AFFLUENCE

NOTICE

NOTICE is hereby given that the Tenth Annual General Meeting of the members of M/s Sai Silks (Kalamandir) Limited will be held on Saturday, 29th September, 2018  at 11.00 A.M. at the Registered Office of the Company situated at 6-3-790/8, Flat No.1, Bathina Apartments, Ameerpet, Hyderabad - 500016 to transact the following business:     

ORDINARY BUSINESS:

1.    To receive, consider and adopt the Audited Financial Statements of the Company for the financial year ended 31st March, 2018 along with the Notes thereon and the Reports of the Board of Directors and the Auditors thereon.

2.    To appoint a Director in place of Mr. Durgarao Doodeswara Kanaka Chalavadi who retires by rotation and being eligible offers himself for reappointment.

By Order of the Board

For SAI SILKS (KALAMANDIR) LIMITED

Ch. Naga Kanaka Durga Prasad

Chairman & Managing Director

DIN:09129166

Place: Hyderabad

Date:  24/08/2018                                                                         

NOTES:

1.    A MEMBER ENTITLED TO ATTEND AND TO VOTE AT THE MEETING IS ENTITLED TO APPOINT A PROXY TO ATTEND AND VOTE ON A POLL INSTEAD OF HIMSELF/HERSELF AND SUCH A PROXY NEED NOT BE A MEMBER OF THE COMPANY. The Proxy form duly filled in should be deposited at the Registered Office of the Company not less than 48 hours before the commencement of the Meeting. All alterations/corrections made in the form of Proxy should be initialed by the Member.

2.    Members/Proxies are requested to bring their copies of Annual Report and the attendance slip sent herewith duly filled in for attending the meeting.

3.    A person can act as proxy on behalf of members not exceeding fifty and holding in aggregate not more than ten percent of the total share capital of the Company carrying voting rights. However, a member holding more than ten percent of the total share capital of the Company carrying voting rights may appoint single person as proxy for his entire shareholding and such person shall not act as a proxy for any other person or shareholder.

4.    Information in respect of Mr. Durgarao Doodeswara Kanaka Chalavadi, Director seeking re-appointment as required under the Secretarial Standards on General Meetings (SS-2) issued by ICSI is attached herewith.

5.    As per SS-2, complete particulars of the venue of the Meeting through route map has been attached herewith the Notice.

Information in respect of Director seeking re-appointment as required under the Secretarial Standards on General Meetings issued by ICSI:-

ROUTE MAP

DIRECTORS' REPORT

Dear Shareholders,

Your Directors have immense pleasure in presenting the 10th Annual Report of your Company together with Audited Accounts for the financial year ended 31st March 2018.

1.         FINANCIAL RESULTS:

                                                                                                        (Rs. In Crores)

2.        REVIEW OF PERFORMANCE & COMPANYS STATE OF AFFAIRS:

Your management feels proud to mention that year on year growth has become a hallmark feature of your Company.

The Company has recorded yet another impressive year of good performance, despite the market odds. During the year under review, the turnover of your Company increased by more than 28 % as compared to last financial year.

Further, during the financial year under review, certain fixed expenses such as depreciation & amortization expenses increased from Rs.7.66 to Rs.9.05 Crores and finance costs increased from Rs.17.21 Crores to Rs.18.12 Crores as compared to the preceding financial year. Profit before taxes stood at Rs.26.72 Crores for the FY ended 31st March, 2018 as against Rs.22.73 Crores for the FY ended 31st March, 2017. After providing for taxes, your Company earned a Net Profit of Rs.15.31 Crores when compared to Rs.14.09 Crores for the FY ended 31st March, 2017.

The newly launched brand KLM has created ripples in the textiles retail market and has become an instant hit with all the sections of society and age group.

During the year under review and till the date of this Report, your Company has opened the following new showrooms:

  Further, the Company proposes to open the following showrooms as detailed hereunder: 

All the new showrooms have recorded excellent performance, in terms of customer response and sales turnover.

No amount is being proposed to be transferred to Reserves for the financial year ended 31st March, 2018.

3.         MATERIAL CHANGES AFTER THE CLOSURE OF THE FINANCIAL YEAR :

Apart from the business related matters which are routine in nature, there are no material changes that took place after the closure of the Financial Year.

4.        FUTURE OUTLOOK:

  The Company proposes to open the following showrooms as detailed hereunder: 

Industry scenario

As we have been witnessing in the recent past, Indian apparel & clothing market has become one of the most dynamic and fashion driven markets across the economy. Further, it is driven by several factors such as rising income level in most parts of the country, changing life style, and rapid urbanization.

Further, Indian apparel & clothing market has witnessed significant growth in the recent past due to strong macro-economic factors together with favorable demographics. Indian apparel & clothing market has consistently grew more than 5.5% year on year basis and is expected to grow at a much higher rate in the near future due to various economic and demographic changes in the nation.

Indian apparel & clothing market is dominated by saree segment, which is most common apparel for the women across the nation. This clothing segment accounted for 43.5% of the overall Indian fabric consumption for the domestic apparel & clothing market. Shirting material represented highest market share in mens segment, this segment accounted for 9.0% of the overall Indian apparel & clothing market. However Jeans and T-Shirt segments are expected to witness highest growth.

At Company level

As you are aware, your Company, since its inception, has concentrated predominantly on sarees which contribute substantially on its topline as well as its bottomline.

However, the newly launched brand KLM has been developed targeting all the sections of society and age group. Alongside the existing brands, your management is aggressively promoting the new format.

Further, the brands Kalamandir and Varamahalakshmi are also performing good in terms of market share.

5.         CHANGE IN NATURE OF BUSINESS:

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

6.         DIVIDEND:

As discussed elsewhere in this Report, your Company has been constantly expanding its operations and reach by opening new outlets under various brand names and formats. In order to meet the long term capital requirements, your Directors have resolved to plough back the profits for the FY ended 2018. Hence, no Dividend is being recommended for the current financial year.

