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நிறுவன பெயரின் முதல் சில எழுத்துக்களை நிரப்பி 'கோ' பட்டனை கிளிக் செய்யவும்

S P Apparels Ltd.-இன் இயக்குநர் அறிக்கை

Mar 31, 2023

The Directors of your Company are pleased to present the 18th Annual Report on the business and operations of the Company together with the Audited Financial Statements (Standalone & Consolidated) for the year ended 31st March, 2023.

FINANCIAL RESULTS

The Companyâs financial performance for the year ended 31st March, 2022 is summarised below: (includes discontinued operations)

(in Million)

PARTICULARS	STANDALONE		CONSOLIDATED
PARTICULARS	2022-23	2021-22	2022-23	2021-22
Revenue from Operations	9395.22	7350.87	10778.81	8594.21
Other Income	227.98	93.70	230.10	94.95
Total Income	9623.20	7444.57	11008.91	8689.22
Total Expenses before Interest & Depreciation	7906.78	5806.74	9353.55	7076.93
Profit before Interest & Depreciation	1716.42	1637.83	1655.36	1612.29
Less: Interest	156.16	105.95	186.19	118.53
Depreciation	337.51	324.07	361.53	345.86
Profit Before Tax	1222.75	1207.81	1107.64	1147.90
Less : Taxation
Provision for Current Tax	302.37	287.17	302.37	291.52
Prev period Tax	(2.62)	(17.70)	(2.62)	(17.70)
Deferred Tax Expenses / (Credit)	4.87	23.99	(17.23)	27.15
Total Tax Expenses	304.62	293.46	282.52	300.97
Profit After Tax from continuing operations	918.13	914.35	825.12	846.93
Profit After Tax from discontinuing operations	-	(82.35)	-	-
Profit After Tax	918.13	832.00	825.12	846.93
Other comprehensive Income (Net of tax)	(66.02)	5.52	(66.02)	5.52
Minority Interest	-	-	(0.30	0.77
Total Comprehensive Income	852.11	837.52	758.80	853.22

Review from Operations:Garment Division:

FY 22 - 23 has been a year with good growth both in terms of quantity and sales revenue, though Q4 had seen some pressure on sales due to inventory pileup with retailers across the globe. The strategies to improve on the capacities are yielding good results.

Spinning industry has undergone a sever stress because of high cotton prices. Due to this the margins dipped in the Garment division. Cotton prices have corrected during later part of the fourth quarter. Further corrections are expected during this year, and this will enable margin expansion going forward.

S.P. Retail Ventures Limited

Financial year 22 - 23 has been a very tough year for the Retail sector. Inflation and higher interest cost is showing some stress in the retail industry.

We have added a childrenâs brand (Angel & Rocket) a premium brand under S P Retail Ventures Limited. We have also added one more brand under the Retail Ventures portfolio. âHEADâ an international brand has given license to S P Retail Ventures Limited to manufacture and sell goods in India under the brand HEAD. This is in under the Athleisure segment.

We are confident that with brands like âCrocodileâ, âHEADâ, âAngel & Rocketâ & â Nataliaâ SP Retail ventures will be able to raise capital and get listed as a company on its own.

S.P. Apparels (UK) (P) Ltd

During the second half of the financial year 22 - 23, there was a change in the team and the business operation place in UK. The change in the team and the place has caused some disturbance in the revenue in SP - UK.

SP-UK team is confident of revenue growth during the second half of this financial year and is expected to grow faster going forward.

OPERATIONS

The Company achieved a total turnover of Rs.9623.20 Million as against a turnover of Rs.7444.57 Million in the previous year. The Companyâs Profit Before Tax is Rs.1222.75 Million during the year, as compared to Rs.1207.81 Million in the previous year, with an increase of 1.24% over the last year. The Company earned a Net Profit of Rs.918.13 Million, as against a Net Profit of Rs.832.00 Million in the previous year.

There was no change in the nature of business of the Company during the financial year ended 31st March, 2023.

DIVIDEND

The Board recommends a dividend of Rs.3/- per Equity Share having a face value of Rs.10/- each (30%) on the Equity Share Capital of Rs.25,09,26,000/- for the year ended on 31st March 2023 aggregating to Rs. 75.28 Million. As per Finance Act, 2020, the Dividend is taxable in the hands of the Shareholders. Dividend on Equity Shares is subject to the approval of the Shareholders at the ensuing Annual General Meeting.

As per the requirements of SEBI notification no. SEBI/LAD/ NRO/GN/2016-17/008 dated 8th July 2016 the Company has formulated a Dividend Distribution Policy which has been duly approved by the Board of Directors. A copy of the Dividend Distribution Policy is available on the Companyâs website: http://www.s-p-apparels.com/assets/img/docs/Dividend-Distribution-Policy.pdf

TRANSFER TO RESERVES & SURPLUS

As at March 31, 2023 the Company has reserves of Rs. 6499.74 Million. During the year under review, the

company has transferred Rs.860.44 Million to Retained Earnings (Other Equity).

Further, the Company has also utilized Securities Premium Reserve of Rs.345.00 Million and Retained Earnings of Rs.51.69 Million towards buyback of its shares on 2nd December, 2022. The Company have also transferred a sum equivalent to the nominal value of 6,00,000 equity shares amounting to Rs. 6 Million to the Capital Redemption Reserve account pursuant to Section 69 of the Companies Act, 2013.

TRANSFER OF UNCLAIMED DIVIDEND TO INVESTOR EDUCATION AND PROTECTION FUND

Since there was no unpaid/ unclaimed Dividend, the provisions of Section 124 & 125 of the Companies Act, 2013 relating to transfer of Unclaimed dividend to Investor Education and Protection fund do not apply.

SHARE CAPITAL

The Authorised Share Capital of the Company is Rs. 47,25,00,000/- divided into 4,72,50,000 equity shares of Rs. 10/- each and the issued share capital of the Company as at 31.03.2023 stood at Rs.25,69,26,000/- divided into 2,56,92,600 Equity Shares of Rs.10/- each and the subscribed and paid-up share capital of the Company as at 31.03.2023 stood at Rs.25,09,26,000/- divided into 2,50,92,600 Equity Shares of Rs.10/- each.

BUYBACK OF SHARES

In terms of Resolution passed by the Board of Directors at their meeting held on 21.09.2022 and after complying with necessary requirements of SEBI (Buy Back of Securities) Regulations, 2018, the Company had bought back 6,00,000 Equity Shares of Rs.10/- each at an average cost of Rs.585/-aggregating to Rs.35,10,00,000/- from all the existing shareholders on a proportionate basis through Tender Offer process. The Buy-Back offer commenced on Thursday, November 03, 2022 and closed on Thursday, November 17, 2022. The equity shares were bought and extinguished in tranches in compliance with the SEBI (Buy-Back of Securities) Regulations, 2018 and SEBI (Depositories and participants) Regulations, 2018.

Consequent to the above, the paid-up share capital of the Company has been reduced from Rs.25,69,26,000/-divided into 2,56,92,600 equity shares of Rs.10/- each to Rs.25,09,26,000/- divided into 2,50,92,600 Equity Shares of Rs.10/- each as at 31.03.2023.

WEBLINK OF ANNUAL RETURN

The Annual Return of the Company for the financial year

2022- 23 as required under Section 92(3) of the Companies Act, 2013 is available on the website of the Company at the link http://www.s-p-apparels.com/wp/wp-content/ uploads/bsk-pdf-manager/2023/08/SPAL-Form_MGT_7-

2023- Website.pdf

CAPITAL EXPENDITURE

As on 31st March, 2023, the gross fixed assets block stood at Rs.7297.08 Million and net fixed assets block at Rs.4196.11 Million. Additions to Fixed Assets during the year amounted to Rs. 485.03 Million.

BOARD AND COMMITTEE MEETINGS

The details of meetings of Board of Directors and Committees thereof and the attendance of the Directors in such meetings have been enumerated in the Corporate Governance Report.

STATEMENT ON COMPLIANCE WITH SECRETARIAL STANDARDS

The Directors have devised proper systems to ensure compliance with the provisions of all applicable Secretarial Standards. Such systems are found to be adequate and are operating effectively. The Company has duly complied with Secretarial Standards issued by the Institute of Company Secretaries of India in respect of the meeting of the Board of Directors (SS-1) and General Meetings (SS-2).

DIRECTORSâ RESPONSIBILITY STATEMENT

Pursuant to the requirement under Section 134(3)(c) of the Companies Act, 2013, with respect to Directorsâ Responsibility Statement, it is hereby confirmed that:

(a) in the preparation of the annual accounts, the applicable

accounting standards had been followed;

(b) 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 of the company for that period;

(c) 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) the directors had prepared the annual accounts on a going concern basis;

(e) the directors laid down internal financial controls to be followed by the Company and such internal financial controls were adequate and operating effectively and

(f) 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.

DETAILS IN RESPECT OF FRAUDS REPORTED BY AUDITORS UNDER SECTION 143(12) OTHER THAN THOSE WHICH ARE REPORTABLE TO THE CENTRAL GOVERNMENT

There were no instances of frauds identified or reported by the Statutory Auditors during the course of their audit pursuant to Section 143(12) of the Companies Act, 2013.

DECLARATION OF INDEPENDENT DIRECTORS

The Company has received declarations from all the Independent Directors of the Company confirming that they meet the criteria of independence as stipulated in Section 149(6) of the Companies Act, 2013 and Regulation 16(1)(b) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and that their name is included in the data bank as per Rule 6(3) of the Companies (Appointment and Qualification of Directors) Rules, 2014. During the year,

the Independent Directors of the Company had no pecuniary relationship or transactions with the Company other than sitting fees and reimbursement of expenses incurred by them for the purpose of attending meetings of the Board of directors and Committee(s). The details of remuneration and /or other benefits of the Independent director are mentioned in the Corporate Governance Report. Further, they have also declared that they are not aware of any circumstance or situation, which exist or may be reasonably anticipated, that could impair or impact their ability to discharge their duties with an objective independent judgment and without any external influence.

