRactivitiesbuildanimportantbridgebetweenbusinessoperationsandsocialcommitmentevolvingintoanintegralpartofbusinessfunctions,goalsandstrategy

TheactivitiesorprojectsthatwillbeundertakenbytheCompanyshallincludeoneormoreofthefollowingasmayberecommendedbytheCSRCommitteeandapprovedbytheBoardofDirectors.

(i)Eradicatinghunger,povertyandmalnutrition,‘promotinghealthcareincludingpreventivehealthcare‘andsanitationincludingcontributiontotheSwachBharatKoshset-upbytheCentralGovernmentforthepromotionofsanitationandmakingavailablesafedrinkingwater.

(ii)Promotingeducation,includingspecialeducationandemploymentenhancingvocationskillsespeciallyamongchildren,women,elderlyandthedifferentlyabledandlivelihoodenhancementprojects.

(iii)Promotinggenderequality,empoweringwomen,settinguphomesandhostelsforwomenandorphans;settingupoldagehomes,daycarecentresandsuchotherfacilitiesforseniorcitizensandmeasuresforreducinginequalitiesfacedbysociallyandeconomicallybackwardgroups.

(iv)ensuringenvironmentalsustainability,ecologicalbalance,protectionoffloraandfauna,animalwelfare,agrofor-estry,conservationofnaturalresourcesandmaintainingqualityofsoil,airandwater[includingcontributiontotheCleanGangaFundset-upbytheCentralGovernmentforrejuvenationofriverGanga.

(v)protectionofnationalheritage,artandcultureincludingrestorationofbuildingsandsitesofhistoricalimportanceandworksofart;settinguppubliclibraries;promotionanddevelopmentoftraditionalartandhandicrafts;

(vi)measuresforthebenefitofarmedforcesveterans,warwidowsandtheirdependents;

(vii)trainingtopromoteruralsports,nationallyrecognizedsports,paralympicsportsandolympicsports

(viii)contributiontotheprimeminister’snationalrelieffundoranyotherfundsetupbythecentralgovt.forsocioeconomicdevelopmentandreliefandwelfareoftheschedulecaste,tribes,otherbackwardclasses,minoritiesandwomen;

(ix)Contributionsorfundsprovidedtotechnologyincubatorslocatedwithinacademicinstitutionswhichareapprovedbythecentralgovt.

(x) rural development projects

(xi)Slumareadevelopment.

(x)SuchOtherProjectsasmaybenotifiedfromTimetotime


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The Company shall give preference to various local areas and areas around which the Company is carrying out its activitiesThepolicydetailsareavailableatthecompanywebsite:http://ksml.in/wp-content/uploads/2016/10/ksml-csr-policy.pdf

Responsibility Statement of CSR CommitteeItisherebyconfirmedthattheimplementationandmonitoringofCSRPolicy,isincompliancewithCSRobjectivesandpolicyoftheCompany

1 Improvements Rural Addanki, of Roads development Andhara projects Pradesh 35.25 35.48 NIL 35.48

SectorinwhichtheProject is covered

SL No.

CSR Project or activityidentified

Locationwhereprojects or

programswasundertaken

Amount outlay (budget) project

or programs wise(RsinLakhs)

Amount spent on theprojects:(1)

Direct expenditure on projects or programs (2)

Overheads(RsinLakhs)

Cumulative expenditure up to the reporting period (Rs in

Lakhs)

Amountspent:Direct or through

implementing agency (Rs in

Lakhs)

2. TheCompositionoftheCSRCommittee:

Mr.G.V.KrishnaReddy Chairman

Mr.V.Ramagopal Member

Mr.M.V.SubbaReddy Member

3. Averagenetprofitofthecompanyfor 19,34,04,490 lastthreefinancialyears

4. PrescribedCSRExpenditurefor(FY 2019-20) 38,68,090 (twopercentoftheaveragenetprofitsofthecompanymadeduringthethreeimmediately precedingfinancialyears

5. DetailsofCSRspentduringthefinancialyear2018-19

(a)Totalamountspentforthefinancialyear2018-19 35.48

(b)Amountunspent,ifany Nil

(c)Mannerinwhichtheamountspentduringthefinancialyearisdetailedbelow:

` Lakhs

Sd/-

G.V. Krishna Reddy


DIN:00018713

Date:11-05-2019




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Annexure -VII TO THE DIRECTORS’ REPORT FORM NO. MR-3

SECRETARIAL AUDIT REPORTFOR THE FINANCIAL YEAR ENDED ON 31stMARCH, 2019

[Pursuanttosection204(1)oftheCompaniesAct,2013andRuleNo.9oftheCompanies (AppointmentandRemunerationPersonnel)Rules,2014]

To,

TheMembers,

M/s.KallamTextilesLimited, (FormerlyknownasKallamSpinningMillsLtd)

Chowdavaram,Guntur.

Wehaveconductedthesecretarialauditof thecomplianceofapplicablestatutoryprovisionsandtheadherencetogoodcorporatepracticesby M/s.KallamTextilesLimited(FormerlyknownasKallamSpinningMillsLtd)(hereinaftercalledtheCompany).SecretarialAuditwasconductedinamannerthatprovidedusareasonablebasisforevaluatingthecorporateconducts/statutorycompliancesandexpressingouropinionthereon.

BasedonourverificationoftheCompany’sbooks,papers,minutebooks,formsandreturnsfiledandotherrecordsmaintainedbytheCompanyandalsotheinformationprovidedbytheCompany,itsofficers,agentsandauthorizedrepresentativesduringtheconductofsecretarialaudit,Weherebyreportthatinouropinion,thecompanyhas,duringtheauditperiodcoveringthefinancialyearendedon31stMarch,2019compliedwiththestatutoryprovisionslistedhereunderandalsothattheCompanyhasproperBoard-processesandcompliance-mechanisminplacetotheextent,inthemannerandsubjecttothereportingmadehereinafter:

Wehaveexaminedthebooks,papers,minutebooks,formsandreturnsfiledandotherrecordsmaintainedbytheCompanyforthefinancialyearendedon31stMarch,2019accordingtotheprovisionsof:

(i). TheCompaniesAct,2013(theAct)andtherulesmadethereunder;

(ii). TheSecuritiesContracts(Regulation)Act,1956(‘SCRA’)andtherulesmadethereunder;(iii).TheDepositoriesAct,1996andtheRegulationsandBye-lawsframedthereunder;

(iv).ForeignExchangeManagementAct,1999andtherulesandregulationsmadethereundertotheextentofForeignDirectInvestment,OverseasDirectInvestmentandExternalCommercialBorrowings;

(v). TheFollowingRegulationsandGuidelinesprescribedundertheSecuritiesandExchangeBoardofIndiaAct,1992(‘SEBIAct’)viz.:-

(a) TheSecuritiesandExchangeBoardofIndia(SubstantialAcquisitionofSharesandTakeovers)Regulations,2011;

(b) SecuritiesandExchangeBoardofIndia(ProhibitionofInsiderTrading)Regulations,2015;

(c) SecuritiesandExchangeBoardof India (IssueofCapitalandDisclosureRequirements)Regulations,2009(up to10thNovember, 2018)andSecuritiesandExchangeBoardofIndia(IssueofCapitalandDisclosureRequirements)Regulations,2018(witheffectfrom 11thNovember,2018):(NotapplicabletotheCompanyduringtheAuditPeriod);

(d) TheSecuritiesandExchangeBoardofIndia(ShareBasedEmployeeBenefits)Regulations,2014

(e) TheSecuritiesandExchangeBoardofIndia(IssueandListingofDebtSecurities)Regulations,2008(NotapplicabletotheCompany duringtheAuditPeriod);

(f) TheSecuritiesandExchangeBoardof India (Registrars toan IssueandShareTransferAgents)Regulations,1993 regarding the CompaniesActanddealingwithclient;

(g) TheSecuritiesandExchangeBoardofIndia(DelistingofEquityShares)Regulations,2009;(NotapplicabletotheCompanyduringthe Audit Period) and

(h) TheSecuritiesandExchangeBoardofIndia(BuybackofSecurities)Regulations,1998;SecuritiesandExchangeBoardofIndia(Buyback ofSecurities)Regulations,2018(NotapplicabletotheCompanyduringtheAuditPeriod);


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(vi).TheCompanyhasidentifiedthefollowinglawsasspecificallyapplicabletotheCompany:

1. TheTextilesCommitteeAct,1963andtherulesmadethereunder;

2. TheTextiles(DevelopmentandRegulation)Order,2001

3. TheTextiles(ConsumerProtection)Regulations,1988

Wehavealsoexaminedcompliancewiththeapplicableclausesofthefollowing:

(i) SecretarialStandardsissuedbytheInstituteofCompanySecretariesofIndia.

(ii) TheListingAgreemententeredintobytheCompanywithBombayStockExchangeLimitedandtheUniformListingAgreemententeredwiththesaidstockexchangepursuanttotheprovisionsoftheSEBI(ListingObligationsandDisclosureRequirements)Regulations,2015(applicablewitheffectfrom01stDecember,2015).

DuringtheperiodunderreviewtheCompanyhascompliedwiththeprovisionsoftheAct,Rules,Regulations,Guidelines,Standards,etc.mentionedaboveexcepttotheextentasmentionedbelow:

1. WhereasintermsoftheprovisionsofSection203oftheCompaniesAct,2013,theCompanywasrequiredtohavecertainKeyManagerial Personnel(KMP).WhereasintermsoftheprovisionsofRegulation6.(1)AoftheSEBI(ListingObligationsAndDisclosureRequirements) Regulations,2015listedentityshallappointaqualifiedcompanysecretaryasthecomplianceofficer.TheCompanyhasnotappointed aCompanySecretaryintermsoftheprovisionsofSection204oftheCompaniesAct,2013andRegulation6.(1)AoftheSEBI(Listing ObligationsAndDisclosureRequirements)Regulations,2015foraperiodupto28.09.2018.

Wefurtherreportthat

TheBoardofDirectorsoftheCompanyisdulyconstitutedwithproperbalanceofExecutiveDirectors,Non-ExecutiveDirectorsandIndependentDirectors.ThechangesinthecompositionoftheBoardofDirectorsthattookplaceduringtheperiodunderreviewwerecarriedoutincompliancewiththeprovisionsoftheAct.

AdequatenoticeisgiventoalldirectorstoscheduletheBoardMeetings,agendaanddetailednotesonagendaweresentatleastsevendaysinadvanceandasystemexistsforseekingandobtainingfurtherinformationandclarificationsontheagendaitemsbeforethemeetingandformeaningfulparticipationatthemeeting.

Majoritydecisioniscarriedthroughwhilethedissentingmembers’viewsarecapturedandrecordedaspartoftheminutes.

Wefurtherreportthatthereareadequatesystemsandprocessesinthecompanycommensuratewiththesizeandoperationsofthecompanytomonitorandensurecompliancewithapplicablelaws,rules,regulationsandguidelines.

Wefurtherreportthatduringtheauditperiod,exceptthefollowingtherearenospecificevents/actionshavingamajorbearingontheCompany’saffairsinpursuanceofthelaws,rules,regulations,guidelines,standards,etc,referredtoabove.

1.ThemembersoftheCompanyinitsAnnualGeneralMeetingforthefinancialyear2017-18heldonSeptember22,2018haveapprovedtheKallamTextilesLtdEmployeesstockOptionplan2018I(ESOP-I2018)andTheKallamTextilesLtdEmployeesstockOptionplan2018II(ESOP-II2018)underSEBI(ShareBasedEmployeeBenefits)Regulations,2014forissueofequityshares.

Place:Guntur

Date:11.05.2019

ForK.SrinivasaRao&Co.CompanySecretaries.,

Sd/-K.SrinivasaRao,Partner

FCS.No.5599/C.P.No:5178

ThisreportistobereadwithourletterofevendatewhichisannexedasAnnexureAandformsanintegralpartofthisreport.


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‘ANNEXURE A’

To,

The Members

M/s.KallamTextilesLtd., (FormerlyknowsasKallamSpinningMilsLtd.,)

Chowdavaram,Guntur

Ourreportofevendateistobereadalongwiththisletter.

1. Maintenanceofsecretarialrecordistheresponsibilityofthemanagementofthecompany.Ourresponsibilityistoexpressanopiniononthesesecretarialrecordsbasedonouraudit.

2. WehavefollowedtheauditpracticesandprocessesaswereappropriatetoobtainreasonableassuranceaboutthecorrectnessofthecontentsoftheSecretarialrecords.Theverificationwasdoneontestbasistoensurethatcorrectfactsarereflectedinsecretarialrecords.Webelievethattheprocessesandpractices,wefollowedprovideareasonablebasisforouropinion.

3. WehavenotverifiedthecorrectnessandappropriatenessoffinancialrecordsandBooksofAccountsofthecompany.

4. Whereeverrequired,wehaveobtainedtheManagementrepresentationaboutthecomplianceoflaws,rulesandregulationsandhappeningofeventsetc.

5. ThecomplianceoftheprovisionsofCorporateandotherapplicablelaws,rules,regulations,standardsistheresponsibilityofmanagement.Ourexaminationwaslimitedtotheverificationofproceduresontestbasis.

6. TheSecretarialAuditreportisneitheranassuranceastothefutureviabilityofthecompanynoroftheefficacyoreffectivenesswithwhichthemanagementhasconductedtheaffairsofthecompany.

Place:Guntur

Date:11.05.2019

ForK.SrinivasaRao&Co.CompanySecretaries.,

Sd/-K.SrinivasaRao,Partner

FCS.No.5599/C.P.No:5178


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ForThePeriod01-04-2018to31-03-2019.

[PursuanttoScheduleV(C)totheSecuritiesandExchangeBoardofIndia(ListingObligationsandDisclosureRequirements)Regulations,2015SEBI(LODR)]:

1. COMPANY’S PHILOSOPHY ON CORPORATE GOVERNANCE: YourCompanyiscommittedtothehigheststandardsofIntegrity,ethicalvalues,transparency,fairness,professionalismandaccountability

acrossalllevelsoftheOrganisationintheconductofitsbusiness.YourCompanybelievesinadoptingandadheringtothebeststandardsofcorporategovernancetoallthestakeholders.YourCompanykeepsitscorporategovernancepoliciesunderconstantreviewtoconformwithbestpracticesandprinciples.

2. GOVERNANCE STRUCTURE TheCorporateGovernancestructureatKallamTextilesLtdisasfollows:

A.Board of Directors : TheBoardisentrustedwithanultimateresponsibilityofthemanagement,directionsandperformanceoftheCompany.Asitsprimaryroleisfiduciaryinnature,theBoardprovidesleadership,strategicguidance,objectiveandindependentviewtotheCompany’smanagementwhiledischargingitsresponsibilities,thusensuringthatthemanagementadherestoethics,transparencyanddisclosures.

B.Committees of the Board: TheBoardhasconstituted the followingCommitteesviz,AuditCommittee,NominationandRemunerationCommittee,CorporateSocialResponsibility(CSR)Committee,Stakeholders’RelationshipCommittee)andShareTransferCommittee.

EachofthesaidCommitteehasbeenmandatedtooperatewithinagivenframework.

3. BOARD OF DIRECTORS :

Promoters /Executive Directors P Venkateswara Reddy(Managing Director)

G V Krishna Reddy (Joint Managing Director & CEO)

MV Subba Reddy(Whole Time Director & CFO)

Non Executive/Independent Directors Ajeya Kallam

Varanasi Ramagopal

Pulla Rao Swargam

Vangala Bhargavi

Non Executive Nominee Director Suryanarayana Murty Vaddadi

A) Composition and Category of Directors :as on 31st March, 2019 as follows

Category Name of the Director

TheCompanyhasanoptimumcombinationofexecutiveandNonexecutiveDirectorsinaccordancewiththeprovisionofRegulation17(1)ofSEBI(ListingObligationsandDisclosureRequirements)Regulations2015.

Ason31-03-2019theBoardconsistsofEightDirectorsoutofwhichthreeDirectorsareExecutiveDirectorsandFiveDirectorsareNon–ExecutiveandIndependentDirectorsincludingaWomanDirectorandaNomineeDirectorfromIREDA.

AllDirectorsarecompetentandexperiencedpersonalitiesintheirrespectivefields.

Duringtheyearunderreview,therewasnochangeinthecompositionoftheBoard.

REPORT ON CORPORATE GOVERNANCE


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Note: NoneoftheDirectorsisamemberofmorethan10Board-levelCommitteesofPublicCompaniesorisaChairmanofmorethan5suchCommittees

Note: A-Absent,P-Present,LOA-Leaveofabsense

Duringtheyearunderreview,themeetingsoftheBoardofDirectorswereheldfive(5)timesonthefollowingdatesandconfirmtotheRegulation17(2)oftheSEBI(LODR)

28-05-2018 09-08-2018 29-09-2018 02-11-2018 11-02-2019 22-09-2018P Venkateswara Reddy P P P P P PG V Krishna Reddy P P P P P PMV Subba Reddy P P P P P PAjeya Kallam LOA p P P p AVaranasi Ramagopal P LOA p p p APulla Rao Swargam P P P P P pVangala Bhargavi P P P P P ASuryanarayana Murty Vaddadi P P P P P A

P Venkateswara Reddy - 1 - G V Krishna Reddy 1 1 2 MV Subba Reddy - 3 - Ajeya Kallam 1 - 2 Varanasi Ramagopal - 2 - Pulla Rao Swargam - 2 1 Vangala Bhargavi - 1 - Suryanarayana Murty Vaddadi 6 2 -

SL No Date

1st 28-05-2018

2nd 09-08-2018

3rd 29-09-2018

4th 02-11-2018

5th 11-02-2019

B) Attendance of Directors at the Board Meetings and last AGM are given in the table below:

C) Number of other Boards or Board Committees in which the company Directors are member or Chairperson:

D) Board Meetings held during the year 2018-19 and its dates

Name of the Director Date of the Board Meeting and attendance

Name of the Director No of Other Directorships & Committee Member/Chairmanships

Other Directorships

Committee Memberships

Committee Chairmanships

Date of last AGM & Attendance


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TheBoardmeetsatleastonceineveryquartertoreviewthequarterlyfinancialresultsandotheritemsontheAgendaandmaximumtimegapbetweentwomeetingsdidnotexceedonehundredandtwenty(120)days

(e) Separate Meetings of Independent Directors:

AsstipulatedunderScheduleIVtotheCompaniesAct,2013andRegulation25(3)oftheSecuritiesandExchangeBoardofIndia(ListingObligationsandDisclosureRequirements)Regulations, 2015, a separatemeetingsof the IndependentDirectorswasheld on02-11-2018,Amongst othermatterstheyreviewedtheperformanceofNon-IndependentDirectorsandtheBoardasawhole.IndependentDirectorsreviewedtheperformanceoftheChairpersonoftheCompany,takingintoaccounttheviewsofExecutiveDirectorsandNon-ExecutiveDirectors;andassessedthequality,quantityandtimelinessofflowofinformationbetweentheCompanyManagementandtheBoardthatisnecessaryfortheBoardtoeffectivelyandreasonably perform their duties

(f) No. of shares and Convertible Instruments held by Non-Executive Directors : None

(g) Familiarization Programmes imparted to Independent Directors:

PursuanttoRegulation25(7)oftheSEBI(LODR)Regulations,2015,familiarizationprogrammeswereimpartedtoIndependentDirectorsoftheCompany,periodically,onthenatureoftheindustryandthebusinessmodeloftheCompany,roles,rightsandresponsibilitiesoftheIndependentDirectorsandotherrelevantinformation.YourCompanyhasthefollowingprocessforinductionandtrainingofBoardMembers:

DiscussingwithIndependentDirectorsandascertainingtheirfurthertraining/updatingneedsandarrangingprogrammesoutsidetheCompanyandarrangingpresentationbyexpertsinthefield.

AdetailedinductionprogrammeisinplacetofamiliarizethenewdirectorsoftheentireoperationsoftheCompany.Theprogrammeincludespresentationsbyvariousbusiness/functionalheads.

VisittothemanufacturingunitsoftheCompanyisalsoarrangedbasedondevelopmentsinfactories.

TheDetailsofFamiliarizationProgrammeforIndependentDirectorsweredisclosedontheCompany’swebsitewww.ksml.in

4. AUDIT COMMITTEE:

A. Brief description of terms of reference

AspertheprovisionsofSection177oftheCompaniesAct,2013andRegulation18(3)&ScheduleII–PartCtotheSEBI(LODR),thebrieftermsofreferenceoftheAuditCommitteeoftheCompany,interaliainclude-

(i) Therecommendationforappointment,remunerationandtermsofappointmentofauditorsoftheCompany.

(ii) Reviewandmonitortheauditor’sindependenceandperformanceandeffectivenessofauditprocess.