7.         SHARE CAPITAL:

During the year under review the company has made a preferential allotment of 4,50,000 equity shares, thereby raising the equity capital to Rs.23,40,45,880 /- in order to meet the  working capital requirements and capital expenditures.

8.         BOARD AND COMMITTEE MEETINGS:

The Board met 12 times during the Financial Year 2017-18 on the following dates:

01.04.2017 15.04.2017, 12.08.2017, 05.09.2017, 09.10.2017, 01.11.2017, 01.12.2017, 04.12.2017, 06.12.2017, 15.12.2017, 28.12.2017, and 02.03.2018.

The intervening gap between any two consecutive Board Meetings was within the period prescribed under the provisions of the Companies Act, 2013.

The names of members of the Board and their attendance at the Board Meetings are as under:

9.         COMPOSITION OF COMMITTEES:

COMMITTEE MEETINGS:

Audit Committee:

The Committee met 4 times during the financial year under review i.e., on 15.04.2017, 05.09.2017, 28.12.2017 and 02.03.2018.

Attendance at the meetings:

Nomination and Remuneration Committee:

The Committee met  2 times during the financial year under review i.e., on 05.09.2017 and 28.12.2017.

Attendance at the meetings:

Stakeholders Relationship Committee

The Committee met 3 times during the financial year under review i.e., on 15.04.2017, 09.10.2017 and 02.03.2018.

Attendance at the meetings:

Executive Management Committee

The Committee met 2 times during the financial year under review i.e., on 12.08.2017 and 06.12.2017.

Attendance at the meetings:

Corporate Social Responsibility Committee

The Committee met 2 times during the financial year under review i.e., on 15.04.2017 and 05.09.2017.

Attendance at the meetings:

10.       DIRECTORS AND KEY MANAGERIAL PERSONNELS:

Mr. Annam Kalyana Srinivas retired by rotation in the previous AGM held on 30.09.2017 and was reappointed thereat.

In accordance with the provisions of Section 152 of the Companies Act, 2013, Mr. Durgarao Doodeswara Kanaka Chalavadi (DIN: 02689280), Director of the Company, retires by rotation at the ensuing Annual General Meeting of the Company and being eligible, offers himself for reappointment.

Mrs. Lakshmi Sowjanya Alla has resigned from the office of Company Secretary (a Key Managerial Personnel of the Company) w.e.f. 30th November, 2017.

11.       DECLARATION BY INDEPENDENT DIRECTORS:

The Company has received respective declarations from all the Independent Directors confirming that they meet the criteria of independence as prescribed under sub-section (7) of Section 149 of the Companies Act, 2013.

In compliance with schedule IV of the Companies Act, 2013 the Independent Directors held their meeting on 05th September, 2017, without the attendance of non independent directors and members of the management, inter alia, to discuss the following:

Noting the report of performance evaluation of the Board from the Chairman of the Board;

Review of the performance of non-independent directors and the Board;

Review of the performance of the Chairman of the Company;

Assessment of the quality and quantity and timeliness of flow of information to the Board;

All independent directors were present at the aforesaid meeting.

12.       DIRECTORS RESPONSIBILITY STATEMENT:

Pursuant to the provisions of Section 134 (3) (c) and Section 134 (5) of the Companies Act, 2013, the Board of Directors, to the best of its knowledge and ability, confirm that:

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

(b)   they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit and loss of the company for that period;

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

(d)   they have prepared the annual accounts on a going concern basis;

(e)   they have laid down internal financial controls to be followed by the company and such internal financial controls are adequate and were operating effectively;

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

13.       AUDITORS:

a)    STATUTORY AUDITORS

                        The shareholders in their meeting held on 30th September, 2017 appointed M/s. Kannegolla Krishna Rao & Co., Chartered Accountants, Eluru, (FRN: 001727S), as the Statutory Auditors of the Company for a period of 5 years i.e., till the conclusion of 14th Annual General Meeting.

In terms of the provisions of Section 139 of the Companies Act, 2013, the appointment of auditors shall be placed for ratification at every AGM. The said requirement of ratification has been done away with by virtue of Companies (Audit and Auditors) Second Amendment Rules, 2018, dated 7th May, 2018. In view of the said amendment, the appointment of M/s Kannegolla Krishna Rao & Co., Chartered Accountants, as the Statutory Auditors of the Company, will continue as such till the conclusion of 14th AGM without any further ratification in every AGM.

b)    INTERNAL AUDITOR

Pursuant to the provisions of Section 138 of the Companies Act, 2013 and the Rules made thereunder, your Company has appointed Mr. V.N.S. Srinivasa Rao as the Internal Auditor of the Company.  

c)    SECRETARIAL AUDITOR

Pursuant to provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, a copy of Secretarial Audit for the FY ended 31st March, 2018 is attached herewith and marked as Annexure IV hereto.

            d)         COST RECORDS:

            It is hereby confirmed that the maintenance of cost records has not been specified by      the Central Government under section 148(1) of the Companies Act, 2013 and hence             accounts and records related thereto are not required to be made or maintained.

14.       DIRECTORS EXPLANATION TO AUDITORS OBSERVATIONS:

            No qualification, reservation or adverse remark or disclaimer has been made by the         Statutory Auditors in their report.

            However, in response to the observations made in the Secretarial Auditors Report, your   Board offers the following explanations:

15.       FIXED DEPOSITS:

The Company has neither accepted nor repaid any deposits during the financial year ended on 31.03.2018. Further, there were no outstanding deposits as at the beginning of the FY or at any time during the financial year 2018. Hence, no details are required to be provided pursuant to Rule 8 (5) (v) & (vi) of the Companies (Accounts) Rules, 2014.

16.       SUBSIDIARIES / JOINT VENTURES / ASSOCIATE COMPANIES:

The Company does not have any Subsidiary or Joint venture or Associate Company as on the closure of the financial year under reporting and even as on the date.

