Shahlon Silk Industries Ltd Directors Report

The Board of Directors present the Companys 16th Annual Report and the Companys audited financial statements for the financial year ended March 31, 2024.

FINANCIAL RESULTS (Rs. in Lakhs)

Particulars	2023-24	2022-23
Total Income	31139.09	30896.76
Profit before Interest, Depreciation and Tax	2838.86	2,228.25
Less : Interest	1478.39	1420.28
Depreciation	781.67	905.38
Profit before exceptional items and Tax	578.80	(97.41)
Profit (loss) on sale of Assets/Investment	32.69	612.78
Profit before Tax	611.49	515.37
Less : Provision for Current Taxation	204.34	170.29
Provision for Deferred Taxation	8.99	(32.69)
Excess/(Short) provision for taxation in earlier year	-	-
Net Profit	398.16	377.77
Add : Balance brought forward from previous year	2802.86	2457.65
Depreciation on Fixed Assets Revaluation	18.71	21.02
Amount available for Appropriation	3219.73	2856.44
Less: Dividend paid during the year	53.58	53.58
Balance Carried to Balance Sheet	3166.15	2802.86

OPERATIONAL PERFORMANCE

During the year under review, your Company has achieved turnover of Rs.31139.09 lakh as against Rs.30896.76 lakh in the previous year, almost at the same level as compared to previous financial year.

An Earnings before Interest, Depreciation and Tax (EBITDA), during the year under review was Rs.2838.86 lakh as compared to Rs.2228.25 lakh in the previous year reflecting healthy growth in profit margins. During the year under review, Profit before tax was Rs. 578.80 lakh as compared to loss of Rs. 97.41 lakh in the previous year. The Profit after tax for the financial year under review was Rs.398.16 lakh as against Rs.377.77 lakh for the previous year.

DIVIDEND

The Board of Directors is pleased to recommend a dividend of Rs.0.06/-(i.e.3.00%) per equity share of Rs. 2/- each on the paid-up equity share capital of company amounting to Rs.53.58 lakh. The dividend payment is subject to approval of members at the ensuing Annual General Meeting. The final dividend once approved by Shareholders will be paid within the stipulated time subject to deduction of tax at source.

DEPOSITS

Your Company has neither accepted nor renewed any deposits within the meaning of the Companies (Acceptance of Deposits) Rules, 2014.

DIRECTORS AND KEY MANAGERIAL PERSONNEL

The Companys Board of Directors comprises an optimum blend of Executive, Non-Executive and Independent Directors. The Chairperson of the Board is an Executive Director. As on March 31, 2024, the Board of directors comprises Six (6) Directors; one Managing Director, one whole-Time Director, One Executive Director, and the remaining three (3) Independent Directors.

During the year under review, Shri Rajendra Kundanlal Desai was re-appointed as an independent director of the Company for a further period of 5 years, by the Board on the recommendation of Nomination and Remuneration Committee, with effect from 3th September, 2023 and Members approved the said appointment through their meeting held on 29th September, 2023.

Smt. Richa Manoj Goyal was re-appointed as an independent director of the Company for a further period of 5 years, by the Board on the recommendation of Nomination and Remuneration Committee, with effect from 3th September, 2023 and Members approved the said appointment through their meeting held on 29th September, 2023.

Shri. Vaibhav Jayantbhai Mehta was re-appointed as an independent director of the Company for a further period of 5 years, by the Board on the recommendation of Nomination and Remuneration Committee, with effect from 17th June, 2024 and Members approved the said appointment through their meeting held on 29th September, 2023.

Pursuant to the provisions of section 152 of the Companies Act, 2013 and in accordance with provisions of Articles of Association of the Company, Shri Nitin R. Shah (DIN 00010487), Whole Time Director of the Company retires by rotation at the ensuing Annual General Meeting and being eligible, offers himself for re-appointment. Your Directors recommend his re-appointment.

None of the Directors of the Company are disqualified for being appointed as Directors as specified under Section 164(2) of the Act read with Rule 14(1) of the Companies (Appointment and Qualification of Directors) Rules, 2014.