(iii) Examinationofthefinancialstatementandtheauditors’reportthereon.

(iv) ApprovaloranysubsequentmodificationoftransactionsoftheCompanywithrelatedparties.

(v) Scrutinyofinter-corporateloansandinvestments.

(vi) ValuationofundertakingsorassetsoftheCompany,whereveritisnecessary.

(vii) Evaluationofinternalfinancialcontrolsandriskmanagementsystems.

(viii) Monitoring the end use of funds raised through public offers and related matters

(ix) Ensuringofaccurateandtimelydisclosuresoffinancialreportingwithhighlevelofintegrity,qualityandtransparency

B. Composition, name of members and Chairperson

ThecompositionoftheCommitteeisinlinewiththeprovisionsofSection177oftheCompaniesAct,2013andSection18(3)oftheSEBI(LODR),asdetailedbelow:

Pulla Rao Swargam Chairman Non Executive/IndependentVangala Bhargavi Member Non Executive/IndependentSuryanarayana Murty Vaddadi Member Non Executive/IndependentVaranasi Ramgopal Member Non Executive/IndependentNandan Bisoi Secretary

Name of Director /Secretary Position Category

Note :Dateoflastreconstitutionduringthefinancialyear:31stMarch,20191.Mr.VaranasiRamgopalwasappointedasamemberw.e.f.31stMarch,20192.Mr.SuryanarayanaMurtyVaddadiresignedasmemberw.e.f.31stMarch,2019


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28-05-2018 09-08-2019 01-11-2018 11-02-2019Pulla Rao Swargam P P P PVangala Bhargavi P P P PSuryanarayana Murty Vaddadi P P P P

Name of the Director Date of the Board Meeting and attendance

C. Meetings and attendance during the year

C. Attendance during the year

Name of Director /Secretary Position Category

Ajeya Kallam Chairman Non Executive/IndependentVaranasi Ramagopal Member Non Executive/IndependentSuryanarayana Murty Vaddadi Member Non Executive/Nominee DirectorPulla Rao Swargam Member Non Executive/Nominee DirectorNandan Bisoi Secretary

Name of the Director Date of the Meeting and attendance 28-05-2018 29-09-2018Ajeya Kallam LOA PVaranasi Ramagopal P PSuryanarayana Murty Vaddadi P P

Note :Dateoflastreconstitutionduringthefinancialyear:31stMarch,20191.Mr.PullaRaoSwargamwasappointedasamemberw.e.f.31stMarch,20192.Mr.SuryanarayanaMurtyVaddadiresignedasmemberw.e.f.31stMarch,2019

5. NOMINATION AND REMUNERATION COMMITTEE:A. Brief description of terms of reference

ThebrieftermsofreferenceareaspertheprovisionsofSection178oftheCompaniesAct,2013andRegulation19(4)&ScheduleII–PartDtotheSEBI(LODR),interaliainclude-

Formulationofthecriteriafordeterminingqualifications,positiveattributesandindependenceofadirectorandrecommendtotheBoardapolicy,relatingtotheremunerationoftheDirectors,KeymanagerialPersonnelandotheremployees;

FormulationofcriteriaforevaluationofIndependentDirectorsandtheBoard;

DevisingapolicyonBoarddiversity;

IdentifyingpersonswhoarequalifiedtobecomedirectorsandwhomaybeappointedinSeniorManagement

inaccordancewiththecriterialaiddownandrecommendtotheBoardtheirappointmentandremoval.

WhethertoextendorcontinuethetermsofappointmentofIndependentDirector,onthebasisofthe

v report of performance evaluation of Independent Directors

B. Composition, name of members and Chairperson

ThecompositionoftheCommitteeis inlinewiththeprovisionsofSection178oftheCompaniesAct,2013andRegulation19(1)oftheSEBI(LODR),asdetailedbelow:




62


D. Performance Evaluation criteria for Independent Directors:

TheperformanceevaluationofIndependentDirectorswascarriedoutbytheentireBoardofdirectors,excludingtheDirectorsbeingevaluated.

ThecriteriaofevaluationwasformulatedintheRemunerationPolicyoftheCompanyandfortheyear2018-19,theIndependentDirectorswereevaluated,onthebasisofafewparameterscomprisingofattendanceatmeetingeitherinpersonorthroughvideo/tele-conferencing,participationindiscussionsonvariousitemsontheagenda,dealingwithrespecttoconflictofinterestsituationandanyspecificideasandcontributiontothelongtermbusinessstrategyofthecompany.

Further,theevaluationoftheIndependentDirectorsalsoincludedtheadditionalcriteriaprovidedbySEBIinitsGuidanceNoteonBoardEvaluationcontainedinCircularNo.SEBI/HO/CFD/CMD/CIR/P/2017/004dated5thJanuary,2017

6. REMUNERATION OF DIRECTORS:A. Policy on Director’s appointment and remuneration:

YourCompanyadoptedaPolicyrelatingtoselection,remunerationandevaluationofDirectorsandSeniorManagement.ThesaidPolicyisavailableonthewebsiteoftheCompanywww.ksml.in

TheNominationandRemunerationPolicyprovidesforappropriatecompositionofExecutive,Non-ExecutiveandIndependentDirectorsontheBoardofDirectorsofyourCompanyalongwithcriteriaforappointmentandremunerationincludingdeterminationofqualifications,positiveattributes,independenceofDirectorsandothermattersasprovidedundersub-section(3)ofSection178oftheCompaniesAct,2013.TheremunerationpaidtotheDirectorsisasperthetermslaidoutintheNominationandRemunerationPolicyofyourCompany.

B. Disclosure with respect to remuneration paid to the Whole time Directors for the year 2018-19 are as follows:

Note: YourCompanyhasnotgrantedanystockoptionstoanyofitsDirectors.

C. Criteria of making payment to Non-Executive and Independent Directors :

TheCompanyhasformulatedPolicyforRemunerationpayabletoNonExecutiveandIndependentDirectors.

i) SittingFeesforattendingmeetingsoftheBoardaswellasCommitteesoftheBoardhasdecidedbytheBoardwithinthelimitsprescribedundertheCompaniesAct.

ii) TravellingandotherexpensestheyincurforattendingBoardandCommitteeMeetingsoftheCompany

Witheffectfrom29thSeptember2017,thesittingfeeswerepaidasfollows:

D. Review of Performance and Compensation to Senior Management:

TheNominationandRemunerationCommitteereviewstheperformanceoftheseniormanagementofyourCompany.TheCommitteeensuresthattheremunerationtotheKeyManagerialPersonnelandSeniorManagementinvolvesabalancebetweenfixedandincentivepayreflectingshortandlongtermperformanceobjectivesappropriatetotheworkingofyourCompanyanditsgoals

7. STAKEHOLDERS’ RELATIONSHIP COMMITTEE:A. Composition, Name of Members and Chairperson

ThetermsofreferenceoftheCommitteeincludesenquiringintoandredressingcomplaintsofshareholdersandtoresolvethegrievancesoftheInvestorsofyourCompany.

Particulars of Remuneration P Venkateswara Reddy G V Krishna Reddy MV Subba Reddy

Salary 35,58,593 33,25,769 10,74,014Benefits 2,35,380 2,34,732 1,34,424Commission 6,57,189 6,57,189 -Terms of Appointment 3Years 3Years 5 Years (29.06.2018 to 28.06.2021) (29.06.2018 to 28.06.2021) (01.06.2017 to 31.05.2022)Stock options Nil Nil NilTotal 44,51,162 42,17,690 12,08,438

Particulars Amount in Rs

For attending each meeting of the Board and other Committees Rs 15,000


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ThecompositionoftheStakeholderRelationshipCommitteeisincompliancewiththeprovisionsofSection178oftheCompaniesAct,2013andRegulation20ofSEBI(LODR)Regulations,2015asdetailedbellow.

Note: dateoflastreconstitutionduringtheyear-Nil.

B. Name and Designation of Compliance Officer

Detailspertainingtothenumberofcomplaintsreceivedandrespondedandthestatusthereofduringthefinancialyear2018-19aregivenbelow:

8. SHARE TRANSFER COMMITTEE:A. Composition, Name of Members and Chairperson :

Name of Director Position Category

G.V.Krishna Reddy Chairman Promoter/Managing Director

P.Venkateswara Reddy Member Promoter/Managing Director

M.V.Subba Reddy Member Promoter/Whole Time Director

B. The terms of reference of the Shareholders’ Committee are as follows :

ToissueduplicatesharecertificatesasandwhentherequestsarereceivedbytheCompany;

Toapprovetheregisterofmembersasontherecorddate(s)and/orbookclosuredate(s)forreceivingdividendsandothercorporatebenefits;

Toreviewcorrespondencewiththeshareholdersvis-a-vislegalcasesandtakeappropriatedecisionsinthatregard;and

ToauthorizeaffixingoftheCommonsealoftheCompanyfromtimetotimeonanydeedorotherinstrumentrequiringauthenticationbyoronbehalfoftheCompany.

C. Particulars of share transfer during the period under review :

TheTransfersofsharesapprovedbytheCommitteewereplacedbeforetheBoardofDirectorsattheirmeetingsfromtimetotime.

Duringtheperiodunderreview78,500sharesweretransferred.

TherewerenopendingShareTransfersasondateofthisreport.

9. CORPORATE SOCIAL RESPONSIBILITY COMMITTEE :A. Terms of reference:

ThebrieftermsofreferenceareaspertheprovisionsofSection135oftheCompaniesAct,2013andtheRulesmadethereunder,include-

FormulationandrecommendationtotheBoard,aCorporateSocialResponsibilityPolicywhichshallindicatetheactivitiestobeundertakenbytheCompanyasspecifiedinScheduleVII.


Ajeya Kallam Chairman Non Executive/Independent

G.V.Krishna Reddy Member Promoter/Managing Director


Name Designation

Mr. Nandan Bisoi (w.e.f -29-09-2019) Company Secretary & Compliance Officer

No. of complaints received during the year 41

No. of complaints resolved during the year 41

No. of complaints pending at the end of the year Nil


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Recommendation of the amount of expenditure to be incurred on the activities referred to the above

MonitoringtheCorporateSocialResponsibilityPolicyoftheCompanyfromtimetotime.

SuchotheractivitiesastheBoardofDirectorsmaydeterminefromtimetotime

B. Composition, Name of Members and Chairperson:

TheCorporateSocialResponsibilityCommitteewasconstitutedwiththefollowingDirectors:


G.V.Krishna Reddy Chairman Promoter/Managing Director

Varanasi Ramgopal Member Promoter/Managing Director


C. Meeting and Attendance:

DuringtheFY2018-19,theCommitteemetonetime,dated11-02-2019.

D. Corporate Social Responsibility (CSR) Policy:

YourCompanyadoptedaPolicyrelatingtoCorporateSocialResponsibilityinaccordancewiththeprovisionsofSection135ofandScheduleVIItotheCompaniesAct,2013andtheRulesmadethereunder.ThesaidPolicyismadeavailableonthewebsiteoftheCompanywww.ksml.in.

10. GENERAL BODY MEETINGS:A. Location and Time of the last three Annual General Meetings held; and No of Special Resolutions passed at the meetings:

ThelocationandtimeoftheAnnualGeneralMeetingsheldduringthelast3yearsareasfollows:

FY Location Date Time No. of special resolutions passed

2017-18 Registerd office of the company NH-5 Chowdavaram, Guntur-522019 22-09-2018 3.00 PM 2

2016-17 Registerd office of the company NH-5 Chowdavaram, Guntur-522019 29-09-2017 3.00 PM -

2015-16 Registerd office of the company NH-5 Chowdavaram, Guntur-522019 28-09-2016 3.00PM -

B. Extraordinary General Meeting (EGM):

TherewasnoExtraOrdinaryAnnualGeneralMeeting(EGM)heldduringthefinancialyear2018-19

C. Special Resolutions passed through Postal Ballot and details of Voting Pattern during the year 2018-19 :

None

D. Whether any special resolution is proposed to be conducted through postal ballot, during the year 2019-20 None

11. MEANS OF COMMUNICATION:A. Quarterly, Half Yearly and Annual results:

TheUnauditedFinancialResultsforeveryQuarterandtheAnnualAuditedFinancialResultsoftheCompany,intheprescribedproforma,aretakenonrecordbytheBoardandaresubmittedtotheStockexchangeandthesameispublishedinBusinessStandard(HyderabadEdition)andvernacularlanguagenewspaper,viz.,AndhraBhoomi(GunturDistrictEdition),withinforty-eighthoursofapprovalthereof

YourCompanymakestimelydisclosuresofnecessaryinformationtoBSELimitedintermsoftheListingRegulationsandotherrulesandregulationsissuedbytheSEBI.

TheQuarterly/AnnualResultsarealsopostedontheCompany’swebsiteatwww.ksml.inandalsoonthewebsiteoftheBSELimited.

B. Website and News Releases

AlltheOfficialnewsreleasesaredisseminatedonthewebsiteoftheCompanywww.ksm.in


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AlltheDetailsregardingthestatusofunclaimeddividend,AnnualReports,Quarterly/Halfyearly/Nine-monthsandAnnualfinancialresultsalongwiththeapplicablepoliciesoftheCompanyandalsoCompany’sofficialnewsreleasesandpresentationsmadetotheinstitutionalinvestorsareavailableontheCompany’swebsiteviz.,www.ksml.in

C. The presentations made to institutional investors or to the analysts

ThepresentationsmadetoinstitutionalinvestorsortotheanalystsarepostedonthewebsiteoftheCompanywww.ksm.in

12. GENERAL SHAREHOLDER INFORMATION :A. Date, Time and venue of Annual general Meeting

Date : 21st September 2019

Time : 3-00 p.m.

Venue : Registered Office of the Company, NH-5, Chowdavaram, Guntur - 522 019.

B. Particulars of Financial Year and Events

Financial Year : 01.04.2019 to 31.03.2020

First Quarter : On or Before 14th August 2019

Second Quarter and Half Yearly : On or Before 14th November 2019

Third Quarter and Nine Months : On or Before 14th February 2020

Fourth Quarter and Annual : On or Before 30th May 2020

C. Dividend Payment Date

Within30daysfromtheDateofDeclaration(SubjecttoapprovalofShareholders)

theBoardofDirectorsoftheCompanyatitsmeetingheldonMay11,2019,interalia,haverecommendedadividendofRs0.20/-shareoffacevalueofRs2each(i.e.,10%dividend)forthefinancialyearendedMarch31,2019subjecttoapprovalofshareholdersattheensuingAnnualGeneralMeeting.

DIVIDEND HISTORY:

Financial Year % of Dividend Amount Paid (In Rs)

2004-05 7 47,95,770

2005-06 10 68,51,100

2006-07 12 82,21,320

2007-08 12 82,21,320

2008-09 9 61,65,990

2009-10 14 95,91,540

2010-11 18 1,23,31,980

2011-12 Nil Nil

2012-13 Nil Nil

2013-14 12 82,21,320

2014-15 10 68,51,100

2015-16 10 68,51,100

2016-17 10 68,51,100

2017-18 10 85,63,875


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D. Listing on Stock Exchanges

TheSharesoftheCompanyarelistedonfollowingStockExchange

Bombay Stock Exchange Limited

Phiroze Jeejeebhoy Towers, Dalal Street,

Mumbai – 400 001. Ph No : 022- 22721233/34

AnnualListingFeesfortheYear2018-19havebeenpaidtoBSELimited

BSE Stock Code 530201

ISIN INE629F01025

E. Market Price Data:

Month High (`) Low (`) No.of Shares Traded

Apr-18 32.9 29.15 7,12,659

May-18 32.6 26.65 4,23,032

Jun-18 29.95 25 3,65,358

Jul-18 26.95 22.75 2,46,730

Aug-18 30.6 23 6,69,829

Sep-18 27.7 20.05 2,97,505

Oct-18 23.45 16.7 1,79,656

Nov-18 23.45 19.3 1,94,043

Dec-18 20.75 17.65 1,41,508

Jan-19 19.45 16.45 1,91,529

Feb-19 18.8 14.05 73,885

Mar-19 18.5 15.65 1,88,367

F. Performance in Comparison to broad-based indices:

TheChartbelowshowsthecomparisonofCompany’ssharepricemovementonBSEvis-à-visthemovementoftheBSESensexfortheyear2017-18(basedonmonthendClosing


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G. Suspension of Securities from trading by Directors – NIL

H. Depository Participants

Depository Participants

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

ISIN Number for NSDL & CDSL : INE629F01025

Depository Fee: Annual custody fee for the financial year 2018-19 paid to National Securities Depository Limited (NSDL) and Central Depository Services India Limited (CDSL).

Central Depository Services (India) Ltd (CDSL) Phiroze Jeejeebhoy Towers, 17th Floor, Dalal Street, Mumbai- 400 001. Ph. No: 022 - 2272 3333

I. Registrars & Share Transfer Agents:

BigshareServicesPvt.Ltd., 306,3rdFloor,RigtWing, AmruthaVille,Opp.YashodhaHospital,RajBhavanRoad, Somajiguda,Hyderabad–500082 PhNo:040-23374967 Website:www.bigshareonline.com

J. Share Transfer System:

TheCompanyhasappointedM/s.BigshareServicesPrivateLimitedasRegistrars&ShareTransferAgentsforbothelectronicandphysicaltransfers.Theshareslodgedfortransferareprocessedandsharecertificatesdulyendorsedarereturnedwithin15daysfromthedateoflodgment,subjecttodocumentsbeingvalidandcompleteinallrespects.TheBoardofDirectorsofyourCompanyhavedelegatedtheauthoritytoapprovethetransferofshares,transmissionofsharesorrequestsfordeletionofnameoftheshareholder,etc.,tothedesignatedofficialsofyourCompany.ThetransactionsrequiringissuanceofnewsharecertificatesareapprovedbytheShareholder’sCommitteeoftheBoardofdirectorsofyourCompany.Asummaryofapprovedtransfers,transmissions,deletionrequests,etc.,areplacedbeforetheBoardofDirectorsfromtimetotimeasperListingRegulations.

K. Distribution of Shareholding as on 31st March 2019

Range (No. of Shares) Shareholders Shareholding No.of Shares % to Total No.of Shareholders % to Total

1 - 500 1,793 37.49 3,20,839 0.75

501 - 1000 1,067 22.31 7,46,572 1.74

1001 - 2000 880 18.40 12,48,302 2.91

2001 - 3000 212 4.43 5,39,895 1.26

3001 - 4000 213 4.45 7,23,153 1.68

4001 - 5000 96 2.02 4,47,096 1.05

5001 - 10000 224 4.69 15,68,947 3.67

10001 - 50000000 297 6.21 3,72,24,571 86.94

5,217 100.00 4,28,19,375 100.00


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Categories of Share Holders as on 31st March 2019

Category No. of Shares held % of share holding

A Shareholding of Promoters/Promoters Group

(a) Individuals/HUFs 1,71,55,501 40.06

(b) Bodies Corporate 54,65,043 12.76

Total Shareholding of Promoter and Promoter Group (A) 2,26,20,544 52.83

B Public shareholding

1. Institutions - -

a) Mutual Funds\UTI 62,500 0.15

b) Banks\Financial Institutions - -

c) Insurance companies - -

d) FIIs - -

Sub Total B (1) 62,500 0.15

2. Non-Institutions

a) Bodies Corporate 6,62,406 1.55

b) Individuals

(i) Individual shareholders holding nominal share capital up to ` 2 lakh 1,04,89,413 24.50

(ii) Individual shareholders holding nominal share capital in excess of ` 2 lakh 80,45,014 18.79

c) Individual (NRI) 2,82,712 0.66

a) Others

(Clearing members) 45,003 0.11

Foreign portfolio Investors 1,17,408 0.27

IEPF 4,94,375 1.15

Sub Total B (2) 2,01,36,331 47.17

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

Total Shareholding = A+B 4,28,19,375 100.00

L. Reconciliation of Share Capital Audit Report and Regulation 40(9) of SEBI(LODR) Regulations, 2015:

AspertheProvisionsofRegulation55AofSEBI(LODR)Regulations,2015,M/s.K.SrinivasaRao&Co.,CompanySecretariesinPracticecarriesouttheSecretarialAudittoreconcilethetotaladmittedcapitalwithNationalSecuritiesDepositoryLimited(NSDL)andCentralDepositoryServices(India)Limited(CDSL)comprisingthetotalissuedandListedCapital.TheauditiscarriedouteveryquarterandthereportthereonissubmittedtotheStockExchange,wheretheSharesoftheCompanyarelisted.TheauditconfirmsthatthetotalListedandIssuedcapitalisinagreementwiththeaggregateofthetotalnumberofsharesindematerializedform(heldwithNSDLandCDSL)andthetotalnumberofsharesinphysicalform.