Based on the confirmation / disclosures received from the Directors and on the evaluation of the relationships disclosed, the following Non-Executive Directors are Independent:

Mr.V.Sakthivel, Mr.A.S. Anand Kumar, Mr.C.R.Rajagopal and Mrs.H.Lakshmi Priya

Pursuant to Companies (Appointment and Qualification of Directors) Rules, 2014, the Certificate of Registration received from all the Independent Directors of the Company were taken on note by the Board of Directors.

STATEMENT REGARDING OPINION OF THE BOARD WITH REGARD TO INTEGRITY, EXPERTISE AND EXPERIENCE (INCLUDING THE PROFICIENCY) OF THE INDEPENDENT DIRECTORS APPOINTED DURING THE YEAR

The Board of Directors have evaluated the Independent Directors during the year 2022-23 and opined that the integrity, expertise and experience (including proficiency) of the Independent Directors is satisfactory.

COMPANYâS POLICY RELATING TO DIRECTORS APPOINTMENT, PAYMENT OF REMUNERATION AND OTHER MATTERS PROVIDED UNDER SECTION 178(3) OF THE COMPANIES ACT, 2013

The Company pursuant to the provisions of Section 178 of the Companies Act, 2013 and in terms of Regulation 19(4) of the SEBI Listing Regulations has formulated a policy on Nomination and Remuneration for its Directors, Key Managerial Personnel and senior management. The Nomination and Remuneration Policy of the Company can be accessed on the Companyâs

website at the link http://www.s-p-apparels.com/wp/wp-content/uploads/bsk-pdf-manager/2022/08/NOMINATION-AND-REMUNERATION-POLICY-11-02-2022.pdf

COMMENTS ON AUDITORSâ REPORT:

There are no qualifications, reservations or adverse remarks or disclaimers made by M/s. ASA & Associates LLP, Statutory Auditors in their report.

Regarding the remarks made by M/s. MDS & Associates LLP, Secretarial Auditors of the Company in their report, the management ensures timely and due compliance in future this regard.

MAINTENANCE OF COST RECORDS UNDER SUB-SECTION (1) OF SECTION 148 OF THE COMPANIES ACT, 2013

The maintenance of cost record as specified by the Central Government under Section 148(1) of the Companies Act, 2013 is applicable to the Company and accordingly the cost accounts and records are made and maintained. However, the appointment of Cost Auditor under the provisions of Section 148 is not applicable to the Company.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS MADE UNDER SECTION 186 OF THE COMPANIES ACT, 2013

The Company has given loans, provided guarantees and made investments including investments in mutual funds and complied with the provisions of section 186 of the Companies Act 2013 and as required therein the details of the loans given, guarantees provided and investments made are annexed by way of notes to accounts. However, the Company has not provided security in connection with a loan to any other body corporate or person during the year under review.

PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES

All transactions entered into with related parties as defined under the Companies Act, 2013 and Regulation 23 of SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015 (as amended) during the financial year 2022-23 were in the ordinary course of business and on an armâs length basis and not material in nature and thus a disclosure in Form AOC-

2 is not required.

The Policy on Related Party Transactions as approved by the Board of Directors of the Company has been uploaded on the Companyâs website and may be accessed through the link at http://www.s-p-apparels.com/assets/img/docs/RPT-Policy.pdf

MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY:

There have been no material changes and commitments, if any, affecting the financial position of the Company which have occurred between the end of the financial year as on 31st March 2023 relate and the date of the report.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO

The information pertaining to conservation of energy, technology absorption, Foreign Exchange Earnings and outgo as required under section 134(3)(m) of the Companies Act,

2013 read with Rule 8(3) of the Companies (Accounts) Rules,

2014 is furnished in Annexure-A and is attached to this report.

STATEMENT CONCERNING DEVELOPMENT AND IMPLEMENTATION OF RISK MANAGEMENT POLICY OF THE COMPANY

The Committee 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 Risk Management Policy of the Company outlines different kinds of risks and risk mitigating measures to be adopted by the Board. The Company has adequate internal control systems and procedures to combat the risk. The Risk management procedure is reviewed by the Audit Committee and Board of Directors on a Quarterly basis at the time of review of Quarterly Financial Results of the Company.

DETAILS OF POLICY DEVELOPED AND IMPLEMENTED BY THE COMPANY ON ITS CORPORATE SOCIAL RESPONSIBILITY INITIATIVES:

The Corporate Social Responsibility Committee has formulated and recommended to the Board, a Corporate Social Responsibility Policy (CSR Policy) indicating the

activities to be undertaken by the Company as specified in Schedule VII of the Companies Act, 2013, which has been approved by the Board. For other details regarding the CSR Committee, refer to the Corporate Governance Report, which is a part of this report. The annual report on CSR activities is furnished in Annexure-B and is attached with this report. The CSR policy may be accessed on the Companyâs website http://www.s-p-apparels.com/wp/wp-content/uploads/ bsk-pdf-manager/2022/05/CSR-Policy.pdf

CONSOLIDATED FINANCIAL STATEMENTS

Your Directors have attached the Consolidated Financial Statements in the Annual Report pursuant to the provisions of the Companies Act, 2013. They are prepared in accordance with the Accounting Standards prescribed by the Institute of Chartered Accountants of India, in this regard. The Consolidated Financials also shows a significant increase in revenue.

ANNUAL EVALUATION OF THE BOARD ON ITS OWN PERFORMANCE AND OF THE INDIVIDUAL DIRECTORS

In accordance with the evaluation criteria and procedure suggested by the Nomination and Remuneration Committee, the Board of Directors evaluated the performance of the Board, having regard to various criteria such as Board composition, Board processes, Board dynamics etc. The Independent Directors, at their separate meetings, also evaluated the performance of non-independent directors and the Board as a whole based on various criteria. The performance of each independent Director was evaluated by the entire board of directors on various parameters like engagement, leadership, analysis, decision making, communication, governance etc. The Board and the Independent Directors were of the unanimous view that performance of the Board of Directors as a whole was satisfactory.

The performances of all the Committees were evaluated by the Board having regard to various criteria such as committee composition, committee processes, committee dynamics, degree of fulfillment of key responsibilities, effectiveness of meetings etc. The Board was of the unanimous view that all the committees were performing their functions satisfactorily.

DIRECTORS AND KEY MANAGERIAL PERSONNEL

During the year under review, Mr.S.Chenduran (DIN: 03173269) was appointed as Joint Managing Director of the Company, by the Board of Directors at their meeting held on 11th August, 2022 with effect from the said date and subsequently, the members of the Company at the Annual General Meeting held on 19th September 2022 have approved the said appointment.

Further, during the year under review, Mrs.S.Shantha (DIN: 00088941) was appointed as Additional Director and Joint Managing Director of the Company, by the Board of Directors at their meeting held on 11th August, 2022 with effect from the said date and subsequently, the members of the Company at the Annual General Meeting held on 19th September 2022 have approved her appointment as Director and Joint Managing Director of the Company.

Mrs.S.Latha (DIN: 00003388), Executive Director retires by rotation at the Annual General Meeting and being eligible, offers herself for re-appointment. Your Directors recommend her re-appointment.

Key Managerial Personnel of the Company as required pursuant to Section 2 (51) and 203 of the Companies Act, 2013 are

Mr.P.Sundararajan- Chairman and Managing Director.

Mrs.S.Latha - Executive Director

Mr.S.Chenduran - Joint Managing Director

Mrs.S.Shantha - Joint Managing Director

Mrs.P.V.Jeeva - Chief Executive Officer - Garment Division.

Mr.V.Balaji - Chief Financial Officer and

Mrs.K.Vinodhini - Company Secretary.

SUBSIDIARIES, JOINT VENTURES AND ASSOCIATE COMPANIES.

The Company has three subsidiary companies viz. Crocodile Products Private Limited, S.P.Apparels (UK) Private Limited and S.P Retail Ventures Limited.

The consolidated financial statements of the company and its subsidiaries were prepared in accordance with the applicable accounting standards have been annexed to the Annual

Report.

The annual accounts of the subsidiary companies are posted on the website of the Company viz. http://www.s-p-apparels.com and will also be kept open for inspection by any shareholder at the Registered Office of the Company.

A report containing the salient features of the subsidiaries as required under Section 129(3) of the Companies Act, 2013 has been annexed herewith in Form AOC - 1 and is attached as Annexure-C to this report.

The Company has formulated a Policy for determining Material Subsidiaries. The Policy may be accessed at: http://www.s-p-apparels.com/wp/wp-content/uploads/bsk-pdf-manager/2022/08/Policy-on-determining-Material-subsidiaries.pdf

The Company does not have Joint Venture or Associate Company.

FIXED DEPOSITS

Since the Company has not accepted any fixed deposit covered under Chapter V of the Companies Act, 2013, there are no deposits remaining unclaimed or unpaid as on 31st March, 2023 and accordingly, the question of default in repayment of deposits or payment of interest thereon during the year does not arise.

FINANCE

Prompt repayments, facilitated by healthy cash flows, elevated the standing of your Company. It enabled prudent application of funds and better negotiation strength. This trend is expected to continue.

DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANYâS OPERATION IN FUTURE

No significant and material order was passed by any Regulators that have any impact on the going concern status and the operations of the Company.

ADEQUACY OF INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO THE FINANCIAL STATEMENTS

The Company has an adequate Internal Control System, commensurate with the size, scale and complexity of its operations. The Audit Committee of the Board periodically reviews the Internal Financial Control Systems and their adequacy and recommends corrective action as and when necessary to ensure that an effective internal control mechanism is in place.