DECLARATION BY INDEPENDENT DIRECTORS

All the Independent Directors of the Company have given declarations that:

[a] they meet the criteria of independence as laid down under the Act and the Listing Regulations;

[b] they have complied with the Code of Independent Directors prescribed under Schedule IV of the Act; and

[c] they have registered themselves with the Independent Directors Database maintained by the Indian Institute of Corporate Affairs.

NOMINATION AND REMUNERATION POLICY:

The Company has devised the Nomination and Remuneration Policy for the selection, appointment and remuneration of Directors, Key Managerial Personnel and also remuneration of other employees including Senior Management employees who have the capacity and ability to lead the Company towards achieving sustainable development.

The extract of Nomination and Remuneration Policy is provided in the Corporate Governance Report and forms part of Boards Report.

PARTICULARS OF EMPLOYEES

The Disclosure required under Section 197(12) of the Companies Act, 2013 read with the Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is annexed as ‘Annexure 1 and forms an integral part of this Report.

A statement comprising the names of top 10 employees in terms of remuneration drawn in terms of Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is annexed as ‘Annexure 2 and forms an integral part of this report. This Annexure-2 is not being sent along with this annual report to the members of the company considering the provisions of Section 136 of the Companies Act, 2013. Members who are interested in obtaining these particulars may write to the Company Secretary at the Registered Office of the Company. The aforesaid Annexure is also available for inspection by Members at the Registered Office of the Company, 21 days before and up to the date of the ensuing Annual General Meeting during the business hours on working days.

There were no employees whose remuneration was in excess of the limits in pursuance of section 197(12) of the Companies Act, 2013 read with Rule 5(2) of The Companies (Appointment & Remuneration of Managerial Personnel) Rules, 2014.

DETAILS OF SUBSIDIARY/JOINT VENTURES/ASSOCIATE COMPANIES

Your Company does not have any Subsidiary, Joint Ventures or Associate Company.

ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND 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 the particulars relating to conservation of energy, Technology Absorption and foreign exchange earnings and outgo is appended as an ‘Annexure-3 to the Boards Report.

DIRECTORS RESPONSIBILITY STATEMENT

To the best of their knowledge, belief and according to the information and explanations obtained, your Directors make the following statements in terms of Section 134(3) (c) & 134 (5) of the Companies Act, 2013: a) In the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

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 and loss 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 had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively.

f) 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.

STATUTORY AUDITORS AND AUDITORS REPORT

M/s Rasesh Shah & Associates, Chartered Accountants (Firm Registration No. 0108671W) will complete their second term as the Statutory Auditors of the company on conclusion of the ensuing 16th AGM.

The Board of Directors on the recommendation of Audit Committee have recommended the appointment of M/s. HTKS & Co., Chartered Accountants (Firm Registration No 111032W) as the Statutory Auditors of the Company, for a term of 5 consecutive years commencing from the conclusion of 16th AGM till the conclusion of 21th AGM of the Company.

M/s. HTKS & Co., have confirmed their eligibility and qualification required under the Act for holding the office as Statutory Auditors of the Company.

There is no qualification or adverse remark in Auditors Report. There is no incident of fraud requiring reporting by the Auditors under Section 143(12) of the Act.

SECRETARIAL AUDITORS AND SECRETARIAL AUDIT REPORT:

The Company has appointed Shri Bhairav H. Shukla, Practicing Company Secretary, (CP: 5820) Surat to conduct the Secretarial Audit of the Company as required by Section 204 of the Companies Act, 2013 and Rules made thereunder. The Company provided all assistance and facilities to the Secretarial Auditors for conducting their audit. Shri Bhairav H. Shukla, has also conducted the Annual Secretarial Compliance pursuant to Regulation 24A of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The Secretarial Audit Report for the financial year ended 31st March, 2024 is annexed herewith as ‘Annexure- 4.

The Auditors Report and the Secretarial Audit Report for the Financial Year ended March 31, 2024, do not contain any qualifications or reservations, or adverse remarks.