Duringtheyear2018-19,InaccordancewiththeRegulation40(9)oftheSEBI(LODR)Regulations,2015,M/sK.SrinivasaRao&Co.,CompanySecretariesinPractice,afterexaminedallthesharetransferdeeds,MemorandumofTransfers,Registers,filesandotherdocumentsrelatedtoCompany,gavecertificatesunderRegulation40(9)oftheSEBI(LODR)Regulations,2015,fortheHalfyear01-04-2018to30-09-2018andFortheHalfyear01-10-2018to31-03-2019.BoththeabovecertificatesweresubmittedtotheBombayStockExchangeLimited,wheretheSharesoftheCompanyareListed,within24hoursofreceiptoftheCertificatebytheCompany.


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M. Dematerialization of shares and liquidity

• Details of your Company’s dematerialized shares as on 31st March, 2019:

Particulars Physical Record Demat Record Total

NSDL CDSL

Number of Shares 16,89,591 3,41,68,635 69,61,149 4,28,19,375

% of Shares 3.95 79.80 16.26 100.00

• Dematerialization of shares :

Shareholderswhocontinuetoholdsharesinphysicalformarerequestedtodematerializetheirsharesattheearliestandavailofthevariousbenefitsofdealinginsecuritiesinelectronic/dematerializedform.Foranyclarification,assistanceorinformation,pleasecontact

BigshareservicesPvt.Ltd., 306,3rdFloor,RightWing,AmruthaVille, Opp.YashodhaHospital,RajBhavanRoad, Somajiguda,Hyderabad–500082 PhNo:040-23374967.

N. Outstanding GDRs/ADRs/Warrants/Convertible Instruments and their impact on equity:

YourCompanydoesnothaveanyoutstandingGDRs/ADRs/ Warrants/ConvertibleInstrumentsason31stMarch,2019.

• Transfer of Unpaid and Unclaimed Amount to IEPF:

Pursuanttotheprovisionsofsection124ofthecompaniesAct,2013,thedeclareddividendswhichremainedunpaidorunclaimedforaperiodofsevenyearsfromthedateoftransfertotheunpaiddividendaccount,havebeentransferredbythecompanytotheInvestorEducationandProtectionFund(IEPF)establishedbytheCentralGovernment.ShareholdersarerequestedtoensurethattheyclaimthedividendfromyourCompanybeforetransferofthesaidamountstotheIEPF.

Duringtheyear2018-19,UnclaimedDividendFortheyear2010-11wastransferredtoInvestorEducationandProtectionFund(IEPF).Pursuanttotheprovisionofrule3oftheInvestorEducationandProtectionFund(AwarenessandProtectionofInvestor)Rules,2001,necessarye-form(Form1INV)whichcontainstheStatementofamountscreditedtoIEPFwasfiledtoRegistrarofCompanies(ROC).

ThefollowingarethedetailsofdividendspaidbytheCompanyandrespectiveduedatesfortransferofunclaimeddividendtoIEPF.

Dividend Declared Year Date of Declaration of Dividend Due date for Transfer to IEPF

2010-11 27th August,2011 01st October,2018

2013-14 27th September,2014 01st November,2021

2014-15 26th September,2015 31st October,2022

2015-16 28th September,2016 02nd November, 2023

2016-17 29th September, 2017 03rd November, 2024

2017-18 22nd September 2018 27th October 2025

• National Electronic Clearing System (NECS) for dividend :

TheSecuritiesandExchangeBoardofIndia(SEBI)hasmadeitmandatoryforallcompaniestousethebankaccountdetailsfurnishedbytheDepositoriesfordepositingdividends.DividendwillbecreditedtotheMembers’bankaccountthroughNECSwherevercompletecorebankingdetailsareavailablewiththeCompany.Incasewherethecorebankingdetailsarenotavailable,dividendwarrantswillbeissuedtotheMemberswithbankdetailsprintedthereonasavailableintheCompany’srecords.Thisensuresthatthedividendwarrants,eveniflostorstolen,cannotbeusedforanypurposeotherthanfordepositingthemoneyintheaccountsspecifiedonthedividendwarrantsandensuressafetyfortheinvestors.TheCompanycomplieswiththeSEBIrequirement.

• Plant Locations:

a)SpinningDivision :Chowdavaram,Guntur-522019,AndhraPradesh

b)WeavingandDyeingDivisions :KunkupaduVillage,AddankiMandal,PrakasamDist.AndhraPradesh.

c)PowerDivision :KothaKothurVillage,NelakondapalliMandal,KhammamDt.TelanganaState.


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• No. of Employees as on 31st March, 2019 : 662

• Address for Correspondence:

Company : KallamTextilesLtd NH-5,Chowdavaram,Guntur,A.P–522019.

RTA : BigshareservicesPvt.Ltd.,306,3rdFloor, RightWing,AmruthaVille, Opp.YashodhaHospital,RajBhavanRoad, Somajiguda,Hyderabad–500082

OfficialWebsiteoftheCompany : www.ksml.in

Investors’E-mailId : [email protected]

13. OTHER DISCLOSURES :

A. RELATED PARTY TRANSACTIONS:

Duringtheyearunderreview,notransactionofmaterialnaturehasbeenenteredintobytheCompanywithitspromoters,thedirectorsorthemanagement,orrelatives,etc.,thatmayhaveapotentialconflictwiththeinterestsoftheCompany.

AllrelatedpartytransactionsareplacedbeforetheAuditCommitteeasalsotheBoardforapproval.PriorOmnibusapprovaloftheAuditCommitteeisobtainedonayearlybasisforthetransactionswhichareofaForeseenorrepetitivenatureandonarm’slengthbasis.

Astatementgivingdetailsofthetransactionsenteredintowiththerelatedparties,pursuanttotheomnibusapprovalsogranted,wasplacedbeforetheAuditCommitteeandtheBoardofDirectorsfortheirapproval/ratificationonaquarterlybasis.

TheRegisterofContractscontainingtransactions,inwhichdirectorsareinterested,wasplacedbeforetheAuditCommittee/Boardregularly.

TheBoardofDirectorsof theCompany,on therecommendationof theAuditCommittee,adoptedapolicyonRelatedPartyTransactions, toregulatethetransactionsbetweentheCompanyanditsRelatedParties,incompliancewiththeapplicableprovisionsoftheCompaniesAct,2013andSEBI(LODR).ThePolicyasapprovedbytheBoardisuploadedontheCompany’swebsiteatwww.ksml.in.ThedetailsoftheRelatedParty

TransactionsinFormAOC-2areannexedasAnnexure-IVtothisReport.TheparticularsoftransactionsbetweentheCompanyanditsrelatedpartiesasperInd-AS-24aresetoutonPageNo.50ofthisAnnualReport.

DetailsofEmployee(s),whoare relativesof theDirectors,holdinganofficeorplaceofprofit in theCompanypursuant toSection188of theCompaniesAct,2013:

DuringtheFinancialYear2018-19,Mr.P.GovardhanReddy,SonofP.VenkateswaraReddy(ManagingDirector),ReceivedatotalRemunerationof `5,66,400/-

DuringtheFinancialYear2018-19,Mr.M.SrinivasaNagarjunaReddy,SonofM.V.SubbaReddy(WholeTimeDirector),ReceivedatotalRemunerationof ` 2,50,611/-

Interms,ofSection177,188andotherapplicableprovisions,ifany,oftheCompaniesAct,2013readwiththeRulesissuedthereunder(includinganystatutorymodification(s)orreenactment(s)thereofforthetimebeinginforce)theappointmentandremunerationpayabletotheaforesaidwasapprovedbytheAuditCommitteeandnotedbytheBoardofDirectorsoftheCompanyandareatarm’slengthandinordinarycourseofbusinessofyourCompany.

Directorswithmateriallysignificant,pecuniaryorbusinessrelationshipwithyourCompany:

ThereisnopecuniaryorbusinessrelationshipbetweentheNon-Executive/IndependentDirectorsandyourCompany,exceptforthesittingfeespayabletothemforattendingtheBoardmeetingsandCommitteemeetingswhichareinaccordancewiththeapplicablelawsandwiththeapprovaloftheshareholders.AdeclarationtothiseffectisalsosubmittedbyalltheDirectorsatthebeginningofeachfinancialyear.

B. Non-Compliances by the Company:

Therehasbeennoinstanceofnon-compliancebytheCompanyonanymatterrelatedtoCapitalMarketsduringthelastthreefinancialyearsandhencenopenaltiesorstrictureswereimposedbySEBI,theStockExchangesoranystatutoryauthorities

C. Establishment of Vigil Mechanism/ Whistle Blower Policy and affirmation that no personnel has been denied access to the Audit Committee.

InaccordancewiththeprovisionsofSection177(9)oftheCompaniesAct,2013andtheRulesmadethereunderandalsoRegulation22oftheSEBI(LODR),yourCompanyestablishedavigilmechanismtermedasWhistleBlowerPolicy,fordirectorsandemployeestoreportconcernsaboutunethicalbehaviour,actualorsuspectedfraudorviolationoftheCompany’sCodeofConductorEthicsPolicy,whichalsoprovidesforadequatesafeguardsagainstvictimizationofdirector(s)/employee(s)whoavailofthemechanismandalsoprovidefordirectaccesstotheChairmanoftheAuditCommitteeinexceptionalcases.TheWhistleBlowermechanismisdevisedinsuchamannerthatwouldenablethestakeholders,includingindividualemployeesandtheirrepresentativebodies,tofreelycommunicatetheirconcernsaboutillegalorunethicalpractices.TheWhistleBlowerPolicyismadeavailableonthewebsiteoftheCompanywww.ksml.in


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D. Compliance with Mandatory Requirements and adoption of non-mandatory requirements:

TheCompanyhascompliedwithallthemandatoryrequirementsofCorporateGovernancenormsasenumeratedunderScheduleIItotheSEBI(LODR)

E. Subsidiary Companies

YourCompanydoesnothaveanysubsidiarycompaniesintermsofRegulation16(1)(c)ofSEBI(LODR)Regulations,2015

F. Disclosure of Compliance by the Listed Entity:

YourCompanyhascompliedwithalltherequirementsoftheStockExchange(s)andtheSEBIonmattersrelatedtoCapitalMarkets.Therewereno penalties imposed or strictures passed against your Company by the statutory authorities in this regard

• Regulation 17 – Board of Directors:

(i) ThecompositionandmeetingsoftheBoardofDirectorsarecompliedwith.

(ii) Periodical review of Statutory ComplianceReport, Quarterly / Half-year / Annual CorporateGovernance Report, Quarterly InvestorGrievanceReport,etc.arecarriedoutbytheBoardofDirectors.

(iii) CodeofConductfortheDirectors(incorporatingthedutiesofIndependentDirectors)andSeniorManagementoftheCompany:TheBoardofDirectorshadlaiddownaCodeofConductapplicabletoalltheDirectorsandSeniorManagersoftheCompany.ThesaidCodeofConducthadalsobeenpostedonthewebsiteoftheCompanywww.ksml.in.

AreportonthecomplianceaspectoftheCodeofConductgivenbytheManagingDirectorhasbeengivenatPageNo.75ofthisAnnualReport.

(iv) CodeofConductforpreventionofInsiderTrading:

PursuanttotherequirementsoftheSecuritiesandExchangeBoardofIndia(ProhibitionofInsiderTrading)Regulations,2015,theBoardofDirectorsofyourCompanyhasadoptedaCodeofConductforpreventionofInsiderTrading.ThisCodeofConductisapplicabletoalldesignatedpersonsasdefinedinthesaidpolicywhoareexpectedtohaveaccesstounpublishedpricesensitiveinformationrelatingtotheCompany.ThesaidCodeofConducthasalsobeenpostedonthewebsiteoftheCompanywww.ksml.in.Further,theBoardofDirectorsofyour Company has also formulated Code of conduct to regulate monitor and report trading by Insiders and the same is being administered bytheComplianceOfficer.

(iv) BoardDisclosure–RiskManagement:

TheCompany’sboardofdirectorshasoverallresponsibilityfortheestablishmentandoversightoftheCompany’sriskmanagementframework.TheboarddirectlyreviewtheanticipatedriskasidentifiedbyauditcommitteeonquarterlybasisandtakesappropriatemeasuresYourCompanyhasdevelopedandimplementedaRiskManagementPolicywhichincludesidentificationofelementsofrisk,ifany,whichintheopinionoftheBoard,maythreatentheexistenceoftheCompany.

YourCompanyhasariskidentificationandmanagementframeworkappropriatetothesizeofyourCompanyandtheenvironmentunderwhichitoperates.

(v) ThedetailsrelatingtothePerformanceEvaluationoftheIndependentDirectorsbytheentireBoardofDirectorsisgiveninPageNo.60tothisReport.

• Regulation 18 – Audit Committee:

CompliancetothisRegulationisgiveninPageNo.60tothisReport.

• Regulation 19 – Nomination & Remuneration Committee:


• Regulation 20 – Stakeholders Relationship Committee:


• Regulation 21 – Risk Management Committee:

NotapplicabletoyourCompany.However,yourCompanyhasformulatedaRiskManagementPolicyandareferencetothisisgiveninPageNo.71tothisReport.

• Regulation 22 – Vigil Mechanism:


• Regulation 23 – Related Party Transactions:



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• Regulation 24 – Corporate Governance Requirements with respect to subsidiary:

Company does not have any subsidiary companies

• Regulation 25 – Obligations with respect to Independent Directors:


• Regulation 26 – Obligations with respect to employees including senior management, key managerial persons, directors and promoters:

Disclosuresrelatingtocompliancetothedirectorshipsinotherlistedentities,BoardlevelCommitteeMembershipsandLimitofChairmanshipsareannuallyprovidedBoardofdirectorstotheCompany.Further,notificationofthechangesintheotherdirectorships,CommitteeMembershipsandChairmanshipsarealsoprovidedbytheDirectorsaswhenoccur.AlltheDirectorsandSeniorManagementhasaffirmedcompliancetotheCodeofConductoftheCompany.

• Regulation 27 – Other Corporate Governance Requirements:

Adoptionofnon-mandatory/discretionaryrequirementsofListingRegulationisbeingreviewedbytheBoardfromtime-totime

• Regulation 46(3) - Website

PursuanttoaboveRegulation,appropriate/requisiteinformationareavailableontheCompany’sWebsite:www.ksml.in

14. OTHER ADDITIONAL DISCLOSURES [As per Schedule V to the SEBI (LODR)]:

A. Disclosure of Related Party Transactions:

PleasereferPageNo.70tothisreport

B. Vigil Mechanism and Whistle Blower Policy:

PleasereferPageNo.70tothisreport

C. Disclosure of Accounting Treatment:

ThefinancialstatementshavebeenpreparedinaccordancewithIndASsnotifiedundertheCompanies(IndianAccountingStandards)Rules,2015.

D. Commodity price risks and Commodity hedging activities:

TheCompanyisexposedtotheriskofpricefluctuationofrawmaterialsaswellasfinishedgoods.TheCompanyproactivelymanagestheserisksthroughforwardbookingInventorymanagementandproactivevendordevelopmentpractices.TheCompany’sreputationforquality,productsdifferentiationandservice,coupledwithexistenceofpowerfulbrandimagewithrobustmarketingnetworkmitigatestheimpactofpriceriskonfinishedgoods.

E. Audit qualifications:

Duringtheyearunderreview,therewasnoauditqualificationonyourCompany’sfinancialstatements.

F. Management Discussion and Analysis Report:

TheManagementDiscussionandAnalysisReportisfurnishedinPages27to35thisAnnualReport.

G. Compliance Certificate from the Statutory Auditors regarding compliance of conditions of Corporate Governance:

PleasereferPageNo.75tothisReport.

H. Disclosure with respect to demat suspense account / unclaimed suspense account:

YourCompanydoesnothaveanyUnclaimedSharesissuedinphysicalformpursuanttoPublicIssue/RightsIssue


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15. PARTICULARS OF DIRECTORS SEEKING APPOINTMENT / RE-APPOINTMENT

TheBoardofDirectorshaveRecommendedtheappointmentofMr.VSNMurtyasindependentDirectorofthecompanysubjecttoapprovalofshareholderbypassingofspecialresolutionattheensuingAnnualGeneralMeeting.

VANGALA BHARGAVI SURYANARAYANA MURTY VADDADIName of the Director

DIN

AGE

Qualification

BriefProfile/NatureofExpertise/Justificationforappointment

Terms and conditions of re- appointment

Names of other Listed companiesinwhichtheperson also holds the directorshipasatMarch31, 2019

Names of the Listed companiesinwhichtheperson also holds the membership of Committees oftheBoardasatMarch 31,2019

Shareholdinginkallam Textiles Limited

Inter-se Relationship betweendirectors

Number of Meetings of the BoardattendedduringtheFinancialYear-2018-19

06950741

33 years

B.Com and is also F.C.A, DISA(Diploma in Information System Audit)

Mrs.BhargaviVangala,aged32years,istheIndependentDirectorofourCompany.She graduated in B.Com and is also F.C.A, DISA (Diplomain InformationSystemAudit).She isapracticingCharteredAccountant. Mrs. BhargaviqualifiedasaCAintheyear2011andispracticinginGuntur,intheareasofTaxation,Auditing&Banking.HerAreaofSpecializationisIndirectTaxes.She is aManagingCommitteemember for the Guntur Branch ofSIRC (Southern India Regional Council) of ICAI

Asper the resolution at itemno. 4 oftheNotice of TwentySeventhAnnualGeneralMeetingreadwithexplanatorystatement thereto

NIL

NIL

NIL

NIL

5

00021952

79years

a Post Graduate in Commerce from Andhra University,Visakhapatnam

Mr.SuryanarayanaMurtyVaddadi,aged79yearsistheNomineeDirectorofourCompanyfromIREDA.HeisaPostGraduateinCommercefromAndhraUniversity, Visakhapatnam.He joinedAndhraPradesh Industrial Development Corporation Ltd (APIDC)andwasactively associated in variousdiversificationprogrammesofAPIDC.In1997,heretiredasChiefGeneralManagerinAPIDC.

As per the resolution at item no. 5 of theNotice of TwentySeventhAnnualGeneralMeetingreadwithexplanatorystatementthereto

NIL

NIL

NIL

NIL

5


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CEO/CFO CERTIFICATION:AsrequiredunderScheduleII–PartBtotheSEBI(ListingObligationsandDisclosureRequirements)Regulations,2015theManagingDirectorandChiefFinancialOfficerhavefurnishedthenecessaryCertificatetotheBoardofDirectorswithrespecttofinancialstatementsandCashflowstatementsfortheyearended31stMarch,2019

CHIEF EXECUTIVE OFFICER (CEO) AND CHIEF FINANCIAL OFFICER (CFO) CERTIFICATION

We,SriP.VenkateswaraReddy,ManagingDirectorandSriM.V.SubbaReddy,ChiefFinancialOfficerofM/s.KALLAMTEXTILESLIMITED,tothebestofourknowledgeandbelief,certifythat:

a) Wehavereviewedthefinancialstatementsandthecashflowstatementfortheyearunderreviewandtothebestofourknowledgeandbelief:

i. Thesestatementsdonotcontainanymateriallyuntruestatementoromitanymaterialfactsorcontainstatementsthatmightbemisleading.

ii. Thesestatementstogetherpresentatrueandfairviewofthecompany’saffairsandareincompliancewithexistingaccountingstandards,applicablelawsandregulations.

(b) Tothebestofourknowledgeandbelief,notransactionsenteredintobythecompanyduringtheyeararefraudulent,illegalorviolativeofthecompany’scodeofconduct.

(c) Weareresponsibleforestablishingandmaintaininginternalcontrolsforfinancialreportingandhaveevaluatedtheeffectivenessofinternalcontrolsystemsofthecompanypertainingtofinancialreportinganddisclosedtotheauditorsandauditcommittee,thedeficienciesinthedesignandoperationofsuchinternalcontrolsandthestepstakentorectifythesedeficiencies.

(d) Wehaveindicatedtotheauditorsandtheauditcommitteethat

i. Therearenosignificantchangesininternalcontroloverfinancialreportingduringtheyear.

ii. Therearenosignificantchangesinaccountingpoliciesduringtheyear.

iii. Therearenofraudsofwhichweareaware,thatinvolvesmanagementorotheremployeeswhohaveasignificantroleinthecompany’sinternalcontrolsystem.

Sd/-

M.V. Subba Reddy

ChiefFinancialOfficer

Sd/-


Managing Director

DIN:00018677

Date:11-02-2019




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DECLARATION

Compliance with the Code of Business Conduct and Ethics

AsprovidedunderRegulation26(3)oftheSEBI(ListingObligationsandDisclosureRequirements)Regulations,2015,allBoardMembersandSeniorManagementPersonnelhaveaffirmedcompliancewithKallamTextilesLtdCodeofConductofboardofdirectorsandseniormanagementfortheyearended31stMarch,2019.

