Deepak Spinners Ltd

Dear Shareholders,

The Board of Directors of your Company ('Board') is pleased to present their 42^nd Annual Report and the Audited Financial Statements for the Financial year ended 31^st March 2024.

Rs.in Lakhs

The above figures are extracted from the audited financial statements as per Indian Accounting Standards (Ind AS). There has been no change in the nature of business activities of the Company during the year.

2. Dividend

The Board of Directors has recommended a dividend of 5% that is, Rs. 0.50 (Rupees Fifty Paise Only) per equity share of the face value of Rs. 10/- each for approval of the members at the 42^nd Annual General Meeting ("AGM") which will be subject to applicable tax in the hands of shareholders. This dividend will be paid when approved by the shareholders in accordance with law and would involve a cash outflow of Rs. 35.95 lacs.

3. General Review

This year gone by has witnessed multiple challenges including geo-political issues. Fabrics imported from China are a big threat to our domestic market. Global freight increased due to war in different countries. Export demands were subdued and the supply of goods for the domestic market was more than demand. This oversupply in the domestic market affected yarn prices adversely.

Despite ongoing challenges, we are seeing signs of recovery in yarn markets and anticipate a resurgence in demand during Financial Year 2024-25. Our efforts continue to control cost with emphasis on quality production and profitability.

Your Company's policy of undertaking modernization and upgradation regularly continues as before. During the year under review, investment on this account has been in the region of Rs. 22.91 Crores. The new 4MW solar power plant at Guna unit is under installation and is expected to be completed and commissioned in June 2024. The Solar Power Plant investment has been approximately Rs. 11 Crores during the year. Substantial savings are expected to accrue therefrom during the coming years.

We are committed to achieving manufacturing excellence through adopting new technology and de-bottlenecking our constraints. Savings from the modernization is expected to be achieved during the current year.

4. Credit Rating

The Company has got the following credit rating from M/s. ICRA Limited on 25^th May 2023.

5. Internal Financial Control Systems

The Company maintains an adequate and effective Internal Financial Control System commensurate with the size, scale and nature of its operations. These are designed for safeguarding its assets, prevention and detection of frauds and errors. These internal control systems provide, among other things, a reasonable assurance that transactions are executed with management authorization and that they are recorded in all material respects to permit the timely preparation of financial statements in conformity with established accounting principles. During the year under review, the Company has not come across any incidence of fraud.

An independent audit function is an important element of the Company's internal control system. Internal Audit is conducted by independent Chartered Accountants, every quarter. The Internal Auditors monitor and evaluate the efficacy and adequacy of internal control systems in the Company. Based on the reports of the Internal Auditors, the respective departments undertake corrective actions in their respective areas and thereby strengthen the controls. Significant audit observations and corrective actions thereon are presented to the Audit Committee of the Board of Directors.

6. Statutory Auditors

As per Section 139 of the Companies Act, 2013, read with the Companies (Audit and Auditors) Rules, 2014, the members of the Company in 40^th AGM had approved the appointment of M/s. Salarpuria & Partners, Chartered Accountants (ICAI Registration No. (302113E) ("M/s. S&P") as the Statutory Auditors of the Company for a term of five consecutive years, that is, from conclusion of 40^th AGM of the Company till the conclusion of the 45^th AGM of the Company.

7. Auditors' Report

The Auditors' Report to the Shareholders given by M/s. Salarpuria & Partners, Chartered Accountants, on Financial Statements of the Company for the Financial Year 2023-24 is part of the Annual Report. The Auditor's Report does not contain any reservation, qualification or adverse remark. During the year under review, the Auditors have not reported any matter under Section 143(12) of the Companies Act, 2013, therefore, no detail is required to be disclosed under Section 134(3)(ca) of the Act.

8. Secretarial Audit

Pursuant to Section 204 of the Companies Act 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Secretarial Audit was carried out by M/s. A. Arora & Co., Company Secretaries (PCS Registration No. 993) for the financial year 2022-23. The Secretarial Audit Report is annexed as 'Annexure - I, and forms an integral part of this Report.

