48th annual report 2010 - 2011sssmills.com/ar/2010-11.pdf · your directors report that the company...

48th Annual Report 2010 - 2011

SREESATYANARAYANA SPINNING MILLS

LIMITED

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Board of Directors:

Dr. Mullapudi Harischandra Prasad ChairmanShri E. Satyanarayana, B.E.(Hons.) Managing DirectorShri M. Narendra Nath, B.Sc., (Ag)Shri P. Narendranath Chowdary, B.Sc.Shri Y. Narayana Rao Chowdary

Auditors:

Messers. Brahmayya & Co.,Chartered Accountants,Vijayawada.

Cost Auditors:

Messers. Narasimha Murthy & Co.,Cost Accountants,Hyderabad.

Bankers:

State Bank of India

Registered Office:

Venkatarayapuram - 534 215Tanuku,West Godavari District,Andhra Pradesh.

Sree Satyanarayana Spinning Mills Limited

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Sree Satyanarayana Spinning Mills Ltd.

Contents

Page

1. Management 1

2. Contents 2

3. Notice to Shareholders 3

4. Directors Report 5

5. Auditor's Report 9

6. Compliance Certificate 17

7. Balance Sheet 21

8. Profit & Loss Account 22

9. Balance Sheet Schedules 23

10. Profit & Loss Account Schedules 28

11. Notes Forming part of the Accounts 30

12. Additional information as required under Part-IV of Schedule 37VI to the Company's Act, 1956

13. Cash flow Statement 38

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NOTICE TO SHAREHOLDERS

NOTICE TO SHAREHOLDERS

Notice is hereby given that the 48th Annual General Meeting of Sree Satyanarayana Spinning Mills Ltd.,will be held at the Registered Office of the Company, Venkatarayapuram Township, Tanuku on Wednesdaythe 07th September, 2011 at 10.00 A.M. to transact the following business.

ORDINARY BUSINESS:

1) To consider and adopt Profit & Loss Account for the year ended 31st March, 2011 and the BalanceSheet as at that date and the reports of the Directors and Auditors, thereon.

2) To declare dividend on Equity Shares.

3) To appoint a director in place of Shri Mullapudi Harischandra Prasad, who retires by rotation, andbeing eligible offer himself for re-election.

4) To appoint a director in place of Shri M.Narendra Nath, who retires by rotation, and being eligibleoffer himself for re-election.

5) To appoint Auditors of the Company to hold office from the conclusion of this meeting till theconclusion of the next Annual General Meeting and to fix up their remuneration.

(BY ORDER OF THE BOARD)

Registered Office:Venkatarayapuram – 534 215, for SREE SATYANARAYANA SPINNING MILLS LTD.TANUKU. E. SATYANARAYANADate: 27-07-2011 Managing Director.

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Explanatory Statement Under Section 173(2) of The Companies Act, 1956 is attached.

Note:

1) A member entitled to attend and vote may appoint a proxy to attend and vote instead of himselfand a proxy need not be a member.

2) The Register of Members of the Company will remain closed from 01-09-2011 to 07-09-2011(both days inclusive).

3) Shareholders are requested to notify their change of address if any to the company.

4) Pursuant to Sec.205-A of the Companies Act, 1956, all unclaimed dividends upto the year2002-2003 have been transferred to the Invester Education & Investment Fund Account of theCentral Government. Shareholders, who have not encashed the dividend warrants for the saidperiod, are requested to claim the amount from the Registrar of Companies, Andhra Pradesh,Hyderabad.

5) The dividend recommended by Directors, if approved at the Meeting, will be paid to theShareholders whose names are on the Register of Members as on 07-09-2011. In respect ofthe shares held in Demat Mode, the above dividend will be paid on the basis of beneficialownership as at end of business hours of 31-08-2011 as per the details furnished by theDepositories for this purpose .

6) Please note that as per the latest SEBI Circular, it has become mandatory for transferee(s)to furnish a copy of his/her/their PAN Card for registration of transfer of shares in Physicalform .