Sd/-P.Venkateswara Reddy

Managing Director (DIN:00018677)

For CHEVUTURI ASSOCIATES Chartered Accountants FirmRegn.no.000632S

Sd/-

(Raghunadha Rao Balineni) Partner

ICAIMembershipNo.028105

AUDITORS’ CERTIFICATE ON COMPLIANCE OF CONDITIONS OF CORPORATE GOVERNANCE UNDER SCHEDULE (E) TO THE SECURITIES AND EXCHANGE BOARD OF INDIA (LISTING OBLIGATIONS AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2015

To the Members of Kallam Textiles Limited (Formerly knowkn as Kallam Spinning Mills Ltd.,)

ThiscertificateisissuedinaccordancewiththetermsofourengagementwithKallamTextilesLimted(‘theCompany’).

WehaveexaminedthecomplianceofconditionsofCorporateGovernancebytheCompany, for theyearendedon31March2019,asstipulatedinregulations17to27andclauses(b)to(i)ofregulation46(2)andparaC,DandEofScheduleVoftheSEBI(ListingObligationsandDisclosureRequirements)Regulations,2015(theListingRegulations).

Managements’ Responsibility

ThecomplianceofconditionsofCorporateGovernanceistheresponsibilityoftheManagement.Thisresponsibilityincludespreparationandmaintenanceofallrelevantsupportingrecordsanddocuments,thedesign,implementationandmaintenanceofinternalcontrolandprocedurestoensurethecompliancewiththeconditionsoftheCorporateGovernancestipulatedinListingRegulations.

Auditor’s Responsibility

Ourresponsibilityislimitedtoexaminingtheproceduresandimplementationthereof,adoptedbytheCompanyforensuringcompliancewiththeconditionsoftheCorporateGovernance.ItisneitheranauditnoranexpressionofopiniononthefinancialstatementsoftheCompany.

PursuanttotherequirementsoftheListingRegulations,itisourresponsibilitytoprovideareasonableassurancewhethertheCompanyhascompliedwiththeconditionsofCorporateGovernanceasstipulatedinListingRegulationsfortheyearended31stMarch,2019.

WeconductedourexaminationoftherelevantrecordsoftheCompanyinaccordancewiththeGuidanceNoteonCertificationofCorporateGovernanceissuedbytheInstituteoftheCharteredAccountantsofIndia(theICAI),theStandardsonAuditingspecifiedunderSection143(10)oftheCompaniesAct,2013,insofarasapplicableforthepurposeofthiscertificateandaspertheGuidanceNoteonReportsorCertificatesforSpecialPurposesissuedbytheICAIwhichrequiresthatwecomplywiththeethicalrequirementsoftheCodeofEthicsissuedbytheICAI

Opinion

BasedonourexaminationoftherelevantrecordsandaccordingtotheinformationandexplanationsprovidedtousandtherepresentationsprovidedbytheManagement,wecertifythattheCompanyhascompliedwiththeconditionsofCorporateGovernanceasstipulatedinregulations17to27andclauses(b)to(i)ofregulation46(2)andparaC,DandEofScheduleVoftheListingRegulationsduringtheyearendedMarch31,2019.WestatethatsuchcomplianceisneitheranassuranceastothefutureviabilityoftheCompanynortheefficiencyoreffectivenesswithwhichtheManagementhasconductedtheaffairsoftheCompany.

Restriction of Use

ThecertificateisaddressedandprovidedtothemembersoftheCompanysolelyforthepurposetoenabletheCompanytocomplywiththerequirementoftheaforesaidRegulationsandmaynotbesuitableforanyotherpurpose.

Date:11-05-2019


Date:11-05-2019


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Recognition and measurement of subsidies from government

The company has recognised government grants in the nature of power subsidy and Interest subsidy which involve significant judgment in assessing their recognition and realizability.

We considered this matter to be significant to our audit due to the quantum of the grants receivable from government, their period of outstanding and its tax effects on recognition of said income.

1. We evaluated the accounting treatment of government grants in terms of Ind AS- 20 in particular about its recognition based on its complying with the conditions attached to the grant and the possibility of the realisation of grant from the government. For this, we obtained copies of relevant orders sanctioning the grants from the management and reconciled the amounts recognised with the eligibility criteria. We also verified the letter of communication by the management with the sanctioning authorities of the grant which were acknowledged and confirms that the government authorities endorsed and accepted the claims of the company. With regard to their realizability, we verified the copies of the minutes of meeting held by the trade association with the government and noted the assurance made by the government for release of grants in due time. Considering all these, we found that the judgment made by the management in recognising the grants are found to be appropriate.

Sl. No. How the matter was addressed in our auditKey Audit matter

TO THE MEMBERS OF KALLAM TEXTILES LIMITED (Formerly known as Kallam Spinning Mills Ltd.,)

Report on the Audit of the Financial Statements

Opinion

We have audited the accompanying financial statements of KALLAM TEXTILES LIMITED (“the Company”), which comprise the Balance Sheet as at March 31, 2019, 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 ended on that date, and a summary of the significant accounting policies and other explanatory information (hereinafter referred to as “the financial statements”).

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid financial statements give the information required by the Companies Act, 2013 (“the Act”) in the manner so required and give a true and fair view in conformity with the Indian Accounting Standards prescribed under section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015, as amended, (“Ind AS”) and other accounting principles generally accepted in India, of the state of affairs of the Company as at March 31, 2019,its profit, total comprehensive income, changes in equity and its cash flows for the year ended on that date.

Basis for Opinion

We conducted our audit of the financial statements in accordance with the Standards on Auditing (S.As) specified under section 143(10) of the Act. Our responsibilities under those Standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India (ICAI) together with the ethical requirements that are relevant to our audit of the financial statements under the provisions of the Act and the Rules made thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the ICAI’s Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the financial statements.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. We have determined the matters described below to be the key audit matters to be communicated in our report.

INDEPENDENT AUDITOR’S REPORT

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Recoverability of deferred tax asset related to unabsorbed losses under Income-taxThe Company has significant deferred tax asset in respect of unabsorbed losses under Income-tax and there is inherent uncertainty involved in forecasting future taxable profits, which determines the extent to which the deferred tax assets are or not recognised.

We evaluated the reasonableness of key tax assumptions, timing of reversal of temporary differences as well as evaluated the reasonableness of the forecasts of future taxable profits with reference to the historical forecasting accuracy considering the potential risk of management bias. These assumptions were based on the knowledge of the tax and operating environment in which the company operates. Considering the management estimates and forecasts of profitability, the tax credits as recognised is considered to be appropriate.

Sl. No. How the matter was addressed in our auditKey Audit matter

2.

Information Other than the Financial Statements and Auditor’s Report Thereon

The Company’s Board of Directors is responsible for the other information. The other information comprises the information included in the Management Discussion and Analysis, Board’s Report including Annexures to Board’s Report, Business Responsibility Report, Corporate Governance and Shareholder’s Information, but does not include the financial statements and our auditor’s report thereon. We obtained Corporate Governance Report, prior to the date of this report and the remaing information is excepted to be made availabel to us after that date.

Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained during the course of our audit or otherwise appears to be materially misstated.

If, based on the work we have performed, on other information that we obtained prior to the date of this report. We conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Management’s Responsibility for the Financial Statements

The Company’s Board of Directors is responsible for the matters stated in section 134(5) of the Act with respect to the preparation of these financial statements that give a true and fair view of the financial position, financial performance, total comprehensive income, changes in equity and cash flows of the Company in accordance with the Ind AS and other accounting principles generally accepted in India. 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 frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, management is responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

The Board of Directors are responsible for overseeing the Company’s financial reporting process.

Auditor’s Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

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• Obtain an understanding of internal financial controls relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 143(3)(i) of the Act, we are also responsible for expressing our opinion on whether the Company has adequate internal financial controls system in place and the operating effectiveness of such controls.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

• Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Company to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

Materiality is the magnitude of misstatements in the financial statements that, individually or in aggregate, makes it probable that the economic decisions of a reasonably knowledgeable user of the financial statements may be influenced. We consider quantitative materiality and qualitative factors in (i) planning the scope of our audit work and in evaluating the results of our work; and (ii) to evaluate the effect of any identified misstatements in the financial statements.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Report on Other Legal and Regulatory Requirements

1. As required by Section 143(3) of the Act, based on our audit 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 it appears from our examination of those books.

c) The Balance Sheet, the Statement of Profit and Loss including Other Comprehensive Income, Statement of Changes in Equity and the Statement of Cash Flow dealt with by this Report are in agreement with the relevant books of account.

d) In our opinion, the aforesaid financial statements comply with the Ind AS specified under Section 133 of the Act.

e) On the basis of the written representations received from the directors as on March 31, 2019 taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2019 from being appointed as a director in terms of Section 164 (2) 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

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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 requirements of section 197(16) of the Act, as amended: In our opinion and to the best of our information and according to the explanations given to us, the remuneration paid by the Company to its directors during the year is in accordance with the provisions of section 197 of the Act.

h) With respect to the other matters to be included in the Auditor’s Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, as amended in our opinion and to the best of our information and according to the explanations given to us:

i. The Company has disclosed the impact of pending litigations on its financial position in its financial statements.

ii. The Company did not have any long term contracts including derivative contracts for which there were only material forceable losses.

iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company.

2. As required by the Companies (Auditor’s Report) Order, 2016 (“the Order”) issued by the Central Government in terms of Section 143(11) of the Act, we give in “Annexure-A” a statement on the matters specified in paragraphs 3 and 4 of the Order.

Place:Camp: GunturDate : 11.5.2019

For Chevuturi AssociatesChartered Accountants

Firm Registration No.000632S

Sd/-(Raghunadha Rao Balineni)

Partner(Membership No: 028105)

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ANNEXURE-A TO THE INDEPENDENT AUDITOR’S REPORT

The Annexure referred to in paragraph 2 under “Report on other legal and regulatory requirements” section of our report to the members of KALLAM TEXTILES LIMITED for the year ended March 31, 2019.

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 Banks at the time of lending and the amount outstanding against such borrowings on 31st March, 2019 was Rs.320 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, Customs duty, 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) Details of disputed statutory dues which have not been deposited as at 31st March, 2019 on account of dispute are given below.

Name of the statue Nature of dues Forum where Period to which Amount (Rs. In lakhs) dispute is pending the amount relates The Income-tax Act, 1961 Income-tax CIT(A), Guntur AY 2016-17 96 (Of which 19 paid under protest)

Note: The above appeal is disposed in favour of the company in the month of April, 2019

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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. However, the company has not borrowed any loans from financial institutions, or raised any funds by way of issue of debentures.

9. The company has not raised monies 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. To the best of our knowledge and 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 paid/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 to the company.

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. During the year, the company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures and hence reporting under clause 3(xiv) of the Order is not applicable to 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 and hence provisions of section 192 of the Companaies Act, 2013 are not applicable to the company.

16. The company is not required to be registered under section 45-IA of the Reserve Bank of India Act, 1934.




Sd/- (Raghunadha Rao Balineni)


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ANNEXURE “B” TO THE INDEPENDENT AUDITOR’S REPORT

Report 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 (“the Company”) as of 31st March 2019 in conjunction with our audit of the 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

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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 2019, 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.




Sd/- (Raghunadha Rao Balineni)


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KALLAM TEXTILES LIMITED (Formerly known as Kallam Spinning Mills Limited)

A ASSETS

1 Non-Current Assets

(a) Property, Plant and Equipment 4 4,09,01,26,212 4,15,68,45,036

(b) Intangible Assets 4 7,53,391 -

(c) Capital Work-in-progress 4 1,83,14,546 5,90,36,453

(d) Financial Assets

(i) Loans 5 6,49,07,065 6,45,05,945

(ii) Other financial assets 6 - -

(e) Other Non-current Assets 7 12,75,218 14,64,073

Total Non-Current assets 4,17,53,76,432 4,28,18,51,507

2 Current Assets

(a) Inventories 8 1,01,04,79,370 92,87,11,656

(b) Financial Assets

(i) Trade receivables 9 22,26,93,176 22,77,96,003

(ii) Cash and cash equivalents 10 40,87,506 75,99,878

(iii) Other Bank balances 10 27,45,284 54,01,676

(iv) Loans 5 8,99,098 5,12,161

(v) Other financial assets 6 6,15,788 4,500

(c) Other Current assets 7 53,11,23,980 45,64,26,590

Total Current assets 1,77,26,44,202 1,62,64,52,464

Total Assets 5,94,80,20,634 5,90,83,03,971

B EQUITY AND LIABILITIES

1 Equity

(a) Equity Share Capital 11 8,56,38,750 8,56,38,750

(b) Other Equity 12 2,09,98,56,501 2,03,76,16,494

Total Equity 2,18,54,95,251 2,12,32,55,244

Liabilities

2 Non-current liabilities

(a) Financial Liabilities

(i) Long-term borrowings 13 1,46,43,73,028 1,75,60,68,615

(ii) Other financial liabilities 14 - -

(b) Provisions 15 1,52,91,438 1,24,81,130

(c ) Deferred Tax liabilities (Net) 16 30,57,57,171 28,38,06,725

(d) Other non-current liabilities 17 9,10,77,012 9,56,80,161

Total Non-current liabilities 1,87,64,98,649 2,14,80,36,631

3 Current liabilities

(a) Financial Liabilities

(i) Short-term borrowings 18 1,39,26,66,382 1,16,05,40,476

(ii) Trade payables 19

Particulars Note No. As at As at

31st March, 2019 31st March, 2018

Balance Sheet as at 31st March, 2019

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- Total outstanding dues of micro and small enterprises - -

- Total outstanding dues of creditors other than 6,51,26,351 8,38,55,898

micro and small enterprises

(iii) Other financial liabilities 14 39,73,50,314 35,08,37,434

(b) Other current liabilities 17 1,62,76,576 99,13,778

(c ) Provisions 15 4,95,624 6,32,691

(d) Current tax liabilities (Net) 20 1,41,11,487 3,12,31,820

Total Current liabilities 1,88,60,26,734 1,63,70,12,097

Total Liabilities 3,76,25,25,382 3,78,50,48,728

Total Equity and Liabilities 5,94,80,20,634 5,90,83,03,971

Particulars Note No. As at As at


The accompanying notes form an integral part of the financial statements.

As per our report of even date For CHEVUTURI ASSOCIATES Firm’s Registration Number: 000632S Chartered Accountants

Sd/- (Raghunadha Rao Balineni) Partner Membership Number: 028105

Place: Camp:Guntur Date: 11.5.2019

Place: Chowdavaram, GunturDate: 11.5.2019

For and on behalf of the Board

Sd/-P. Venkateswara Reddy

Managing Director

Sd/-G.V.Krishna Reddy


Sd/-M.V. Subba Reddy

Whole Time Director & CFO

Sd/-Nandan Bisoi

Company Secretary

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I Revenue from Operations 21 3,10,73,59,121 3,12,64,26,542 II Other Income 22 1,40,73,032 1,13,22,728 III Total Income (I+II) 3,12,14,32,153 3,13,77,49,270 IV Expenses Cost of Materials consumed 23 1,76,50,52,598 1,70,28,44,603 Purchases of Stock-in-Trade 24 2,30,94,432 - Changes in inventories of Finished goods, Stock-in-trade and work-in-progress 25 -7,20,68,154 -3,84,98,189 Employee benefits expense 26 20,98,33,195 20,86,36,897 Finance costs 27 20,59,90,565 21,88,33,106 Depreciation and Amortization expense 28 15,68,35,871 14,19,46,320 Other expenses 29 71,31,45,547 69,33,02,560 Total Expenses (IV) 3,00,18,84,054 2,92,70,65,297 V Profit before exceptional items and tax (III-IV) 11,95,48,099 21,06,83,973 VI Exceptional Items - - VII Profit before tax (V-VI) 11,95,48,099 21,06,83,973 VIII Tax expense: Current tax 2,61,20,497 4,60,26,739 Deferred tax (Net of MAT Credit Entitlement) 2,68,85,113 79,27,680 IX Profit for the year (VII-VIII) 6,65,42,490 15,67,29,554 X Other Comprehensive Income A. Items that will not be re-classified to statement of Profit and loss 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 10,87,460 9,27,375 d) Deferred tax credit/(charge) on revaluation surplus 49,34,666 -11,78,38,220 Total Other comprehensive income 60,22,126 50,47,48,052 XI Total Comprehensive Income for the year (IX+X) 7,25,64,616 66,14,77,606 XII Earnings per Share - Basic and Diluted 1.55 3.66 (Profit after tax and before OCI/Wt. average number of shares)

Particulars Note No. Year ended


Statement of Profit and Loss for the Year ended 31st March, 2019


(Raghunadha Rao Balineni) Partner Membership Number: 028105



Sd/- P. Venkateswara Reddy

Managing Director

Sd/- G.V.Krishna Reddy


Sd/- M.V. Subba Reddy


Sd/- Nandan Bisoi

Company Secretary


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CASH FLOW FROM OPERATING ACTIVITIES

Net Profit before tax 11,95,48,099 21,06,83,973

Add/Less: Adjustments for

Depreciation 15,68,35,871 14,19,46,320

Interest expense 20,59,90,565 21,88,33,106

Interest income (46,33,244) (42,73,465)

Amortisation of Govt. grants (46,03,149) (45,91,242)

Remeasurement of employee defined benefit plans 1087460 9,27,375

Loss on sale of assets 17,451 4,64,465

Operating profit before working capital changes 47,42,43,053 56,39,90,532

Add/Less: Adjustments for working capital

Inventories (81,767,714) (5,65,27,057)

Trade and other receivables (6,88,58,453) (5,75,59,729)

Trade and other payables (2,97,33,740) 6,24,22,697

Cash generated from operations 29,38,83,146 51,23,26,443

Less: Direct taxes paid 4,68,54,882 5,98,64,908

Net cash from operating activities 24,70,28,264 45,24,61,535

CASH FLOW FROM INVESTING ACTIVITIES

Purchase of fixed assets and Capital WIP (Net of subsidy) (5,01,81,232) (11,61,28,193)

Proceeds from sale of fixed assets 15,250 26,26,683

Margin Money deposit with banks and other balances 26,56,392 1,27,449

Interest received 4633244 42,73,465

Net cash used in Investing activities (4,28,76,346) (10,91,00,596)

CASH FLOW FROM FINANCING ACTIVITIES

Proceeds from/(Repayment of) borrowings 69,83,431 (12,04,96,653)

Dividend and tax paid (1,03,24,608) (82,45,823)

Interest and finance charges (20,43,23,113) (21,48,33,106)

Net cash used in financing activities (20,76,64,290) (34,35,75,582)

Net decrease in cash and cash equivalents (35,12,372) (2,14,643)

Cash and cash equivalents at the beginning of the Year 7,599,878 78,14,521

Cash and cash equivalents at the end of the Year 40,87,506 75,99,878

(For components of cash and cash equivalents refer note no.10)

Net decrease in cash and cash equivalents (35,12,372) (2,14,643)

Particulars 2018-19 2017-18

Cash flow statement for the year ended 31.03.2019

The cash flow statement has been prepared under the indirect method as set out in Indian Accounting Standard (Ind AS 7) “Statement of Cash flows”.

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Borrowings:

Long term borrowings 2,00,97,35,563 (22,51,42,473) 0 1,78,45,93,090

Short term borrowings 1,16,05,40,476 23,21,25,906 0 1,39,26,66,382

3,17,02,76,039 69,83,433 - 3,17,72,59,472

Particulars of liabilities arising from financing activity As at 1.4.2018 Net cash fIows Non cash changes As at 31.3.2019

Disclosure under para 44A of Ind AS 7 “Cash flow statement”







Managing Director





Sd/- Nandan Bisoi

Company Secretary

Place: Chowdavaram, GunturDate: 11.5.2019

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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 Changes in equity during the year: - - As at 31st March, 2019 4,28,19,375 8,56,38,750

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 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 8245823 Transfer to General Reserve - - - - - - 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 Add: Profit for the year 18-19 - 66542490 - - 6,65,42,490 Other Comprehensive Income - - 10,87,460 10,87,460 Add: Deferred tax on OCI (On revaluation surplus) 49,34,666 49,34,666 Total Comprehensive Income for the year 6,65,42,490 49,34,666 10,87,460 7,25,64,616 Less: Appropriations Proposed Dividend and Dividend tax for the year 2017-18 1,03,24,608 1,03,24,608 Transfer to General Reserve - - - - - - Balance at the end of reporting period 31st March, 2019 1,60,36,486 96,51,01,118 60,81,86,602 50,87,55,343 17,76,952 2,09,98,56,501

Particulars No’s INR

Particulars

Reserves and Surplus Items of Other Comprehensive Income Total General Retained Revaluation Revaluation Actuarial Gains/ Reserve earnings surplus surplus (Losses)

Statement of Changes in Equity as at 31st March, 2019

Statement of Changes in Equity as at 31st March, 2019

A. Equity share capital

B. Other Equity







Managing Director





Sd/- Nandan Bisoi

Company Secretary

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Note No.1

I. CORPORATE INFORMATION

Kallam Textiles Limited (Formerly known as “ Kallam Spinning Mills Limited “) is incorporated on 18th February, 1992. It is a leading textile company engaged in the business of Manufacturing 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 POLICIES

i) Basis of preparation

A) Statement of compliance

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 Companies (Indian Accounting Standards) Rules 2015, as amended from time to time.