The directors confirm that the Internal Financial Control (IFC) is adequate with respect to the operations of the Company. A report of Auditors pursuant to Section 143(3)(i) of the Companies Act, 2013 certifying the adequacy of Internal Financial Control is annexed with the Auditors Report.

AUDITORS

a) STATUTORY AUDITORS

M/s. ASA & Associates LLP, Chartered Accountants, Chennai were appointed as the Statutory Auditors of the Company for a period of five years at the Annual General Meeting of the Company held on 19th September 2022 from the conclusion of the 17th Annual General Meeting till the conclusion of the 22nd Annual General Meeting to be held in the year 2027. M/s.ASA & Associates LLP, Chartered Accountants, Chennai have given a certificate of consent under section 139 of the Companies Act 2013 to act as the Statutory Auditors of the Company. The Company has received a certificate from the Statutory Auditors to the effect that their appointment as the Statutory Auditors of the Company, if made would be within the limits prescribed under section 139 of the Companies Act, 2013.

b) SECRETARIAL AUDITORS

The Board has appointed M/s. MDS & Associates LLP, Company Secretaries, Coimbatore (LLPIN: ABZ-8060) as the Secretarial Auditors of the Company for the year 2023-24 to carry out the Secretarial Audit, pursuant to the provisions of Section 204 of the Companies Act, 2013.

The report of the Secretarial Auditors for the financial year 2022-23 is annexed as Annexure-D to this Report.

c) INTERNAL AUDITOR

The Board has appointed M/s. BM & Associates, Chartered

Accountants, Coimbatore as Internal Auditors for the financial year 2023-24 pursuant to the provisions of Section 138 of the Companies Act, 2013.

EMPLOYEE WELFARE

The Employee Welfare Initiatives and practices followed by the Company is among the best in the Corporate sector. The strength of companyâs employees is close to 13,525.

DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORK PLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013

The Company has complied with the provisions relating to the constitution of Internal Complaints Committee under the Sexual Harassment of Women at Workplace in line with the requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. An Internal Complaints Committee has been set up to define the policy and redress complaints received. All employees (permanent, contractual, temporary, trainees) are covered under this policy. There were no complaints received from any employee or third parties during the Financial Year.

1. Number of complaints received - Nil

2. Number of complaints disposed of - NA PARTICULARS OF EMPLOYEES

The statement pursuant to Section 197(12) of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is annexed to Annexure-E attached to this report.

MANAGEMENT DISCUSSION & ANALYSIS

As per Regulation 34 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, a separate section on Management Discussion and Analysis Report outlining the business of your Company forms part of this Annual Report.

BUSINESS RESPONSIBILITY REPORT

In pursuance of Regulation 34(2)(f) of the Listing Regulations, the Business Responsibility and Sustainability Report,

containing the initiatives taken by the company from environmental, social and governance perspective, forms part of this Report.

CORPORATE GOVERNANCE

A report on Corporate Governance is annexed and forms part of this report. The Company has complied with the conditions relating to Corporate Governance as stipulated in Regulation 27 of SEBI (Listing Obligation & Disclosure Requirements) Regulations, 2015 (as amended).

AUDIT COMMITTEE

The Audit Committee of the Board of Directors has been duly constituted in accordance with the provisions of Section 177 of the Companies Act, 2013. The details relating to the composition, meetings and functions of the Committee are set out in the Corporate Governance Report forming part of this Annual Report. The Board has accepted the Audit Committee recommendations during the year whenever required and hence no disclosure is required under Section 177(8) of the Companies Act, 2013 with respect to rejection of any recommendations of Audit Committee by the Board.

VIGIL MECHANISM AND WHISTLE BLOWER POLICY

The Company has provided for adequate safeguards to deal with instances of fraud and mismanagement and to report concerns about unethical behaviour or any violation of the Companyâs Code of Conduct. During the year under review, there were no complaints received under this mechanism. The policy can be accessed on the Companyâs website at http://www.s-p-apparels.com/assets/img/docs/Vigil-

Mechanism-Policy_Revised.pdf

DETAILS OF APPLICATION MADE OR ANY PROCEEDING PENDING UNDER THE INSOLVENCY AND BANKRUPTCY CODE, 2016 DURING THE YEAR

No applications has been made and no proceedings are pending against the Company under the Insolvency and Bankruptcy Code, 2016.

DETAILS OF DIFFERENCE BETWEEN AMOUNT OF THE VALUATION DONE AT THE TIME OF ONE TIME SETTLEMENT AND THE VALUATION DONE WHILE TAKING LOAN FROM THE BANKS OR FINANCIAL INSTITUTIONS ALONG WITH THE REASONS THEREOF

The disclosure under this clause is not applicable as the Company has not undertaken any one-time settlement with the banks or financial institutions.

INDUSTRIAL RELATIONS

The relationship between the management and the employees at all levels during the year under review has been cordial and productive.

CAUTIONARY NOTE

Certain statements in âmanagement discussions and analysisâ section may be forward looking and are stated as required by law and regulations. Many factors, both external and internal, may affect the actual results which could be different from what the directors envisage in terms of performance and outlook.

ACKNOWLEDGEMENT

Your Directors wish to place on record their appreciation, for the contribution made by all the employees at all levels but for whose hard work and support, your Companyâs achievements would not have been possible. Your Directors also wish to thank its customers, suppliers and bankers for their continued support and faith reposed in the Company.

Mar 31, 2018

DIRECTORS'' REPORT

The Members,

The Directors of your Company are pleased to present the 13th Annual Report on the business and operations of the Company together with the Audited Financial Statements (Standalone & Consolidated) for the year ended 31st March, 2018. The Management Discussion and Analysis is also included in this Report.

FINANCIAL RESULTS

The Company''s financial performance for the year ended 31st March, 2018 is summarized below:

('' In Millions)

PARTICULARS	Standalone		Consolidated
	2017-18	2016-17	2017-18	2016-17
Sales and other income Revenue from Operations	6,280.10	6,201.33	6,624.15	6,330.01
Other Income	164.55	210.96	163.82	212.98
Total	6444.65	6,412.29	6787.97	6542.99
Profit before Interest & Depreciation	1202.87	1222.71	1221.98	1248.66
Less: Interest	286.20	184.40	287.42	184.91
Depreciation	240.70	209.36	223.89	193.22
Profit Before Tax	675.97	828.98	710.66	870.52
Less : Taxation Provision for Current Tax	252.73	293.20	253.71	308.30
MAT Credit	--	15.09	(1.01)	--
Deferred Tax Expenses / (Credit)	3.12	26.17	(20.17)	26.17
Profit After Tax	420.12	494.52	478.13	536.05
Other comprehensive Income (Net of tax)	(50.03)	21.93	(50.03)	21.93
Minority Interest	-	-	-8.59	-12.58
Total Comprehensive Income	370.09	516.45	419.51	545.40

towards increase in our capacity base. We are planning to increase our capacity by 15% every year. We are also working towards improvement in our utilization levels by 5% which indeed will improve our margins. We are also consistently working on our operational efficiency which is a continuous process. Higher efficiency will improve both revenue and the margin.

The modernization and expansion of our Spinning plant is in process and will be completed by end of FY 2018 - 19. We are also in the process of enabling our processing plant suitable for bio-logical treatment and will be completed by end of FY 2018 - 19. This will enable us to increase our capacity by 20% in the processing plant. All our knitting machines have been installed and are effectively under production as planned.

The financial statements for 2016-17 have been redrawn as per Ind As. Accordingly, the figures stated above for 2016-17 may not be comparable with financials for 2016-17 approved by the Directors dated May 24, 2017.

REVIEW OF OPERATIONS:

Garment Division:

During this financial year, we have added a few new customers to our marque set of customer list. We have added new customers from US such that our geographical customer base is diversified. The strategy to change our product mix is also working well and in couple of years we will settle down to the ideal product mix.

During the current financial year we have increased our sewing capacity by 575 sewing machines. We have added 2 more factories to our list of factories and we are consistently working

Retail Division

Our strategy in retail division during the FY 2016 - 17 was to increase our presence in large format stores and during the current financial year our presence in large format stores has increased by 53%. We are planning to increase our presence in large format stores by another 50% by end of financial year 2018- 19. Our endeavor is to improve our EBO''s through franchise model.

Our distribution channel was affected this year mainly due to the implementation of GST domestically. We have planned to improve our distributor base considerably during the current year and improve the product mix which will improve the revenue during the year to come.

SP UK:

Our subsidiary company SPUK''s total revenue recorded Rs.353.63 million for FY 2017 - 18 as against a revenue of Rs.128.95 million during FY 2016 - 17 at a growth rate of 174%. EBITDA recorded Rs.12.88 million as against Rs. 0.17 million for FY 2016 - 17.

There was no change in the nature of business of the Company during the financial year ended 31st March, 2018.

DIVIDEND

The Board in its meeting held on 14th August, 2018 has recommended a dividend of 10% for the 20,000,000 Redeemable preference shares of Rs.10/-each for the Financial Year 2017-18 amounting to Rs.20.00 million subject to the approval of shareholders at the ensuing Annual General Meeting (Previous Year: Rs.20.00 million). The Board further recommended dividend of 5% on the 2,51,67,600 Equity shares of Rs.10/- each for the Financial Year 2017-18 amounting to Rs.12.58 million subject to the approval of shareholders at the ensuing Annual General Meeting (Previous Year: 5% per equity share).

The dividend payout is in accordance with the Company''s Dividend Distribution Policy. The Dividend Distribution Policy of the Company is available in the following link : www.spapparels.com.

RESERVES & SURPLUS

As at March 31, 2018 the Company had reserves of Rs. 3,773.23 million. During the year under review the company has transferred Rs. 200 Million to Capital Redemption Reserve towards redemption of 10% Redeemable Cumulative Preference Shares and Rs. 370.09 Million to the general reserve.