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DIRECTORS' REPORT :

ToThe Shareholders

Your Directors have pleasure in presenting their FORTY Eighth ANNUAL REPORT and the AuditedStatement of accounts for the year ended 31st March, 2011.

Financial Results:2011 2010

Rs. Rs.

Income 45,30,49,076 33,35,20,002Expenditure 35,76,65,743 26,42,63,087Gross Profit 9,53,83,333 6,92,56,915Depreciation 32,68,134 16,38,551

————— —————9,21,15,199 6,76,18,364

Less: Provision for Taxation: Current & Deferred 3,05,58,530 2,67,69,857

————— —————6,15,56,669 4,08,48,507

Add: Balance brought forward from previous year 11,51,67,117 8,01,55,373————— —————

Available for appropriation 17,67,23,786 12,10,03,880Provision for proposed dividend 15,75,150 15,75,150Tax on distributable profits 2,55,529 2,61,613General Reserve 90,00,000 40,00,000Balance carried forward to next year 16,58,93,107 11,51,67,117

————— —————17,67,23,786 12,10,03,880

————— —————

Working of the Mills:

During the financial year the mill worked for 355 days in triple shift. The turnover during the year isRs.42,49,68,342 /-as against Rs.33,25,50,002/- in the previous year. The Company earned net profit ofRs.9,21,15,199/-as against net profit of Rs.6,76,18,364/- during the previous year. The tacit faith of theshareholders in the judgment of the management, by giving the Board of Directors a free hand, the Boardhas organized the business in a manner considered to be in the best interest of the Company. TheOperations of the Company were carried out satisfactorily through out the year.

Dividends:

Your Directors recommend a dividend of Rs.15/- per equity share of Rs.10/- each for the year ended31st March, 2011 subject to approval of the shareholders.


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Replacement & Modernisation:

Your Directors report that the Company has carried out a modernization programme in various depart-ments during the period under review to improve the quality and productivity. Your Directors further statethat special efforts are being taken on R&D and technical up gradation, utilization of fixed assets, workingcapital control and also employee productivity. Our aim is to build sound customer relationship throughcreation of value for them, and in the process to earn the equitable return for ourselves.

Outlook for the Current Year:

The rise in cotton prices from September 2010 to March 2011 has been the highest since World War1. Subsequently the cotton prices have fallen substantially. The growth in the yarn price had been slowerthan that of cotton up to March 2011, and later on the downfall has been much greater than that of cotton.

In the future, mills will not be able to pass the entire increase in the manufacturing cost, as imports willprovide the upper threshold value. On the other hand, the cost of power, capital and raw material hasbeen on the rise in India. The imposition of 10% excise duty on finished garments sold in the domesticmarket was a severe blow for the entire textile chain. Environmental activism has further magnified theproblem. Over the last few months the appreciating rupee and the flip flop export policy for cotton and yarnhas compounded the misery.

With the pricing capacity gone, mills will find it difficult to stay profitable. With cost pressures on the riseand demand outlook anemic, the cost pass through will remain incomplete, impacting the margins heavily.

Fixed Deposits:

There are no unclaimed Fixed Deposits.

Industrial Relations:

We recognize that the employees represent our greatest asset and potential. The relation with the em-ployees of the Company in various levels continued to be cordial and harmonious during the year underreview. Motivated and well-trained people are critical to business success. Scientific training is beingimparted to all sections of the workers with the help of SITRA and SIMA Industrial Engineering Division.

Particulars under Section 217 2(A)

No Director /Employee is getting more than Rs.2 lakhs per month.

Directors’ Responsibility Statement:

Your Directors’ confirm:

i. That in the preparation of the annual accounts, the applicable Accounting Standards havebeen followed.

ii. That the Directors have selected such accounting policies and applied them consistently andmade judgments and estimates that are reasonable and prudent so as to give a true and fairview of the state of affairs of the Company at the end of the financial year ended 31st March,2011 and of the profit of the Company for that year.

iii. That the Directors had taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregu-larities.

iv. That the Directors have prepared the annual accounts on a going concern basis.