B) Basis of measurement

These financial statements have been 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.

Operating Cycle

All assets have been classified as current or non-current as per the company’s normal operating cycle and other criteria set out in the Schedule III to the Act and Ind AS 1 - Presentation of Financial Statements, based on the nature of the products and the time between the acquisition of assets for processing and their realization in cash equivalents.

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 and judgements

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

COMPANY OVERVIEW AND SIGNIFICANT ACCOUNTING POLICIES 2018-19

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 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

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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.

III) SIGNIFICANT ACCOUNTING POLICIES

A) PROPERTY, PLANT AND EQUIPMENT

An item of Property, Plant and Equipment that qualified as an asset is measured at initial recognition at Cost. Following initial recognition, items of Property, plant and equipment are carried at cost 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 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 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) INTANGIBLE ASSETS

Intangible assets are stated at cost of acquisition less accumulated amortization. Intangible assets are amortized over their respective individual estimated useful lives on a straight line basis from the date they are available for use.

C) 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.

D) DEPRECIATION

The company has computed depreciation on Property, plant and equipment based on the useful lives as specified in Schedule II of Companies Act, 2013 under straight line method.

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The intangible assets, being Computer Software is amortized over a period of 5 years on 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.

E) 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.

F) IMPAIRMENT OF ASSETS

i) 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.

G) INVENTORIES

i) Textile division :

Inventories of raw materials, stores and spares, trading goods, work-in-progress and Finished stocks are valued at cost or net realizable value which ever is lower. Cotton Waste is valued at Net realizable Value.

Materials and other items held for use in the production of finished goods are not written down below cost if the finished goods in which they were incorporated are expected to be sold at or above cost.

The cost in respect of above items is measured as under:

Raw material are valued at cost and is arrived at based on actual identification of material on stock.

Work-in-progress at raw material cost plus conversion cost depending on the stage of completion.

Finished goods at material cost plus conversion cost and other overheads incurred to bring the goods to their present condition and location.

Stores and spares at weighted average cost of purchase and other direct expenses incurred to bring the inventory to present location and condition.

Net realizable value is the estimated selling price in the ordinary course of business less estimated cost of completion and costs incurred to make the products sold.

ii) Power Division :

a) Stock of power (Banked with APTRANSCO) is valued at cost or net realizable value whichever is lower.

H) 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 entity satisfies a performance obligation by transferring the promised goods to customers and the goods are transferred when the customer obtains control over the goods 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.

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.

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I) 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 associated with it will flow to the Company.

J) 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”.

K) 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.

L) 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 date

i) 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.

M) 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.

Contingent assets are not recognized in the financial statements since this may result in the recognition of income that may never be realized.

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N) 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 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.

O) 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.

P) 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.

Q) 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.

Note No.3

III. Standards Issued but not effective

i) Ind AS 116 Leases : On March 30, 2019, Ministry of Corporate Affairs has notified Ind AS 116, Leases. Ind AS 116 will replace the existing leases Standard, Ind AS 17 Leases, and related Interpretations. The Standard sets out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract i.e., the lessee and the lessor. Ind AS 116 introduces a single lessee accounting model and requires a lessee to recognize assets and liabilities for all leases with a term of more than twelve months, unless the underlying asset is of low value. Currently, operating lease expenses are charged to the statement of Profit & Loss. The Standard also contains enhanced disclosure requirements for lessees. Ind AS 116 substantially carries forward the lessor accounting requirements in Ind AS 17. The effective date for adoption of Ind AS 116 is annual periods beginning on or after April 1, 2019. The standard permits two possible methods of transition: • Full retrospective – Retrospectively to each prior period presented applying

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Ind AS 8 Accounting Policies, Changes in Accounting Estimates and Errors • Modified retrospective – Retrospectively, with the cumulative effect of initially applying the Standard recognized at the date of initial application. Under modified retrospective approach, the lessee records the lease liability as the present value of the remaining lease payments, discounted at the incremental borrowing rate and the right of use asset either as: • Its carrying amount as if the standard had been applied since the commencement date, but discounted at lessee’s incremental borrowing rate at the date of initial application or • An amount equal to the lease liability, adjusted by the amount of any prepaid or accrued lease payments related to that lease recognized under Ind AS 17 immediately before the date of initial application. Certain practical expedients are available under both the methods.

On completion of evaluation of the effect of adoption of Ind AS 116, the Company is proposing to use the ‘Modified Retrospective Approach’ for transitioning to Ind AS 116, and take the cumulative adjustment to retained earnings, on the date of initial application (April 1, 2019). Accordingly, comparatives for the year ended March 31, 2019 will not be retrospectively adjusted.

However, at present, the company does not have any contracts in the nature of lease which have material impact.

ii) Amendment to Ind AS 19 – Plan amendment, curtailment or settlement- On March 30, 2019, Ministry of Corporate Affairs issued amendments to Ind AS 19, ‘Employee Benefits’, in connection with accounting for plan amendments, curtailments and settlements. The amendments require an entity:

• to use updated assumptions to determine current service cost and net interest for the remainder of the period after a plan amendment, curtailment or settlement; and

• to recognise in profit or loss as part of past service cost, or a gain or loss on settlement, any reduction in a surplus, even if that surplus was not previously recognised because of the impact of the asset ceiling. Effective date for application of this amendment is annual period beginning on or after April 1, 2019. The Company does not have any impact on account of this amendment.

iii) Ind AS 12 Appendix C, Uncertainty over Income Tax Treatments :

On March 30, 2019, Ministry of Corporate Affairs has notified Ind AS 12 Appendix C, Uncertainty over Income Tax Treatments which is to be applied while performing the determination of taxable profit (or loss), tax bases, unused tax losses, unused tax credits and tax rates, when there is uncertainty over income tax treatments under Ind AS 12. According to the appendix, companies need to determine the probability of the relevant tax authority accepting each tax treatment, or group of tax treatments, that the companies have used or plan to use in their income tax filing which has to be considered to compute the most likely amount or the expected value of the tax treatment when determining taxable profit (tax loss), tax bases, unused tax losses, unused tax credits and tax rates.

The standard permits two possible methods of transition - i) Full retrospective approach – Under this approach, Appendix C will be applied retrospectively to each prior reporting period presented in accordance with Ind AS 8 – Accounting Policies, Changes in Accounting Estimates and Errors, without using hindsight and ii) Retrospectively with cumulative effect of initially applying Appendix C recognized by adjusting equity on initial application, without adjusting comparatives. The effective date for adoption of Ind AS 12 Appendix C is annual periods beginning on or after April 1, 2019. The Company will adopt the standard on April 1, 2019 and has decided to adjust the cumulative effect in equity on the date of initial application i.e. April 1, 2019 without adjusting comparatives. The effect on adoption of Ind AS 12 Appendix C would be insignificant in the financial statements.

Amendment to Ind AS 12 – Income taxes : On March 30, 2019, Ministry of Corporate Affairs issued amendments to the guidance in Ind AS 12, ‘Income Taxes’, in connection with accounting for dividend distribution taxes. The amendment clarifies that an entity shall recognise the income tax consequences of dividends in profit or loss, other comprehensive income or equity according to where the entity originally recognised those past transactions or events. Effective date for application of this amendment is annual period beginning on or after April 1, 2019. The Company is currently evaluating the effect of this amendment on the financial statements.

3



Carrying Amounts of :

Land - Freehold 92,58,92,141 92,56,40,141

Factory Buildings 68,18,53,049 70,08,53,553

Office Buildings 51,82,71,099 51,07,84,199

Plant and Equipment 1,88,27,13,153 1,92,47,31,015

Electrical and Electronic Equipment 6,66,92,407 8,01,10,877

Borewells and Water pumps 6,41,792 10,55,801

Office and Other equipment 49,89,105 49,54,778

Furniture and Fixtures 6,33,710 8,11,207

Vehicles 84,39,756 79,03,465

Total Property Plant and equipment 4,09,01,26,212 4,15,68,45,036

Property, Plant and Equipment

Particulars As at As at


Note No.4

3






AG

M N



01 - 16

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3



Carrying amount of: Computer software 7,53,391 -

7,53,391 -

Particulars Software Total (A) Gross carrying value at cost

Balance at March 31, 2017 - - Additions - -

Disposals/adjustments - -

Balance at March 31, 2018 - -

Additions 7,59,635 7,59,635

Disposals/adjustments

Balance at March 31, 2019 7,59,635 7,59,635 (B) Accumulated amortisation and impairment Balance at March 31, 2017 - - Amortisation expense - -

Balance at March 31, 2018 - - Amortisation expense 6,244 6,244

Disposals/adjustments - -

Balance at March 31, 2019 6,244 6,244 (C) Carrying amount Balance at March 31, 2017 - - Balance at March 31, 2018 - - Balance at March 31, 2019 7,53,391 7,53,391

Intangible assets Note No.4



Carrying value - At Cost/Deemed Cost As at 31st March, 2017 4,48,31,391

Additions 10,87,60,647

Less: Capitalised during the year 9,45,55,585

As at 31st March, 2018 5,90,36,453

Additions 2,98,72,315

Less: Capitalised during the year 7,05,94,222

As at 31st March, 2019 1,83,14,546

Capital Work-in-Progress

Particulars Amount

3






AG

M N



01 - 16

As at 1st April, 2017 99,595 99,595 Additions - -

Capitalised during the year 99,595 99,595

As at 31st March, 2018 - - Additions 16,85,418 16,85,418

Capitalised during the year* 16,85,418 16,85,418

As at 31st March, 2019 - -

Unallocated Capital Expenditure

Nature of Expenditure Interest on Borrowings Total

* The above expenditure was included in the carrying amount of Property, Plant and equipment (Including Capital-works-in-progress)

Unsecured Considered Good

a) Security deposits with Govt. authorities and others 6,49,07,065 6,45,05,945 - -

b) Employee related advances - - 8,67,902 4,80,965

c) Other advances - - 31,196 31,196

Total 6,49,07,065 6,45,05,945 8,99,098 5,12,161

a) Claims receivable - - 6,15,788 4,500

Total - - 6,15,788 4,500

Loans considered good- Secured - - - -

Loans considered good- Unsecured 6,49,07,065 6,45,05,945 8,99,098 5,12,161

Loans which have significant increase in credit risk - - - -

Loans - Credit impaired - - - -

Loans

Other Financial Assets

Of above:

Note No. 5

Note No. 6

Non-Current Current Particulars As at As at As at As at 31st March, 2019 31st March, 2018 31st March, 2019 31st March, 2018


Note: 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 or private company in which any director is a partner, a director or a member.

3



Unsecured Considered Good a) Advances for Capital goods 12,75,218 14,64,073 - -

b) Advances to creditors against supplies - - 1,62,37,384 1,23,53,859

c) Prepaid expenses - - 44,39,229 33,74,830

d) Balances with Statutory Authorities:

Excise Duty receivable - 24,43,758

IGST receivable 82,32,922 16,00,352

CGST Receivable - 69,58,444

SGST receivable 68,16,779 1,59,54,700

IGST receivable on impoted Goods 14,75,988 -

Taxes paid under protest 19,46,600 -

e) EPCG Terminal Excise Duty refund receivable 33,24,918 87,38,420

f) Duty draw back refund receivable 24,91,745 37,47,661

g) Interest rebate receivable under TUF scheme 4,94,02,844 3,63,29,591

h) Interest subsidy receivable from AP government 18,93,37,701 16,91,77,796

i) Power Subsidy receivable 24,34,97,840 19,11,24,397

j) Accrued Interest 39,20,030 46,22,782

Total 12,75,218 14,64,073 53,11,23,980 45,64,26,590

Other Assets Note No. 7


Note: 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 or private company in which any director is a partner, a director or a member.

Spinning/Power: Raw materials 42,87,99,490 41,43,20,340

Work-in-progress 10,50,45,255 8,78,10,939

Finished goods 6,34,33,491 6,54,19,600

Stores and spares 3,61,12,449 3,75,69,590

Weaving/Dyeing unit: Raw materials 90,72,529 99,93,202

Work-in-progress 29,53,75,310 20,79,69,574

Finished goods 5,51,89,402 8,57,75,191

Stores and spares 1,74,51,444 1,98,53,220

Total 1,01,04,79,370 92,87,11,656

Inventories (At lower of cost and net relisable value) Note No. 8



Note:

(i) The mode of valuation of inventories has been stated in Note No.g in Accounting Policies.

(ii) The cost of inventories recognised as an expense for the year ended 31st March, 2019 has been disclosed on the face of the statement of P&L in note no.23,24,25 and 29.

(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 liquidated after more than twelve months.

3






AG

M N



01 - 16

Trade receivables considered good- Secured - -

Trade receivables considered good- Unsecured 22,26,93,176 22,77,96,003

Trade receivables which have significant increase in credit risk - -

22,26,93,176 22,77,96,003

Trade receivables - Credit impaired - -

Total 22,26,93,176 22,77,96,003

Trade receivables Note No. 9



Notes:

(i) The average credit period is 15-45 days. No interest is charged for overdue receivables.

(ii) The above amount does not include any amount due from related parties.

(iii) There is no customer who represents more than 10% of total balance of trade receivables.

iv) The company had used the 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.,

v) During the year, the company has not recognised any loss allowance towards trade receivables.

i) Balances with banks in Current accounts a. In Current accounts 11,20,226 23,75,637

ii) Cash on hand 29,67,280 52,24,241

Total 40,87,506 75,99,878

As at 31st March 2017 5,00,00,000 10,00,00,000 Changes during the year - -


As at 31st March’ 2019 5,00,00,000 10,00,00,000

Authorised Share Capital (FV Rs.2/- each)

Cash and cash equivalents

Share Capital

Other Bank Balances

Note No. 10

Note No. 10

Note No. 11





Particulars No’s INR Equity

a. Earmarked balances with banks held as margin money against LC and guarantees falls due for maturity within 12months from the date of Balance sheet. 13,52,681 40,00,881

b. Earmarked balances with banks towards unclaimed dividends 13,92,603 14,00,795

Total 27,45,284 54,01,676

3



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 2019 4,28,19,375 8,56,38,750

Issued Share Capital

Rights, preferences and restrictions attached to the equity shares:

The Company has only one class of shares referred to as equity shares having a face value of Rs.2/- each. Each holder of equity share is eligible for one vote per share held. The Company declares and pays dividends in Indian rupees.The dividend proposed by the Board of Directors is subject to the approval of the Shareholders in the ensuing Annual General Meeting, except in the case of interim dividend. In the event of liquidation, the holders of equity shares will be entitled to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to the number of equity shares held by the shareholders.

Particulars No’s INR

As at 31st March, 2017 1,60,36,486 Transfers during the year -

As at 31st March, 2018 1,60,36,486 Transfers during the year -

As at 31st March, 2019 1,60,36,486

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 Deferred tax credit taken on revaluation of assets 49,34,666

As at 31st March, 2019 1,11,69,41,945

Particulars

Particulars

Amount

Amount

Other Equity a) General Reserve

b) Revaluation Reserve

Note No. 12

Kallam Haranadha Reddy 27,32,500 6.38% 2245625 5.24%

Gurram Venkata Krishna Reddy 35,13,723 8.21% 3513723 8.21%

Kallam Agro products and Oils Pvt. Ltd 54,65,043 12.76% 5465043 12.76%

Kallam Mohan Reddy 26,79,625 6.26% 1946875 4.55%

1,43,90,891 33.61% 13171266 30.76%

Details of share holders holding more than 5% of total number of shares

Name of the Share Holder No of Shares held

No of Shares held

% out of total number of shares of the Company

% out of total number of shares of the Company

As at 31st March, 2019 As at 31st March, 2018

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.

3






AG

M N



01 - 16

As at 31st March, 2017 77,72,89,374Add: 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 82,45,823

As at 31st March, 2018 90,95,72,729Add: Total comprehensive income for the period transferred from statement of profit and loss 6,76,29,950

Final dividend and dividend distribution tax for the year 2017-18 1,03,24,608

As at 31st March, 2019 96,68,78,071

Particulars Amount

c) Retained Earnings

Summary of Other Equity

General Reserve 1,60,36,486 1,60,36,486

Revaluation surplus 1,11,69,41,945 1,11,20,07,279

Retained Earnings 96,68,78,071 90,95,72,729

2,09,98,56,502 2,03,76,16,494



Nature of reserves:

a) 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.

b) Revaluation surplus

The 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 dif-ferential 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 at its buildings at their fair value. The resultant increase over its carrying value was transferred to Revaluation surplus through other comprehensive income.

c) Retained Earnings:

Retained earnings are the profits that the company has earned till date less transfers to general reserves and dividends paid to share holders.

3



Long Term Borrowings Note No. 13

A. Secured

i. Term loans

a) From Financial Institutions :

i) IREDA 16,20,418 32,39,670 16,18,996 16,19,252

b) From banks :

i) Andhra Bank 50,45,15,906 55,60,78,043 8,06,01,066 5,80,00,000

ii) Indian Bank 86,71,81,704 1,08,56,95,900 21,80,00,000 18,77,43,798

iii) Bank of Baroda 5,90,00,000 7,90,00,000 2,00,00,000 60,00,000

Total (a) 1,43,23,18,028 1,72,40,13,613 32,02,20,062 25,33,63,050 B. Unsecured

a) Deferred payment liabilities

i) Interest free Sales tax Deferment - - - 3,03,900

b) Other Loans

i) Loans from Promoters and their relatives 25,00,000 25,10,000 - -

ii) Loans from Directors 2,95,55,000 2,95,45,000 - -

Total (b) 32055000 3,20,55,000 - 3,03,900 Total (a+b) 1,46,43,73,028 1,75,60,68,613 32,02,20,062 25,36,66,950

Particulars As at 31st March, 2019

As at 31st March, 2018



Non-Current Current

I) HYDEL POWER PLANT:

i) IREDA :

a) Term loan from IREDA is secured by way of 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 ` 16,18,996/- ; 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 @ 11.50%

c) The above loan is repayable in following manner.

2019-20: ` 3,08,01,066/-


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, secured by way of first pari passu charge on current assets of the division. Further guaranteed by two directors in their personal capacities.

b) The above loans carry interest @ 9.45% to 11.50%.

c) The above loans are repayable in following manner.

2019-20 ` 4,98,00,000/- ; 2020-21: ` 9,93,00,000/- ; 2021-22: ` 10,76,51,143/- ; 2022-23: ` 7,89,65,500/- ; 2023-24: ` 9,28,19,805 ; 2024-25 : ` 2,60,00,000/- ; 2025-26 : ` 9,97,79,458/-

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. The loans are further secured by way of pari passu 2nd charge on inventories and book debts of the division. Further guaranteed by two directors in their personal capacities.

b) The above loans carry interest @ 10% and 12.70%.


2019-20 ` 5,00,00,000/- ; 2020-21: ` 6,25,00,000/-

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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. The loans are further secured by way of hypothecation of inventories and books debts of the division. Further guaranteed by two directors in their personal capacities.

b) The above loans carry interest @10% to 11.10%.


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: ̀ 20,26,95,900/- and 2024-25: ̀ 6,30,00,000/-


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 @11.50%.

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/-


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. The said amount was repaid by the company during the year and no amount was outstanding as on 31.3.2019.

VI. Loans accepted from promoters 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.

Other Financial Liabilities

Provisions

Note No. 14

Note No. 15

a) Current maturities of long-term debt - - 320,220,062 253,666,950

(Refer note no.13)

b) Creditors for capital goods - - 2,116,139 2,758,617

c) Interest accrued and due - - 10,372,530 12,951,142

d) Unclaimed dividend - - 1,392,729 1,401,425

e) Employee related payments - - 26,051,453 25,771,830

f) Other Liabilities - - 37,197,401 54,287,470

Total - - 397,350,314 350,837,434

a) Provision for employee benefits

- Group gratuity (Unfunded) 1,52,91,438 1,24,81,130 4,95,624 5,92,967

- Leave Encashment (Unfunded) - - - 39,724

Total 1,52,91,438 1,24,81,130 4,95,624 6,32,691

Particulars

Particulars









Non-Current

Non-Current

Current

Current

3



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. 48,90,794/- (Year ended March 31, 2018: Rs. 48,54,301/- for provident fund and ESI 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.