The Secretarial Report is self-explanatory and does not call for any further comments. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark in the reports. During the year under review, the Auditors have not reported any matter under Section 143(12) of the Companies Act, 2013, therefore, no detail is required to be disclosed under Section 134(3)(ca) of the Act.

In terms of Section 204 of the Companies Act, 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board of Directors have appointed M/s A. Arora & Co., Company Secretaries (PCS Registration No. 993) as the Secretarial Auditors of the Company concerning the Financial year 2024-25.

The Company has received their written consent that the appointment is under the applicable provisions of the Act and rules framed thereunder. The Secretarial Auditors have confirmed that they are not disqualified to be appointed as the Secretarial Auditors of the Company for the Financial year 2024-25.

9. Cost Audit

Pursuant to Section 148 of the Companies Act, 2013 read with the Companies (Cost Records and Audit) Amendment Rules, 2014, the Company is required to make and maintain cost records in respect of its manufacturing activities and get them audited by a qualified Cost Accountant

The Board of Directors have, on the recommendation of the Audit Committee, appointed, M/s Shakti K. & Associates, Cost Accountants (ICWAI Registration no. 11338), as Cost Auditors of the Company, to carry out cost audit of the products manufactured by the Company for the Financial year 202425. The Company has received their written consent that the appointment is under the applicable provisions of the Companies Act, 2013 and rules framed thereunder. They have also confirmed that they are not disqualified to be appointed as Cost Auditors of the Company for the Financial year 202425.

The remuneration of the Cost Auditor has been approved by the Board of Directors on the recommendation of Audit Committee. As required under the Companies Act, 2013, In terms of the provisions of Section 148(3) of the Companies Act, 2013 read with Rule 14(a)(ii) of the Companies (Audit and Auditors) Rules, 2014, the remuneration payable to the Cost Auditor is required to be placed before the members in a general meeting for their ratification. Accordingly, necessary resolution is proposed for ratification for the remuneration payable to M/s. Shakti K. & Associates, Cost Auditors in the Notice convening the 42^nd AGM.

10. Directors and Key Managerial Personnel (KMP)

(a) i) The tenure of Shri Pradip Kumar Daga as 'Chairman and Managing Director' has expired on 15^th

April 2024. He has been appointed as 'Chairman Emeritus' by the Board of Directors with effect from 16^th April 2024.

(ii) Shri Yashwant Kumar Daga (DIN 00040632), was re-designated as 'Chairman and Managing Director' with effect from 16^th April 2024.

(iii) Pursuant to Section 152 of Companies Act, 2013 and Articles of Association of the Company, Smt. Asha Devi Daga (DIN 00048885), retires by rotation at the forthcoming AGM and being eligible, offers herself for re-appointment. The Board recommends her re-appointment. The brief resume and other details as required under the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 "Listing Regulations" read with the Secretarial Standard 2 are provided in the Notice of the 42nd AGM.

(iv) There were no other changes in Key Managerial Personnel of the Company.

(b) Statement on declarations given by Independent Directors

All the Independent Directors of your Company have submitted the declarations confirming that they meet the criteria of independence as laid down under Section 149(6) of the Companies Act 2013 and Regulation 25 read with Regulation 16 of the (Listing Regulations) and are eligible for continuing as Independent Directors.

All the Independent Directors of the Company have confirmed compliance of relevant provisions of Rule 6 of the Companies (Appointment and Qualifications of Directors) Rules, 2014.

The Board is of the opinion that the Independent Directors of the Company possess requisite qualifications, experience and expertise and they hold highest standards of integrity.

(c) Meetings of the Board of Directors

During the year, five Board Meetings were convened and held, the details of which are given in the Corporate Governance Report. The intervening gap between any two consecutive meetings did not exceed the gap prescribed by the Companies Act, 2013 and the Listing Regulations.

(d) Committees of the Board

The Board of Directors of the Company has the following four Committees -

a) The Audit Committee,

b) The Corporate Social Responsibility Committee,

c) The Nomination and Remuneration Committee and

d) The Stakeholders Relationship Committee.

During the year, all recommendations made by the Committees were approved and accepted by the Board. A detailed note on the composition of the Board and its Committees is provided in the Corporate Governance Report.