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Directors:

In accordance with the provisions of the Companies Act, 1956 and Article 122 of the Company’s Articlesof Association, Dr. Mullapudi Harischandra Prasad and Shri M.Narendra Nath directors retire by rotationat the ensuing Annual General Meeting. Dr. Mullapudi Harischandra Prasad and Shri M.Narendra Nathbeing eligible, offer themselves for re-election.

Environment And Safety:

Sree Satyanarayana Spinning Mills Ltd., firmly believes in safe and healthy working conditions in factoriesand other premises that are as necessary and important as production, productivity and quality. YourCompany is giving special attention to hygiene, environment and safety operations in different depart-ments.

Auditors:

The Present auditors of the Company, M/s Brahmayya & Co., Chartered Accountants, Vijayawada retireat the conclusion of this meeting and are eligible for re-appointment.

Cost Auditors:

M/s Narasimha Murty and Company, Cost Accountants, Hyderabad are appointed as Cost Auditors of thecompany for the year 2011-2012 as Cotton Textile Industry is subjected to cost audit.

Appreciation:

Your Directors wish to place on record their sincere appreciation for the excellent services rendered by theemployees at all levels whose hard work and dedication has allowed these results to be achieved. We aregrateful to all our bankers, financial institutions, State and Central Governments. Your directors lookforward to the future with confidence and determination.

(FOR AND ON BEHALF OF THE BOARD)

Venkatarayapuram - 534 215, Dr. MULLAPUDI HARISCHANDRA PRASADTanuku, Chairman.Date: 27-07-2011


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Information pursuant to Section 217 (1) (E) of the Companies Act, 1956 read withthe Companies (Disclosure of Particulars in the Report of Board of Directors)Rules, 1988.A. Conservation of Energy:

Energy Conservation measures taken:Apart from implementing various suggestions made by South India Textile Research Association intheir energy audit report we have started replacing ring frames spindles and rings with new energyefficient spindles and smaller diameter rings.

B. Technology Absorption, Adaptation and Innovation:Continuous concerted efforts are made towards technology absorption. The thrust areas have beenin improving the quality of the product and increasing productivity through cost effective programmesand value engineering techniques.

FORM "A"A. Power and Fuel Consumption:

31-3-2011 31-3-20101 Electricity

a) Purchased units in lacs:EPDC of AP Ltd 73.79 49.81A.P.G.P.C.L. 64.20 75.73

Total amount in lacs:EPDC of AP Ltd 330.46 173.25A.P.G.P.C.L. 197.93 188.49

Rate per Unit in Rs:EPDC of AP Ltd 4.48 3.48A.P.G.P.C.L. 3.08 2.49

b) Own Generationi) Through Diesel Generator Units in Lacs — 0.08 Units per litre of Diesel Oil — 2.81 Cost per Unit in Rs. — 15.26ii) Through Steam Turbine/Generation — —

C) Average Unit Cost 3.83 2.892. Coal — —3. Furnace Oil — —4. Other / Internal Generati — —B. Consumption per unit of production (Production of various counts has been converted to

the standard count of 40s)Electricity units per kg 3.66 3.76Furnace Oil — —Coal — —Others — —

Research and Development:1. Specific areas in which R & D carried out by the Company:

- Improvement of existing products.- Development of testing systems, and improvement of facilities in quality control to improve thequality of the product.

2. Benefits derived as a result of the R& D: Improvement in product quality enables the Company to earn better price and also to compete in the

competitive market.3. Future plan of action: The Company proposed to develop further Quality Control Department and to have R & D facility for

growth of the Company..