These plans typically expose the Company to acturial risks such as interest rate risk, longevity risk and salary risk.

Risk Management:

Interest rate risk - The plan exposes the Company to the risk of fall in interest rates. A fall in interest rates will result in an increase in the ultimate cost of providing the above benefit and will thus result in an increase in the value of the liability. Longetivity risk - The present value of defined benefit plan liability is calculated by reference to the best estimate of the mortality of plan participants both during and after employment. An increase in the life expectancy of the plan participants will increase the plan’s liability.

Salary risk - The present value of the defined benefit plan is calculated with reference to the future salaries of participants under the plan. An increase in salary of the plan participants will increase the plan’s liability.

(i) Balance Sheet

The assets, liabilities and surplus / (deficit) position of the defined benefit plans at the Balance Sheet date were:

(ii) Movements in Present Value of Obligation and Fair Value of Plan Assets

The assets, liabilities and surplus / (deficit) position of the defined benefit plans at the Balance Sheet date were:

* No asset or fund was held by the company to pay employee benefits.

Present value of obligation 1,57,87,062 1,30,74,097

Fair Value of plan assets* - -

(Asset)/Liability recognised in the Balance Sheet 1,57,87,062 1,30,74,097

As at April 1 2017 1,03,49,650 Current service cost 28,23,850 Interest cost 8,27,972 Interest income - Actuarial (gain)/loss arising from changes in financial assumptions -9,27,375 Contribution by employer - Benefit payments - Return on plan assets excluding interest income - As at March 31 2018 1,30,74,097 Current service cost 27,54,497 Interest cost 10,45,928 Interest income - Actuarial (gain)/loss arising from changes in assumptions -10,87,460 Contributions by employer - Benefit payments - Return on plan assets excluding interest income - As at March 31 2019 1,57,87,062



Particulars Plan Obligation

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(iii) Statement of Profit and Loss

The charge to the Statement of Profit and Loss comprises

Employee Benefit Expenses Current service cost 27,54,497 28,23,850

Past service cost - -

Interest cost 10,45,928 8,27,972

Interest income - -

Net impact on profit before tax 38,00,425 36,51,822

Remeasurement of the net defined benefit plans: Actuarial (gain)/loss arising from changes in assumptions (10,87,460) (-9,27,375)

Return on plan assets excluding interest income - -

Net impact on other comprehensive income before tax (10,87,460) (9,27,375)

Particulars 2018-19 2017-18

iv) Assets

The major category of plan assets as a % of the total plan assets

(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.

(vi) Sensitivity analysis

The sensitivity of the overall plan obligations to changes in the weighted key assumptions are :

The estimates of future salary increases, considered in actuarial valuation, takes into account inflation, seniority, promotion and other relevant factors such as supply and demand factors in the employment market.

The sensitivity analysis above have been determined based on reasonably possible changes of the respective assumptions occurring at the end of the year and may not be representative of the actual change. It is based on a change in the key assumption while holding all other assumptions constant. When calculating the sensitivity to the assumption, the same method used to calculate the liability recognised in the Balance Sheet has been applied. The methods and types of assumptions used in preparing the sensitivity analysis did not change compared with the previous year.

Unfunded Nil Nil

Discount rate 7.65% 8.00%

Salary escalation rate 12.00% 12.00%





Discount rate (1% movement) 1,75,04,903 1,43,15,916 1,19,46,891 1,43,99,134

Salary escalation rate (1% movement) 1,73,77,543 1,44,00,350 1,30,74,097 1,44,12,220

ParticularsAs at

31st March, 2019As at



31st March, 2018Increase IncreaseDecrease Decrease

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vii) Discontinuance of liability

Amount payable upon discontinuance of all employees is Rs.93,87,292/-

viii) Best estimate of contribution during the next year

The best estimate contribution of the company during the next year would be Rs.Nil since the company is not contributing to any fund.

(ix) Maturity analysis

Maturity profile of defined benefit obligation :

Within 1 year 6,75,597

1-2 year 7,91,547

2-3 year 9,31,117

3-4 year 10,54,704

4-5 year 14,59,977

5-10 year 79,45,122

Particulars As at March 31, 2019

Liability:

Towards depreciation 59,68,98,611 58,29,97,323

Asset:

On allowances under Income-tax (3,89,57,402) (3,96,11,612)

Unabsorbed losses as per Income tax Act (8,84,65,074) (11,82,84,899)

MAT Credit Entitlement (16,37,18,964) (14,12,94,087)

Total 30,57,57,171 28,38,06,725



Components

Deferred Tax

The following is the analysis of deferred tax (assets)/liabilities presented in the Balance Sheet

Movement in Deferred Tax Assets/Liabilities

Note No.16

Deferred tax liabilities/(assets) in relation to: Liability:

Depreciation 42,55,90,487 15,74,06,836 58,29,97,323 1,39,01,288 59,68,98,611

Asset:

Expenses allowable under Income tax when paid -36,28,015 -3,59,83,597 -3,96,11,612 6,54,210 -3,89,57,402

Unabsorbed Depreciation as per Income Tax Act -16,23,44,096 4,40,59,197 -11,82,84,899 2,98,19,825 -8,84,65,074

MAT credit entitlement -10,15,77,552 -3,97,16,535 -14,12,94,087 -2,24,24,877 -16,37,18,964

Net deferred tax liability 15,80,40,824 12,57,65,901 28,38,06,725 2,19,50,446 30,57,57,171

Component As at

31st March, 2017Charge/(Credit) in Statement of P&L

and OCI



Charge/(Credit) in Statement of P&L

and OCI

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Other Liabilities Note No. 17

a) Advances received from customers against supplies - - 60,39,045 10,21,800

b) Statutory Liabilities - - 55,75,882 42,30,329

c) Teak Plantation Deposits - - 58,500 58,500

d) Deferred government grants 9,10,77,012 9,56,80,161 46,03,149 46,03,149

Total 9,10,77,012 9,56,80,161 1,62,76,576 99,13,778





Non-Current Current

Note: The company received government grants in the nature of export incentives. During the year, the company received incentives under dutu draw back and MEIS 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.

A. Secured Loans repayable on demand :

Working Capital Loans :

a) Cash Credit from banks

i) From Andhra Bank 71,69,01,451 59,69,13,211

ii) From Indian Bank 61,83,55,584 51,19,98,903

III) From Bank of Baroda 4,88,09,347 4,94,28,362

B. Unsecured Loans repayable on demand :

a) From a Director 86,00,000 22,00,000

Total 1,39,26,66,382 1,16,05,40,476



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 presently @ 9.60% .

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/ Second and 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 of dyeing division and further secured by way of personal guarantee of 2 Directors .This Loan carries interest @ 11.25%.

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.

Short Term Borrowings Note No.18

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Dues to : Small and Micro Enterprises - -

: Other than Small and Micro Enterprises 6,51,26,351 8,38,55,898

Total 6,51,26,351 8,38,55,898

Provision for Income-tax 21,59,47,949 18,81,60,000

Less: Advance Income-tax and TDS 20,18,36,462 15,69,28,180

1,41,11,487 3,12,31,820





Trade Payables

Current Income-Tax Liabilities (Net)

Note No.19

Note No.20

Note: The company has no information about the status of its creditors to identify their status under Micro, Small and Medium Enterprises Development Act, 2006. Consequently, the disclosure requirements u/s 22 of the said Act has not been made.

Profit before tax 11,95,48,099 21,06,83,973

Enacted Tax Rates in India ( Under MAT) 21.55% 21.34%

Computed Tax expense 2,57,61,420 4,49,63,331

Add: Tax effects of expenses which are not deductible in determining taxable profit “

- Interest on Income Tax 3,59,077 10,36,669

Tax on Ind AS adjustments - -

Excess provision of income tax relating to earlier years - 26,739

Current Tax Provision (A) 2,61,20,497 4,60,26,739 Increase of Deferred tax liability on account of Fixed Assets 1,39,01,288 15,74,06,836

Decrease of Deferred tax Asset on account of expenses and losses 3,04,74,035 80,75,600

MAT credit entitlement -2,24,24,877 -3,97,16,535

Deferred Tax Charge (Including charge/credit to OCI) (B) 2,19,50,447 12,57,65,901

Total Tax Expense (A+B) 4,80,70,943 17,17,92,640



The current income- tax expense for the year can be reconciled to the accounting profit as follows :

Revenue from Operations

Sale of goods 3,09,21,95,277 3,10,71,21,015

Other Operating Revenue

Job work charges 1,86,231 3,19,000

Export Incentive 1,49,77,613 1,89,86,527

3,10,73,59,121 3,12,64,26,542

Particulars Year ended Year ended


Revenue From Operations Note No.21

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Interest from banks and others 46,33,244 42,73,465

(From financial assets recognised at amortised cost)

Deferred Govt. grants credited back 46,03,149 45,91,242

Credit Balances Written back 17,786 52,633

Gain on exchange fluctuations 14,27,518 5,57,577

Miscellaneous receipts 33,91,335 18,47,811

TOTAL 1,40,73,032 1,13,22,728



Other Income

Revenue from Operations from sale of goods include:

Note No.22

i) Cotton Yarn 62,41,574 1,51,78,82,661 64,29,493 1,51,08,97,417

ii) OE Yarn 53,55,285 71,33,86,805 60,26,546 78,42,55,542

iii) Cotton Waste 23,00,864 12,85,64,180 23,96,344 15,51,07,247

iv) OE Waste 11,11,863 1,50,66,145 10,80,815 1,74,97,843

v) Cotton Seed 80,66,756 16,21,94,466 92,91,664 16,03,54,101

vi) Cotton Lint 40,40,225 50,17,62,828 45,19,922 51,50,25,547

vii) Damaged Kappas 23,045 5,76,125 52,900 2,18,213

viii) Sale of Gray Fabric (Mtrs) 2,50,85,324 1,57,17,07,953 2,46,12,847 1,53,99,60,020

ix) Sale of Fabric Waste 1,41,524 58,12,032 1,68,248 59,03,630

x) Sale of Dyed Fabric (Mtrs) 27,40,134 26,01,68,150 33,41,032 31,73,05,733

xi) Sale of Dyed Yarn (Kgs) 5,36,681 19,14,61,503 5,59,820 20,79,95,581

xii) Sale of cut pieces cloth and shirts 702 1,61,996 479 7,68,299

xiii) Gray Yarn 13,20,955 34,00,15,284 7,33,538 17,86,76,908

xiv) Sale of Power (KWH) 38,39,254 1,83,10,472 24,53,066 1,16,57,377

5,42,70,70,600 5,40,56,23,458 Less: Inter divisional transfers

Cotton Yarn 39,90,555 1,07,15,10,087 42,42,926 1,10,95,57,267

OE yarn 7,62,433 10,87,45,464 10,53,411 14,31,56,005

Dyed yarn 5,36,681 19,14,61,503 5,54,920 20,37,82,928

Gray Yarn 13,20,955 34,00,15,284 7,33,538 17,86,76,908

Cotton Waste 19,92,581 12,13,80,157 21,60,973 14,83,03,788

Cotton Lint 40,40,225 50,17,62,828 45,19,922 51,50,25,547

2,33,48,75,323 2,29,85,02,443 TOTAL 3,09,21,95,277 3,10,71,21,015

ParticularsYear ended 31st March, 2019 Year ended 31st March, 2018

Qty(kgs.) Qty(kgs.) Revenue Revenue

Note: Deferred govt. grant credited back represents amount recognised as income in proportion to the amount of depreciation charged to the Statement of Profit and Loss in respect of assets on which grants were received.

3



Opening Stock 42,43,13,542 41,05,26,421

Add: Purchase of Raw Material 1,77,86,11,075 1,71,66,31,724

2,20,29,24,617 2,12,71,58,145 Less : Closing Stock 43,78,72,019 42,43,13,542

TOTAL 1,76,50,52,598 1,70,28,44,603

Cotton Kappas, Lint, Yarn and waste 1,76,50,52,598 1,70,28,44,603

TOTAL 1,76,50,52,598 1,70,28,44,603

Opening work-in-progress 29,57,80,513 24,48,99,557

Opening Finished goods 15,11,94,791 16,35,77,558

44,69,75,304 40,84,77,115 Closing work-in-progress 40,04,20,565 29,57,80,513

Closing Finished goods 11,86,22,893 15,11,94,791

51,90,43,458 44,69,75,304 Increase in inventories 7,20,68,154 3,84,98,189

Salaries and Wages 19,97,92,107 19,91,80,914

Contribution to provident and other funds 48,90,794 48,54,301

Staff welfare expenses 22,76,007 13,38,824

Contribution towards group gratuity 28,74,287 32,62,858

TOTAL 20,98,33,195 20,86,36,897









Cost of Materials Consumed

Components of material consumed

Changes in inventories of work -in- progress

Employee benefit expenses

Note No.23

Purchase of stock-in-trade Note No.24

Note No.25

Note No.26

Yarn 1,91,215 2,30,94,432 - -

TOTAL 1,91,215 2,30,94,432 - -

ParticularsYear ended

31st March, 2019Year ended

31st March, 2018Qty(Kgs) Qty(Kgs)Amount Amount

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Interest paid to banks and others 33,20,25,433 36,51,45,966

Interest on Income - Tax 16,67,452 37,38,818

Other Borrowing Costs 23,37,867 22,25,715

Total Interest Cost 33,60,30,752 37,11,10,499 Less: Subsidy under TUF Scheme 5,57,20,143 6,96,40,993

Interest subsidy from AP Government 7,43,20,044 8,26,36,400

TOTAL 20,59,90,565 21,88,33,106

Depreciation and Amortization 15,68,35,871 14,19,46,320

TOTAL 15,68,35,871 14,19,46,320

Consumption of Stores and Spares 16,98,66,742 17,92,48,222

Processing charges paid 4,74,770 26,55,720

Power and Fuel (Net of power subsidy) 36,22,33,173 34,47,29,085

Repairs and Maintenance: Buildings 22,00,540 13,58,036

Machinery 6,82,23,524 5,50,02,614

Others 13,53,638 10,70,606

Insurance 39,98,154 40,23,651

Loading and Unloading charges 3,74,81,585 3,34,77,707

Commission on Sales 2,39,98,751 3,07,38,838

Rents - Office 1,04,050 1,33,910

Rates and taxes 74,14,567 76,56,767

Payments to auditors

- Statutory audit 2,75,000 2,75,000

- Tax audit and taxation matters 50,000 50,000

- Towards certication and other matters 1,50,000 -

- Cost audit 30,000 30,000

Directors Sitting Fee 3,45,000 4,50,000

Donations 2,85,000 35,000

CSR expenses 35,48,806 29,36,681

Miscellaneous expenses 3,06,84,950 2,89,58,078

Loss on sale of assets 17,451 4,64,465

Debit Balances written off 4,09,846 8,180

TOTAL 71,31,45,547 69,33,02,560







Finance costs

Depreciation and amortisation

Other expenses

Note No.27

Note No.28

Note No.29

3



i) Stores & Spares 59,14,301 2,64,06,803

ii) Capital goods 43,23,905 1,27,92,938

a) Commission On Yarn & Fabric Sales 53,41,965 39,64,067

b) Foreign Travel 11,05,892 7,38,687

a) Estimated amounts of contracts remaining to be Executed on Capital accounts, and not provided for - 6,45,300

b) State levies on Electricity 35,67,626 37,20,543

c) Income-tax 95,49,290 -

d) Entry Tax 2,34,726 -

a) Raw material:

Imported 24,31,61,216 13.78 2,32,19,631 1.36

Indigenous 1,52,18,91,382 86.22 1,67,96,24,972 98.64

Total 1,76,50,52,598 100.00 1,70,28,44,603 100.00b) Spares & Components:

Imported 1,57,51,855 9.27 2,03,07,805 11.33

Indigenous 15,41,14,887 90.73 15,89,40,417 88.67

Total 16,98,66,742 100 17,92,48,222 100







Particulars Year ended % Year ended %


CIF value of imports

Expenditure incurred in Foreign Currency

Contingent liabilities not provided for:

Balances in personal accounts of various parties are subject to confirmation by and reconciliation with the said parties.

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

Comparision between consumption of imported and indigenous raw materials Spares and components

Note No.30

Note No.32

Note No.33

Note No.34

Note No.35

Note No.31

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2) Relatives of Key managerial Personnel who are under employment with the company:

1. Poluri Govardhana Reddy, Son of P.Venkateswara Reddy

2. M.Srinvivasa Nagarjuna Reddy, Son of M.V.Subba Reddy

3) Companies controlled by Key managerial personnel/Relatives 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:

I. Details of Transactions:

a. Remuneration Paid:

1. P.Venkateswara Reddy, MD 44,51,162 -Short term employment benefits 39,67,569 -Post employment benefits 4,83,593

2. G.V.Krishna Reddy, JMD 42,17,690 -Short term employment benefits 39,66,921 -Post employment benefits 2,50,769

3. M.V.Subba Reddy,WTD 12,08,438 -Short term employment benefits 10,16,664 -Post employment benefits 1,91,774

Total 98,77,290

b. Salary paid:

1. P. Govardhan Reddy 5,66,400

2. M. Srinivas Nagarjuna Reddy 2,50,611

c. Sale of Goods and Services:

1. Kallam Brothers Cottons Pvt Ltd- Testing & Sale of Fabric 2,77,880

2. Kallam Agro products and Oils Pvt. Ltd Seed Sales 8,76,89,898

d. Purchases of Goods and Services:

1. Kallam Brothers Cottons Pvt Ltd- Lint & Yarn Purchase 2,51,57,727

Commission 2,280

II. Balance as at 31-03-2019:

a) Unsecured loans from:

1. P.Venkateswara Reddy, MD 1,71,55,000

2. G.V.Krishna Reddy, JMD 85,40,000

3. M.V.Subba Reddy, WTD 38,50,000

Total 2,95,45,000

b) Remuneration payable to:

1. P.Venkateswara Reddy, MD 8,12,904

2. G.V.Krishna Reddy, JMD 9,36,689

3. M.V.Subba Reddy, WTD 1,82,026

Total 19,31,619

d)Trade dues from:

1. Kallam Brothers cottons pvt Ltd., Guntur 1,04,034

2. Kallam Agro Products and Oils pvt Ltd., Guntur 22,56,678

III. Sitting fees paid to Non-executive and Independent directors

1. Ajeya Kallam 60,000

2. Varanasi Ramgopal 60,000

3. Pulla Rao Swargam 75,000

4. Vangala Bhargavi 75,000

5. Suryanarayana Murthy Vaddadi 75,000 (Non-executive nominee director)

3



Segment Information:

Corporate Social Responsibility

Note No.36

Note No.37

Segment Revenue: 1. Spinning 24,162.18 24,834.56

2. Weaving 18,529.00 18,794.94

3. Dyeing 5,316.63 3,869.91

4. Power 183.10 116.67 48,190.91 47615.98Less: Inter segment Revenue 17,117.32 16,351.72 Net Revenue from Operation 31,073.59 31,264.26

Segment Results (Profit before Tax and Interest) 1. Spinning 1,612.71 2,655.36

2. Weaving 1,583.61 1,618.51

3. Dyeing 47.87 33.84

3. Power 11.20 -12.55 3,255.39 4,295.16 Less: Interest (net) 2,059.91 2,188.33

Net Profit Before Tax 1,195.48 2,106.83Capital Employed: (Segment Assets-Segment Liabilities)

1. Spinning 23,311.88 25,460.89 2. Weaving 15,091.25 15,883.63

3. Dyeing 1,070.08 1,270.65

4. Power 1,146.71 1,432.32

Total 40,619.92 44,047.49Capital Expenditure:1. Spinning 412.71 611.10

2. Weaving 496.32 425.83

3. Power 0.00 0.00

4. Dyeing 0.00 3.86

Depreciation:1. Spinning 716.48 618.47

2. Weaving 699.37 663.77

3. Dyeing 77.94 63.34

4. Power 74.56 73.87

Particulars (Amount in Lacs)

Year 2018-19 Year 2017-18

Amount required to spent during the year 35,25,781 28,18,112

Amount actually spent 35,48,806 29,36,681

Short Fall NIL NIL



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Disclosure as per Regulation 53(F) of Securities Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015:

Foreign exchange earnings

Dividend: (Subsequent event)

Category-wise classification of Financial instruments

Fair value hierarchy

Note No.38

Note No.39

Note No.40

Note No.41

Note No.42

i) Loans and advances in the nature of loans given to Companies in which Directors are interested ` Nil (March 31, 2018: ` Nil)

ii) Details of investments made under Section 186 of the Companies Act, 2013 Rs. Nil. There are no loans / guarantees issued under Section 186 of the Companies Act, 2013.

