Sutlej Textiles and Industries Ltd Directors Report

To

The members,

SUTLEJ TEXTILES AND INDUSTRIES LIMITED

Your Directors are pleased to present the Eighteenth Annual Report, together with the audited financial statements of your Company for the year ended 31^st March, 2023.

1. FINANCIAL RESULTS

The financial statements of the Company have been prepared in accordance with the Indian Accounting Standards (Ind AS) notified under Section 133 of the Companies Act, 2013 (the Act) read with The Companies (Accounts) Rules, 2014. The financial statements for the financial year ended 31^st March, 2023 as well as comparative figures for the year ended 31^st March, 2022 are Ind AS compliant.

The financial highlights of your Company for the year ended 31^st March, 2023 are summarized as follows:

(Rs. in crore)

	Standalone		Consolidated
Particulars	Year ended 31st March, 2023	Year ended 31st March, 2022	Year ended 31st March, 2023	Year ended 31st March, 2022
Total Income	3,063.89	3,072.25	3,100.46	3,112.20
EBITDA	289.06	417.62	286.12	414.33
Less: Depreciation	125.41	120.03	126.88	121.03
EBIT	163.65	297.59	159.24	293.30
Less: Finance Cost	56.63	48.72	57.92	49.77
Profit before exceptional items and tax	107.02	248.87	101.32	243.53
Less: Exceptional items	56.00	7.81	36.38	7.81
Profit Before Tax	51.02	241.06	64.94	235.72
Less: Tax	28.18	85.38	27.66	85.49
Profit after Tax	22.84	155.68	37.28	150.23

There have been no material changes and commitments affecting the financial position of the Company which have occurred between end of the financial year and the date of this report. There has been no change in the nature of business of the Company.

The Company has transferred Rs. 2 crore to Reserves for the year ended 31^st March, 2023.

2. DIVIDEND

Your Directors are pleased to recommend a dividend of Re.1/- per share for the year ended 31^st March, 2023, subject to shareholders approval at the forthcoming 18^th Annual General Meeting (AGM) of the Company. The total outgo on account of dividend to the shareholders will be Rs. 16.38 crore (subject to deduction of TDS as per Section 194 of the Income Tax Act, 1961).

3. FINANCE

3.1 Your Company continues to focus on judicious management of its working capital. Receivables, inventories and other working capital parameters were kept under strict check through a process of continuous monitoring.

3.2 Rating

Your Company has been assigned a rating of:

i. IND A+ Outlook: Negative for term loan bank facilities.

ii. IND A+ / Negative / IND A1+ for fund based and non - fund based working capital limits.

3.3 Deposits

Your Company has discontinued its Fixed Deposit Scheme with effect from 31^st March, 2014 and has not accepted any public deposits during the year under review. As on 31^st March, 2023, there were no unclaimed / outstanding deposits or accrued interest with respect to deposits.

3.4 Particulars of Loans, Guarantees and Investments

Details of Loans, Guarantees and Investments made by your Company and covered under the provisions of Section 186 of the Act are appended as notes to the financial statements.

4. MODERNIZATION AND OTHER CAPITAL PROJECTS

During the financial year, your Company continued with various modernization and de-bottlenecking activities.

Your Company also proposes to set up a green field project for 89,184 Spindles comprising of Cotton Melange Yarn and PC Grey Yarn along with Dye House at J&K at an estimated project cost of Rs. 914 crore.

Your Company during the year has invested an amount of Rs. 97.62 crore on modernization, technology up-gradation and de-bottlenecking. This will result in further improvement in efficiency and sustaining plant utilization and will result in value addition and improvement in quality.

5. SUBSIDIARIES

The Company has a wholly owned subsidiary in the USA viz. Sutlej Holdings Inc., which in turn has a wholly owned subsidiary viz. American Silk Mills, LLC. Pursuant to the provisions of Indian Accounting Standard - 110 (Ind AS - 110) prescribed under the Companies (Accounting Standards) Rules, 2006, the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (Listing Regulations, 2015) and as prescribed by the Securities and Exchange Board of India, consolidated financial statements presented by the Company include financial information of subsidiary companies, which forms part of the Annual Report. The highlights of financial performance of the Companys subsidiaries for the financial year 2022 - 23 are disclosed in form AOC - 1, which forms part of Financial Statements. Your Company has also formulated a policy for determining material subsidiaries, which is available on the website of the Company at the web link:

https://www.sutlejtextiles.com/pdf/Policies%20&%20Codes/Material%20Subsidiary%20Policy.pdf

6. MANAGEMENT DISCUSSION AND ANALYSIS REPORT

The detailed review of the operations, state of affairs, performance and outlook of the Company is given separately in the Management Discussion and Analysis Report as required under Regulation 34 of the Listing Regulations, 2015 by way of "Annexure I" to this report.