(e) Board Evaluation

Pursuant to the provisions of the Companies Act, 2013 and Listing Regulations an annual evaluation was conducted for all Board Members as well as for the working of the Board and its Committees. A structured questionnaire for evaluation of the Board and its various Committees and individual Directors was prepared and recommended to the Board by the Nomination & Remuneration Committee with a specific focus on performance and effective functioning of the Board. The Board evaluation was conducted through a questionnaire designed with qualitative parameters and feedback based on ratings.

The performance evaluation of the Chairman and Non-Independent Directors was carried out by the Independent Directors at their meeting held on 25^th January 2024. The Directors expressed their satisfaction with the evaluation process.

11. Directors' Responsibility Statement

The Board of Directors acknowledge the responsibility for ensuring compliance with the provisions of Section 134(3)(c ) read with Section 134(5) of the Companies Act, 2013 in the preparation of the annual accounts for the year ended on 31^st March 2024 and confirm as under -

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

b) That the Directors had 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) That the Directors had 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) That the Directors had prepared the annual accounts on a going concern basis; and

e) That the Directors, had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively.

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

12. Corporate Social Responsibility

In accordance with the requirements of Section 135 of the Companies Act, 2013, the Company has a Corporate Social Responsibility Committee, the terms of reference and other details of which are provided in the Corporate Governance Report. The CSR Policy has been framed and posted on the website of the Company, www.dsl-india.com .

As required by Section 134(3)(o) of the Companies Act, 2013 and Rule 9 of the Companies (Corporate Social Responsibility) Rules, 2014, Annual Report on CSR activities is annexed as 'Annexure - II' and forms integral part of this report.

13. Vigil Mechanism

Pursuant to Section 177(9) of the Companies Act, 2013, read with Rule 7 of the Companies (Meetings of board and its Powers) Rules, 2014 and Regulation 22 of Listing Regulations, the Company has in place a Policy for Vigil Mechanism for reporting of concerns of any wrongful conduct concerning the Company or its business or affairs.

The policy provides a framework for raising concerns by its employees and directors against any kind of malpractices, fraud, violation of the Company's policies or rules, and other matters on account of which the interest of the Company is affected or is likely to be affected. The policy of Vigil Mechanism is an internal policy, to make protected disclosures on a confidential basis, and to raise concerns to be appropriately dealt with. The policy provides that all protected disclosures can be addressed to the Vigil Officer or the Chairman, of the Audit Committee in certain cases.

Adequate safeguards are provided against the victimization of those who avail of the mechanism. Complaints received, if any, by Vigil Officer are investigated by the Vigil Officer and a report thereon is submitted to the Audit Committee.

It is affirmed that no personnel was denied access to the Vigil Officer and the Audit Committee, and no complaints were received during the Financial Year 2023-24.

The Policy on Vigil Mechanism is also posted on the Company's website www.dsl-india.com.

(weblink: http://www.dsl-india.com/policies-code-of-conduct )

14. Risk Management Policy

On the recommendations of the Audit Committee, the Board of Directors has formulated a Risk Management Policy for dealing with different kinds of risks which it faces in day to day operations of the Company. The Company has an efficient Risk Management framework to identify and evaluate business risks and opportunities.

The Audit Committee has been delegated the responsibility for monitoring and reviewing risk management, assessment and minimization procedures. The risk management procedures are reviewed by the Audit Committee and the Board of Directors on a quarterly basis at the time of review of the quarterly financial results of the Company.

15. Nomination and Remuneration Policy

The Board has on the recommendations of the Nomination and Remuneration Committee adopted a policy for selection and appointment of Directors, KMP and Senior Management and their remuneration. The extract of the Company's Remuneration Policy is attached as 'Annexure-III' and forms part of this report of the Board of Directors. The web link of the said Policy on the Company's website is http://www.dsl-india.com/policies-code-of-conduct

16. Related Party Transactions

During The Financial Year 2023-24, all contracts / arrangements / transactions entered into by your Company with Related Parties were on an arm's length pricing basis and were in the ordinary course of business and did not attract the provisions of Section 188 of the Companies Act, 2013.