The Carrying amounts and fair value of financial instruments by categories as at 31st March, 2019 and 31st March, 2018 are as follows:

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.

Foreign exchange earnings on exports during the year calculated on FOB basis ` 61,22,03,244/- (Previous year ` 89,04,12,531)

a) Dividend paid for the financial year 2017-18 @ Rs.0.20/share ` 85,63,875 Dividend distribution tax paid on final dividend ` 17,60,733

b) The Board of directors at its meeting held on 11.5.2019 have recommended a dividend Rs. 0.20/ share of face value of Rs. 2/- each (i.e 10% dividend) for the financial year ended 31.03.2019. The above is subject to approval at the ensuing Annual general meeting of the company and hence not recognized as a liability.

Financial assets Measured at Amortised cost (i) Loans and advances 6,58,06,163 6,50,18,106 6,58,06,163 6,50,18,106

(ii) Other financial assets 6,15,788 4,500 6,15,788 4,500

(iii) Trade receivables 22,26,93,176 22,77,96,003 22,26,93,176 22,77,96,003

(iv) Cash and cash equivalents 40,87,506 75,99,878 40,87,506 75,99,878

(v) Other bank balances 27,45,284 54,01,676 27,45,284 54,01,676

Total assets 29,59,47,917 30,58,20,163 29,59,47,917 30,58,20,163 Financial liabilities Measured at Amortised cost (i) Borrowings (including current 3,17,72,59,472 3,17,02,76,041 3,17,72,59,472 3170276041 maturities of Long term borrowings)

(ii) Other financial liabilities 7,71,30,252 9,71,70,484 7,71,30,252 9,71,70,484

(iii) Trade payables 6,51,26,351 8,38,55,898 6,51,26,351 8,38,55,898

Total liabilities 3,31,95,16,075 3,35,13,02,423 3,31,95,16,075 3,35,13,02,423





Carrying value Fair value

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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.

Financial instruments measured at Amortised cost

The carrying amount of financial assets and financial liabilities measured at amortized cost in the financial statements are a reasonable approximation of their fair values since the company does not anticipate that the carrying amounts would be significantly different from the values that would eventually be received or settled.

Financial Risk Management Note No.43

The Company’s financial liabilities comprise mainly of borrowings, trade payables and other payables. The Company’s 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 referes to the risk that the counterparty will default on its contractual obligations resulting in financial loss to the company. It encompasses of both the direct risk of default and the risk of deterioration of creditworthiness as well as concentration of risks. The company is exposed to credit risk from its operting activities mainly from trade receivables. 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. Credit quality of a customer is assessed based on a detailed study of credit worthiness and accordingly Individual risk limits are defined.

Receivables from customers

Concentration 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. The history of trade receivables shows a negligible provision for bad and doubtful debts. Therefore, the company does not have any significant concentration of credit risk related to trade receivables. No single party contributes more than 10% of outstanding receivables as on date of balance sheet.

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, 2019 and March 31, 2018 is the carrying value of each class of financial assets.

B. Foreign currency risk management

Foreign 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.

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The carrying amounts of the company’s foreign currency denominated monetary items are as follows :

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.10,67,808/- gain in the Statement of Profit and Loss. A 5% weakening of the INR against these currencies would have led to an equal but opposite effect.

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, 2019 and March 31, 2018 . 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.

The company requires funds both for short-term operational needs as well as long term investment programmes mainly in growth projects.

The table summarises the maturity pattern of the company’s financial liabilities based on contractual undiscounted payments.

Assets : Trade Receivables 2,36,08,929 7,70,16,192

Liabilities : Trade and Other Payables 22,52,778 6,92,656

Net Assets / (Liabilities) 2,13,56,151 7,63,23,536

Particulars 31st March, 2019 31st March, 2018

As on 31.3.2019Long term borrowings 32,02,20,062 1,46,43,73,028 - 1,78,45,93,090

Short term borrowings (Repayable on demand) 1,39,26,66,382 - - 1,39,26,66,382

Trade payables 6,51,26,351 - - 6,51,26,351

Other financial liabilities 7,71,30,252 - - 7,71,30,252

As on 31.3.2018Long term borrowings 25,36,66,950 1,75,60,68,613 - 2,00,97,35,563

Short term borrowings (Repayable on demand) 1,16,05,40,476 - - 1,16,05,40,476

Trade payables 8,38,55,898 - - 8,38,55,898

Other financial liabilities 9,71,70,484 - - 9,71,70,484

Particulars

Amount (`)

within 1 year

Amount

> than 5 years

Amount

1-5 years

Amounts

Total

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D. Interest risk

Interest rate risk is the risk that the fair value of future cash flows of the financial instruments will fluctuate because of changes in market interest rates. In order to optimize the Company’s position with regards to interest income and interest expenses and to manage the interest rate risk, the managment performs a comprehensive corporate interest rate risk management by balancing the proportion of fixed rate and floating rate financial instruments in its total portfolio.

According to the Company, interest rate risk exposure is only for floating rate borrowings. For floating rate liabilities, the analysis is prepared assuming the amount of the liability outstanding at the end of the reporting period was outstanding for the whole year. A 50 basis point increase or decrease is used when reporting interest rate risk internally to key management personnel and represents management’s assessment of the reasonably possible change in interest rates.

Capital Management

Equity 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. The funding requirement is met through a mixture of equity, internal fund generation and other non current borrowings. The company monitors capital using geraing ratio which is net debt divided by total capital plus net debt.

Total Borrowings 3,17,72,59,472 (All the said loans are with floating rate of interest)

Interest rate sensitivity

A change of 50 bps in interest rates would have following Impact on profit before tax

An increase in 50 bps will decrease the profit by 1,65,02,152 A decrease in 50 bps will increase the profit by 1,65,02,152

Particulars As at 31.3.2019

Interest bearing loans and borrowings 3,17,72,59,472 3,17,02,76,039 (Long term and short term borrowings)

Total debt 3,17,72,59,472 3,17,02,76,039

Equity share capital 8,56,38,750 8,56,38,750

Other equity 98,29,14,556 92,56,09,215

Total capital 1,06,85,53,306 1,01,12,47,965

Total debt and capital 4,24,58,12,778 4,18,15,24,004 Capital geraing ratio (Debt/Total debt and capital) (in %) 74.83 75.82

Basic and Diluted Earning per share: No. of shares at the beginning of the year 4,28,19,375 3,42,55,500

Increase on account of Bonus Issue - 85,63,875

Total Weighted average number of shares at the end of the Year 4,28,19,375 4,28,19,375

Net Profit after tax before OCI as per Statement of Profit and Loss 6,65,42,490 15,67,29,554

Basic and diluted Earning per share 1.55 3.66



Calculation of Earnings per Share : Note : 44

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Notice hereby given that the 27thAnnual General Meeting of Kallam Textiles Limited (Formerly known as Kallam Spinning Mills Limited), scheduled to be held on Saturday, September 21, 2019 at 3-00p.m. at the registered office of the Company NH-5, Chowdavaram, Guntur- 522019, to transact the following business.

ORDINARY BUSINESS

1. Adoption of Financial Statements and the reports of the Directors and Auditors thereon

To receive, consider and adopt the audited Financial Statements for the financial year ended 31.03.2019 together with the reports of Directors’ and Auditors’ thereon.

2. Declaration of Final Dividend on equity shares.

To declare Final dividend of ̀ 0.20 for equity shares for the financial year 2018-19.

3. Appointment of Director under Retirement by Rotation

To appoint a Director in place of Mr. G. V. Krishna Reddy (DIN:00018713), Mr. G.V. Krishna Reddy is liable to retire by rotation in terms of Section 152(6) of the Companies Act, 2013 and, being eligible, offers himself for re-appointment.

SPECIAL BUSINESS:

4. Re-appointment of Ms. VANGALA BHARGAVI (DIN 06950741) as an Independent Director of the Company for the second term.

To consider and, if thought fit, to pass, with or without modification, the following resolution as a Special Resolution:

“RESOLVED THAT pursuant to recommendation of the Nomination and Remuneration Committee and approval of the Board of Directors in their respective meetings held on May 11, 2019 and in terms of Sections 149, 150, 152 and any other applicable provisions of the Companies Act, 2013 (“Act”) and the Companies (Appointment and Qualification of Directors) Rules, 2014 (including any statutory modification(s) or re-enactment thereof for the time being in force) read with Schedule IV to the Act and Regulation 16(1)(b) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, Ms.VANGALA BHARGAVI (DIN:06950741, Independent Non-Executive Director of the Company who has submitted a declaration that she meets the criteria of independence as provided in Section149(6) of the Act and Regulation 16 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, as amended, from time to time and who is eligible for reappointment, be and is hereby re- appointed as an Independent Non-Executive Director

of the Company to hold office for second term of five consecutive years on the Board of Company with effect from September 26, 2019 upto September 25, 2024 not liable to retire by rotation.

RESOLVED FURTHER THAT Mr. P Venkateswara Reddy, The Managing Director of the Company, be and are hereby authorized to do all acts, deeds and things including filings and take steps as may be deemed necessary, proper or expedient to give effect to this Resolution and matters incidental thereto.”

5. Appointment of Mr.VSN Murthy (DIN 00021952) as an Independent Director of the Company

To consider and, if thought fit, to pass, with or without modification, the following resolution as a Special Resolution:

“RESOLVED THAT pursuant to the provisions of Section 149 read with Schedule IV and all other applicable provisions of the Companies Act, 2013 (“the Act”) and pursuant to Regulation17(1A) of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 and the applicable provisions of the Companies Act, 2013 and relevant Rules framed thereunder (including any statutory modification(s)/ amendment(s) / re- enactment (s) thereto), Mr.VSN Murthy (DIN:00021952), Non- Executive Nominee Director (IREDA), aged 80 years, and whose fresh appointment as non executive/independent director, requires approval of Members by way of Special Resolution, the consent of shareholders be and is hereby accorded to the appointment of Mr.VSN Murthy (DIN00021952), as a ‘Non-Executive Independent Director’ of the Company, to hold office for a period of Five years with effect from September 21, 2019 up to September 20, 2024 not liable to retire by rotation.

RESOLVED FURTHER THAT Mr. P Venkateswara Reddy, The Managing Director of the Company, be and are hereby authorized to do all acts, deeds and things including filings and take steps as may be deemed necessary, proper or expedient to give effect to this Resolution and matters incidental thereto.”

6. To ratify the remuneration of the Cost Auditors for the financial year ending 31st March, 2020

To consider and, if thought fit, to pass, with or without modification, the following resolution as an Ordinary Resolution:

“RESOLVED THAT pursuant to the provisions of Section 148 and all other applicable provisions, if any, of the Companies Act, 2013 and the Companies (Audit and Auditors) Rules, 2014 (including any statutory modification(s) or re-enactment thereof, for the time being in force), the remuneration not exceeding ` 20,000

NOTICE TO SHAREHOLDERS

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(Rupees Twenty Thousand only) plus taxes asapplicable and reimbursement of actual travel and out-of-pocket expenses for the financial year ending 31st March, 2020 to be paid to M/s. SAIRAM & ASSOCIATES, Cost Accountants, (Membership No. 41498) appointed by the Board of Directors of the Company to conduct the audit of the cost records of the Company for FY 2019-20, be and is hereby ratified and confirmed.

RESOLVED FURTHER THAT the Board of Directors of the Company (including any Committee thereof) be and is hereby authorized to do all such acts, deeds and things and take all such steps as may be necessary, proper or expedient to give effect to this resolution.

7. To increase in the Authorized Share Capital of the Company and consequential amendments of the Capital Clause in the Memorandum of Association of the Company.

To consider and, if thought fit, to pass, with or without modification, the following resolution as an Ordinary Resolution.

“RESOLVED THAT pursuant to the provisions of Section 13, 61 and 64 and other applicable provisions of the Companies Act, 2013 (including any amendment thereto or re-enactment thereof) and the rules framed there under, the consent of the members of the Company be and is hereby accorded to increase the Authorized Share Capital of the Company from existing Rs. 10,00,00,000 (Rupees Ten Crores) divided into 5,00,00,000 (Five crore) Equity Shares of Rs. 2/- each to Rs. 20,00,00,000 (Rupees Twenty crores) divided into 10,00,00,000 (Ten crores) Equity Shares of Rs. 2/- each by creation of additional 5,00,00,000 (Five Crore) Equity Shares of Rs. 2/- each ranking pari passu in all respect with the existing Equity Shares of the Company;

RESOLVED FURTHER THAT the Memorandum of Association of the Company be and is hereby, altered by substituting the existing Capital Clause(Clause V) with the following:

Clause -V. The Authorized Share Capital of the Company is Rs. 20,00,00,000 (Rupees Twenty crores) divided into 10,00,00,000 (Ten Crores) Equity Shares of Rs. 2/- each.

The Company shall have power to increase or reduce the capital to consolidate or subdivide the shares and issue shares of higher and lower denomination, to issue any shares including preference shares, with special rights or privileges as to voting, dividend, repayment of capital or otherwise, or to subject the shares to any restrictions, limitations and conditions and to vary, modify or abrogate any such rights, privileges, restrictions, or conditions. The rights of the holders of any class of shares for the time being forming part of the capital of the Company, may be modified, affected, varied, extended or surrendered in such manner as may for the time being be provided by the regulations of the Company and to vary modify or amalgamate any such rights privileges or condition in such manner as any for the time being provided by the regulation of the company.

RESOLVED FURTHER THAT Mr. P Venkateswara Reddy, the managing Director of the Company, be and

are hereby severally authorized to file, sign, verify and execute all such e- forms, papers or documents, as may be required and do all such acts, deeds, matters and things as may be necessary and incidental for giving effect to this Resolution”.

Notes:

1. An Explanatory statement pursuant to Section 102(1) of the Companies Act, 2013, in respect of item nos. 4 to 7 of the Notice set out above, is annexed hereto.

2. A MEMBER ENTITLED TO ATTEND AND VOTE AT THE MEETING IS ENTITLED TO APPOINT A PROXY TO ATTEND AND VOTE INSTEAD OF HIM/ HERSELF AND THE PROXY NEED NOT BE A MEMBER OF THE COMPANY. A person can act as proxy on behalf of members not exceeding 50 (fifty) and holding in the aggregate not more than 10% of the total share capital of the Company carrying voting rights. However a member holding more than 10% of the total share capital of the Company carrying voting rights may appoint a single person as proxy and such person cannot act as a proxy for any other person or shareholder.

3. The instrument of Proxy in order to be effective, should be deposited at the Registered/Corporate office of the Company, duly completed and signed, not less than 48 hours (i.e. on or before September 19, 2019, 3.00 P.M. IST) before the commencement of the meeting. A Proxy form is sent herewith. Proxies submitted on behalf of the Companies, Societies etc., must be supported by an appropriate resolution/authority, as applicable.

4. In case of joint holder attending the Meeting, only such joint holder who is higher in the order of names will be entitled to vote.

5. Corporate Members intending to send their authorized representative to attend the Annual General Meeting, pursuant to Section 113 of the Companies Act, 2013, are requested to send to the Company, a certified copy of the relevant Board Resolution together with the respective specimen signatures of those representative(s) authorized under the said resolution to attend and vote on their behalf at the Meeting.

6. Members, Proxies and Authorized representatives are requested to bring to the Meeting, the attendance slips enclosed herewith duly completed and signed mentioning therein details of their DP ID and Client ID/ Folio No.

7. M/ s Big Share Service Private Limited is the Registrar and Share Transfer Agent of the Company.

8. The register of members and share transfer books of the Company shall remain closed from September 13, 2019 to September 21, 2019 (both days inclusive) for determining the names of the members eligible for voting at the Meeting. The members whose names appear on the Company’s register of members as on September 13, 2019 will be eligible to attend and vote at the Meeting.

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9. The dividend as recommended by the Board of Directors, if approved by the Shareholders at the 26thAnnual General Meeting, will be paid within 30 days from the date of declaration to those members whose names stand on the Register of Members of the Company as on the closing hours of business on September 12, 2019, and the dividend in respect of shares held in dematerialized form in the depository system will be paid to the beneficial owners of the shares as on the closing hours of business on September 12, 2019, as per the details furnished by the National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL).

10. The notice is being sent to all the members of the Company,whose names appear on the register of members/ record(s) of depositories as on Tuesday, the August 27, 2019.

11. Copy of the Annual Report 2018-19 including the Notice of the 27thAGM of the Company inter alia indicating the process and manner of e-voting along with the Attendance Slip, Proxy Form will be sent by electronic mode to the members whose email addresses are registered with the Company/ Depository Participant(s), unless any member has requested for a hard copy of the same. For members who have not registered their email addresses, physical copy of the Annual Report 2018-19 including the Notice of the AGM are being sent by the permitted mode.

12. Members may also note that the Notice of the Twenty Seventh Annual General Meeting and the Annual Report for year ended March 31, 2019 will also be available on the Company’s website www.ksml.in for their download. The physical copies of the aforesaid documents will also be available at the Company’s Registered Office in Guntur for inspection during normal business hours on working days. Even after registering for e- communication, members are entitled to receive such communication in physical form, upon making a request for the same, by post free of cost. For any communication, the members may also send requests to the Company’s email id: “corp @ksml.in”. The Company has a dedicated e-mail address [email protected] for members to mail their queries or lodge complaints, if any. We will endeavour to reply to your queries at the earliest

13. The Register of Directors and Key Managerial Personnel and their shareholding, maintained under Section 1 70 of the Companies Act, 2013, will be available for inspection by the members at the AGM.

14. The Register of Contracts or Arrangements in which the Directors are interested, maintained under Section 189 of the Companies Act, 2013, will be available for inspection by the members at the AGM.

15. Additional information pursuant to Regulation 36(3) of the SEBl (Listing Obligations and Disclosure Requirements) Regulations, 2015 in respect of the directors seeking appointment/re-appointment at the ensuing Annual General Meeting is furnished and

forms part of the Notice. The Directors have furnished the requisite declarations for their appointment/ re-appointment.

16. Members desiring to seek any information on the Annual Accounts to be explained at the meeting are requested to send their queries in writing to the Company at the Registered Office of the Company so as to reach at least 7 days before the date of the meeting to provide the required information.

17. The accounts, the reports and all other documents required under the law to be annexed thereto will be available for inspection between 10.00 a.m. to 01.00 p.m. at the Registered Office of the Company on any working day prior to the date of the Annual General Meeting.

18. Pursuant to Section 72 of Companies Act, 2013, member(s) of the Company may nominate a person in whom the shares held by him/ her/them shall vest in the event of his/ her/ their unfortunate death. Member(s) holding shares in physical form may file nomination in the prescribed Form SH-13 and any variation/ cancellation thereof can be made by giving notice in Form SH-14, as prescribed under the Companies (Share Capital and Debentures) Rules, 2014 with the Share Transfer Agent of the Company. The Forms can be obtained from the Share Department of the Company or Share Transfer Agent or from the Website of the Ministry of Corporate Affairs at www.mca.gov.in. In respect of shares held in dematerialized form, the nomination form may be filed with the respective Depository Participant.

19. Members eligible to receive dividend and whose shareholding is in electronic mode are requested to direct change of address notifications and updates of bank account details to their respective depository participant(s). We urge the members to utilize the Electronic Clearing System (ECS) for receiving dividendsMembers holding shares in physical form are requested to notify/ send the following to the Company‘s Registrar and Transfer Agent at: Big share Services Private Limited, 306, 3rd Floor, Right Wing, Amrutha Ville, Opp. Yashodha Hospital, Raj Bhavan Road, Somajiguda, Hyderabad -500 082 at the earliest not later than 15th September, 2019.

• Any change in their address/mandate/ Bank details; and

• Particular of their Bank Account, in case the same has not been sent earlier.

In order to update their Bank details already registered with Big share Services Pvt Ltd or register their bank details by submitting the duly completed Electronic Clearing Services (ECS) mandate form duly attached to this annual report and fill the required fields and forward the same to the above mentioned address of Company’s Registrar and Share Transfer Agent in order to enable the company to remit the Dividend amount through ECS.

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20. Members holding shares in the electronic form are advised to inform change in address/bank mandate directly to their respective Depository Participants. The address/bank mandate as furnished to the Company by the respective Depositories viz. NSDL and CDSL will be printed on the dividend warrant. SEBI has mandated the submission of Permanent Account Number (PAN) by every participant in securities market. In view thereof, members who have not furnished PAN are requested to furnish the same as under :

21. Members holding shares in Physical form are submit their PAN details to the Registrar and Transfer Agents Members holding shares in Electronic form are submit their PAN details to their Depository Participants with whom they are maintaining their de mat accounts. and for securities market transactions and off market transactions involving transfer of shares in physical form of listed companies, it shall be mandatory for transferee(s) to furnish a copy of PAN Card to the Share Transfer Agent for registration of such transfer of shares.