7. DIRECTORS AND KEY MANAGERIAL PERSONNEL

7.1 Change in Directors and Key Managerial Personnel

a) Mr. Bipeen Valame resigned as the Wholetime Director and Chief Financial Officer of the Company w.e.f. 11^th June, 2022.

b) Mr. Rajib Mukhopadhyay (DIN: 02895021) was appointed as the Wholetime Director and Chief Financial Officer (KMP) of the Company w.e.f. 11^th June, 2022.

7.2 Re-appointment of Directors

Mr. Rohit Dhoot (DIN: 00016856), a Director of the Company retires by rotation and being eligible has offered himself for re-appointment.

Necessary resolution seeking approval of the members for the director proposed to be reappointed, along with brief profile, has been incorporated in the Notice of the ensuing AGM.

7.3 Independent Directors

All the Independent Directors of the Company have been appointed for a fixed term of 5 (five) consecutive years from the date of their respective appointment / regularization in the AGM and they are not liable to retire by rotation. All Independent Directors have given declarations that they meet the criteria of independence as laid down under Section 149(6) of the Act and Listing Regulations, 2015. The Independent Directors have also confirmed that they have complied with Schedule IV of the Act and the Companys Code of Conduct.

The Board is of the opinion that the Independent Directors of the Company possess requisite qualifications, experience and expertise in the fields of strategy, planning and execution, management and leadership, functional and managerial experience, legal and risk management, corporate governance systems and practices, finance, banking and accounts and they hold highest standards of integrity.

7.4 Board Effectiveness

7.4.1 Familiarization Policy

Pursuant to Regulation 25(7) of Listing Regulations, 2015, the Board has framed a policy to familiarize the Independent Directors about the Company. The policy is available on the website of the Company at the weblink:

https://www.sutlejtextiles.com/pdf/csr/STIl- Familiarisation%20Programme.pdf

The Familiarization Policy of the Company seeks to familiarize the Independent Directors with the working of the Company, their roles, rights and responsibilities, vis a vis the Company, the industry in which the Company operates, business model, etc.

7.4.2 Board Evaluation

Pursuant to the provisions of the Act and Listing Regulations, 2015, the Board has carried out an evaluation of its own performance and that of the directors individually, as well as the evaluation of the working of the Board Committees. The manner of evaluation has been explained in the Corporate Governance Report.

7.5 Criteria for selection of Directors, KMPs and Senior leadership positions and their remuneration

The Board on the recommendation of the Nomination and Remuneration Committee has framed a policy for selection and appointment of Directors, Senior Management Personnel and their remuneration. The policy is available on the Companys website at the weblink:

https://www.sutlejtextiles.com/pdf/Policies%20 &%20Codes/Remuneration%20Policy.pdf

The policy contains, inter-alia, principles governing Directors appointment and remuneration, including criteria for determining qualifications, positive attributes, independence of Directors, etc.

7.6 Key Managerial Personnel

Pursuant to the provisions of Sections 2(51) and 203 of the Act read with The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the following are the Key Managerial Personnel of the Company:

• Mr. Updeep Singh Chatrath, President & Chief Executive Officer;

• Mr. Bipeen Valame, Wholetime Director & CFO (upto 11^th June, 2022);

• Mr. Rajib Mukhopadhyay, Wholetime Director & CFO (w.e.f. 11^th June, 2022); and

• Mr. Manoj Contractor, Company Secretary & Compliance Officer.

8. MEETINGS OF THE BOARD

A calendar of prospective meetings is prepared and circulated in advance to the Directors. During the year, six meetings of the Board were convened. The details of Board and Committee meetings held during the year under review, are given in the Corporate Governance Report forming part of this Annual Report. The gap between these meetings was within the prescribed period under the Act and Listing Regulations, 2015.