TRANSFER OF UNCLAIMED DIVIDEND TO INVESTOR EDUCATION AND PROTECTION FUND

Since there was no unpaid/unclaimed Dividend, the provisions of Section 124 & 125 of the Companies Act, 2013 relating to transfer of Unclaimed Dividend to Investor Education and Protection Fund does not arise.

SHARE CAPITAL

The issued, subscribed and paid up share capital of the Company as at 31.03.2018 stood at Rs.45,16,76,000/- divided into 2,51,67,600 Equity Shares of Rs.10/- each and 2,00,00,000 10% Redeemable Cumulative Preference Shares of Rs.10/- each. During the year under review the Company has not made any fresh issue of shares

However, the Company has during the current year redeemed its entire 2,00,00,000 10% Redeemable Cumulative Preference Shares of Rs.10/-in accordance with the provisions of Section 55 of the Companies Act,2013 read with Companies (Share capital and debentures) Rules 2014.

Further the Company has during the current year allotted 5,25,000 Equity Shares of Rs.10/- each on preferential basis to the promoters.

CAPITAL EXPENDITURE

As on 31st March, 2018, the gross fixed assets block stood at Rs 5200.47 Million and net fixed assets block at Rs 3123.22 Million. Additions to Fixed Assets during the year amounted to Rs. 373.85 Million.

CONSOLIDATED FINANCIAL STATEMENT

In accordance with the provisions of the Companies Act, 2013 ("the Actâ) and Ind AS 110 - Consolidated Financial Statement, the audited consolidated financial statement is provided in the Annual Report.

DETAILS IN RESPECT OF FRAUDS REPORTED BY AUDITORS UNDER SECTION 143(12) OTHER THAN THOSE which ARE REPORTABLE TO THE CENTRAL GOVERNMENT

There were no instances of frauds identified or reported by the Statutory Auditors during the course of their audit pursuant to Section 143(12) of the Companies Act, 2013.

SUBSIDIARY COMPANIES

The Company has two subsidiary companies viz. Crocodile Products Private Limited and S.P.Apparels (UK) Private Limited, their financials and details as required Under Section 136 of the Companies Act, 2013 (hereinafter referred to as the ''Act'') are available in the website of the company. These documents will also be available for inspection on all working days, during business hours, at the Registered Office of the Company.

The Company has formulated a Policy for determining Material Subsidiaries. The Policy may be accessed at: http://www.s-p-apparels. com/investors/policies/.

A statement pursuant to first proviso to Section 129(3) of the Companies Act, 2013, in Form No. AOC-1 in respect of subsidiary companies is attached vide Annexure I.

Crocodile Products Private Limited (CPPL):

During the year under review, CPPL has made a profit (after tax) of Rs 28.64 Million as against the profit of Rs 1.64 Million during the previous year. This increase is due to increase in the royalty collection during the current year.

S.P.Apparels (UK) Private Limited:

During the year under review, SPUK, had made a total revenue of Rs.353.63 Million as against a revenue of Rs.128.95 Million during the previous year. EBITDA recorded Rs.12.88 million as against Rs. 0.17 million for FY 2016 - 17.

FIXED DEPOSITS

The Company has not accepted any deposits from public within the meaning of Section 73 of the Companies Act, 2013, read with the Companies (Acceptance of Deposits) Rules, 2014 and hence no amount on account of principal or interest were outstanding for payment on the date of the Balance Sheet.

FINANCE

Prompt repayments and pre-closure of certain high cost debt, facilitated by healthy cash flows, elevated the standing of your Company. It enabled prudent application of funds and better negotiation strength. This trend is expected to continue.

SECRETARIAL STANDARDS

The Directors state that applicable Secretarial Standards, i.e. SS-1 and SS-2, relating to ''Meetings of the Board of Directors'' and ''General Meetings'', respectively, have been duly followed by the Company.

DIRECTORS AND KEY MANAGERIAL PERSONNEL

In accordance with the provisions of Section 152 of the Companies Act, 2013 and the Company''s Articles of Association, Mr.S.Chenduran, Director (Operations) retires by rotation at the forthcoming Annual General Meeting and being eligible he offers himself for re-appointment. The Board of Directors has recommended his re-appointment.

The details of the above Director, required to be disclosed under Regulation 36(3) of SEBI (Listing Obligations and Disclosure Requirement) Regulations, 2015 form part of the Notice to the ensuing Annual General Meeting. All the Directors of the Company have confirmed that they are not disqualified from being appointed as Directors in term of Section 164 (2) of the Act.

Mr.Srinivas Chidambaram, Non-Executive Director has ceased to be a Director of the Company w.e.f. June 29, 2017. The Board places on record its appreciation towards valuable contribution made by Mr.Srinivas Chidambaram during his tenure as a Director of the Company

The shareholders of the Company at its Annual General Meeting held on August 11, 2017 have approved re-appointment of Mrs.S.Latha, Executive Director on the Board of the Company by passing an ordinary resolution.

The Company has adequate number of Independent Director in compliance with the Act and SEBI (LODR) Regulations, 2015 hereinafter referred to as Listing regulations. Familiarization Program on the Company and its operation was conducted for the Independent Directors.

The Company pays remuneration by way of salary to its Chairman cum Managing Director and fixed monthly remuneration to its Executive Director and Whole Time Director, Director (Operations) in line with the approvals accorded by the General Meetings in pursuance of the recommendation of the Nomination and Remuneration Committee as per the guiding principles laid down in the Nomination and Remuneration Policy and also by the Board of Directors.

statement on declaration given by independent

DIRECTOR

The Company has received requisite declaration pursuant to Section 149(6) of Companies Act, 2013 from all independent directors confirming that they meet with the criteria of their Independence laid in Section 149 (6).

PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES

In terms of Section 136 of the Act and as advised the Annual Report is being sent to the members and others entitled thereto, excluding the information on employees particulars which is available for inspection by the members at the Registered Office of the Company during business hours on working days of the Company up to the date of ensuing Annual General Meeting. If any member is interested in inspecting the same, such member may write to the Company Secretary in advance.

The following policies of the Company are available at the Company website www.spapparels.com.

a) Policy for Board Members and Senior Management Personnel; and

b) Nomination and Remuneration Policy.

ANNUAL PERFORMANCE EVALUATION

The Board has carried out an annual evaluation of its own performance, the Directors and also committees of the Board based on the guideline formulated by the Nomination & Remuneration Committee. Board composition, quality and timely flow of information, frequency of meetings, and level of participation in discussions were some of the parameters considered during the evaluation process.

A note on the familiarization programme adopted by the Company for the orientation and training of the Directors and the Board evaluation process undertaken in compliance with the provisions of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 is provided in the Corporate Governance Report which forms part of this Report.

Further, the Independent Directors of the Company met once during the year on February 14, 2018 to review the performance of the Nonexecutive directors, Chairman of the Company and performance of the Board as a whole.

COMMITTEES

As required by the provisions of the Act and Listing Regulations, the Company has already formed the following Committees, the details of which are disclosed in the Report on Corporate Governance forming part of this Report.

I. Audit Committee

II. Stakeholders Relationship Committee

III. Nomination and Remuneration Committee

IV. Corporate Social Responsibility (CSR) Committee

POLICIES

As required by the provisions of the Act and the Listing Regulations, the following policies have been framed and disclosed on the Company''s website ''www.spapparels.com''.

I. Nomination & Remuneration Policy

II. Related Party Transaction Policy

III. Corporate Social Responsibility Policy

IV. Vigil Mechanism Policy

V. Policy on Determining Material Subsidiaries

VI. Code for Fair Disclosure

VII. Risk Management Policy

RISK MANAGEMENT

Pursuant to section 134 (3) (n) of the Companies Act, 2013 & Regulation

17 (9) of the Listing Regulations, the Company has framed an effective Risk Management policy in order to analyze, control or mitigate risk. The board periodically reviews the risks and suggests steps to be taken to control the same.

VIGIL MECHANISM & WHISTLE BLOWER POLICY

The Company has a vigil mechanism for reporting of genuine concerns or grievances through its Whistle Blower policy. The Company provides key positions to women professionals and encourages no disparity in any manner. This has created a congenial work atmosphere for women and to express their confidence of reporting of any grievances. The Company affirms that no personnel have been denied access to the Audit Committee. All suspected violations and reportable matters can be reported to the Chairman of the Audit Committee at e-mail id - [email protected]. The Whistle Blower Policy has been posted on the website of the Company.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

The Corporate Social Responsibility Committee consisting of Directors Mr. P.Sundararajan - Chairman, Mrs. S.Latha and Mr. V.Sakthivel as members of the committee have formulated and recommended to the Board, a Corporate Social Responsibility Policy (CSR Policy) indicating the activities to be undertaken by the Company as specified in Schedule VII of the Companies Act, 2013, which has been approved by the Board. The CSR policy may be accessed on the Company''s website www.spapparels.com. The annual report on CSR activities is annexed (Annexure II) herewith.

During the year the Company has spent Rs 2.40 Million on CSR Activities out of the stipulated sum of Rs 12.73 Million. The Company''s CSR initiatives involve setting the foundation of various programs at a small scale to learn from on-ground realities, getting feedback from community and then putting an enhanced sustainable model to ensure maximum benefit to the community. For this reason, during the year, the Company''s spend on the CSR activities has been less than the limits prescribed under Companies Act, 2013 and an amount of Rs 10.33 Million remains unspent. The existing CSR activities are scalable and new initiatives are being considered. Going forward the Company will endeavour to spend on CSR activities in accordance with the legal requirements.

BOARD MEETINGS

The Board of Directors met six times during the financial year on 24.05.2017, 07.07.2017, 14.08.2017, 14.11.2017, 14.02.2018 and 15.03.2018. The Composition of Board, procedure, dates and other details are included in the Corporate Governance Report that forms part of this Report.