22. As a part of ”green initiative in the corporate governance”, the ministry of corporate affairs vide its circular no’s.17/ 2011 and 1/ 2011 dated 21.04.2011 respectively, has permitted the companies to serve the documents, namely, notice of the general meeting, balance sheet, profit and loss account, auditors’ report, directors‘ report, etc. to the members through E-mail. The shareholders holding shares in physical form are requested to register their E-mail address with the Registrar and share transfer agents (Big Share Services Pvt. Ltd.,) by sending duly signed requested letter quoting their Registered folio no., name, address and E-mail ID to be registered in the E-MAIL REGISTRATION FORM, which is attached along with this Notice and in case of shares held in demat form, the shareholders may register their E-mail addresses with their DPs (Depository Participants).

SHARE HOLDERS INSTRUCTIONS FOR E-VOTING

Instructions for Voting through electronic means:

In compliance with the provisions of Section 108 of the Companies Act, 2013 and Rule 20 of the Companies (Management and Administration) Rules, 2014, the Company has also provided e-voting facility through Central Depository Services (India) Limited (CDSL) for its members to enable them to cast their votes electronically on all resolutions set forth in the notice conveningthe 27th Annual General Meeting held on Saturday, September 21, 2019 at 3.00 p.m. IST

EVEN (E—VOTING EVENT NUMBER): 190816030

i) The e-voting period begins on Wednessday, September 18, 2019 at 9.00 a.m. (IST) and ends on Friday, September 20, 2019 at 5.00 p.m. (IST). During this period, shareholders of the Company, holding shares either in physical form or in dematerialized form, as on the cut-off date i.e. Saturday, September 14, 2019 may cast their votes electronically. The e- voting module shall be disabled by CDSL for voting

after 5.00 pm. (IST) on Friday, September 20, 2019.

ii) The shareholders should log on to the e-voting website: www.evotingindia.com iii) Click on “Shareholders” tab to cast your vote.

iv) Now Enter your User ID

a) For CDSL: 16 digits beneficiary ID,

b) For NSDL: 8 Character DP ID followed by 8 Digits Client ID

c) Members holding shares in Physical Form should enter Folio Number registered with the Company.

v) Next enter the Image Verification as displayed and Click on Login.

For Members holding shares in Demat Form and Physical Form

PAN* Enter your 10-digit alpha—numeric PAN issued by Income Tax Department (Applicable for both demat shareholders as well as physical shareholders)

• Members who have not updated their PAN with the Company/ Depository

Participant are requested to use the first two letters of their name and the 8 digits of the sequence number in the PANfield.

• In case the sequence number is less than 8 digits enter the applicable number of 0’s before the number after the first two characters of the name in CAPITAL letters. Eg. If your name is Ramesh Kumar with sequence number 1 then enterRA00000001 in the PAN field.

Date of Enter the Date of Birth (in dd/mmBirth (DoB) yyyy format) as recorded in your

demataccount or in the company records for the said demat account or folio no.

Dividend, Enter the Dividend Bank Details asBank recorded in your demat account or intheDetails company records for the said demat

account or folio no. If both the details are not recorded with

the depository or company pleaseenter the member id / folio number in the Dividend Bank details field asmentioned in instruction (iv).

vi) If you are holding shares in demat form and had logged on to www.evotingindia.com and voted on an earlier voting of any Company, then your existing password is to be used.

vii) If you are a first time user, follow the steps given below:

viii) After entering these details appropriately, click on ”SUBMIT” tab.

ix) Members holding shares in physical form will

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then directly reach the Company selection screen. However, members holding shares in demat form will now reach ‘Password Creation’ menu wherein they are required to mandatorily enter their login password in the new password field. Kindly note that this password is also to be used by the demat holders for voting for resolutions of any other company on which they are eligible to vote, provided that company opts for e-voting through CDSL platform. It is strongly recommended not to share your password with any other person and take utmost care to keep your password confidential.

x) For Members holding shares in physical form, the details can be used only for e-voting on the resolutions contained in this Notice.

xi) Click on the EVSN along with”Kallam Textiles Limited” from the drop down menu and click on ”SUBMIT”.

xii) On the voting page, you will see ”RESOLUTION DESCRIPTION” and against the same, the option “YES/ NC)” for voting. Select the option YES or NO as desired. The option YES implies that you assent to the Resolution and option NO implies that you dissent to the Resolution.

xiii) Click on the “RESOLUTIONS FILE” link if you wish to view the entire Resolution details.

xiv) After selecting the resolution you have decided to vote on, click on ”SUBMIT”. A confirmation boxwill be displayed. If you wish to confirm your vote, click on ”OK”, else to change your vote, click on”CANCEL” and accordingly modify your vote.

xv) Once you “CONFIRM” your vote on the resolution, you will not be allowed to modify your vote.

xvi) You can also take out print of the voting done by you by clicking on “CLICK HERE TO PRINT” optionon the Voting page.

xvii) If you as a Demat account holder have forgotten the existing password, then enter the User ID and the image verification code and click on Forgot

Password & enter the details as prompted by the system.

xviii) Share holders can also cast there vote using CDSLs’ mobile app m-voting available for android based mobiles. The m-voting app can be downloaded from google play store. Please follow the instructions as prompted by the mobile app while voting on your mobile.

xix) Note for Non Individual Shareholders and Custodians :

a. Non-Individual shareholders (i.e. other than Individuals, HUF, NRI etc.) and Custodians are required to log on to www.evotingindia.com and register themselves as Corporates and Custodians respectively

b. A scanned copy of the Registration Form bearing the stamp and sign of the entity should be emailed to [email protected]

c. After receiving the login details, a compliance user should be created using the admin login andpassword. The Compliance user would be able to link the account(s) for which they wish to vote on.

d. The list of accounts should be mailed to [email protected] and on approval of theaccounts, they would be able to cast their vote.

e. A scanned copy of the Board Resolution and Power of Attorney (POA) which they have issued infavour of the Custodian, if any, should be uploaded in PDF format in the system for the scrutinizerto verify the same.

xx) In case You have any queries or issues regarding e-voting, You may refer the Frequently AskedQuestions (”FAQs”) and e-voting manual available at www.evotingindia.com, under help section orwrite an email to [email protected]

xxi) M/ s K. Srinivasa Rao & Co. Company Secretaries, Guntur (Entity ID : 34721) has been appointed as the Scrutinizer to Scrutinize the e-voting process in a fair and transparent manner.

By the order of Board of Directors

Sd/- Place : Chowdavaram, Guntur Nandan Bisoi

Date : 14-08-2019 Company Secretary & Compliance Officer

ACS 54169

3



EXPLANATORY STATEMENT PURSUANT TO SECTION 102 OF THE COMPANIES ACT, 2013

ITEM NO-4. Re-appointment of Ms. VANGALA BHARGAVI (DIN 06950741) as an

Independent Director of the Company.

Ms. VANGALA BHARGAVI (DIN 06950741), were appointed as Independent Directors on the Board of the Company pursuant to the provisions of Section 149 of the Companies Act, 2013 read with the Companies (Appointment and Qualification of Directors) Rules, 2014 and the erstwhile Clause 49 of the Listing Agreement with the stock exchanges to hold office as an Independent Directors of the Company up to the September 26, 2019 (“first term” in line with the explanation to Sections 149(10) and 149(11) of the Companies Act, 2013).

The Nomination and Remuneration Committee of the Board of Directors, on the basis of the report of performance evaluation of Independent Directors, has recommended reappointment of Ms. VANGALA BHARGAVI (DIN 06950741) for a second term of 5 (five) consecutive years on the Board of the Company.

Section 149 of the Companies Act, 2013 (“Act”) and Regulations 16 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“Listing Regulations”) inter alia prescribe that an independent directors of the company shall meet the criteria of independence as provided in Section 149(6) of the Act and Regulations 16 of Listing Regulations.

Section 149(10) of the Act provides that an independent director shall hold office for a term of up to five consecutive years on the Board and shall be eligible for re-appointment on passing a special resolution by the company and disclosure of such appointment in its Board’s report. Section 149(11) provides that an independent director may hold office for up to two consecutive terms.

The Company has received a declaration from Ms. VANGALA BHARGAVI (DIN 06950741) confi rming that she meets the criteria of independence as prescribed under the Act and the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“Listing Regulations”). Ms. VANGALA BHARGAVI is also not disqualifi ed from being appointed as a Director in terms of Section 164 of the Act and has given her consent to act as a Director of the Company.

In the opinion of the Board, Ms. VANGALA BHARGAVI fulfils the conditions for her appointment as an Independent Director as specified in the Act and the Listing Regulations and she is independent of the management.

A copy of the draft letter of appointment for Independent Directors, setting out the terms and conditions for the appointment of Independent Directors is available for inspection by the Members at the registered office of the Company during business hours on any working day up to the date of this Annual General Meeting and is also available on the website of the Company www.ksml.in

The brief resume in relation to the experience, functional expertise, memberships on other Companies’ Boards

and Committees in respect of the appointment of Ms. VANGALA BHARGAVI as the Independent Director, as required under the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, is set out in this Notice.

Ms. VANGALA BHARGAVI is not related to any other Director and Key Managerial Personnel of the Company. The Board is of the opinion that it will be beneficial to the Company to avail of her services as an Independent Director of the Company and recommends the Ordinary resolution as set out in Item No.4 of the Notice for approval of the shareholders.

The Board of Directors of the Company in its Board Meeting held on May 11, 2019 has approved the above proposal and recommended passing of the proposed Special Resolutions

None of the Directors and Key Managerial Personnel of the Company and their relatives are concerned or interested, financially or otherwise, in this resolutions except to the extent of their shareholding (if any) and directorship in the Company, being an appointee in their respective resolutions

ITEM NO -5 Appointment of Mr.VSN Murthy (DIN 00021952) as an Independent Director of the Company

As per the provisions of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Amendment) Regulations, 2018, notified on 9th May, 2018,w.e.f 01.04.2019, approval of the shareholders by way of a special resolution is required for continuation of directorship of the non-executive directors of the Company who have attained the age of 75 years Our non-executive Directors Mr VSN Murty have attained the age of 75 years on 1st April, 2019.

The brief resume of the aforesaid directors is part of the notice of the meeting.

He is in good physical condition and of sound and alert mind and the Board is confident about him being able to function and discharge their duties in an able and competent manner. Considering their seniority, expertise and vast experience in their respective fields, which has benefited the Company immensely, the Board recommends their fresh appointment as independent Non executive Director for a period of five year w.e.f the date of ensuing Annual General Meeting and none of the other Directors / Key Managerial Personnel of the Company or their relatives are, in any way, concerned or interested, in the said resolution

ITEM NO -6 To ratify the remuneration of the Cost Auditors for the financial year ending 31st March, 2020

The Board, on the recommendation of the Audit Committee, has approved the appointment and remuneration of M/s SAI RAM & ASSOCIATES, Cost Accountants, (Membership No. 41498) Guntur, to conduct the audit of the cost records of the Company for the financial year ending 31st March, 2020. The board of Directors recommended a remuneration not exceeding ` 20,000 (Rupees Twenty Thousand only) plus taxes asapplicable and reimbursement of actual travel and out-of-pocket expenses for the financial year ending 31st March, 2020

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In accordance with the provisions of Section 148 of the Companies Act, 2013, read with the Companies (Audit and Auditors) Rules, 2014, the remuneration payable to the Cost Auditors has to be ratified by the shareholders of the Company. Accordingly, consent of the members is sought for passing an Ordinary Resolution as set out at Item No. 6 of the accompanying Notice, for ratification of the remuneration payable to the Cost Auditors for the financial year ending 31st March, 2020.

The Board recommends the Ordinary Resolution set out at Item No. 6 of the Notice for approval by the shareholders. None of the Directors / Key Managerial Personnel of the Company or their relatives is, in any way, concerned or interested in the resolution.

ITEM NO-7 To increase Authorized Share Capital of the Company and consequent Alteration of capital clause of Memorandum of Association and Article of association of Association.

The Members may please note that existing Authorized Share capital of the Company is Rs 10,00,00,000 (Rupees Ten crores only) divided into 5,00,00,000 (Five Crore) Equity Shares of ` 2/- (Rupees two only) each.

In order to raise additional capital as mentioned in Item Nos. 7 of this Notice, it is necessary to have adequate provision in the Authorized Share Capital. Accordingly, it is proposed to increase the Authorised Share Capital of the

Company to Rs. 20,00,00,000 (Rupees Twenty crores) divided into 10,00,00,000 (Ten crores) Equity Shares of Rs. 2/- each by creation of additional 5,00,00,000 (Five Crore) Equity Shares of Rs. 2/- each ranking pari passu in all respect with the existing Equity Shares of the Company. Consequent upon the increase in the Authorised Share Capital, as proposed, the existing Clause V of the Memorandum of Association of the Company will also have to be replaced. The existing Articles of Association of the Company be and is hereby replaced, altered, modified and revised The draft amended Memorandum of Association and Articles of Association will be available for inspection by the Members at the Registered Office and/or Corporate Office of the Company.

As per provisions of the Companies Act, 2013, any increase in Authorized Share Capital and consequent amendment in Memorandum of Association and Article of Association of the Company requires consent and approval of the Members of the Company by way of an Ordinary Resolution. Accordingly, approval of the members is being sought by way of an Ordinary Resolution. No Directors, Key Managerial Personnel of the Company or their respective relatives, are in any way concerned or interested, financially or otherwise, in the said resolution.

By the order of Board of Directors

Sd/- Place : Chowdavaram, Guntur Nandan Bisoi

Date : 14-08-2019 Company Secretary & Compliance Officer

ACS 54169

3



ANNEXURE A TO THE NOTICE

PURSUANT TO REGULATION 36 OF THE LISTING REGULATIONS AND SECRETARIAL STANDARD-2 ISSUED BY THE INSTITUTE OF COMPANY SECRETARIES OF INDIA, INFORMATION ABOUT THE DIRECTORS

PROPOSED TO BE APPOINTED / RE-APPOINTED IS FURNISHED BELOW :

VANGALA BHARGAVI SURYANARAYANA MURTY VADDADIName of the Director

DIN

AGE

Qualification

Brief Profile/ Nature of Expertise/Justification for appointment

Terms and conditions of re- appointment

Names of other Listed companies in which the person also holds the directorship as at March 31, 2019

Names of the Listed companies in which the person also holds the membership of Committees of the Board as at March 31, 2019

Shareholding in kallam Textiles Limited

Inter-se Relationship between directors

Number of Meetings of the Board attended during the Financial Year - 2018-19

06950741

33 years

B.Com and is also F.C.A, DISA (Diploma in Information System Audit)

Mrs. Bhargavi Vangala, aged 32 years, is the Independent Director of our Company.She graduated in B.Com and is also F.C.A, DISA (Diploma in Information System Audit). She is a practicing Chartered Accountant. Mrs. Bhargavi qualified as a CA in the year 2011 and is practicing in Guntur, in the areas of Taxation, Auditing & Banking.Her Area of Specialization is Indirect Taxes. She is a Managing Committee member for the Guntur Branch of SIRC (Southern India Regional Council) of ICAI

As per the resolution at item no. 4 of the Notice of Twenty Seventh Annual General Meeting read with explanatory statement thereto

NIL

NIL

NIL

NIL

5

00021952

79 years

a Post Graduate in Commerce from Andhra University, Visakhapatnam

Mr. Suryanarayana Murty Vaddadi, aged 79 years is the Nominee Director of our Company from IREDA. He is a Post Graduate in Commerce from Andhra University, Visakhapatnam. He joined Andhra Pradesh Industrial Development Corporation Ltd (APIDC)andwasactively associated in various diversification programmes of APIDC. In 1997, he retired as Chief General Manager in APIDC.

As per the resolution at item no. 5 of the Notice of Twenty Seventh Annual General Meeting read with explanatory statement thereto

NIL

NIL

NIL

NIL

5

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2. Declaration of Final Dividend on equity shares 3. Appointment of Director under

Retirement by Rotation 4. Re-appointment of Ms. VANGALA BHARGAVI

(DIN 06950741) as an Independent Director of the Company for the second term.




KALLAM TEXTILES LIMITED(Formerly known as KALLAM SPINNING MILLS LIMITED)

CIN -L18100AP1992PLC013860 NH-5, Chowdavaram, GUNTUR - 522 019. A.P., INDIA.

Ph: 0863-2344016 : Fax:0863-2344000 E-mail: [email protected] GSTIN : 37AAACK9363M1ZY

KALLAMKALLAM

Form No.MGT-12

POLLING PAPER

[Pursuant to section 109(5) of the Companies Act, 2013 and rule 21(1)(C) of the Companies (Management and Administration) Rules, 2014]

Name of the Company : Kallam Textiles Limited

Registered Office : Chowdavaram, Guntur -522019

I/We hereby exercise my/our vote(s) in respect of the following resolutions stated in the Notice of the Twenty Seven Annual General Meeting of the Company to be held on September 21st 2019 by sending my/our assent or dissent to the said Resolutions by placing the tick () mark at the appropriate box below:

Place : Chowdavaram

Date : 14-08-2019

(Signature of the Shareholder)

Particulars DetailsS.No

1. Name of the First Named Shareholder (IN BLOCK LETTERS)

2. Name(s) of the Joint Holder(s) if any

3. Postal Address

4. Registered Folio No. / Client ID No.

5. Class of Share Equity 6. Number of Share(s) held

Description of Resolutions No of sharesheld by me

(FOR) I/We assent to the Resolution

(AGAINST) I/We dissent to the Resolution

Item No.

3




2. Declaration of Final Dividend on equity shares

3. Appointment of Director under Retirement by Rotation

4. Re-appointment of Ms. VANGALA BHARGAVI (DIN 06950741) as an Independent Director of the Company for the second term.







KALLAMKALLAM

Form No.MGT-11 PROXY FORM

(Pursuant to section 105(6) of the Companies Act, 2013 and rule 19(3) of the Companies (Management and Administration) Rules, 2014)

I/We, being member of ……………………………..shares of Kallam Textiles Limited, hereby appoint

1)……………………………………….… of …………………………. having email ID ……………………................ or failing him

2)……………………………………….… of …………………………. having email ID ……………………................ or failing him

3)……………………………………….… of …………………………. having email ID …………………………………….................

and whose signature(s) are appended below as my/our proxy to attend and vote (on a poll) for me/us and on my /our behalf at the 27th ANNUAL GENERAL MEETING of the company to be held at Chowdavaram, Guntur -522019, Andhra Pradesh, India, on 21st September, 2019 at 3.00 pm and at any adjournment(s) thereof in respect of such resolutions as are indicated below.

Note: this form, in order to be effective should be duly stamped, completed, signed and deposited at the Registered

Office of the Company, Not Less than 48 hours before the meeting

Signature of the First Proxy Holder

Signed this ……………………..day of …………………….2019.

Signature of the Third Proxy HolderSignature of the second Proxy Holder

Name of the Member(s):

Registered Address

E-mail Id :

Folio No/ Client ID :

DP ID :

For AgainstResolutions Item No.

…………………………….

/Signature of the member

AffixRevenueStamp

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KALLAMKALLAM




KALLAMKALLAM

ATTENDANCE SLIP

DP Id

Client Id

NAME AND ADDRESS OF THE SHAREHOLDER:

I hereby record my presence at the 27th ANNUAL GENERAL MEETING of the Company held on Saturday, The 21st September, 2019 at 3.00 P.M. at Chowdavaram, Guntur- 522019,Andhra Pradesh, India.

Note: Please full up this attendance slip and hand it over at the entrance of the meeting hall, Members are requested to

bring their copies of the Annual Report to the meeting.

Name of the member/Proxy (IN BLOCK LETTERS) Signature of the member/Proxy

Folio No.

No.of Shares

3



ROUTE MAP

For the Venue of the 27th Annual General Meeting of Kallam Textiles Limited

KALLAM TEXTILES LIMITED Chowdavaram, Guntur-522019, A.P., India. Phones : 0863-2344010 / 16. E-mail : [email protected] Website : www.ksml.in

For Queries, contact us Ph. : 0863 - 2344016, Fax : 0863 - 2344000, E-mail : [email protected]

KALLAMKALLAM

BOOK - POST

Registered and Corporate Office : Chowdavaram, Guntur-522019, A.P., India. Phones : 0863-2344016 / 10. E-mail : [email protected] Website : www.ksml.in

CIN No. : L18100AP1992PLC013860

If undelivered Please return to

KALLAM TEXTILES LIMITEDFormerly known as “Kallam Spinning Mills Limited”

KALLAMKALLAM

kallam textiles limitedkallam textiles limited (formerly known as “kallam spinning mills...

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