9. RELATED PARTY TRANSACTIONS

All related party transactions that were entered into during the financial year were on an arms length basis and were in the ordinary course of business. Your Company did not enter into any material related party transactions with Promoters, Directors, Key Managerial Personnel or other designated persons.

All Related Party Transactions are placed before the Audit Committee and also the Board for approval. Prior omnibus approval of the Audit Committee is obtained on an annual basis for transactions which are of a foreseeable and repetitive nature. A detailed statement of such Related Party Transactions entered into pursuant to the omnibus approval so granted are placed before the Audit Committee for their review on a quarterly basis. Suitable disclosures as required by the Indian Accounting Standards - 24 (Ind AS-24) have been made in the notes to Financial Statements.

The Company has formulated a Related Party Transactions Policy for the purpose of identification and monitoring of such transactions. The policy on Related Party Transactions as approved by the Board is uploaded on the Companys website and is available at the weblink:

https://www.sutlejtextiles.com/pdf/Policies%20&%20Codes/Poiicy-on-Reiated-Party-Transactions. pdf

10. INTERNAL FINANCIAL CONTROL SYSTEMS

Your Companys Internal Financial Control Systems are robust, comprehensive and commensurate with the nature of its business, size, scale and complexity of its operations. The system covers all major processes including operations, to ensure reliability of financial reporting, compliance with policies, procedures, laws and regulations, safeguarding of assets and economical and efficient use of resources.

The Internal Auditors continuously monitor the efficacy of internal controls with the objective of providing to the Audit Committee and the Board of Directors, an independent, objective and reasonable assurance on the adequacy and effectiveness of the organizations risk management with regard to internal control framework.

The policies and procedures adopted by the Company ensures orderly and efficient conduct of its business and adherence to the Companys policies, prevention and detection of frauds and errors, accuracy and completeness of the records and the timely preparation of reliable financial information.

The Audit Committee actively reviews adequacy and effectiveness of internal control systems and suggests improvements, for strengthening them in accordance with business dynamics, if necessary. The Audit Committee also meets the Companys Statutory Auditors to ascertain their views on the Financial Statements, including the financial reporting system and compliance of accounting policies and procedures followed by the Company.

11. AUDITORS

11.1 Statutory Auditor

The Companys Auditors, M/s. BSR & Co., LLP, Chartered Accountants, (ICAI Firm Registration Number: 101248W/W-100022), were re-appointed as the Statutory Auditors of the Company for a second term of five years commencing from the Companys financial year 2022-23 to hold office from the conclusion of the 17^th Annual General Meeting of the Company till the conclusion of the 22^nd Annual General Meeting to be held in the year 2027. The Auditors have confirmed their eligibility under Section 141 of the Act and the Rules framed thereunder. As required under Regulation 33 of the Listing Regulations, 2015 the Auditors have also confirmed that they hold a valid certificate issued by the Peer Review Board of the Institute of Chartered Accountants of India.

The Report given by the Auditors on the Financial Statements of the Company for the financial year ended 31^st March, 2023 is part of this Report. There has been no qualification, reservation, adverse remark, reporting of any fraud or disclaimer by the Auditors in their Report.

11.2 Internal Auditors

The Board of Directors on the recommendation of the Audit Committee of the Board has appointed M/s. Singhi & Co., Chartered Accountants (Firm Registration Number: 302049E) as Internal Auditors of the Company. M/s. Singhi & Co. have confirmed their eligibility and have granted their consent to act as Internal Auditors of the Company for the financial year 2023 - 24.

11.3 Cost Auditors

In conformity with the provisions of Section 148 of the Act read with The Companies (Cost Records and Audit) Amendment Rules, 2014, the Board on the recommendation of the Audit Committee, has appointed M/s. K. G. Goyal & Associates, Jaipur, Cost Accountants (Firm Registration Number: 000024) to audit the cost records relating to the Companys units for the financial year ending on 31^st March, 2024, at a remuneration as specified in the Notice convening the 18^th AGM.

As required under the Act, the remuneration payable to the Cost Auditor is required to be placed before the members in a general meeting for their ratification. Accordingly, a resolution seeking members ratification for the remuneration payable to M/s. K. G. Goyal & Associates, Cost Accountants is included in the Notice convening the 18^th AGM.