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Auditor's Report

TOTHE SHAREHOLDERS OFSREE SATYANARAYANA SPINNING MILLS LIMITEDTANUKU

We have audited the attached Balance Sheet of SREE SATYANARAYANA SPINNING MILLS LIMITED,as at 31st March 2011, its Profit and Loss Account for the year ended on that date and its cash-flowstatement for the year ended on that date annexed thereto. These financial statements are the responsi-bility of the Company’s management. Our responsibility is to express an opinion on these financial state-ments based on our audit.We conducted our audit in accordance with auditing standards generally accepted in India. Those Stan-dards require that we plan and perform the audit to obtain reasonable assurance about whether thefinancial statements are free of material misstatement. An audit includes examining, on a test basis,evidence supporting the amounts and disclosures in the financial statements. An audit also includesassessing the accounting principles used and significant estimates made by management, as well asevaluating the overall financial statement presentation. We believe that our audit provides a reasonablebasis for our opinion.As required by the Companies (Auditors’ Report) Order, 2003 issued by the Government of India in termsof sub-Section (4A) of Section 227 of the Companies Act, 1956, we enclose in the Annexure a statementon the matters specified in paragraphs 4 and 5 of the said Order.Further to our comments in the Annexure referred to above, we report that:a. We have obtained all the information and explanations, which to the best of our knowledge and belief

were necessary for the purposes of our audit;b. In our opinion, proper books of account as required by law have been kept by the company so far as

appears from our examination of such books;c. The Balance Sheet and Profit and Loss Account and Cash-flow Statement dealt with by this report

are in agreement with the books of account;d. In our opinion, the Balance Sheet and Profit and Loss account and the Cash-flow Statement dealt

with by this report comply with the Accounting Standards referred to in sub-section (3C) of Section211 of the Companies Act, 1956;

e. On the basis of written representations received from the directors, as on March 31, 2011, and takenon record by the Board of Directors, we report that none of the directors is disqualified as on March31, 2011 from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 ofthe Companies Act, 1956;

f. In our opinion and to the best of our information and according to the explanations given to us, thesaid accounts give the information required by the Companies Act, 1956, in the manner so requiredand give a true and fair view in conformity with the accounting principles generally accepted in India;

i. In the case of the Balance Sheet, of the state of affairs of the Company as at March 31,2011,

ii. In the case of the Profit and Loss Account, of the profit for the year ended on that date,iii. In the case of the cash-flow statement, of the cash-flows of the company for the year

ended on that date

Place : Tanuku for BRAHMAYYA & CO.,Date : 28th July, 2011 Chartered Accountants

Firm Registration No. 0005135 T.V. RAMANA

(ICAI Memb. No. 200523) Partner.


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Annexure (Referred to in Paragraph 3 of our Report of even date)

1.1 According to the information and explanations furnished to us, the company has maintainedproper records showing full particulars including quantitative details and situation of its fixed as-sets, except furniture, fixtures and office equipment.

1.2 According to the information and explanations furnished to us, the company has carried outphysical verification of some of its fixed assets during the year. However, the company has in-formed us that it has adopted a phased programme of verification of its fixed assets other thanfurniture, fixtures and office equipment which, in our opinion, is reasonable having regard to thesize of the company and the nature of the assets. No material discrepancies were noticed onsuch verification carried out during the year.

1.3 According to the information and explanations furnished to us, the company has not disposed ofa substantial part of its fixed assets during the year so as to affect the going concern assumptionin its case.

2.1 According to the information and explanations furnished to us, the company has physically veri-fied only the high value items in the stores and spares during the year. In our opinion, the fre-quency of such verification is reasonable.

2.2 In our opinion, the procedures of physical verification of inventories followed by the managementare reasonable and adequate in relation to the size of the company and the nature of its business.

2.3 According to the information furnished to us, the company is maintaining proper records of itsinventory; and the discrepancies noticed on verification between the physical stocks to the extentverified and the book records were not material, and have been properly dealt with in the books ofaccount.

3.1 According to the information and explanations furnished to us, the company has not granted anyloans to any parties covered by the register maintained under Section 301 of the Companies Act1956, and consequently reporting under sub-clauses b, c and d of clause 4(iii) of the Order doesnot arise during the year.

3.2 According to the information and explanations furnished to us, the company has not taken anyfresh deposits from Directors & their relatives in accordance with the provisions of Companies(Acceptance of Deposits) Rules 1975, that are covered by Sec 301 of the Companies Act,1956,the balances held at the beginning of the year were repaid during the year under report.

