Kallam Textiles Ltd

TO

THE MEMBERS OF THE KALLAM TEXTILES LTD,

Your Directors take pleasure in presenting the 32nd Annual Report covering the highlights of the finance, business, and operations of your Company together with Standalone Audited Financial Statements prepared in compliance with Ind AS accounting standards, for the financial year ended March 31, 2024.

1. FINANCIAL RESULTS :

The financial results for the year ended 31st March 2024 are summarized below:

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

For the period under review (FY 2023-24),the turnover of the company was Rs 368.47 Crores as against Rs. 414.19 Crores in the previous Financial Year. The Net loss after tax was Rs.37.44 Crores as against net Loss Rs. 21.29 Crores in the previous financial year.

During the year the company made defaults in repayment of term loan instalments. The banks classified these loans as NPA and issued notices for recovery of these dues u/s 13(2) r.w.s 13(3) of SARFAESI Act, 2002. The banks also taken possession of the properties offered as security u/s 13(4) of the Act. The company applied for restructure of these loans which is pending.

More details are available in Management Discussion & analysis report placed at Annexure –I to this report

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.

DIVIDEND

During the year company has not recommended any dividend due to losses incurred by the company.

AMOUNTS TRANSFERRED TO RESERVES

There is no transfer amount to the reserves for the period under review.

ANNUAL RETURN:

Annual Return of the Company pursuant to Section 92 of the Companies Act, 2013 read with Companies (Management and Administration) Rules, 2014, in the prescribed Form MGT-7, is available at the weblink http://ksml.in/ wp-content/ uploads/2023/08/MGT-9-2023-24.pdf as Pursuant to Section 92(3) read with Section 134(3)(a) of the Act, the Annual Return as on March 31, 2024.

3. NUMBER OF MEETINGS HELD OF THE BOARD:

The Board of Directors met 5 (Five) times during the year 2023-24. The details of the Board Meetings and the attendance of the Directors are provided in the Report on Corporate Governance

4. DIRECTORS AND KEY MANAGERIAL PERSONNEL

(i) During the year the shareholders has confirmed the re-appointment of Sri. Mr.M.V. SubbaReddy (Din: 0018719) as a Whole Time Director of the company for a period of one year w.e.f 01.06.2023.

(ii) Re-appointment of Director under retire by rotation:

(ii)During the year the shareholders at the 31st AGM held on 28.08.2023 has approved the re-appointment of Sri. P.Venkateswara Reddy as a Director of the Company under the retire by rotation as per the provisions of the Companies Act,2013.

(iii) Resignation of independent director during the financial year 2023-24

Mr.Varanasi Ramgopal, (DIN: 02889497) had resigned from the office of non executive independent director of the Company with effect from 30-04-2023 due to personal reasons.

(iv) Appointment of Independent Director during the Financial Year 2023-24

Mr. Srinivas Petluri (DIN: 02836590),appointed as independent Director of the company for a period of five years w.e.f 14.06.2023 as per the recommendation of the Nomination and Remuneration Committee

Statement regarding opinion of the Board with regard to integrity, expertise and experience (including the proficiency) of the independent directors appointed during the year to be appointed".: Subject to approval of shareholders at the ensuing Annual General Meeting of the company, the Board has proposed to appoint Smt.V L Sandhyarani (DIN: 10627130) , as independent Director of the company for a period of five years w.e.f 29.05.2024 in their Board meeting held on 29th may,2024 , for appointment as per the recommendation of the Nomination and Remuneration Committee, his reappointment for a term of another 5 (five) consecutive years effective from 29.05.2024 is very much beneficial to the company and therefore it is desirable to continue to avail his services as an Independent Director. Accordingly it is proposed to appoint Smt.V L Sandhyarani (DIN: 10627130)as an Independent Director of the Company not liable to retire by rotation and to hold office for a term of 5 (five) consecutive years on the Board of the Company and also necessary special resolution are appended in AGM Notice item no 3.

Statement regarding opinion of the Board with regard to integrity, expertise and experience (including the proficiency) of the independent directors appointed during the year to be appointed".: Subject to approval of shareholders at the ensuing Annual General Meeting of the company, the Board has proposed to appoint Sri V. Raghavendra Reddy (DIN : 10704660), as independent Director of the company for a period of five years w.e.f 1st August, 2024 in their Board meeting held on 1st August, 2024, for appointment as per the recommendation of the Nomination and Remuneration Committee, his reappointment for a term of another 5 (five) consecutive years effective from 1st August, 2024 is very much beneficial to the company and therefore it is desirable to continue to avail his services as an Independent Director. Accordingly it is proposed to appoint Sri V.Raghavendra Reddy (DIN : 10704660) as an Independent Director of the Company not liable to retire by rotation and to hold office for a second term of 5 (five) consecutive years on the Board of the Company and also necessary special resolution are appended in AGM Notice item no 4.

Mr.M.V.Subba Reddy , Director of the Company 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 reappointment is being placed for your approval at the ensuing AGM.

(viii) 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 are posted on the website of the Company www.ksml.in.

(ix) 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. More details are available in the Corporate Governance Report which forms part of this report.

(x) 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.

(xi) 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 –II to this report.

5. 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. The details of dividends paid by the Company and respective due dates for transfer of unclaimed dividend to IEPF is available in Corporate Governance report which forms part of this report.