AUDIT COMMITTEE

The Audit Committee comprises Independent Directors namely Mr.V.Sakthivel (Chairman), Mr.A.S.Anandkumar and Mr.P.Yesuthasen. During the year all the recommendations made by the Audit Committee were accepted by the Board.

CONSOLIDATED FINANCIAL STATEMENTS

Your Directors have pleasure in attaching the Consolidated Financial Statements pursuant to the provisions of the ''Act'' and the Listing Regulations entered into with the Stock Exchanges. They are prepared in accordance with the Accounting Standards prescribed by the Institute of Chartered Accountants of India, in this regard. The Consolidated Financials also show a significant increase in Revenues as well as Profitability.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

The Company has duly complied with the provisions of Section 186 of the Act and as required therein the details of the Borrowals, Security, Investment etc., are annexed by way of notes to accounts.

RELATED PARTY TRANSACTIONS

All transactions entered with Related Parties for the year under review were on arm''s length basis and in the ordinary course of business and the provisions of Section 188 of the Companies Act, 2013 and the Rules made thereunder are not attracted. Thus, disclosure in Form AOC-2 in terms of Section 134 of the Companies Act, 2013 is not required.

Further, these transactions are placed before the Audit Committee and Board of the Company specifying the nature and value of transactions for their consideration and approval.

The Transactions covered by Indian Accounting Standards - IND AS are reported in the Notes to Accounts of the Consolidated Financial Statements as well as Standalone Financial Statements of your Company. The Company''s Policy on dealing with related party transactions is available on the Company''s website.

EMPLOYEE WELFARE

The Employee Welfare Initiatives and practices followed by the Company is among the best in the Corporate sector. The Company employs close to 12,898 workers.

PREVENTION OF SEXUAL HARASSMENT OF WOMEN AT WORKPLACE

Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 provides for protection against sexual harassment of women at workplace and for the prevention and redressal of complaints of sexual harassment and also for the matters incidental thereto. The Company has accordingly adopted the policy against Sexual Harassment of Women at Workplace, for the purpose of preventing, prohibiting and redressing sexual harassment of female employees at all the workplace within the Company which are based on fundamental principles of justice and fair play.

Further, Anti Sexual Harassment Committee has been constituted at each unit which shall be responsible for redressal of complaints related to sexual harassment. The details of all such complaints and its proper redressal through prompt corrective steps are informed to the Top Management so as to ensure that suitable processes and mechanisms are put in place to ensure that issues of sexual harassment, if any, are effectively addressed.

During the year, no complaints of sexual harassment were received by the Company from any of its Units.

ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

The particulars relating to energy conservation, technology absorption, foreign exchange earnings and outgo, as required to be disclosed under the Act read with the Companies (Accounts) Rules, 2014 are provided in the Annexure III to the Report.

DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to Section 134(3)(c) of the Companies Act, 2013, your Directors hereby state that:

a) in the preparation of the annual accounts for the year ended March 31, 2018, the applicable accounting standards read with requirements set out under Schedule III to the said Act, have been followed and there are no material departures from the same;

b) 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 the Company as at March 31, 2018 and of the profit of the Company for the year ended on that date;

c) the Directors have taken proper and sufficient care for the 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 fraud and other irregularities;

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

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

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

MATERIAL CHANGES AND COMMITMENTS

The Company has during the current year redeemed its entire

2,00,00,000 10% Redeemable Cumulative Preference Shares of Rs.10/- each and has issued and allotted 5,25,000 Equity Shares of Rs.10/- each on preferential basis to the promoters after the balance sheet date. There has been no change in the nature of business of the Company.

SIGNIFICANT & MATERIAL ORDER PASSED BY THE REGULATORS

No significant and material order was passed by any Regulators that have any impact on the going concern status and the operations of the Company.

MANAGEMENT DISCUSSION AND ANALYSIS STATEMENT

In pursuance of Listing Regulations and the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, Management Discussion and Analysis Statement is presented in a separate section, forming part of the Annual Report. attached to this Report.

CORPORATE GOVERNANCE REPORT

The Company is committed to maintain the highest standards of Corporate Governance and adhere to the Corporate Governance requirements set out by the Securities and Exchange Board of India (SEBI). The report on Corporate Governance as stipulated under the Listing Regulations forms an integral part of this Report. Certificate from the Secretarial Auditor of the Company confirming the compliance with the conditions of Corporate Governance is also attached to the report on Corporate Governance.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has an Internal Control System, commensurate with the size, scale and complexity of its operations. The details of Internal Financial Control (IFC) and their adequacy are included in the Report of Management Discussion and Analysis, which forms part of this report.

RATIO OF REMUNERATION TO EACH DIRECTOR

Details / Disclosures of Ratio of Remuneration of Director to the median employee''s remuneration as required by the Act and Companies Rules are appended.

AUDITORS AND AUDITORS REPORT:

a) STATUTORY AUDITORS

M/s. ASA & Associates LLP, Chartered Accountants, Chennai were appointed as Statutory Auditors of the Company, for a term of 5 (five) consecutive years, at the Annual General Meeting held on August 11, 2017. They have confirmed that they are not disqualified from continuing as Statutory Auditors of the Company.

b) SECRETARIAL AUDITOR

Pursuant to the provisions of section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed M/s. S.Rajaguru & Associates, Company Secretary in Practice to undertake the Secretarial Audit of the Company. The Secretarial Audit reports in Form MR-3 for the year ended 31st March, 2018 is annexed to this report. There is no secretarial audit qualification for the year under review.

c) INTERNAL AUDITOR

The Board had appointed M/s. Deloitte Haskins & Sells LLP, Chartered Accountants, Coimbatore as Internal Auditors for the financial year 2017-18.

AUDITORS REPORT

The Auditor''s Report to the Shareholders does not contain any qualification.

EXTRACT OF ANNUAL RETURN

Pursuant to section 92 (3) of the Act and Rule 12 (1) of the Companies (Management and Administration) Rules, 2014, an extract of annual return in MGT - 9 forms part of this Report.

CONVERGENCE WITH IND AS FROM APRIL 1, 2017

The Ministry of Corporate Affairs (MCA), in 2015, had notified the Companies (Indian Accounting Standards (IND AS)) Rules 2015, which stipulated the adoption and applicability of IND AS in a phased manner. As per these rules, in the second phase all listed Companies including the parent or subsidiaries of such companies will have to prepare their financial statements following Ind AS with effect from 01st April 2017 with comparative periods beginning 01st April 2016. Accordingly, the financial statements for 2017-2018 have been drawn up as per Ind AS and opening Balance sheet as of April 1, 2016 has been restated to reflect the changes brought in by Ind AS.

Reconciliation of Standalone Statement of Profit and Loss as per Ind AS with previous GAAP for the year ended March 31, 2017:

(Rs. in millions)

Particulars	Year ended March 31, 2017
Net profit as per previous GAAP	565.10
1) Rental Income on trade deposit	0.17
2) Interest Expenses on Trade deposit	-0.17
3) Amortization of lease prepayments	-2.96
4) Interest income on security deposits	2.73
5) Additional Charges on preference liability	-26.34
6) Interest Expenses on Unsecured Loans	-20.65
7) Deferral of TUF receivables	-3.09
8) Amortization of TUF Deferral	12.62
9) Amortization of EPCG Deferral	1.88
10) Tax effect on effective portion of cash flow hedges	-11.61
11) Opening Effect on deferral of EPCG on Spare Parts	-1.21
Net profit as per Statement of Profit and loss	516.45

ACKNOWLEDGEMENT

Your Directors wish to place on record their appreciation, for the contribution made by all the employees at all levels but for whose hard work, and support, your Company''s achievements would not have been possible. Your Directors also wish to thank its customers, suppliers and bankers for their continued support and faith reposed in the Company.

Reconciliation of Consolidated Statement of Profit and Loss as per Ind AS with previous GAAP for the year ended March 31, 2017:

(Rs. in millions)

Particulars	Year ended March 31, 2017
Net profit as per previous GAAP	619.22
1) Rental Income on trade deposit	0.17
2) Interest Expenses on Trade deposit	-0.17
3) Amortisation of lease prepayments	-2.96
4) Interest income on security deposits	2.73
5) Additional Charges on preference liability	-26.34
6) Interest Expenses on Unsecured Loans	-20.65
7) Deferral of TUF receivables	-3.09
8) Amortisation of TUF Deferral	12.62
9) Amortisation of EPCG Deferral	1.88
10) Tax effect on effective portion of cash flow hedges	-11.61
11) Effect of EPCG on Spare parts	-1.23
12) Share of profit attributable to Minority Interest	-25.16
Net profit as per Statement of Profit and loss	545.40

For and on behalf of the Board of Directors

P. Sundararajan S. Latha

Managing Director Executive Director

(DIN : 00003380) (DIN : 00003388)

V. Balaji K. Vinodhini

Chief Financial Officer Company Secretary

Place : Avinashi

Date : 14.08.2018

Mar 31, 2017

The Members,

The Directors of your Company are pleased to present the 12th Annual Report on the business and operations of the Company together with the Audited Financial Statements for the year ended March 31, 2017. The Management Discussion and Analysis is also included in this Report.

FINANCIAL RESULTS

Highlights of Financial Results for the financial year 2016-2017 are as under:

During the current year we have increased the capacity of yarn production by adding a few machines. Currently we are producing more counts compared to last year.

During the current year we have balanced our dyeing and finishing capacities by adding a compacting machine.

Retail Division:

During the year, EBO business grew due to increase in the number of stores and change in the product mix offered to customers. We have re-aligned our product mix according to the market expectation and fashion trend.