3.3 In our opinion, the rate of interest and other terms and conditions on which loans (deposits) havebeen taken by the company from parties covered in the register maintained under section 301 ofthe Companies Act, 1956 are not, prima facie, prejudicial to the interest of the company.

3.4 According to the information and explanations furnished to us, the company has been regular inrepaying the principal and interest amounts as stipulated on the loans/deposits taken by it fromthe persons covered in the register maintained under Section 301 of the Companies Act 1956.


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4. In our opinion and according to the information and explanations given to us, there are adequateinternal control procedures commensurate with the size of the company and the nature of itsbusiness with regard to purchases of inventory, fixed assets and with regard to the sale of goodsand services. Further, during the course of our audit, we have not come across any instances ofmajor weaknesses in internal control that in our opinion, require correction but have so continuedwithout correction

5.1 Based on the information and explanations given to us, we are of the opinion that the transactionsthat are required to be entered in the register maintained under section 301 of the CompaniesAct, 1956 have been so entered.

5.2 In our opinion and according to the information and explanations given to us, the transactionswhich have been entered into, pursuant to contracts that have been entered in the register main-tained under Section 301 of the Companies Act 1956, have been made at prices which arereasonable having regard to prevailing market prices at the relevant time, and other terms andconditions in the context of the transactions.

6. In our opinion and according to the information and explanations given to us, the company hascomplied with the provisions of section 58A and 58AA of the Companies Act, 1956 and Compa-nies (Acceptance of Deposits) Rules, 1975 with regard to the deposits accepted from the public.According to the information furnished to us, no Order has been passed on the company by theCompany Law Board or National Company Law Tribunal or Reserve Bank of India or any Court orany other Tribunal for non-compliance with the provisions of Sections 58A and 58AA of the Com-panies Act 1956.

7. In our opinion, the company has an internal audit system commensurate with the size and natureof its business.

8. We have broadly reviewed the books of account and records maintained by the company pursu-ant to the Rules made by the Central Government for the maintenance of Cost Records undersection 209 (1) (d) of the Companies Act, 1956 and we are of the opinion that prima facie theprescribed accounts and records have been made and maintained. However, we are not requiredand have not carried out a detailed audit of the same.

9.1 According to the information furnished to us, the company has been regular in depositing with theappropriate authorities, the undisputed statutory dues including Provident Fund, Investor Educa-tion Protection Fund, Employees’ State Insurance, Income Tax, Sales Tax, Wealth Tax, CustomDuty, Excise Duty, Service Tax, Cess and other material statutory dues applicable to it, as at thedate of the Balance Sheet under report, for a period of more than six months from the date theybecame payable.

9.2 According to the information furnished to us, the following amounts of Sales Tax, Customs Duty,Excise Duty, Service Tax, Cess, Income Tax, Wealth Tax, have been disputed by the company,and hence, were not remitted to the concerned authorities at the date of the Balance Sheet underreport.


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S.No Nature of the dues Name of Statute Amount Rs. Pending before

1 APGST Andhra Pradesh General 1070811Sales Tax Act, 1957 (Rs.384370/-

paid underprotest) STAT

2 Central Sales Tax Central Sales Tax Act, 959623(Rs.492141/-paid underprotest) STAT

3 Income Tax- Assessment Year 1989-90 Income Tax Act, 1961 2884527 Hon’ble High Court

(Rs.2150580/- of Andhra Pradeshpaid underprotest)

4 Income Tax- Assessment Year 2005-06 Income Tax Act,1961 14509522

(entire amountas been paidunder protest) ITAT

5 Income Tax- Assessment Year 2008-09 Income Tax Act,1961 10122762 Commissioner

(Rs.5122262/- of Income Taxpaid under (Appeals)protest)

10. According to the information and explanations furnished to us the company had no accumulatedlosses at the end of the year under report and it did not incur cash losses during the immediatelypreceding financial year.