11.4 Secretarial Audit

Pursuant to the provisions of Section 204 of the Act and The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board had appointed M/s. R. Chouhan & Associates, Company Secretary in Practice, to undertake the Secretarial Audit of the Company for the year under review. The Secretarial Audit Report does not contain any qualification, reservation, adverse remark or disclaimer and is annexed to this Report.

In addition to the above and pursuant to SEBI circular dated 8^th February, 2019, a report on Secretarial Compliance for the financial year 2022 - 23 has been submitted to stock exchanges.

12. BUSINESS RISK MANAGEMENT

Pursuant to Regulation 17(9) of the Listing Regulations, 2015, the Company has laid down a robust risk management framework to inform the Board about the risk assessment and minimization procedures undertaken by the Company. Your Company has formed a Risk Management Committee, for timely identification and mitigation of risks as a better corporate governance practice.

The risk management framework is designed to identify, evaluate and assess business risks and their impact on Companys business. The risk assessment and minimization procedures are reviewed by the Board periodically to ensure that executive management controls risk through the mechanism of a properly defined framework. The framework is aimed at creating and protecting stakeholder value by minimizing threats and losses and identifying and maximizing opportunities.

13. ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

The requisite information with regard to conservation of energy, technology absorption and foreign exchange earnings and outgo, as required to be disclosed pursuant to Section 134(3)(m) of the Act read with Rule 8 of The Companies (Accounts) Rules, 2014 is given to the extent applicable in "Annexure II", to this Report.

14. CORPORATE GOVERNANCE

Your Company is committed to maintain the highest standards of ethics and governance, resulting in enhanced transparency for the benefit of all stakeholders. Your Company has implemented all the stipulations enshrined in the Listing Regulations, 2015, and the requirements set out by the Securities and Exchange Board of India. The Report on Corporate Governance as stipulated under Regulation 27 of the Listing Regulations, 2015 forms part of this report as "Annexure III". The requisite Certificate from M/s. R. Chouhan & Associates, Company Secretaries in Practice, confirming compliance with the conditions of Corporate Governance stipulated under Regulation 27 of the Listing Regulations, 2015 is annexed to the Report on Corporate Governance, which forms part of this Report.

15. CORPORATE SOCIAL RESPONSIBILITY

In conformity with Section 135 of the Act and Rules made thereunder, your Company has formed a Corporate Social Responsibility (CSR) Committee to oversee the CSR activities undertaken by the Company. The details of the Committee and its terms of reference are set out in the Corporate Governance Report forming part of the Boards Report. Your Company has adopted a CSR Policy for the Company which provides a broad framework with regard to implementation of CSR activities carried out by the Company in accordance with Schedule VII of the Act. The CSR Policy is available on the Companys website at the weblink:

https://www.sutlejtextiles.com/pdf/Policies%20&%20Codes/CSR%20Policy2022.pdf

During the financial year 2022-23, your Company has spent Rs. 2.08 crore towards CSR activities. Your Companys key objective is to make a difference to the lives of the underprivileged and local communities and is committed to CSR engagement. The activities undertaken by your Company have been duly acknowledged and appreciated by the concerned State Governments and communities. A report on CSR activities as prescribed under the Act and Rules made thereunder is annexed herewith as "Annexure IV".

16. VIGIL MECHANISM / WHISTLE BLOWER POLICY

Your Company has in place a vigil mechanism for directors and employees to report concerns about unethical behaviour, actual or suspected fraud or violation of your Companys Code of Conduct.

Under the vigil mechanism of the Company, which also incorporates a Whistle Blower Policy in terms of Regulation 22 of the Listing Regulations, 2015, protected disclosures can be made by a whistle blower through an e-mail, or dedicated telephone line or a letter to the Chairman of the Audit Committee. Adequate safeguards are provided against victimization to those who avail of the vigil mechanism.

The Whistle Blower Policy is available on the Companys website at the weblink :

https://www.sutlejtextiles.com/pdf/Policies%20&%20Codes/Whistle%20Blower%20Policy.pdf

17. BUSINESS RESPONSIBILITY AND SUSTAINABILITY REPORT

Your Company does business that delivers longterm shareholder value and benefits society. Your Company continue to focus on its commitments which are aligned with national priorities and United Nations Sustainability Development Goals.