During the year the company has transferred unclaimed dividend of Rs. 2, 35, 131 and to IEPF authority with respect to the dividend year 2015-16.

Disclosure with respect to Demat Suspense Account / unclaimed suspense account: Your Company does not have any Unclaimed Shares

6. COMMITTEES OF THE BOARD:

The Board of Directors has the following Committees:

A. Audit Committee

B. Nomination and Remuneration Committe

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.

7. RISK MANAGEMENT :

The Company has implemented an integrated risk management framework, through which the Board and Audit Committee periodically reviews and assesses significant risks on a regular basis to help ensure that there is a robust system of internal controls in place. Your Company believes that managing risks helps in maximizing returns. The Company's approach to addressing business risks is comprehensive and includes periodic review of such risks and a framework for mitigating controls and reporting mechanism of such risks. More details on the same are given in the Report on Corporate Governance

8. 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, are 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 inbusiness 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 are presented to the Audit Committee of the Board. To maintain its objectivity and independence of the Internal Audit functions.

9. 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). We confirmed that no person has been denied access to the audit committee.

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. There were no Loans, Guarantees, Investments and securities given/made/provided by the Company during the Year

11. 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 relatives, etc, that may have a potential conflict with the interests of the Company. All related party transactions are placed before the Audit Committee and also for approval of Board on quarterly basis. Prior omnibus approval of the Audit Committee is obtained on a yearly basis for the transactions which are of 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, is 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, is 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 is 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 are annexed as Annexure -III to this Report.

12. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS 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, 2013 read with Rule 8 (3) of the Companies (Accounts) Rules, 2014, is set out herewith as Annexure -IV to this report.

13. CORPORATE SOCIAL RESPONSIBILITY (CSR)

As per the provisions of Section 135 of the Companies Act, 2013 and the Rules made thereunder, your Company has put in place a Corporate Social Responsibility Committee which comprises of Mr. G.V.Krishna Reddy as Chairman and Mr. Srinivas Petluri, Mr M.V.Subba Reddy as members. The provisions of section 135 of the Act, read with Companies (Corporate Social Responsibility Policy) Rules, 2014 are not applicable to the Company during the year.

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

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

M/s. Brahmayya & Co., Chartered Accountants (ICAI Registration No. 000513S)were appointed as statutory auditors at the AGM Held on 27th September,2022 for term of five years till the conclusion of the 35thAGM to be held in the year 2027.

Auditors' Report

The Auditors' Report to the Members for the year under review is unmodified/ clean. The Notes to the Accounts referred to in the Auditors' Report are self-explanatory and therefore do not call for any further clarifications under Section 134(3) (f) of the Act. There has been no qualification, reservation, adverse remark or disclaimer given by the Auditors in their Report.

(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. There is no adverse remark, qualification, reservation or disclaimer in the Cost Audit Report submitted by M/s. Sairam& Associates,Cost Accountant for the financial year ended 31.03.2024.

The Board of Directors of your Company, on the recommendations made by the Audit Committee at its meeting held on 29th May, 2024 had appointed M/s. Sairam& Associates,Cost Accountant, (Membership No. 41948) as the Cost Auditor of your Company to carry out audit of cost records relating to Textile and Power Divisions as required under the Companies Act, 2013for the financial year 2024-25 at a remuneration of Rs 30,000/-, 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 2024-25 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 subsection (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 report for the year ended 31.03.2024 does not contain any qualification, reservation or adverse remark or disclaimer in his report

(iii) Secretarial Auditors:

Pursuant to the provisions of Section 204 of the Act, the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 and Regulation 24A of the SEBI Listing Regulations, the Company had appointed K. Srinivasa Rao & Co, Company Secretaries, Guntur to undertake the Secretarial Audit of the Company for FY 2023-24. Further, in terms of the provisions of the Circular No. CIR/CFD/ CMD1/27/2019 dated February 8, 2019 issued by SEBI, M/s. K.Srinivasa Rao & Co, Company Secretaries, Guntur has issued the Annual Secretarial Compliance Report, confirming compliance by the Company of the applicable SEBI Regulations and circulars / guidelines issued there under. The Secretarial Audit Report & Annual Secretarial Compliance report are appended as "Annexure -VI" to this Report. There is no adverse remark, qualification, reservation or disclaimer in the Secretarial Audit Report.

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

The Auditor's report for the year ended 31.03.20234does not contain any qualification, reservation or adverse remark or disclaimer in his report

(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 by the Company or by its Officers or Employees, to the Audit Committee under Section 143(12) of the Companies Act, 2013.

15. 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, 2024 and the date of the Directors' Reportrt

CASES FILED/DISPOSED PENDING UNDER IBC:

There were no cases filed/disposed/pending against the company under IBC code.

CHANGES IN SHARE CAPITAL

During the current year, there is no change in the capital Structure of the company.

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.

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, 2024

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).

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

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.

21. OBLIGATION OF YOUR COMPANY UNDER THE SEXUALHARASSMENTOFWOMENATWORKPLACE (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 Companyis required to set up an Internal 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 have constituted Internal Complaints Committees (ICC). During the year 2023-24, there was no ComplaintsReceived in this regards.

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, 2024, 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, 2024, 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, 2024 and of the profit and loss of the Company for the financial year ended 31st March, 2024;

(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.

23. 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.