11. According to the information and explanations furnished to us by the company, there were no delaysin repayment of its dues to banks.

12. According to the information furnished to us, the company has not granted any loans or advances onthe basis of security by way of pledge of shares, debentures, and other securities.

13. In our opinion and according to the information and explanations furnished to us, the company is nota chit fund or a nidhi / mutual benefit fund/ society and hence, the requirements of clause 4(xiii) of theCompanies (Auditor’s Report) Order, 2003 are not applicable to the company during the year underreport.

14. According to the information furnished to us, the company is not dealing in or trading in shares,securities, debentures and other investments. Accordingly, the requirements of clause 4(xiv) of theCompanies (Auditor’s Report) Order, 2003 are not applicable to the company.

15. According to the information furnished to us, the company has not given any guarantees for loanstaken by others from any banks or financial institutions.

16. In our opinion, and according to the information and explanations furnished to us and on an overallexamination of the balance sheet, no term loans were obtained by the company from banks andfinancial institutions during the year under report.


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17. According to the information and explanations given to us and on an overall examination of the Bal-ance Sheet of the company, we are of the opinion that funds raised on short-term basis have primafacie not been used during the year for long-term applications.

18. According to the information and explanations furnished to us, the company has not made any pref-erential allotment of shares during the year to parties and companies covered in the register main-tained under section 301 of the Act, or to any others.

19. According to the information and explanations given to us, the company has not issued any deben-tures during the year under report.

20. The company has not raised any moneys through public issue of its securities during the year, and thequestion of end use of such moneys did not arise during the year.

21. During the course of our examination of the accounts of the company in accordance with generallyaccepted auditing practices, we have not come across any instances of fraud on or by the company,nor have we been informed by the management, of any. such instance being noticed or reportedduring the year.

Place : Tanuku for BRAHMAYYA & CO.,Date : 28th July, 2011 Chartered Accountants

Firm Registration No. 0005135 T.V. RAMANA (ICAI Memb. No. 200523)

Partner.


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Accounting Policies

1. GENERAL:

The Accounts are prepared under the historical cost convention and in accordance with generallyaccepted accounting practices.

2. FIXED ASSETS:

Fixed Assets are stated at cost net of CENVAT less accumulated depreciation. Cost of acquisition offixed assets is inclusive of freight, duties, taxes, incidental expenses relating to the cost of acquisitionand the cost of installation/erection, as applicable.

3. BORROWING COSTS:

Borrowing costs that are directly attributable to the acquisition, construction or production of assetsthat necessarily take a substantial period of time to get ready for their intended use or sale arecapitalized as part of cost of such assets. Other borrowing costs are recognized as an expense in theperiod in which they are incurred.

4. INVESTMENTS:

Long term investments are carried at cost. Provision for diminution in the value of long term invest-ments is made only if such a decline is other than temporary in the opinion of the management.

Current investments are carried at lower of cost and fair value. The comparison of cost and fair valueis done separately in respect of each category of investments.

5. INVENTORIES:

Inventories are valued at lower of cost or net realizable value. In respect of raw materials, stores andspares cost is determined using FIFO and weighted average method respectively. Cost of work – in –progress and finished goods include appropriate portion of over heads etc., and excise duty whereverapplicable.Cotton waste and scrap are valued at net realizable value.

Machinery spares which can be used only in connection with an item of fixed assets and whose useis expected to be irregular are amortised over the life of the principal asset.

6. SALES:

Sales are exclusive of duties & Taxes, rebates and discounts but inclusive of Packing Charges..

7. Employee Benefits:a) Company’s contributions to Employee’s Provident fund and Employee State Insurance are made

under a Defined Contribution Plan, and are accounted for at actual cost in the year of accrual.

b) The company’s liability to gratuity on retirement of its eligible employees is funded with the LifeInsurance Corporation of India. The incremental expense thereon for each year is arrived at asper actuarial valuation and is recognized and charged to the Profit and Loss Accountant in theyear in which the employee has rendered service.