Your Company aims to create a positive business environment and empowering your Companys employees to make sustainable business decisions.

In terms of Regulation 34 of Listing Regulations, 2015 read with relevant SEBI Circulars, new reporting requirements on ESG parameters were prescribed under "Business Responsibility and Sustainability Report" (BRSR). The BRSR seeks disclosure on the performance of the Company against nine principles of the "National Guidelines on Responsible Business Conduct" ("NGRBC").

As per the SEBI Circulars, effective from the financial year 2022-23, filing of BRSR is mandatory for top 1000 listed companies by market capitalization. Accordingly, for the financial year ended 31^st March, 2023, the BRSR is annexed as "Annexure V" and forms an integral part of this Report.

18. PREVENTION OF SEXUAL HARASSMENT AT WORKPLACE

As required under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and Rules framed thereunder, your Company has implemented a policy on prevention, prohibition and redressal of sexual harassment at workplace. This has been widely communicated internally. Your Company has constituted an Internal Complaints Committee as per the requirement of the Act to redress complaints relating to sexual harassment at its workplaces. No complaints were received during the year under review.

19. SIGNIFICANT AND MATERIAL ORDERS PASSED BY REGULATORS OR COURTS

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

20. ANNUAL RETURN

Pursuant to the provisions of Section 134(3)(a) and Section 92(3) of the Act read with Rule 12 of the Companies (Management and Administration) Rules, 2014, a copy of the Annual Return of the Company for the financial year ended 31^st March, 2023 is uploaded on the website of the Company and can be accessed at www.sutlejtextiles.com

21. PARTICULARS OF EMPLOYEES

Disclosures pertaining to remuneration and other required information pursuant to Section 197(12) of the Act read with Rule 5 of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, in respect of employees of the Company, is provided herewith as "Annexure VI" and forms part of this Report.

22. COMPLIANCE OF ACCOUNTING STANDARDS

As per requirements of the Listing Regulations, 2015 and applicable Accounting Standards, your Company has made proper disclosures in the Financial Statements. The applicable Accounting Standards have been duly adopted pursuant to the provisions of Sections 129 and 133 of the Act.

23. COMPLIANCE OF SECRETARIAL STANDARDS

The Company has complied with the Secretarial Standards issued by the Institute of Company Secretaries of India and forming part of the Act, on meetings of the Board of Directors and General Meetings.

24. DIVIDEND DISTRIBUTION POLICY

As required under Regulation 43A of Listing Regulations, 2015, your Company has formulated a Policy on Distribution of Dividend which can be accessed at the weblink: httpsV/www.sutlejtextiles. com/pdf/Policies%20&%20Codes/Dividend- Distribution-Policy.pdf

25. DIRECTORS RESPONSIBILITY STATEMENT

To the best of their knowledge and belief and according to your information and explanations obtained, your Directors make the following statements in terms of Section 134(3)(c) of the Act :

a. that in the preparation of the annual financial statements for the year ended 31^st March, 2023, the applicable accounting standards have been followed alongwith proper explanation relating to material departures, if any;

b. that such accounting policies have been selected and applied consistently and judgment and estimates have been made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31^st March, 2023 and of the profit of the Company for the year ended on that date;

c. that proper and sufficient care has been taken 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. that the annual financial statements have been prepared on a going concern basis;

e. that proper internal financial controls were in place and that the financial controls were adequate and were operating effectively; and

f. that systems to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively.

26 ACKNOWLEDGEMENTS

Your Directors would like to express their sincere appreciation for the assistance and co-operation received from various stakeholders including financial institutions and banks, government authorities and other business associates who have extended their valuable support and encouragement during the year under review.

Your Directors take this opportunity to place on record their appreciation for the committed services rendered by the employees of the Company at all levels, who have contributed significantly towards the Companys performance and for enhancing its inherent strength.

Your Directors also acknowledge with gratitude the encouragement and support extended by our valued shareholders.

For and on behalf of the Board

(C. S. Nopany)

Executive Chairman DIN: 00014587

Place: Mumbai Dated: 05^th May, 2023