17.       CORPORATE SOCIAL RESPONSIBILITY:

During the year under review, your Company undertook various philanthropic activities, predominantly in the areas of Child Education, vocational skills development, women empowerment and healthcare & sanitation, either on its own or in association with KALAMANDIR FOUNDATION.

The CSR Committee, constituted by the Board, is in place and is actively involved in identifying new areas for the purpose of CSR which are more needy, requires immediate attention and are germane to the Companys Policy. Further, the Committee also supervises the progress of CSR activities of the Company.

The composition of the CSR Committee has been already disclosed elsewhere in this Report.

Simultaneously KALAMANDIR FOUNDATION, the CSR arm of your Company is also actively involved in furthering the cause of CSR for your Company.

Pursuant to the provisions of Section 135 of the Companies Act, 2013 your Company was required to spend an amount of Rs.37,74,905  towards CSR Activities.

Your management feels proud to mention that for the financial year ended 31st March, 2018 your Company together with KALAMANDIR FOUNDATION has spent a total amount of Rs.  78,14,181 towards various CSR activities which was far more than the mandatorily prescribed limit.

The Report on CSR activities for FY 2017-18 is appended to this Report as "Annexure III".

18.       CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN     EXCHANGE EARNINGS AND OUTGO:

The details regarding Energy Conservation, Technology Absorption, Foreign Exchange Earnings and Outgo as required under Section 134 (3) (m) of the Companies Act, 2013 read with the Companies (Accounts) Rules, 2014 are given in the Annexure I and forms part of this report.

19.       EXTRACT OF ANNUAL RETURN:

In accordance with Section 134 (3) (a) of the Companies Act, 2013, an extract of the Annual Return in the prescribed Format i.e. Form MGT -9 is appended as Annexure V to this Report.

20.       RELATED PARTY TRANSACTIONS:

The Company has not entered into any related party transactions which are not at arms length basis during the FY ended 31st March, 2018.

However, all the related party transactions entered into during the financial year 2017-18 were at arms length basis and were in the ordinary course of business. The details of related party transactions which were entered into during the previous year / current year are provided in  Note No.30 forming part of the notes to financial statements.

As per clause h of Section 134 (3) of the Companies act, 2013, the particulars of related party transactions, (which were entered  into pursuant to existing contracts as well as fresh contracts) as referred to in Section 188 (1) of the Companies act, 2013 have been disclosed in Form No. AOC 2 which is appended as Annexure II to this Report.

21.       LOANS, GUARANTEES AND INVESTMENTS:

During the year under review, the Company has not made any investment or given any guarantee or provided any security as contemplated under Section 186 of the Companies Act, 2013.

22.       INTERNAL FINANCIAL CONTROL:

The Company has laid down internal financial controls through Entity level controls inter-alia to ensure orderly and efficient conduct of business, including adherence to Companys policies and procedures, accuracy and completeness of accounting records and timely preparation and reporting of reliable financial statements/information, safe guarding of assets, prevention and detection of frauds and errors.

The evaluation of these internal financial controls was done through the internal audit process, established within the Company and also through appointing professional firm to carry out such tests by way of systematic internal audit program. Based on the review of the reported evaluations, the directors confirm that, for the preparation of financial accounts for the year ended March 31, 2018, the applicable Accounting Standards have been followed and the internal financial controls are generally found to be adequate and were operating effectively and that no material weakness were noticed.        

23.       RISK MANAGEMENT POLICY:

The Company has in place a Risk Management Policy, aimed at sustainable business growth with stability and to promote a pro-active approach in reporting, evaluating and resolving risks associated with the business.

Pursuant to the said policy, the Board (a) oversees and approves the Companys enterprise wide risk management framework and (b) oversees that all the risks that the organization may face such as inventory management related risks, financial, liquidity, security, legal, regulatory, reputational and other risks have been identified and assessed and ensures that there is an adequate risk management mechanism in place capable of addressing those risks.

24.       BOARD EVALUATION, NOMINATION AND REMUNERATION POLICY:

Based on the recommendations made by the Nomination and Remuneration Committee, the Company has in place a Policy for performance evaluation of the Board and the committees as a whole and that of the Individual Directors, which include criteria for determining qualifications, positive attributes and independence of Directors.

Besides, the Company also surveys on the best practices prevalent in the Industry with respect to evaluation of the performance of the Board and its members. The Company also avails services of professionals seeking their suggestions on the said matter. Based on the inputs received from the aforesaid sources and in accordance with the Policy of the Company, evaluation process is undertaken at appropriate time(s).

The following policies of the Company are attached herewith and marked as Annexure VI & VII respectively:

a)    Policy for selection of Directors and determining Directors Independence

b)    Remuneration Policy for Directors, Key managerial Personnel and other    employees.

25.       VIGIL MECHANISM / WHISTLE BLOWER POLICY:

The Company has in place a robust and full-fledged Vigil Mechanism and a Whistle Blower Policy for its directors and employees, to report concerns about unethical behavior, actual or suspected fraud or violation of the Companys code of conduct in terms of Section 177 (10) of the Act and Rules thereunder. The mechanism provides adequate safeguards against victimization of persons who use this mechanism.

Mr. Naveen Nandigam, Independent Director of the Company is the Head of the Vigil Mechanism; all the employees have direct access to report their concerns and complaints. During the year under the review no complaint has been received. 

The details of the vigil mechanism are provided in the Corporate Governance Report and are set out in Annexure VIII to this Report.

26.       POLICY ON PREVENTION, PROHIBITION AND REDRESSAL OF SEXUAL   HARASSMENT AT WORK PLACE:

The Company strongly supports the rights of all its employees to work in a harassment free environment. The Company has adopted a Policy on Prevention, Prohibition and Redressal of Sexual Harassment at workplace as per the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules made thereunder. The policy aims to provide protection to Employees at the workplace and prevent and redress complaints of sexual harassment and for matters connected or incidental thereto, with the objective of providing a safe working environment, where Employees feel secure. The Company has also constituted an Internal Committee, known as Anti Sexual Harassment Committee to address the concerns and complaints of sexual harassment and to recommend appropriate action.