(Rs. In Millions)

Particulars	Standalone		Consolidated
	2016-17	2015-16	2016-17	2015-16
Sales and other income Domestic sales	1,417.97	1,127.08	1546.64	1,086.53
Export Sales	4,809.88	4,241.72	4809.89	4,241.72
Other Income	208.25	48.63	210.27	49.29
Total	6,436.10	5,417.43	6,566.80	5,377.54
Profit before Interest & Depreciation	1,257.76	772.10	1,283.68	733.66
Less: Interest	134.35	252.44	134.87	252.72
Depreciation	223.85	207.15	207.71	201.00
Profit Before Tax	899.56	312.51	941.10	279.94
Less : Taxation Provision for Current Tax	308.29	66.89	308.29	68.45
MAT Credit	-	-14.88		-30.34
Deferred Tax Expenses / (Credit)	26.17	55.62	26.17	55.32
Profit After Tax (before appropriation)	565.10	204.88	606.64	186.51

REVIEW OF OPERATIONS:

Garment Division:

During the financial year, growth in the garment division was supported by the increase in capacities and increase in customer demand. Higher growth has led to increase in margins.

Increase in capacity was due to setting up of new factories as also increase in capacities of the existing factories. During the current year, we have re-aligned our product mix. The basic volume products have increased in percentage when compared to the previous years. This new product mix also helped us improve our worker efficiency and this contributed to revenue growth.

Our Large Format Storesâ sales also have grown substantially due to opening up of new outlets. Our products were well accepted in all regions and our partners have offered us more space looking at the brandâs performance.

E- com business posted good growth as we targeted quality conscious customers.

SPUK :

During the year under review, we have started business relationship with some new customers and also have started working on new products.

DIVIDEND

The Board in its meeting held on 24th May, 2017 has recommended a dividend of 10% for the 20,000,000 Redeemable preference shares of Rs.10/-each for the Financial Year 2016-17 amounting to Rs.20.00 million subject to the approval of shareholders at the ensuing Annual General Meeting (Previous Year: 3% from the date of its allotment, ie.22.09.2011 to 31.03.2016 aggregating Rs.44.00 million). The Board further recommended dividend of 5% on the 2,51,67,600 Equity shares of Rs.10/- each for the Financial Year 2016-17 amounting to Rs.12.58 million subject to the approval of shareholders at the ensuing Annual General Meeting (Previous Year: Nil).

RESERVES & SURPLUS

As at March 31,2017 the Company had reserves of Rs.3576.53 million. During the current year company had transferred Rs.2463.43 million to the reserves. (Share premium Rs.1922.40, Dividend & Dividend tax (Rs.24.07) and profits of Rs.565.10)

Your Company has earned a total profit after tax of 565.10 millions out of which a sum of Rs.20.00 million was transferred to towards dividend proposed to be distributed to Preference shareholders and the remaining has been transferred to Reserves & surplus for the purpose of future expansions and acquisitions.

SHARE CAPITAL

During the year under review, the Company has issued 89,22,388 Equity shares of face value Rs.10 each through an IPO. IPO included 80,22,388 Equity shares as fresh issue and 9,00,000 equity shares by way of offer for sale by New York Life Investment Management India Fund (FVCI) II LLC. The fully paid up Equity Shares of Rs.10/- each of the Company as on March 31, 2017 Rs.25,16,76,000/-, 10% Redeemable Cumulative Preference Shares of Rs.10/- each of the Company as on March 31, 2017 Rs.20,00,00,000/- and total paid up capital of the Company as on March 31, 2017 Rs.45,16,76,000/-.

CAPITAL EXPENDITURE

As on 31st March, 2017, the gross fixed assets block stood at Rs.4829.16 Million and net fixed assets block at Rs.2978.83 Million. Additions to Fixed Assets during the year amounted to Rs.415.66 Million.

SUBSIDIARY COMPANIES

The Company has two subsidiary companies viz. Crocodile Products Private Limited and S. P. Apparels (UK) Private Limited their financials and details as required Under Section 136 of the Companies Act, 2013 (hereinafter referred to as the âActâ) are available in the website of the company.

A statement pursuant to first proviso to Section 129(3) of the Companies Act, 2013, in Form No. AOC-1 in respect of subsidiary companies is attached vide Annexure.

Crocodile Products Private Limited:

During the year under review, CPPL has made a profit of Rs.1.6 Million as against the losses of Rs.8.4 Million during the previous year. This increase is due to increase in the royalty collection during the current year.

S. P. Apparels (UK) Private Limited:

During the year under review, SPUK, had made a revenue of GBP 1.47 Million as against a revenue of GBP 0.20 Million during the previous year. SPUK broke even at the PAT level during the current year as against a loss of 1.56 million during the previous year.

FIXED DEPOSITS

FINANCE

DIRECTORS

a) Change in Directorâs Designation:

The Board at its meeting held on 24th August, 2016 had redesignated Mr. Srinivas Chidambaram, Nominee Director, as Non-Whole Time Director of the Company.

b) Directors Retire by Rotation:

In accordance with the provisions of Section 152 of the Companies Act, 2013 and the Companyâs Articles of Association, Mrs. S. Latha Sundararajan, Executive Director retires by rotation at the forthcoming Annual General Meeting and being eligible she offers herself for re-appointment.

The Company has adequate number of Independent Director in compliance with the Act and SEBI (LODR) Regulations, 2015 hereinafter referred to as Listing regulations. Familiaraization Program on the Company and its operation was conducted for the Independent Directors. Requisite declaration from the Independent Directors of the Company under Section 149 (7) of the Act confirming that they meet with the criteria of their Independence laid in Section 149 (6) have been obtained.

STATEMENT ON DECLARATION GIVEN BY INDEPENDENT DIRECTOR

The Company has received declaration pursuant to Section 149(6) of Companies Act, 2013 from all independent directors.

KEY MANAGERIAL PERSONNEL AND MANAGERIAL REMUNERATION CRITERIA

In pursuance of the Act the Company has Key Managerial Personnel. None of the Managing Directors or Whole Time Directors receive any remuneration or commission from the Subsidiary Companies and the remuneration paid to them is within the purview of the provisions of Section 197 read with Schedule V of the Act. The Company pays remuneration by way of salary to its Chairman cum Managing Director and fixed monthly remuneration to its Executive Director and Whole Time Director, Director (Operations) in line with the approvals accorded by the General Meetings in pursuance of the recommendation of the Nomination and Remuneration Committee as per the guiding principles laid down in the Nomination and Remuneration Policy and also by the Board of Directors. The information as required by Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is appended.

ANNUAL PERFORMANCE EVALUATION

Further, the Independent Directors of the Company met once during the year on February 14, 2017 to review the performance of the Nonexecutive directors, Chairman of the Company and performance of the Board as a whole.

COMMITTEES

I. Audit Committee

II. Stakeholders Relationship Committee

III. Nomination and Remuneration Committee

IV. Corporate Social Responsibility (CSR) Committee

POLICIES

As required by the provisions of the Act and the Listing Regulations, the following policies have been framed and disclosed on the Companyâs website âwww.spapparels.comâ

I. Nomination & Remuneration Policy

II. Related Party Transaction Policy

III. Corporate Social Responsibility Policy

IV. Vigil Mechanism Policy

V. Policy on Determining Material Subsidiaries

VI. Code for Fair Disclosure

VII. Risk Management Policy

RISK MANAGEMENT

Pursuant to section 134 (3) (n) of the Companies Act, 2013 & Regulation 17 (9) of the Listing Regulations, the Company has framed an effective Risk Management policy in order to analyze, control or mitigate risk. The board periodically reviews the risks and suggests steps to be taken to control the same.

VIGIL MECHANISM & WHISTLE BLOWER POLICY

CORPORATE SOCIAL RESPONSIBILITY (CSR)

The Corporate Social Responsibility Committee consisting of Directors Mr. Sundararajan - Chairman, Mrs. S Latha and Mr. V Sakthivel as members of the committee have formulated and recommended to the Board, a Corporate Social Responsibility Policy (CSR Policy) indicating the activities to be undertaken by the Company as specified in Schedule VII of the Companies Act, 2013, which has been approved by the Board. The CSR policy may be accessed on the Companyâs website www.spapparels.com. The annual report on CSR activities is annexed herewith.

During the year the Company could spend Rs.2.08 Million on CSR Activities out of the stipulated sum of Rs.4.61 Million. The Companyâs CSR initiatives involve setting the foundation of various programs at a small scale to learn from on-ground realities, getting feedback from community and then putting an enhanced sustainable model to ensure maximum benefit to the community. For this reason, during the year, the Companyâs spend on the CSR activities has been less than the limits prescribed under Companies Act, 2013 and an amount of Rs.2.53 Million remains unspent. The existing CSR activities are scalable andnew initiatives are being considered. Going forward the Company will endeavour to spend on CSR activities in accordance with the legal requirements.

BOARD MEETINGS

The Board of Directors met seven times during the financial year on 06.06.2016, 08.07.2016, 19.07.2016, 06.08.2016, 24.08.2016, 14.11.2016 and 14.02.2017. The Composition of Board, procedure, dates and other details are included in the Corporate Governance Report that forms part of this Report.

CONSOLIDATED FINANCIAL STATEMENTS

Your Directors have pleasure in attaching the Consolidated Financial Statements pursuant to the provisions of the âActâ and the Listing Regulations entered into with the Stock Exchanges. They are prepared in accordance with the Accounting Standards prescribed by the Institute of Chartered Accountants of India, in this regard. The Consolidated Financials also show a significant increase in Revenues as well as Profitability.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

The Company has duly complied with the provisions of Section 186 of the Act and as required therein the details of the Borrowals, Security, Investment etc., are annexed by way of notes to accounts.

