Bannari Amman Spinning Mills Ltd

Dear Members,

Your Directors herewith present the 35^th Annual Report together with Audited accounts of the Company for the year ended 31^st March, 2025.

Your Directors have not recommended any dividend for the year 2024-25.

There has been a gradual improvement in the performance of the Company as can be seen from Net Profit/(loss) after Tax from continuing operations which stands @ (Rs.117.78 lakhs) as compared to (Rs.2063.26 lakhs) in the previous year. This can be attributed to improvement in operating efficiency coupled with better demand for Textile & Clothing products.

The Company has considered the assets of the Garment and Processing (R-44 site at SIPCOT, Perundurai) divisions as discontinued operations and classified as assets held for sale/discontinued operations. There is no change in the nature of business during the financial year and until the date of this report.

During the year under review, the Spinning Units produced 21343.10 tonnes (21503.01 tonnes) and sold 17027.83 tonnes (19349.41 tonnes) of Yarn.

The sales include 135.99 tonnes (291.55 tonnes) by way of export. The total yarn sales amounted to Rs.49204.58 lakhs (Rs.52679.62 lakhs) of which export sales amounted to Rs.402.25 lakhs (Rs.817.63 lakhs). The reduction in export sales is due to weak overseas demand as well as unremunerative prices for cotton yarn during the year.

The Spinning Units produced 7736.36 tonnes (7966.21 tonnes) of saleable waste cotton and sold 8344.36 tonnes (6983.32 tonnes) and the total waste cotton sales of this division amounted to Rs.6799.44 lakhs (Rs.6491.27 lakhs).

The Weaving Unit specializes in manufacturing wider-width cotton grey woven fabric. During the year under review, 130.18 lakh metres (127.40 lakh metres) of fabric were produced and 107.91 lakh metres (127.82 lakh metres) of fabric were sold.

The sales include 19.55 lakh metres (32.69 lakh metres) by way of export. The total fabric sales amounted to Rs.10425.73 lakhs (Rs.9130.54 lakhs) of which export sales amounted to Rs.1506.11 lakhs (Rs.2788.59 lakhs).

During the year under review, the Home Textile Unit produced 40.60 lakh pieces (25.22 lakh Pieces) of made ups and sold 34.91 lakh pieces (32.50 lakh pieces) and made fabric sales of 9.02 lakh metres ( 6.03 lakh metres)

The total sales of this unit amounted to Rs.5383.93 lakhs (Rs.4109.22 lakhs) which includes fabric sales amounting to Rs.1601.90 lakhs (Rs.434.82 lakhs).

During the year under review, 2239.38 tonnes (4222.34 tonnes) of Knitted fabric were produced and 2085.65 tonnes (3723.52 tonnes) were sold. The total sales of this unit amounted to Rs.6110.89 lakhs (Rs.10835.28 lakhs) of which export sales amounted to Rs.496.13 lakhs (Rs.1595.58 lakhs).

During the year under review, 2225.45 tonnes (1918.31 tonnes) of fabric were processed on job work basis and 1184.56 tonnes (1075.91 tonnes) of fabric were produced and 1085.47 tonnes (1368.06 tonnes) of fabric were sold. The total fabric sales of this division amounted to Rs.5582.09 lakhs (Rs.5202.28 lakhs).

The company has 4 windmills of 1250 KW each totaling 5 MW in Radhapuram Taluk, Tirunelveli District, Tamilnadu, 23 windmills, each of 800 KW capacity totaling 18.40 MW capacity in Dharapuram Taluk, Tirupur District and Palani Taluk, Dindigul District, Tamilnadu. The total installed capacity of Windmills is 23.40 MW and the whole of the wind power generated is captively consumed by the Spinning Units and Weaving Unit.

The windmills produced 322.14 Lakh units of power as against 371.91 Lakh units produced in the last year.