We further confirm that during the year under review, there were no cases filed pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

27.       SIGNIFICANT OR MATERIAL ORDERS PASSED BY THE REGULATORS OR         COURTS

There are no orders passed by the Regulators / Courts which would impact the going concern status of your Company and its future operations. Further, it is confirmed that there were no instances of fraud to be reported by the Auditors vide their Report for the FY 2017-18.

28.       ACKNOWLEDGEMENTS:

Your Board members wish to place on record their appreciation for the continued co-operation and support by the Banks, Government authorities, Business Partners, Weavers and Suppliers, Customers and other Stakeholders and more importantly the employees of the Company.

                                           For and on behalf of the Board of Directors

                                                                                 Ch. Naga Kanaka Durga Prasad

Chairman and Managing Director

Place: Hyderabad

Date:  24/08/2018

Annexure - I

CONSERVATION OF ENERGY, RESEARCH & DEVELOPMENT, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS/ OUTGO:

The particulars as prescribed under Section 134 (3) (m) of the Companies Act, 2013 read with the Companies (Accounts) Rules, 2014 are as follows:

A.       Conservation of Energy : NA

i.                the steps taken or impact on conservation of energy;

ii.               the steps taken by the Company for utilizing alternate sources of energy;

iii.        the capital investment on energy conservation equipment;

B.       Technology Absorption: NA

i.    the efforts made towards technology absorption;

ii.    the benefits derived like product improvement, cost reduction, product development or import substitution;

iii.    in case of imported technology (imported during the last three years reckoned from the beginning of the financial year)-

         the details of technology imported; the year of import;

         whether the technology been fully absorbed;

         if not fully absorbed, areas where absorption has not taken place, and the reasons thereof; and

         the expenditure incurred on Research and Development.

C.       Foreign Exchange Earnings and Outgo during the year: 2017-18 (Amount in Rs.)

Foreign Exchange Earned:                   Nil

Foreign Exchange Outgo:                    Rs.63,94,138

For and on behalf of the Board of Directors

Ch. Naga Kanaka Durga Prasad

Chairman and Managing Director

Place: Hyderabad

Date:  24/08/2018  

Annexure II

Form No. AOC-2

(Pursuant to clause (h) of sub-section (3) of section 134 of the Act and Rule 8(2) of the Companies (Accounts) Rules, 2014)

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

1. Details of contracts or arrangements or transactions not at arms length basis: NIL

The Company has not entered into any contract or arrangement or transaction which is not at arms length basis during the year under review.

2. Details of material contracts or arrangement or transactions at arms length basis:

For and on behalf of the Board of Directors

Ch. Naga Kanaka Durga Prasad

Chairman and Managing Director

Place: Hyderabad

Date:  24/08/2018  

Annexure III

ANNUAL REPORT ON CORPORATE SOCIAL RESPONSIBILITY (CSR) ACTIVITIES

1. The CSR is being reported from 01 April, 2017 to 31 March, 2018.

2. A brief outline of the Companys CSR policy, including overview of projects or programmes   undertaken and a reference to the CSR policy and projects /programmes:

A. CSR Policy:

CSR Vision Statement & Objective

CSR Vision:

In alignment with its vision, as a socially responsible corporate citizen, Sai Silks (Kalamandir) Limited (SSKL) will continue to enhance value creation in the society and community in which it operates. Through its conduct, services, and CSR initiatives it will strive to promote sustained growth in the surrounding environs.

Objective:

To operate its business in a sustainable manner respecting the society & the environment, while recognizing the interests of all its stakeholders

To also take up directly or indirectly programs that will benefit the communities in and around its malls/stores/shopping complexes which will over a period of time enhance the quality of life and economic well-being of the local residents.

Through its regular services and additionally through its CSR initiatives, SSKL will generate community goodwill and create a positive image of SSKL as a socially responsible corporate.

Resources:

2% of the average net profits of the Company made during the three immediately preceding financial years.

Any income arising therefrom.

Surplus arising out of CSR activities.

Identification of CSR works:

The applications, representations received from community representatives, NGOs, Panchayat or Govt. agencies requesting assistance for a  Work  to be taken up or SSKL on its own or through its Trust Kalamandir Foundation identifying a work for execution, will be listed.

Areas Identified for CSR activities:

The areas where the Company intends to focus its CSR activity are listed below. This is not an exclusive list and the Company may include other activities, based on the areas identified and felt need for improvement by the CSR Committee-Support the economically backward and children in the need of health and education; Support the humanity during the natural calamities, donation of clothes to flood relief camps; Collaborate in the initiatives of other NGOs for the cause of fostering the needy children health care; Support the initiatives that would help the public at large in understanding the health hazards; Conduct the workshops and create awareness about conservation of natural resources; Promote the activities, which would support the welfare and well-being of the Weavers Community; Eradicating extreme hunger and poverty; Infrastructure Development (village roads, culverts, bus shelters, solar lighting etc); Ensuring environmental sustainability; Drinking water / Sanitation; Healthcare ; Community Development; Education and vocational training; Skill Development; Child care and nutrition.

SSKL will engage in the above activities independently or in such manner that it will complement the work being done by local authorities where ever necessary in such a manner that, the work executed by SSKL or through its Kalamandir Foundation  will offer a multi fold benefit to the community.

Implementation Process:

A CSR Cell will be formed at Malls/ Stores/ Shopping Complexes and at Corporate and Registered Office to identify the various projects / programmes suitable as per the policy of the Company. These identified projects / programmes will be scrutinized by the CSR Committee and select for implementation.

Monitoring:

The coordinators periodically inspect & report the progress of work commissioned every quarter and submit a report to CSR Committee.