RELATED PARTY TRANSACTIONS

All transactions entered with Related Parties for the year under review were on armâs length basis and in the ordinary course of business and the provisions of Section 188 of the Companies Act, 2013 and the Rules made thereunder are not attracted. Thus, disclosure in Form AOC-2 in terms of Section 134 of the Companies Act, 2013 is not required.

Further, these transactions are placed before the Audit Committee and Board of the Company specifying the nature and value of transactions for their consideration and approval.

The Transactions covered by Accounting Standards AS-18 are reported in the Notes to Accounts of the Consolidated Financial Statements as well as Standalone Financial Statements of your Company. The Companyâs Policy on dealing with related party transactions is available on the Companyâs website.

EMPLOYEE WELFARE

The Employee Welfare Initiatives and practices followed by the Company is among the best in the Corporate sector. The Company employs close to 10,070 workers.

PARTICULARSOF EMPLOYEESAND RELATED DISCLOSURES

The information required pursuant to Section 197 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of Employees of the Company, will be provided upon request. In terms of Section 136 of the Act, the reports and accounts are being sent to the members and others entitled thereto, excluding the information on employees particulars which is available for inspection by the members at the Registered Office of the Company during business hours on working days of the Company up to the date of ensuing Annual General Meeting. If any member is interested in inspecting the same, such member may write to the Company Secretary in advance.

PREVENTION OF SEXUAL HARASSMENT OF WOMEN AT WORKPLACE

During the year, no complaints of sexual harassment were received by the Company from any of its Units.

ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to Section 134(3)(c) of the Companies Act, 2013, your Directors hereby state that:

a) in the preparation of the annual accounts for the year ended March 31, 2017, the applicable accounting standards read with requirements set out under Schedule III to the said Act, have been followed and there are no material departures from the same;

b) the Directors have selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2017 and of the profit of the Company for the year ended on that date;

d) the Directors have prepared the annual accounts on a âgoing concernâ basis;

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

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

MATERIAL CHANGES AND COMMITMENTS

There are no material changes and commitments affecting the financial position of the Company that would impact the going concern status of the Company and its future operations which have occurred between the end of the financial year of the Company to which the financial statements relate and the date of the report. Further, there has been no change in the nature of business of the Company.

SIGNIFICANT & MATERIAL ORDER PASSED BY THE REGULATORS

No significant and material order was passed by any Regulators that have any impact on the going concern status and the operations of the Company.

CORPORATE GOVERNANCE REPORT AND MANAGEMENT DISCUSSION AND ANALYSIS STATEMENT

In pursuance of Listing Regulations the Corporate Governance Report and Management Discussion and Analysis Statement are attached to this Report. Certificate from the Secretarial Auditor of the Company confirming the compliance with the conditions of Corporate Governance is also attached to this report.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

RATIO OF REMUNERATION TO EACH DIRECTOR

Details / Disclosures of Ratio of Remuneration of Director to the median employeeâs remuneration as required by the Act and Companies Rules are appended.

AUDITORS:

a) STATUTORY AUDITORS

M/s. Deloitte Haskins & Sells, Chartered Accountants, Coimbatore are statutory auditors of the Company and their appointment expires at the conclusion of the ensuing Annual General Meeting of the Company since their completion of two terms of five continuous years.

M/s. ASA & Associates LLP, Chartered Accountants, Chennai have given a certificate of consent under Section 139 of the Companies Act, 2013 for their appointment at the ensuing Annual General Meeting to act as the statutory auditors of the Company for five years from the conclusion of the ensuing Annual General Meeting.

b) SECRETARIAL AUDITOR

Pursuant to the provisions of section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed M/s. S.Rajaguru & Associates, Company Secretary in Practice to undertake the Secretarial Audit of the Company. The Secretarial Audit reports in Form MR-3 for the year ended 31st March, 2017 is annexed to this report. There is no secretarial audit qualification for the year under review.

c) INTERNAL AUDITOR

The Board had appointed M/s BM & Associates, Chartered Accountants as Internal Auditors for the financial year 2016-17.

AUDITORS REPORT

The Auditorâs Report to the Shareholders does not contain any qualification.

EXTRACT OF ANNUAL RETURN

Pursuant to section 92 (3) of the Act and Rule 12 (1) of the Companies (Management and Administration) Rules, 2014, an extract of annual return in MGT - 9 forms part of this Report.

ACKNOWLEDGEMENT

Your Directors wish to place on record their appreciation, for the contribution made by all the employees at all levels but for whose hard work, and support, your Companyâs achievements would not have been possible. Your Directors also wish to thank its customers, suppliers and bankers for their continued support and faith reposed in the Company.

For and on behalf of the Board of Directors

P. Sundararajan S. Latha

Managing Director Executive Director

(DIN : 00003380) (DIN : 00003388)

V. Balaji K. Vinodhini

Chief Financial Officer Company Secretary

Place : Avinashi

Date : 07.07.2017

Mar 31, 2016

The Members,

The Directors of your Company are pleased to present the 11th Annual Report on the business and operations of the Company together with the Audited Financial Statements for the year ended March 31,2016. The Management Discussion and Analysis is also included in this Report.

FINANCIAL RESULTS

The performance of the Company on standalone and consolidated for the year ended 31st March, 2016 is given as under.

(Rs. in Millions)

S.No.	PARTICULARS	STANDALONE 2015-16	STANDALONE 2014-15	CONSOLIDATED 2015-16	CONSOLIDATED 2014-15
1	Export Sales	4241.72	3718.01	4241.72	3718.01
2	Domestic Sales	1127.08	1039.77	1086.53	1007.65
3	Total Sales	5368.80	4757.78	5328.25	4725.66
4	Other Income	48.63	66.93	49.29	66.67
5	Total Income	5417.43	4824.71	5377.54	4792.33
6	EBITDA	940.80	763.90	902.36	755.52
7	EBITDA %	17.52	16.06	16.94	15.98
8	Depreciation	207.15	197.48	201.00	199.67
9	PBIT	733.65	566.43	701.36	555.85
10	PBIT %	13.66	11.91	13.16	11.76
11	Interest	252.44	311.53	252.72	311.60
12	PBT	481.20	254.90	448.64	244.25
13	PBT %	8.96	5.36	8.42	5.17
14	Provision for Taxation	122.51	203.84	123.77	219.49
15	MAT Credit entitlement	14.88	53.43	30.34	53.43
16	PAT (before appropriation)	204.88	104.49	186.51	78.19
17	PAT %	3.82	2.20	3.5	1.65
18	Preference Dividend	44.00	â	44.00	â
19	EPS (Basic) (Rs.)	8.86	5.75	7.88	4.66
20	EPS (Diluted) (Rs.)	8.86	5.64	7.88	4.56

The Company has carried forward profit of Rs. 204.88 millions to the Balance Sheet in respect of the financial year ended 31st March, 2016.

FINANCIAL PERFORMANCE

Your Company has reported top-line growth of 12.84% over the previous year. At Standalone level, the Gross Revenue was at Rs. 5368.80 million compared with Rs. 4757.78 millions in the previous year. The Operating Profit (EBITDA) before tax stood at Rs.940.80 million as against Rs. 763.90 million in the previous year. The Net Profit for the year stood at Rs. 204.88 million as against Rs. 104.49 million reported in the previous year registering an increase of 96.06%.

The Consolidated Gross Revenue for the Financial Year 2015- 2016 was at Rs. 5328.25 million (Previous Year:: Rs.4725.66 million), registering a growth of 12.75%. The Consolidated Operating Profit (EBITDA) stood at Rs. 902.36 million (Previous Year: Rs.755.52 million). The Consolidated Profit after tax stood at Rs. 186.51 million (Previous Year: Rs.78.19 million).

There are no material changes or commitments affecting the financial position of the Company which have occurred between the end of the financial year and the date of this Report.

DIVIDEND

Your Directors have recommended a dividend of 3% for the 20,000,000 Redeemable preference shares of Rs.10/-each from the date of its allotment, ie.22.09.2011 to 31.03.2016 aggregating to Rs.44.00 million (Previous Year: nil). This cumulative dividend will be paid upon the approval of the shareholders of the Company at the ensuing Annual General Meeting.

SUBSIDIARY COMPANIES AND CONSOLIDATED FINANCIAL STATEMENTS

The consolidated financial statements of the Company and its subsidiaries has been prepared in accordance with applicable accounting standards, issued by the Institute of Chartered Accountants of India and is available at the registered office of the Company for the shareholders.

A statement pursuant to first proviso to Section 129(3) of the Companies Act, 2013, in Form No. AOC-1 in respect of subsidiary companies is attached vide Annexure -1.

REVIEW OF OPERATIONS

The Company has increased 120 sewing machines during the year over the previous period, The Company continues its strive to achieve further growth in the current year to meet the expectations of the customers timely.

The Processing Division has achieved 85% utilization of its capacity. The embroidery and printing factories have also achieved 90% of their capacities during the year.

With partial modernization of machines, the Spinning Division has improved its quality of yarn. The 30% production of yarn has been used for captive consumption of the garment division of the Company, thus the improved quality of yarn is used for the fabric.

The efficiency level of the factories of the Garment Division has shown improvement in the range of 5% to 10% during the year under review.

The retail division has shown significant growth in terms of increase of retail stores to 40 across the country. The inner garments business has much penetration in Pan India level.

BOARD MEETINGS

During the financial year 2015-16, the Board of the Company held six meetings on 26th June, 2015, 28th August, 2015, 13th November, 2015, 17th December, 2015, 28th December, 2015 and 29th February, 2016.

SHARE CAPITAL

During the year under review, the Company has converted 72,49,454 numbers of 6% Compulsorily Convertible Preference Shares (6% CCPS) of Rs.10/- each and issued 3,45,212 equity shares of Rs.10/- each paid up (including a premium of Rs.200/-) per share and allotted the same in favor of M/s. Euro Asia Agencies Limited, Hong Kong. These shares have the same rights on pari-passu basis with the existing paid-up equity shares of the Company. The paid up Equity Share Capital as at March 31,2016 Rs.371.45 million.

PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS.

In terms of Section 186 of the Companies Act, 2013, the Company has made the following during the year:

(a) Loans given to body corporate/firms: S.P.Apparels UK(P) Ltd. (WOS) - Rs.11.62 million

(b) Guarantees/securities given to body corporate/firms: Nil

(i) S.P.Apparels UK(P) Ltd. (WOS) - Rs. 14.80 million (against 1,50,000 shares subscribed)

(ii) RASI g Energy Private Limited - Rs. 1,58,400/- (against 1034 shares subscribed)

(iii) OPG Power Generation Private Limited - Rs. 3,08,000/- (against 28000 shares subscribed)

(iv) Netaji Apparels Park- Rs. 17,75,000/- (against 1175 shares subscribed)

CORPORATE SOCIAL RESPONSIBILITY (CSR) ACTIVITIES

Pursuant to Section 135 of the Companies Act, 2013, and the relevant rules, the Corporate Social Responsibility (CSR) Committee formulated by the Board has approved a policy on Corporate Social Responsibility which is available on the website of the Company, viz.,www.spapparels.com. The Company''s policy on CSR envisages expenditure in areas falling within the purview of Schedule VII of the Companies Act, 2013.

Your Company''s CSR Committee comprises of the following Directors of the Company

a) Mr. P.Sundararajan - Chairman and Managing Director

b) Mrs. S.Latha - Executive Director

c) Mr. V.Sakthivel - Independent Director

During the year under review, your Company continued and undertaken CSR activities in a much broader scale covering the activities under the Company''s CSR policy.

The average net profits of the Company for the previous three financial years is Rs. 143.80 million. The prescribed CSR expenditure shall be Rs.2.87 million being 2% of the said average net profits. Your Company has expended Rs.0.96 million towards various CSR activities during the year as under.

(Rs. in Millions)
SI No.	CSR Project or Activity identified	Sector in which the Project is Covered	Projects or programs (1) Local area or other (2) Specify the State and district where projects or programs was undertaken	Amount outlay (budget) project or program wise	Amount spent on the projects or Programs Subheads: Direct expenditure on projects or program Overhead	Cumulative expenditure upto to the reporting period	Amount spent: Direct or through implement ing agency
1	2	3	4	5	6	7	8
1	Promotion & Education	Education	Tiruppur District, Tamilnadu	0.26	Direct - 0.14 Over head- 0.12	0.26	Direct - 0.14 Through Implementing Agency 0.25
2	Environmental	Environment	Chennai, Kadalur Districts, Tamilnadu	0.55	Direct - 0.45 Over head- 0.10	0.55	Direct - 0.45 Through Implementing Agency 0.10
3	Others	Charitable Purpose	Tiruppur, Salem and Erode District, Tamilnadu	0.15	Direct - 0.15	0.15	Direct 0.15
	Total			0.96	0.96	0.96	0.96

The major implementing agencies of these activities are:

a. Tirupur Auxilium Salessian Sisters Society-Marialaya, Tiruppur, Tamilnadu.

b. Tesco Sourcing India Private Limited

The implementation and monitoring of CSR policy and its activities are in compliance with the objectives specified under the Companies Act, 2013 and the rules related thereto.

The balance unspent amount of Rs.1.91 million would be expended during the current financial year 2016-17 including the prescribed amount for the current year.

RELATED PARTY TRANSACTIONS

All transactions entered with Related Parties for the year under review were on arm''s length basis and in the ordinary course of business and that the provisions of Section 188 of the Companies Act, 2013 and the Rules made there under are not attracted. Thus, disclosure in form AOC-2 in terms of Section 134 of the Companies Act, 2013 is not required.

Further, these transactions are placed before the Audit Committee and Board of the Company specifying the nature and value of transactions for their consideration and approval.

DIRECTORS'' RESPONSIBILITY STATEMENT

Pursuant to Section 134(3) (c) of the Companies Act, 2013, your Directors hereby state that:

a) in the preparation of the annual accounts for the year ended March 31, 2016, the applicable accounting standards read with requirements set out under Schedule III to the said Act, have been followed and there are no material departures from the same;

b) 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 the Company as at March 31,2016 and of the profit of the Company for the year ended on that date;

d) the Directors have prepared the annual accounts on a ''going concern¹ basis;

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

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

MATERIAL CHANGES AND COMMITMENTS

VIGIL MECHANISM

The Company has a vigil mechanism for reporting of genuine concerns or grievances through its Whistle Blower policy. The Whistle Blower Policy has been posted on the website of the Company. The Company provides key positions to women professionals and encourage no disparity in any manner. This has created a congenial work atmosphere for women and to express their confidence of reporting of any grievances.

CONSERVATION OF ENERGY

The Company continues to give major emphasis for conservation of energy. The efficiency of energy utilization in each of the factories is monitored, in order to achieve effective conservation of energy.

TECHNOLOGY ABSORPTION

The manufacturing processes are being constantly updated. Product developments have resulted in reducing the cost of production and also provided flexibility in manufacturing.

FOREIGN EXCHANGE EARNINGS AND OUTGO

(Rs. in Millions)

	2015-16	2014-15
Foreign Exchange earned through exports	4172.47	3679.04
Foreign Exchange used	222.98	98.86

BUSINESS RISK MANAGEMENT

The Board has constituted a risk management committee for development and implementation of risk management policy for the Company including identification of elements of risk, if any. As such the Company has no principal risks or uncertainties which threaten the existence of the Company.

ANNUAL EVALUATION

The Board evaluates its performance at its meetings and that of its committees and individual directors as a part of good corporate governance.

This evaluation is broadly based on parameters such as understanding of the Company''s vision, objectives, skills, knowledge, experience, participation and attendance in Board/ Committee meetings.

The performance evaluation of the Chairman and Managing Director of the Company was made by the Independent Directors taking in the account the views of all other Directors. They also assessed the quality, quantity and timeliness of flow of information between the Company management and the Board. The Directors expressed overall satisfaction on the evaluation process.

DIRECTORS

Mr.P.Velusamy and Mr.P.Ashokaraman Directors, retired at the Annual General Meeting held on 30th September, 2015 and they choose themselves not for re-appointment as Directors of the Company. The Board recorded its appreciation for the valuable guidance and services rendered by them during the tenure of their directorship of the Company.

Mr.V.Senthil, Independent Director, resigned from the Board effective from 13th November, 2015 and the Board placed on record its appreciation for the valuable services rendered by him during his tenure.

M/s. P.Yesuthasen, A.S.Anand Kumar, and G.Ramakrishnan were appointed as Independent Directors on the Board of the Company, for a term of 5 (five) years, not liable to retire by rotation in compliance with the provisions of the Companies Act, 2013 and the rules made there under.

In accordance with the provisions of Section 152 of the Companies Act, 2013 and the Company''s Articles of Association, Mrs.S.Latha, Executive Director and Mr.S.Chenduran, Director (Operations) retire by rotation at the forthcoming Annual General Meeting and, being eligible they offer themselves for re-appointment.

The Board at its meeting held on 6th June, 2016 considered and approved re-appointment of Mrs.S.Latha, Executive Director of the Company for a period of 5 years with effect from 16th August, 2016 (previous 5 year term expires on 15th August, 2016) and payment of remuneration to her subject to the approval of the shareholders of the Company at the ensuing Annual General Meeting as per the applicable provisions of the Companies Act, 2013.

STATUTORY AUDITORS

M/s. Deloitte Haskins & Sells, Chartered Accountants, Coimbatore, (Firm Registration No.008072S), The retiring statutory auditors, are eligible for re-appointment and have given a certificate of consent under Section 139 of the Companies Act, 2013 for their appointment at the ensuing Annual General Meeting to act as the statutory auditors of the Company from the conclusion of the ensuing Annual General Meeting till the conclusion of the next Annual General Meeting.

SECRETARIAL AUDITOR

Pursuant to the provisions of section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed M/s. S.Rajaguru & Associates, Company Secretary in Practice to undertake the Secretarial Audit of the Company. The Secretarial Audit report in Form MR-3 for the year ended 31st March, 2016 is annexed vide Annexure No.2. There is no secretarial audit qualification for the year under review.

PUBLIC DEPOSITS

EXTRACT OF ANNUAL RETURN

The details forming part of the extract of Annual Return in Form MGT-9 is annexed herewith vide Annexure-3.

PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES

In terms of section 197(12) of the Companies Act, 2013 read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the particulars of employees as applicable are given hereunder.

Date of

Remune -

Last

No.

Name

Age

Designation & Nature of duties

ULUallTICaXIOn

& Experience

commen

cement

ration

Rs.Lacs

Employ

ment

held

Mr. P. Sundararajan

Chairman and Managing Director

B.Sc

(35 years)

18.11.05

84.00

Partner -S.P.

Apparels

Notes:

(i) Nature of employment: contractual.

(ii) The remuneration includes salary and other perquisites evaluated as per Income Tax Rules wherever necessary.

(iii) Mr.P.Sundararajan, Chairman and Managing Director is related to Mrs.S.Latha, Executive Director, and Mr.S.Chenduran,Director (Operations).

MANAGEMENT DISCUSSION AND ANALYSIS

A report on Management Discussion and Analysis is annexed (Annexure-4) covering the industry scenario, opportunities and growth prospects.

ACKNOWLEDGEMENT

Your Directors wish to place on record their appreciation, for the contribution made by the employees at all levels but for whose hard work, and support, your Company''s achievements would not have been possible. Your Directors also wish to thank its customers, suppliers and bankers for their continued support and faith reposed in the Company.

On behalf of the Board of Directors,

Avinashi P.SUNDARARAJAN

06.06.2016 Chairman and Managing Director

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