The Board of Directors of the Company at their meeting held on 4th December 2023 approved the MOU for sale of its entire shareholding In its Subsidiary Company, M/s Young Brand Apparel Private Limited (YBAPL) and for the sale of its Garment unit at Palladam and Land & Building at R-44 site in SIPCOT, Perundurai to M/s S P Apparels Limited. The transaction relating to sale of stake in M/s YBAPL has been completed in full in June'2024. In terms of Ind AS 105, the operations of the above units were treated as discontinued operations and accounted accordingly.

The textile and apparel industry is facing challenges with regard to pricing and hence there is stress on operational Profitability. The export demand is weak on account of factors caused by Geo political tensions. The domestic demand looks promising but pricing concerns remain. Overall the prospects for the current year depends on improvement in prices and the Company's focus on value added product mix is expected to achieve better performance.

There are no material changes and commitments affecting the Financial position of the Company, subsequent to the end of the Financial Year.

There are no proceedings pending under the Insolvency and Bankruptcy Code, 2016. There was no instance of one-time settlement with any Bank or Financial Institution.

The Company has no public deposits outstanding at the beginning of the year and, the Company has not accepted any deposits within the meaning of Section 73 to 76 of the Companies Act, 2013 and the Companies (Acceptance of Deposits) Rules, 2014 during the year under review.

During the year, there is no change in Share Capital of the Company.

The Company, during the year has issued and alloted 42,25,806 Share Warrants aggregating to Rs.26.20 crores to Promoters and other Investors who have paid 25% of the issue size amounting to Rs.6.55 crores and the balance has to be subscribed within 18 months from the date of allotment.

The Company has offered 1,50,79,504 Equity shares of Rs.5/- each on rights basis to the existing equity shareholders in the ratio of 10:43 shares at a price of Rs.27/- including a premium of Rs.22/- each. The issue opened on 13^th May 2025 and closed on 26^th May 2025. Assuming full subscription, the capital structure of our Company as on date of the Letter of Offer, prior to and after the proposed Issue, is set forth below:

* Assuming full subscription to the issue.

In line with requirements of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 your Company is committed to the principles of good Corporate Governance and continues to adhere good corporate governance practices consistently.

A separate section is given as part of this Annual Report, on Corporate Governance, Management Discussion and Analysis along with a certificate from a Practicing Company Secretary regarding compliance of conditions of Corporate Governance as stipulated under Regulation 34(3) read with Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

Pursuant to the sub-section (3) of Section 92 of the Companies Act, 2013, Annual Return for Financial Year ended on 31st March, 2025, is posted on the website of the Company viz., www.bannarimills.com

Sri S V Arumugam, Director, (DIN 00002458), who is longest in the Office, shall retire by rotation at the ensuing Annual General Meeting, he is eligible for re-appointment and seeks re-appointment.

Sri Tharanipathy Rajkumar and Smt Sadhana Vidhya Shankar were appointed as Additional Directors w.e.f 03.09.2024 and special Resolution was passed to confirm their appointment as Independent Directors by the Shareholders through postal ballot on 04.10.2024 to comply with the requirement under regulation 17 (1) (c) of SEBI (LODR) Regulations, 2015.

Sri S K Sundararaman was appointed as Additional Director w.e.f 03.09.2024 and special Resolution was passed to confirm his appointment as Non Executive Director in Non Independent Director category by the Shareholders through postal ballot on 04.10.2024 to comply with the requirement under regulation 17 (1) (c) of SEBI (LODR) Regulations, 2015.

All independent Directors have given declarations that they have met the criteria of independence as laid down under section 149 (6) of the Companies Act,2013 and Regulation 25(8) of SEBI (Listing Obligations and Disclosure requirements) Regulations 2015.

The company has obtained a Certificate from Sri R Dhanasekaran, Company Secretary in Practice certifying that none of the Directors on the Board of the Company have been debarred or disqualified from being appointed or continuing as Directors of companies by the Board/Ministry of Corporate Affairs or any such statutory authority.