COST AUDITORS

In terms of the provisions of Section 148 of the Act read with the Companies (Cost Records and Audit) Rules, 2014 as amended from time to time, the Board of Directors, on the recommendation of the Audit Committee, has appointed M/s. PNR & Co. LLP, Cost Accountants, Surat (Firm Registration No: 006470) as Cost Auditor of the Company, for the financial year ending 31st March 2025, on a remuneration as mentioned in the Notice convening the 16th Annual General Meeting for conducting the audit of the cost records maintained by the Company.

A Certificate from M/s. PNR & Co. LLP, Cost Accountants has been received to the effect that their appointment as Cost Auditor of the Company, if made, would be in accordance with the limits specified under Section 141 of the Act and Rules framed thereunder.

A resolution seeking Members approval for remuneration payable to Cost Auditors forms part of the Notice of the 16th Annual General Meeting of the Company and the same is recommended for your consideration.

Cost Audit Report for the year 31st March 2023 was filed with the Central Government, within the prescribed time limit AND The Cost Audit Report for the year ended on 31st March 2024, shall be filed within prescribed time after completion of Cost Audit by Cost Auditors.

The company has made and maintained books of account and records pursuant to the rules made by the Central Government for the maintenance of cost records under section 148(1) of the Companies Act, 2013.

INTERNAL FINANCIAL CONTROLS SYSTEMS AND THEIR ADEQUACY:

The Company believes that Internal Control is one of the key pillars of governance, which provides freedom to the management within a framework of appropriate checks and balances. The Company has a robust internal control framework, which has been developed considering the nature, size and risks in the business.

The Company has adequate internal control systems in place and also has reasonable assurance on authorizing, recording and reporting transactions of its operations. The Company has well-placed, proper and adequate internal controls environment, commensurate with its size, scale and complexities of its operations. The Company had already developed and implemented a framework for ensuring internal controls over financial reporting. This framework includes entity level policies, processes and operating level standard operating procedures (SOP). Internal control systems are an integral part of your Companys Corporate Governance structure. Information Technology (IT) policies and processes also ensure that they mitigate the current business risks. The Company has in placed ERP software system, supported by BI tools. The systems and processes are continuously improved by adopting best in class processes and automation and implementing the latest IT tools which help further for maintaining financial and commercial discipline. These have been designed to provide reasonable assurance with regard to credibility of data and compliances, inter-alia:

a) Recording and providing reliable financial and operational information;

b) Complying with the applicable statutes;

c) Safeguarding assets from unauthorized use;

d) Executing transactions with proper authorization, and ensuring compliance with corporate policies;

e) Prevention and detection of Frauds / errors;

f) Continuous updating of IT software/systems.

These are aimed at giving the Audit Committee a reasonable assurance on the reliability of financial reporting and statutory & regulatory compliances, effectiveness and efficiency of your Companys operations. The Internal Financial Control Systems are reviewed periodically and revised to keep in tune with the changing business environment.

Statutory Auditors of the company has conducted audit of internal financial control system over financial reporting and operating effectiveness of such controls. Separate audit report on internal financial control is annexed to Auditors Report and forming part of this report.

AUDIT COMMITTEE

Audit Committee presently consists of three Directors. The composition of Audit Committee is as follows.

Name of Directors	Category	Position
Mr. Rajendra Kundanlal Desai	Non-Promoter/Independent/Non-Executive Director	Chairman
Ms. Richa Manoj Goyal	Non-Promoter/Independent/Non-Executive Director	Member
Mr. Dhirajlal Raichand Shah	Promoter/Executive Director	Member

There are no instances where the Board has not accepted any recommendation of the Audit Committee.

VIGIL MECHANISM / WHISTLE BLOWER POLICY:

In pursuance of the provisions of section 177(9) & (10) of the Companies Act, 2013 and rules made thereunder and SEBI Listing Regulations, a Vigil Mechanism for directors and employees to report genuine concerns or grievances about unethical behavior, actual or suspected fraud or violation of the companys code of conduct has been established. Adequate safeguards have been provided against victimization of persons who use the vigil mechanism. The

Vigil Mechanism Policy has been uploaded on the website of the Company.