B.        Composition of the CSR Committee:

         Mr. Naveen Nandigam (Independent Director)

         Mr. JineshwarKumar Sankhala (Independent Director)   

         Mr. Ch. Naga Kanaka Durga Prasad (Managing Director)                      

            C. Average net profit of the Company for last three financial years:

Average net profit: Rs.18,87,45,271/-

D. Prescribed CSR Expenditure (two percent of the amount mentioned above):

The Company is required to spend Rs 37,74,905 /-towards CSR.

E. Details of CSR spend for the financial year:

a. Total amount spent for the financial year:

            Rs. 78,14,181/-

b. Amount unspent, if any:

            NIL

c. Reason for not spending: N.A.

d. Manner in which the amount spent during the financial year is detailed below:

e.  A responsibility statement of the CSR Committee that the implementation and 

       monitoring of CSR Policy, is in compliance with CSR objectives and Policy of the 

       company.

The implementation and monitoring of Corporate Social Responsibility Policy is in compliance with CSR objectives and policy of the Company.

For and on behalf of the Board of Directors

Ch. Naga Kanaka Durga Prasad                            Naveen Nandigam

Chairman and Managing Director               Chairman CSR Committee

Place: Hyderabad

Date:  24/08/2018

Annexure IV

Form No. MR-3

SECRETARIAL AUDIT REPORT

For the Financial Year ended March 31, 2018

[Pursuant to Section 204(1) of the Companies Act, 2013 and Rule No.9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014]

To,

The Members,

SAI SILKS (KALAMANDIR) LIMITED

6-3-790/8, Flat No. 1, Bathina Apartments

Ameerpet, Hyderabad- 500016

I have conducted the secretarial audit of the compliance of applicable statutory provisions and the adherence to good corporate practices by SAI SILKS (KALAMANDIR) LIMITED, (hereinafter called the Company). Secretarial Audit was conducted in a manner that provided me a reasonable basis for evaluating the corporate conducts / statutory compliances and expressing my opinion thereon.

Based on my verification of the Companys books, papers, minutes books, forms and returns filed and other records maintained by the Company and also the information provided by the Company, its officers, agents and authorized representatives during the conduct of secretarial audit, I hereby report that in my opinion, the Company has, during the audit period covering the financial year ended on 31st March, 2018 complied with the statutory provisions listed hereunder and also that the Company has proper Board-processes and compliance-mechanism in place to the extent, in the manner and subject to the reporting made hereinafter:

I have examined the books, papers, minute books, forms and returns filed and other records maintained by SAI SILKS (KALAMANDIR) LIMITED (the Company) for the financial year ended on 31st March, 2018, as made available to us, according to the provisions of:          

      i.        The Companies Act, 2013 (the Act) and the Rules made thereunder;

     ii.        The Depositories Act, 1996 and the Regulations and Bye-laws framed thereunder;

    iii.        The Securities Contracts (Regulation) Act, 1956 (SCRA) and the Rules made thereunder Not Applicable

   iv.        Foreign Exchange Management Act, 1999 and the Rules and Regulations made thereunder to the extent of Foreign Direct Investment and Overseas Direct Investment and External Commercial BorrowingsNot applicable to the Company during the audit period.

    v.        Regulations and Guidelines under the Securities and Exchange Board of India Act, 1992 (SEBI Act) - Not applicable

   vi.        Other laws applicable specifically to the Company

I have been informed that generally applicable laws such as fiscal laws, labour laws and trade related laws etc., alone are applicable to the Company and hence there are no other laws applicable specifically to the Company.

I have also examined the compliance with the applicable clauses of the following:

i.      Listing Agreement entered into by the Company with Stock Exchange(s) N.A

Since the securities (equity shares) of the Company are not listed, no Listing Agreement has been entered into by the Company with any Stock Exchange.

ii.  Secretarial Standards with regard to Meetings of the Board of Directors (SS-1) and General Meetings (SS-2) issued by The Institute of Company Secretaries of India (effective 1st July 2015).

During the period under review, the Company has complied with the provisions of the Act, Rules, Regulations, Guidelines, Standards, etc. mentioned above subject to the following observations:

         There were few instances where the Company filed forms and returns required to be filed with the Registrar of Companies with additional fee.

         The Company is yet to file Form ADT-1 in connection with appointment of the Statutory Auditors in the AGM held on 30.09.2017.

I further report that:

The Board of Directors of the Company is duly constituted with proper balance of Independent and Non-Independent Directors.

As per the information provided by the Company, adequate notice is given to all directors to schedule the Board Meetings, agenda and detailed notes on agenda were sent sufficiently in advance as per the confirmation given by the management, and a system exists for seeking and obtaining further information and clarifications on the agenda items before the meeting and for meaningful participation at the meeting.

As per the Minutes of the meetings duly recorded and signed by the Chairman, the decisions of the Board were unanimous and no dissenting views have been recorded.

I further report that:

As per the information provided by the management, there are adequate systems and processes in the company commensurate with the size and operations of the company to monitor and ensure compliance with applicable laws, rules, regulations and guidelines.

I further report that during the Audit period, following specific events / actions occurred in the Company in pursuance of the above referred laws, rules, regulations, guidelines, etc., having a major bearing on the Companys affairs-

         Issue and allotment of 4,50,000/- Equity shares  Rs.10 each at a premium of Rs.90 per share on preferential basis.

                                                                                                ANAND KUMAR C KASAT

                                                                                                Practicing Company Secretary 

                                                                                                            M. No.42078

                                                                                                            C.P. No.17420

Place: Hyderabad                                                                                                      

Date: 24.08.2018

[This Report is to be read with our letter of even date which is annexed as Annexure A and forms an integral part of this report.]

Annexure A

To,

The Members,

SAI SILKS (KALAMANDIR) LIMITED

6-3-790/8, Flat No. 1, Bathina Apartments

Ameerpet, Hyderabad- 500016

Secretarial Audit Report of even date is to be read along with this letter.

Management's Responsibility

1.    It is the responsibility of the management of the Company to maintain secretarial records, devise proper systems to ensure compliance with the provisions of all applicable laws and regulations and to ensure that the systems are adequate and operate effectively.