The Company has appointed the following persons as Key Managerial Personnel:

The Audit Committee comprises of

The Board has implemented the suggestions made by the Audit Committee from time to time.

Pursuant to the provisions of the Companies Act, 2013 and Regulation 17 (10) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the evaluation of Independent Directors are done by the entire Board of Directors including performance and fulfilment of independence criteria specified in the regulation and their independence from the Management. Independent Directors at their meeting without participation, of non-Independent Directors and management considered and evaluated the Boards' performance, performance of the Chairman and Managing Director.

The Board has carried out an annual evaluation of performance of Board and of individual Directors as well as the Committees of Directors. The evaluation has been conducted internally in the manner prescribed by Nomination and Remuneration Committee.

During the year under review, 7 (seven) Board Meetings were conducted. The details of the same have been given in the Corporate Governance Report under Regulation 17 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, forming part of this Report.

The Company has not furnished /extended any Corporate Guarantee during the year under review. Investments of the Company in the shares of other companies is provided under notes to Balance Sheet appearing in this Annual Report.

The Company has established a vigil mechanism 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. The policy has been posted in the website of the Company: www.bannarimills.com.

The Board of Directors have framed a policy setting out the framework for payment of Remuneration to Directors, Key Managerial Personnel and Senior Management Personnel of the Company. The policy is explained as part of the Corporate Governance Report. The Committee ensures that

a. The level and composition of remuneration is reasonable and sufficient to attract, retain and motivate Directors of the quality required to run the Company successfully

b. Relationship of remuneration to performance is clear and meets appropriate performance benchmarks and

c. Remuneration to Directors, Key Managerial Personnel and senior management involves a balance between fixed and incentive pay reflecting short and long term performance objectives appropriate to the working of the Company and its goals.

All the related party transactions that were entered into during the financial year in the ordinary course of business and the prices were at arm's length basis. Hence, the provisions of Section 188 (1) of the Companies Act, 2013 are not attracted. Further no materially significant related party transactions were entered by the Company with Promoters, Directors, Key Managerial Personnel or other designated persons which may have potential conflict with interest of the company at large. Approval of Audit Committee was obtained for transactions of repetitive nature on annual basis. All related party transactions are placed before the Audit Committee for approval and Board of Directors for their review. The policy on Related Party Transactions is available in the website www.bannarimills.com.

Disclosure of these Transactions in 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 as set out below:

Form for disclosure of particulars of contracts/arrangements entered into by the company with related parties referred to in sub-section (1) of section 188 of the Companies Act, 2013 including certain arm's length transactions under third proviso thereto

1. Details of contracts or arrangements or transactions not at arm's length basis: Nil

2. Details of material contracts or arrangement or transactions at arm's length basis: Nil

The Company has borrowed Rs.12.00 Crores (Previous Year Rs.17.00 Crores) as Inter Corporate Deposits from Murugan Enterprise Private Limited, one of the Promoters and Holding Company of the Company. There were no transactions made with any person or entity belonging to promoter/promoter group which holds 10% or more shareholding in the Company.

There are no significant and material orders passed by the Regulators/Courts that would impact the going concern status and the Company's operation in future.

As stipulated in Section 134 (5) of the Companies Act, 2013 your Directors confirm that:

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

b) Your 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 the Company at the end of the financial year and of the profit and loss of the Company for that period;

c) Your Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

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

e) Your Directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and

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

The present Auditors of the Company M/s P N Raghavendra Rao & Co., Chartered Accountants, (Firm Registration No: 003328S) Coimbatore, were appointed for a term of 5 years, pursuant to the resolution passed by the members at the Annual General Meeting held on 26th September, 2022 and hold Office upto the conclusion of the Annual General meeting to be held in the year 2027. The Company has received a communication from them confirming their eligibility to continue as Auditors of the Company.

The Auditor's Report does not contain any qualifications, reservations or adverse remarks requiring any comment by the Board of Directors.