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c) Expense on account of unutilized \ unencashed leave is arrived at as per actuarial valuation andis recognized and charged to the Profit and Loss Account in the year in which employee hasrendered services in lieu of such leave.

d) Gains / losses arrived at in the above actuarial valuations are charged to the profit and lossaccount immediately in each year.

8. DEPRECIATION:

Depreciation has been provided in accordance with Schedule XIV of the Companies Act. Deprecia-tion on Factory Buildings, Plant and Machinery and Electrical Installations is charged on straight linemethod and on the other assets on written down value method, treating the unit as continuous pro-cess industry.

9. FOREIGN EXCHANGE TRANSACTIONS:

a) Export sales are initially accounted at the exchange rate prevailing on the date of documentation/invoicing and the same is adjusted with the difference in the rate of exchange arising on actualreceipt of proceeds in foreign exchange.

b) Import of Materials / Capital equipment are accounted at the rates at which the actual paymentsare effected.

c) Assets and liabilities arising out of foreign exchange transactions, as mentioned above, are trans-lated at the rates of exchange ruling on the date of Balance Sheet, and are suitably adjusted tothe appropriate revenue / capital account.

10. DIVIDENDS:

Provision is made in the accounts for the dividends payable by the Company as recommended by theBoard of Directors, pending approval of the shareholders at the Annual General Meeting. Tax, if anyon distributable profits is provided for in the year to which such distributable profits relate.

11. TAXATION:

Provision is made for income tax liability estimated to arise on the results for the year at the currentrate of tax in accordance with the Income Tax Act, 1961.

- The net deferred tax liability arising on account of timing differences between book and tax profits isaccounted for under the liability method, at the current rate of tax.

- Deferred tax resulting from timing differences between book and tax profits is accounted for underthe liability method, at the current rate of tax.

- Deferred tax assets arising on account of brought forward losses and unabsorbed depreciation arerecognized only when there is virtual certainity supported by convincing evidence that such assetswill be realized. Deferred tax assets arising on other temporary timing differences are recognized onlyif there is reasonable certainty of realization.

Minimum alternate tax payable under the provisions of the Income Tax Act 1961 is recognized as anasset in the year in which credit become eligible and is set off to the extent allowed in the year in whichthe Company becomes liable to pay income taxes at the enacted tax rates.


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INFORMATION PURSUANT TO LISTING AGREEMENT WITH STOCK EXCHANGES

The Securities of the Company are listed in the Stock Exchanges as stated below and the annual listingfees have been paid to each of the Exchanges.

NAME OF THE STOCK EXCHANGE ADDRESS

1. The Madras Stock Exchange Limited Exchange Building,P.B. No. 183, Second Line Beach,Chennai - 600 001.


12. IMPAIRMENT OF ASSETS:

An asset is treated as impaired when the carrying cost of the same exceeds its recoverable amount.An impairment loss is charged to the Profit and Loss Account in the year in which an asset is identifiedas impaired. The impairment loss recognized in prior accounting period is reversed if there has beena change in the estimate of recoverable amount.

13. CONTINGENT LIABILITIES:

Contingent liabilities are not recognized in the accounts, but are disclosed after a careful evaluation of the concerned facts and the legal issues involved.

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COMPLIANCE CERTIFICATE

CIN of the Company: L18101AP1962PLC000919

Authorised Capital- Rs.25,00,000Paid-up Capital — Rs.10,50,100

ToThe MembersSREE SATYANARAYANA SPINNING MILLS LIMITEDVenkatarayapuramTanuku — 534 215West Godavari District.

I have examined the registers, records, books and papers of SREE SATYANARAYANA SPINNING MILLSLIMITED (the Company) as required to be maintained under the Companies Act, 1956, (the Act) and therules made there under and also the provisions contained in the Memorandum and Articles of Associationof the Company for the financial year ended 31st March, 2011. In my opinion and to the best of myinformation and according to the examinations carried out by me and explanations furnished to me by theCompany, its officers and agents, I certify that in respect of the aforesaid financial year:

1 the Company has kept and maintained registers as stated in Annexure ‘A’ to this certificate, as perthe provisions and the rules made there under and all entries therein have been duly recorded.