Auditor's Responsibility

2.    My responsibility is to express an opinion on these secretarial records, standards and procedures followed by the Company with respect to secretarial compliances.

3.    I believe that audit evidence and information obtained from the Company's management is adequate and appropriate for us to provide a basis for our opinion.

4.    Wherever required, I have obtained the management's representation about the compliance of laws, rules and regulations and happening of events etc.

Disclaimer

5.    The Secretarial Audit Report is neither an assurance as to the future viability of the Company nor of the efficacy or effectiveness with which the management has conducted the affairs of the Company.

ANAND KUMAR C KASAT

Practicing company Secretary 

M. No.42078

CP No.17420

Place: Hyderabad                                                                                                      

Date: 24.08.2018

Annexure V

Form No.MGT-9

EXTRACT OF ANNUAL RETURN

As on the financial year ended on 31.03.2018

[Pursuant to section 92(3) Act, 2013and rule12 (1) of the

Companies (Management and Administration) Rules, 2014]

I.     REGISTRATION AND OTHER DETAILS:

II.   PRINCIPAL BUSINESS ACTIVITIES OF THE COMPANY

All the business activities contributing 10% or more of the total turnover of the Company shall be stated:-

III. PARTICULARS OF HOLDING, SUBSIDIARYAND ASSOCIATE COMPANIES: N. A.

The Company does not have any Holding, Subsidiary or Associate Company

IV. SHAREHOLDING PATTERN (Equity Share Capital Break up a percentage of Total   Equity)

i)             Category-wise Share Holding

Note:  During the year under review, 4,50,000 equity Shares were allotted to Mr. CH. Nagakanaka Durga Prasad on 28th December, 2017 with the approval of shareholders in their meeting held on 06th December, 2017

ii)            Shareholding of Promoters/Promoters group:

iii)                                 Change in Promoters Shareholding/Promoters group (please specify, if there is no change):

During the year 4,50,000 equity Shares were allotted to Mr. CH. Nagakanaka Durga Prasad (Promoter) on 28th December, 2017

iv)                                 Shareholding Pattern of top ten Shareholders (other than Directors, Promoters and Holders of GDRs and ADRs): NOT APPLICABLE (Since, all the shareholders are either promoters or Directors)

(v)Shareholding of Directors and Key Managerial Personnel:

*Mrs. Lakshmi Sowjanya Alla resigned from the office of Company Secretary w.e.f. 30.11.2017

V.INDEBTEDNESS:

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

VI.   REMUNERATION OF DIRECTORS AND KEY MANAGERIAL PERSONNEL

A.   Remuneration to Managing Director, Whole-time Directors and/or Manager:-

B.   Remuneration to other directors:-

C. REMUNERATION OF KEY MANAGERIAL PERSONNEL OTHER THAN     MD/MANAGER/WTD:

VII. PENALTIES/PUNISHMENT/COMPOUNDING OF OFFENCES: Not Applicable

For and on behalf of the Board of Directors

                    Ch. Naga Kanaka Durga Prasad

            Chairman & Managing Director

                                                                                                                           DIN: 01929166                                           

Place: Hyderabad                                        

Date:  24/08/2018

Annexure - VI

Policy for selection of Directors and determining Directors Independence   Introduction:

1.1  Your Company believes that an enlightened Board consciously creates a culture of leadership to provide a long-term vision and policy approach to improve the quality of governance. Towards this, your Company ensures constitution of a Board of Directors with required composition, diversified expertise and experience and commitment to discharge their responsibilities and duties effectively.

1.2  Your Company recognizes the importance of Independent Directors in achieving the effectiveness of the Board.   Scope:

This Policy sets out the guiding principles for the Nomination and Remuneration Committee for identifying persons who are qualified to become Directors and to determine the independence of Directors, in case of their appointment as independent directors of the Company.  Terms and References:

In this Policy, the following terms shall have the following meanings:

3.1  Director means a director appointed to the Board of the Company.

3.2  Nomination and Remuneration Committee or NR Committee means the committee constituted by Sai Silks (Kalamandir) Limiteds Board in accordance with the provisions of Section 178 of the Companies Act, 2013.

3.3  Independent Director means a director referred to in sub-section (6) of Section 149 of the Companies Act, 2013.   Policy:

4.1 Qualifications and Criteria

4.1.1 The Nomination and Remuneration Committee and the Board shall review on an annual basis, appropriate skills, knowledge and experience required of the Board as a whole and its individual members. The objective is to have a Board with diverse background and experience that are relevant for the Companys operations.

4.1.2In evaluating the suitability of individual Board members, the Nomination Remuneration Committee may take into account factors, such as:General understanding of the Companys business perspective; Educational and professional background Standing in the profession; Personal and professional ethics, integrity and values; Willingness to devote sufficient time and energy in carrying out their duties and responsibilities effectively.

4.1.3 The proposed appointee shall also fulfill the following requirements:Shall possess a Director Identification Number; Shall not be disqualified under the Companies Act, 2013; Shall give his / her written consent to act as Director; Shall endeavor to attend all Board Meetings and wherever he is appointed as a Committee Member, the Committee Meetings; Shall disclose his concern or interest in any Company or companies or bodies corporate, firms including his shareholding at the first meeting of the Board in every financial year and thereafter whenever there is a change in the disclosures already made; Such other requirements as may be prescribed, from time to time, under the Companies Act, 2013 and other relevant laws.

4.1.4 The NR Committee shall evaluate each individual with the objective of having a group that best enables the success of the Companys business.

4.2 Criteria of Independence

4.2.1 The NR Committee shall assess the independence of Directors at the time of appointment / re-appointment and the Board shall assess the same annually. The Board shall re-assess the independence when any new interest or relationship is disclosed by a Director.