There were no frauds reported by the Statutory Auditors under provisions of Section 143 (12) of the Companies Act, 2013 and rules made thereunder.

Pursuant to provisions of section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed Mr R Dhanasekaran, Practicing Company Secretary to undertake the Secretarial Audit of the Company. The report is annexed herewith as Annexure-I.

The Company has complied with all applicable Secretarial Standards issued by the Institute of Company Secretaries of India from time to time.

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, the Board of Directors, on the recommendation of Audit Committee, has appointed Sri M Nagarajan, Cost Accountant, Coimbatore as Cost Auditor to conduct Cost Audit of the Company for the financial year 2025-2026. The Company has maintained such accounts and cost records as required under Section 148 (1) of the Companies Act, 2013.

The Company has one Subsidiary namely M/s Bannari Infotech Private Limited (formerly Bannari Amman Infinite Trendz Private Limited) as on 31.03.2025.

During the year under review, the following two Companies ceased to be Subsidiaries or Joint Venture of the Company, w.e.f. 5.6.2024.

i. Young Brand Apparel Private Limited (also Joint Venture Company)

ii. Young Brand Global Private Limited (subsidiary of Young Brand Apparel Private Limited)

In accordance with the Section 129 (3) of the Companies Act, 2013, the consolidated Financial Statements of the Company has been prepared which forms part of the Annual Report. A separate statement containing the salient features of the Financial Statements of Subsidiaries in Form AOC-1 (Part A) is ANNEXURE-II.

The Company has an Internal Control System, commensurate with the size, scale and complexity of its operations. The scope and authority of the Internal Audit function is defined in the Internal Audit Manual. To maintain its objectivity and independence, the Internal Audit function reports to the Chairman of the Audit Committee and to the Chairman and Managing Director of the Company.

The Company has Independent Internal Auditor and an Internal Audit Department, which monitors and evaluates the efficiency and adequacy of internal control system in the Company, its compliance with operating systems, accounting procedures and policies at all locations of the Company.

Based on the report of internal audit function, corrective actions are taken in the respective areas and thereby strengthen the controls. Significant audit observations and recommendations along with corrective actions thereon are presented to the Audit Committee of the Board.

Pursuant to section 134(3)(n) of the Companies Act, 2013, the Committee has developed a Risk Management Policy and implemented the same. At present the Company has not identified any element of risk which may be of threat to the existence of the Company.

The Company has constituted Corporate Social Responsibility Committee which shall recommend to the Board, the activities to be undertaken by the Company as specified in Schedule VII, recommend the amount of expenditure to be incurred on such activities and monitor the CSR policy of the Company. The company has fully spent the amount stipulated under the requirements of the Act. The Company has constituted Corporate Social Responsibility Committee consisting of the following Directors:

The CSR activities and its related particulars is enclosed as Annexure III

I. Conservation of Energy and others- The particulars required to be included in terms of Section 134(3)(m) of the Companies Act, 2013, read with Rule 8(3) of the Companies (Accounts) Rules, 2014 for the year ended 31st March, 2025, relating to Conservation of Energy, etc., is enclosed as Annexure IV.

II. Remuneration of Directors and other details-The information required under Section 197(12) of the Companies Act, 2013 read with Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 and forming part of the Directors' Report for the year ended 31st March, 2025 is provided in Annexure V.

During the year under review the human relations continued to be very cordial. The Company wishes to acknowledge the contribution of the employees at all levels of the Organisation.

The Company has an Anti-Sexual Harassment Policy in line with the requirements of The Sexual Harassment of Women at the Workplace (Prevention, Prohibition & Redressal) Act, 2013 and an Internal Complaints Committee (ICC) has constituted to redress complaints of sexual harassment as provided therein. All employees (permanent, contractual, temporary, trainees) are covered under this policy.

Your Directors acknowledge with gratitude the timely assistance and help extended by the Bankers for having provided the required bank facilities. Your Directors wish to place on record their appreciation of the contributions made by the employees at all levels of your company.