BUSINESS RISK MANAGEMENT

The Company has laid down a Risk Management Policy and identified threat of such events which if occur may adversely affect either or value to shareholders, ability of Company to achieve objectives, ability to implement business strategies. Such inherent risks are categorized into Strategic risk, Operating risk and Regulatory risk. Managing Director and other Directors of the Company in consultation with Audit Committee will review from time to time the risk and suggest steps to be taken to control and mitigate the same through a properly defined framework. It may be noted that none of the identified risks is of a nature which would threaten the existence of the Company. We consistently and periodically review our systems and policies in order to establish sound risk management and internal control systems.

ANNUAL RETURN:

Pursuant to Section 134(3)(a) and Section 92(3) of the Act read with Companies (Management and Administration) Rules, 2014, the Annual Return of the Company in Form MGT-7 has been placed on the Companys website (www.shahlon.com).

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS:

The company has not given any guarantees or provided any security covered under the provisions of section 185 and 186 of the Companies Act, 2013. The company has complied with the provisions of the Companies Act, 2013 with respect to loans given and investments made.

RELATED PARTY TRANSACTIONS:

All the related party transactions are entered on arms length basis, in the ordinary course of business and are in compliance with the applicable provisions of the Companies Act, 2013 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. There are no materially significant related party transactions made by the Company with Promoters, Directors, Key Managerial Personnel etc. which may have potential conflict with the interest of the Company at large or which warrants the approval of the shareholders. Accordingly, no transactions are being reported in Form AOC-2 in terms of Section 134 of the Act read with Rule 8 of the Companies (Accounts) Rules, 2014. Details of the transactions made with Related Parties are provided in the Companys financial statements in accordance with the Accounting Standards.

All Related Party Transactions are presented to the Audit Committee and the Board. Omnibus approval is obtained for the transactions which are foreseen and repetitive in nature. A statement of all related party transactions presented before the Audit Committee on a quarterly basis, specifying the nature, value and terms and conditions of the transactions.

EVALUATION OF THE BOARDS PERFORMANCE

The Company has devised a Policy for performance evaluation of the Board as a whole, Committees and individual Directors (including Independent Directors) which include criteria for performance evaluation of Non-executive Directors and Executive Directors. The exercise was carried out through a structured evaluation process covering various aspects of the Boards functioning such as composition of the Board & committees, experience & competencies, performance of specific duties & obligations, governance issues etc. Separate exercise was carried out to evaluate the performance of individual Directors including the Board Chairman who were evaluated on parameters such as attendance, contribution at the meetings and otherwise, independent judgment, safeguarding of minority shareholders interest etc.

The evaluation of the Independent Directors was carried out by the entire Board and that of the Chairman and the Non-Independent Directors were carried out by the Independent Directors.

The Directors were satisfied with the evaluation results, which reflected the overall engagement of the Board and its Committees with the Company.

ALTERATION OF THE OBJECTS CLAUSE OF THE MEMORANDUM OF ASSOCIATION OF THE COMPANY

During the financial year under review, the Company has altered Object clause of the Memorandum of Association specifically to include or insert the businesses of Solar Plant, warehouse business, business of construction of Common Effluent Treatment Plants (CETP) and businesses of infrastructure and real estate development projects by adding or inserting in the objects. The alteration in the Objects Clause of the Memorandum of Association is to facilitate diversification; which will expand the area of its activities and benefited to the company and its shareholders as a whole. This additional Object may conveniently and advantageously be combined with the existing businesses activities of the Company.

The shareholders of the Company approved the aforesaid amendment of the Companys object clause to include new business activities through postal ballots held on dated 10th November 2023 and 8th February 2024 respectively.

SCHEME OF AMALGAMATION / ARRANGEMENT

During the under review, your Company has not proposed or considered or approved any Scheme of Merger / Amalgamation / Takeover / Demerger or Arrangement with its Members and/or Creditors.