4.2.2 The criteria of independence, as laid down in Companies Act, 2013, is as below:

An independent director in relation to a Company, means a director other than a managing director or a whole-time director or a nominee director

a.    who, in the opinion of the Board, is a person of integrity and possesses relevant expertise and experience;

b.    (i) who is or was not a promoter of the Company or its holding, subsidiary or associate Company;

(ii) who is not related to promoters or directors in the Company, its holding, subsidiary or associate Company;

c.    who has or had no pecuniary relationship with the Company, its Holding, subsidiary or associate Company, or their promoters, or directors, amounting to two percent or more of its gross turnover or total income as may be prescribed, whichever is lower, during the two immediately preceding financial years  or during the current financial year;

d.    none of whose relatives has or had pecuniary relationship or transaction with the Company, its holding, subsidiary or  associate Company, or their promoters, or directors, amounting to two per cent or more of its gross turnover or total income or fifty lakh rupees or such higher amount as may be prescribed, whichever is lower, during the two immediately preceding financial years or during the current financial year;

e.    who, neither himself nor any of his relatives

(i)            holds or has held the position of a key managerial personnel or is or has been employee of the Company or its holding, subsidiary or associate Company in any of the three financial years immediately preceding the financial year in which he is proposed to be appointed;

(ii)           is or has been an employee or proprietor or a partner, in any of the three financial years immediately preceding the financial year in which he is proposed to be appointed, of

(A)  a firm of auditors or Company secretaries in practice or cost auditors of the Company or its holding, subsidiary or associate Company; or

(B)  any legal or a consulting firm that has or had any transaction with the Company, its holding, subsidiary or associate Company amounting to ten per cent or more of the gross turnover of such firm;

(iii)          holds together with his relatives two per cent or more of the total voting power of the Company; or

(iv)         is a Chief Executive or director, by whatever name called, of any nonprofit organization that receives twenty-five per cent or more of its receipts from the Company, any of its promoters, directors or its holding, subsidiary or associate Company or that holds two per cent or more of the total voting power of the Company; or

(v)          is a material supplier, service provider or customer or a lessor or lessee of the Company.

f.     shall possess appropriate skills, experience and knowledge in one or more fields of finance, law, management, sales, marketing, administration, research, corporate governance, technical operations, corporate social responsibility or other disciplines related to the Companys business.

g.    shall possess such other qualifications as may be prescribed, from time to time, under the Companies Act, 2013.

h.    who is not less than 21 years of age.

4.2.3 The Independent Directors shall abide by the Code for Independent Directors as specified in Schedule IV to the Companies Act, 2013.

4.3       Other directorships / committee memberships

4.3.1 The Board members are expected to have adequate time and expertise and experience to contribute to effective Board performance. Accordingly, members should voluntarily limit their directorships in other listed public limited companies in such a way that it does not interfere with their role as directors of the Company. The NR Committee shall take into account the nature of and the time involved in a Directors service on other Boards, in evaluating the suitability of the individual Director and making its recommendations to the Board.

4.3.2 A Director shall not serve as Director in more than 20 companies of which not more than shall be 10 Public Limited Companies.

For and on behalf of the Board of Directors

Ch. Naga Kanaka Durga Prasad

Chairman and Managing Director

Place: Hyderabad

Date:  24/08/2018

            Annexure - VII

Remuneration Policy for Directors, Key Managerial Personnel and other employees

1. Introduction:

Your Company recognizes the importance of aligning the business objectives with specific and measureable individual objectives and targets. The Company has therefore formulated the remuneration policy for its directors, key managerial personnel and other employees keeping in view the following objectives:

a)    Ensuring that the level and composition of remuneration is reasonable and sufficient to attract, retain and motivate, to run the Company successfully.

b)    Ensuring that relationship of remuneration to performance is clear and meets the performance benchmarks.

c)    Ensuring that remuneration involves a balance between fixed and incentive pay reflecting short and long term performance objectives appropriate to the working of the Company and its goals.

2. Scope:

This Policy sets out the guiding principles for the Nomination and Remuneration Committee for recommending to the Board the remuneration of the directors, key managerial personnel and other employees of the Company.

Terms and References:

In this Policy, the following terms shall have the following meanings:

3.1 Director means a director appointed to the Board of the Company.

3.2 Key Managerial Personnel means

(i) the Chief Executive Officer or the Managing Director or the Manager;

(ii) the Company Secretary;

(iii) the Whole-time Director;

(iv) the Chief Financial Officer; and

(v) such other officer as may be prescribed under the Companies Act, 2013

3.3  Nomination and Remuneration Committee or NR Committee means the committee constituted by Board of Directors your Company  in accordance with the provisions of Section 178 of the Companies Act, 2013.

4.         Policy:

4.1       Remuneration to Executive Directors and Key Managerial Personnel

4.1.1    The Board, on the recommendation of the Nomination and Remuneration Committee, shall review and approve the remuneration payable to the Executive Directors of the Company within the overall limits approved by the shareholders.

4.1.2    The Board, on the recommendation of the Nomination and Remuneration Committee, shall also review and approve the remuneration payable to the Key Managerial Personnel of the Company.

4.1.3    The remuneration structure to the Executive Directors and Key Managerial Personnel may include the following components:

(i) Basic Pay

(ii) Perquisites and Allowances

(iii) Commission

(iv)  Retiral benefits

(v) Annual Performance Bonus

4.2       Remuneration to Non-Executive Directors

The Board, on the recommendation of the Nomination and Remuneration Committee, shall review and approve the remuneration payable to the Non-Executive Directors of the Company within the overall limits approved by the shareholders, if any.

4.3       Remuneration to other employees

Employees may be assigned grades according to their qualifications and work experience, competencies as well as their roles and responsibilities in the organization. Individual remuneration shall be determined within the appropriate grade and shall be based on various factors such as job profile, skill sets, seniority, experience and prevailing remuneration levels for equivalent jobs.

For and on behalf of the Board of Directors

Ch. Naga Kanaka Durga Prasad

Chairman and Managing Director

Place: Hyderabad

Date:  24/08/2018

Annexure VIII

VIGIL MECHANISM / WHISTLE BLOWER POLICY

As referred in the Directors Report and the Report on Corporate Governance, the Company has framed and adopted the Whistleblower policy that covers our directors and employees. The policy is subject to need based review and modifications, if required, from time to time.