There were no materially significant transactions with related parties during the financial year which conflicted with the interest of the Company and hence, enclosing of Form AOC 2 is not required. Suitable disclosures as required by the Accounting Standard Ind AS - 24 have been made in the notes to the Financial Statements.

All related party transactions are placed before the Audit Committee and also before the Board for approval. Prior omnibus approval of the Audit Committee is obtained on a yearly basis for transactions which could be foreseen and are of a repetitive nature for a period of one year. All transactions entered into under the omnibus approval are placed before the Audit Committee every quarter.

The Policy on Related Party Transactions, as approved by the Board is uploaded on the Company's website. None of the Directors has any pecuniary relationship or transaction vis-a-vis the Company.

Pursuant to Regulation 23(9)of the Listing Regulations, your Company has filed the reports on related party transactions with the Stock Exchange.

17. Disclosures regarding Employees

a) The Statement of Details of Remuneration as required under Section 197 and Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is attached as 'Annexure - IV' and forms a part of this Board's Report.

b) The information required under Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 and forming part of this report is given in separate annexure to this Report.

The said annexure is not being sent along with this Report to the Members of the Company in line with the provisions of Section 136 of the Companies Act, 2013. Any member interested in obtaining a copy of the said statement may write to the Company Secretary at the Registered Office of the Company. The aforesaid annexure is also available for inspection by the Members at the Registered office of the Company, twenty-one days before the 42nd AGM and up to the date of the said AGM during business hours on working days.

c) No employee, except Shri Y. K. Daga, Chairman and Managing Director by himself or along with his relatives holds 2% or more of the equity shares of the Company.

d) The Company has not received any complaint under 'The Sexual Harassment of Women at Workplace (Prohibition, Prevention and Redressal) Act, 2013, during the year. The Company is compliant of all the provisions relating to the constitution of an Internal Complaint Committee under the said Act and rules thereunder.

18. Public Deposits

During the year, the Company has neither accepted nor renewed any deposits from the public and as such, there are no outstanding deposits in terms of the Chapter V of the Companies Act, 2013 and the Companies (Acceptance of Deposits) Rules, 2014.

19. Loans, Guarantees and Investments

The Company has not given loans, directly or indirectly to any person or other body corporate or given guarantee or provided any security in connection with a loan to any other body corporate or person. The Company has also not made any investments as per the provisions of Section 186 of the Companies Act, 2013.

20. Management Discussion and Analysis Report

A report for the year under review as required under Regulation 34 and as stipulated under Part B of Schedule V of Listing Regulations, is annexed herewith and forms part of this report.

21. Corporate Governance

A report on Corporate Governance as required under Regulation 34 and as stipulated in Part C of Schedule V of Listing Regulations is annexed herewith and forms part of this report. Compliance Certificate issued by Statutory Auditors of the Company, regarding compliance of Corporate Governance is also annexed therewith.

22. Annual Return

In terms of Section 92(3) of the Companies Act, 2013 and Rule 12 of the Companies (Management and Administration) Rules, 2014, The annual Return of the company is available on the website of the Company at the weblink http://www.dsl-india.com/annual-return.

23. Energy Conservation, Technology Absorption and Foreign Exchange Earnings and Outgo.

As required by Section 134(3)(m) of the Companies Act, 2013 and Rule 8(3) of the Companies (Accounts) Rules, 2014, information with regard to Conservation of energy, technology absorption and foreign exchange earnings and outgo are annexed as 'Annexure - V' to form part of this report.

24. Significant and Material Orders Passed by the Regulators or Courts

There are no significant material orders passed by the regulators / courts which would impact the going concern status of the Company and its future operations.

25. Material Changes and Commitments

There are no material changes and commitments affecting the financial position of the Company which occurred between the end of the financial year of the Company to which the financial statements are related and the date of this report.

26. Compliance with Secretarial Standards

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

27. Acknowledgement

We thank our customers, vendors, Bankers, stakeholders, business associates, Central and State Governments and district-level authorities for their continued support. We are pleased to record our appreciation of the cooperation and support extended by every employee and workman of the Company.