DETAILS OF APPLICATION MADE OR ANY PROCEEDING PENDING UNDER THE INSOLVENCY AND BANKRUPTCY CODE, 2016, DURING THE FINANCIAL YEAR ALONG WITH THEIR STATUS AS AT THE END OF THE FINANCIAL YEAR

During the under review, there was no application made and proceeding initiated / pending by any Financial and/or Operational Creditors against your Company under the Insolvency and Bankruptcy Code, 2016.

As on the date of this Report, there is no application or proceeding pending against your Company under the Insolvency and Bankruptcy Code, 2016.

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

During the under review, the Company has not made any settlement with its bankers for any loan(s) / facility(ies) availed or / and still in existence.

SECRETARIAL STANDARDS

The Company complies with all applicable mandatory Secretarial Standards issued by the Institute of Company Secretaries of India (ICSI).

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS:

There are no significant and material orders passed by the Regulators or Courts or tribunals which would impact the going concern status of the Company and its future operations.

MATERIAL CHANGES AFFECTING THE COMPANY

There have been no material changes and commitments affecting the financial position of the Company between the end of the financial year and date of this report.

DISCLOSURE AS PER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013

The Company has zero tolerance for sexual harassment at work place and has adopted a policy against sexual harassment in line with the provisions of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the rules framed thereunder. An Internal Complaints Committee (ICC) has been set up in compliance with the said Act.

During the year under review, no complaint of sexual harassment was received by the committee.

TRANSFER TO RESERVES

During the year under review, the Company has not transferred any amount to Reserves.

TRANSFER OF UNCLAIMED DIVIDEND AND SHARES TO IEPF

During the year, the Company has transferred the unclaimed and unpaid dividend of 239,704/-. Further, 42,845 corresponding equity shares on which dividends were unclaimed for seven consecutive years were transferred as per the requirements of the IEPF Rules.

CORPORATE SOCIAL RESPONSIBILITY

The provisions of Section 135 of the Companies Act, 2013 relating to Corporate Social Responsibility are applicable to the company.

In pursuance of the provisions of section 135(5) of the Act, the amount to be spent by the company shall be at least 2% of the average net profits of the company made during the three immediately preceding financial years. Net profit for the purpose of this section shall be calculated in accordance with the provisions of section 198 of the Act. The average net profit of last three immediately preceding financial years is negative.

Further, section 135(9) of the Act provides that where the amount to be spent by a company under sub-section (5) does not exceed fifty lakh rupees, the requirement under sub-section (1) for constitution of the Corporate Social Responsibility Committee shall not be applicable and the functions of such Committee provided under this section shall, in such cases, be discharged by the Board of Directors of such company.

Hence, the company is not required to spend on CSR activity during the financial year under review under the provisions of the Act, and therefore the Board of Directors had not constituted CSR Committee.

However during current FY 2024-25, the company is required to spend on CSR activity since the average net profit of last three immediately preceding financial years is Rs. 417.26 Lakh. Hence during current FY 2024-25, the company will undertake Corporate Social Responsibility activities.

CORPORATE GOVERNANCE:

A separate report on Corporate Governance pursuant to Regulation 34(3) of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, read with Part C of Schedule V thereof, along with a certificate from Shri Bhairav H. Shukla, Practicing Company Secretary, (CP: 5820) Surat confirming compliance of the conditions of Corporate Governance are annexed to this Report as ‘Annexure- 5.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

Pursuant to Regulation 34(2)(e) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, Management Discussion and Analysis Report is given in ‘Annexure- 6 to this Report.

Acknowledgment

Your Directors express their grateful appreciation for the assistance and co-operation received from the Banks, Financial Institutions, Government Authorities, Customers, Suppliers and Shareholders during the year under review. Your Directors also wish to place on record their deep sense of appreciation for committed services of employees of the Company at all the levels.

For and on behalf of the Board of Directors

Place : Surat	Dhirajlal. R. Shah
Date : 14.08.2024	Chairman