Scope and purpose:

The purpose of this policy is to define the Company's policy on reporting irregularities and for submitting complaints regarding questionable accounting, internal accounting controls and auditing practices, to provide employees with procedures on reporting such irregularities and complaints, including confidential reporting, and to establish procedures for the receipt, retention and remedying of such irregularities and complaints.

This policy applies to all employees of the Company.  Roles and Responsibilities

How & Where to Report

You must report all suspected violations to (i) your immediate supervisor; (ii) the nodal officer, i.e., the Chairman of Audit Committee; at or (iii) anonymously, by sending an email to: secretarial@kalamandir.com

If you have reason to believe that your immediate supervisor or the Company Secretary is involved in the suspected violation, your report may be made to the Chairman of the Audit Committee at the registered office of the Company.

Because you have several means of reporting, you need never report to someone you believe may be involved in the suspected violation or from whom you would fear retaliation.

Post reporting Investigation

All reports under this Policy will be promptly and appropriately investigated, and all information disclosed during the course of the investigation will remain confidential, except as necessary to conduct the investigation and take any remedial action, in accordance with applicable law. Everyone working for or with the Company has a duty to cooperate in the investigation of reports of violations. Failure to cooperate in an investigation, or deliberately providing false information during an investigation, can be the basis for disciplinary action, including termination of employment. If, at the conclusion of its investigation, the Company determines that a violation has occurred, the Company will take effective remedial action commensurate with the nature of the offense. This action may include disciplinary action against the accused party, up to and including termination. Reasonable and necessary steps will also be taken to prevent any further violations of Company policy.

Zero - Retaliation policy

No one may take any adverse action against any employee for complaining about, reporting, or participating or assisting in the investigation of, a reasonably suspected violation of any law, this Policy, or the Company's Code of Conduct and Ethics. The Company takes reports of such retaliation seriously. Incidents of retaliation against any employee reporting a violation or participating in the investigation of a reasonably suspected violation will result in appropriate disciplinary action against anyone responsible, including possible termination of employment. Those working for or with the Company who engage in retaliation against reporting employees may also be subject to civil, criminal and administrative penalties.

Modification

The Audit Committee or the Board of Directors of your Company can modify this Policy unilaterally at any time without notice. Modification may be necessary, among other reasons, to maintain compliance with national, state or local regulations and / or accommodate organizational changes within the Company.

Please sign the acknowledgment form below and return it to the Company Secretary. This will let the Company know that you have received the Policy and are aware of the Company's commitment to a work environment free of retaliation for reporting violations of any Company policies or any applicable laws.

For and on behalf of the Board of Directors

Ch. Naga Kanaka Durga Prasad

Chairman and Managing Director

Place: Hyderabad

Date:  24/08/2018

Your management feels proud to mention that year on year growth has become a hallmark feature of your Company. The Company has recorded yet another impressive year of good performance, despite the market odds. During the year under review, the turnover of your Company increased by more than 28 % as compared to last financial year.   Further, during the financial year under review, certain fixed expenses such as depreciation & amortization expenses increased from Rs.7.66 to Rs.9.05 Crores and finance costs increased from Rs.17.21 Crores to Rs.18.12 Crores as compared to the preceding financial year. Profit before taxes stood at Rs.26.72 Crores for the FY ended 31st March, 2018 as against Rs.22.73 Crores for the FY ended 31st March, 2017. After providing for taxes, your Company earned a Net Profit of Rs.15.31 Crores when compared to Rs.14.09 Crores for the FY ended 31st March, 2017. The newly launched brand “KLM” has created ripples in the textiles retail market and has become an instant hit with all the sections of society and age group.   During the year under review and till the date of this Report, your Company has opened the following new showrooms:   Sl. No. Brand name / format Location 1. KLM Fashion Mall Ameerpet, Hyderabad 2. KLM Fashion Mall Kukatpally, Hyderabad 3. KLM Fashion Mall Jagadamba Centre, Visakhapatnam 4. KLM Fashion Mall Trunk Road, Nellore 5. KLM Fashion Mall J N Road, Rajahmundry     Further, the Company proposes to open the following showrooms as detailed hereunder:   Sl. No. Brand name / format Location 1. KLM Fashion Mall Marathahalli, Bengaluru 2. KLM Fashion Mall HSR Layout, Bengaluru 3. KLM Fashion Mall Jayanagar, Bengaluru 4. Kanchipuram Varamahalakshmi M G Road, Vijayawada   All the new showrooms have recorded excellent performance, in terms of customer response and sales turnover.

A.       Conservation of Energy : NA   i.                the steps taken or impact on conservation of energy; ii.               the steps taken by the Company for utilizing alternate sources of energy; iii.        the capital investment on energy conservation equipment;  

A.       Technology Absorption: NA i.    the efforts made towards technology absorption; ii.    the benefits derived like product improvement, cost reduction, product development or import substitution; iii.    in case of imported technology (imported during the last three years reckoned from the beginning of the financial year)- ·         the details of technology imported; the year of import; ·         whether the technology been fully absorbed; ·         if not fully absorbed, areas where absorption has not taken place, and the reasons thereof; and the expenditure incurred on Research and Development

A.       Foreign Exchange Earnings and Outgo during the year: 2017-18 (Amount in Rs.)   Foreign Exchange Earned:                   Nil Foreign Exchange Outgo:                    Rs.63,94,138

Pursuant to the provisions of Section 134 (3) (c) and Section 134 (5) of the Companies Act, 2013, the Board of Directors, to the best of its knowledge and ability, confirm that:   (a)   in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;   (b)   they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit and loss of the company for that period;   (c)   they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;   (d)   they have prepared the annual accounts on a going concern basis;   (e)   they have laid down internal financial controls to be followed by the company and such internal financial controls are adequate and were operating effectively;   (f)    they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.