2. the Company has duly filed the forms and returns as stated in Annexure ‘B’ to this certificate with theRegistrar of Companies within the time prescribed under the Act and the rules made there under.

3. the Company being a Public Limited Company, no comments are required in respect of number ofmembers.

4. the Board of Directors duly met 4 (FOUR) times on 24th April 2010, 24th July 2010, 23rd October2010 and 29th January 2011 in respect of which meetings, notices were given and the proceedingswere properly recorded and signed in the Minutes Book maintained for the purpose.

5. the Company has closed its Register of Members from 21st September, 2010 to 28th September2010, during the financial year.

6. the annual general meeting for the financial year ended on 31st March, 2010 was held on 28th Sep-tember, 2010 after giving due notice to the members of the Company and the resolutions passedthereat were recorded in Minutes Book maintained for the purpose.

7. an extraordinary general meeting was held on 28th February 2011 during the financial year.8. the Company has not advanced any loans to its directors or persons or firms or companies referred to

under section 295.9. the Company has duly complied with the provisions of Section 297 of the Act in respect of the con-

tracts specified in that section.10. the Company has made necessary entries in the register maintained under section 301 of the Act.11. as there were no instances falling within the purview of section 314 of the Act, the Company has not

obtained necessary approvals from the Board of Directors, members or of Central Government.12. the Company has issued two duplicate share certificates during the financial year.13. the Company :

(i) has delivered all the certificates on lodgment thereof for transfer in accordance with theprovisions of the Act.

(ii) has deposited the amount declared as dividend in a separate Bank Account on 29th September2010 which is within five days from the date of declaration of such dividend.(iii) Paid / posted warrants for dividends to all the members of the Company within a period of 30(thirty) days from the date of declaration of dividend and that all unclaimed / unpaid dividend has beentransferred to Unpaid Dividend Account of the Company with Andhra Bank, Venkatarayapuram on02.05.2011.


18

(iv) transferred the amounts in unpaid dividend account which have remained unclaimed or unpaidfor a period of seven years to investor education and protection fund.

(v) has complied with the provisions of Section 217 of the Act.14. the Board of Directors of the Company is duly constituted. There was no appointment of additional

director, alternate director, and director to fill casual vacancy during the financial year.15. there was no appointment of Managing Director during the financial year.16. the Company has not appointed any sole-selling agents during the financial year.17. the Company has obtained approval of the Central Government under section 233 B (2) of the Act in

respect of appointment of the Cost Auditor.18. the directors have disclosed their interest in other firms/companies to the Board of Directors pursuant

to the provisions of the Act and the rules made there under.19. the company has not issued any shares, debentures or other securities during the financial year.20. the Company has not bought back any shares during the financial year.21. the company has not redeemed any preference shares or debentures during the financial year under

review.22. there were no transactions necessitating the Company to keep in abeyance the rights to dividend,

rights shares and bonus shares pending registration of transfer of shares.23. as per the information and explanation made available by the Company, the Company has complied

with the provisions of Sections 58A and 58AA read with Companies (Acceptance of Deposits) Rules,1975/the applicable directions issued by the Reserve Bank of India / any other authority in respect ofdeposits, the Company has not accepted/ renewed any new deposits during the year, however theCompany has voluntarily filed a copy of Statement in lieu of Advertisement and other necessaryparticulars as required with the Registrar of Companies, Andhra Pradesh, Hyderabad on 29.09.2010.The Company has also filed return of deposit pertaining to 2009-10 with the Registrar of Companiesin Form No.62 on 29.06.2010

24. the Company has borrowed the required funds within the authorized limits as per Section 293(1) (d) ofthe Companies Act, 1956 during the financial year.

25. the Company has not made any loans or advances or given guarantees or provided securities orinvestment in other body corporate during the financial year as per Section 372A of the CompaniesAct, 1956.

26. the Company has not altered the provisions of the Memorandum with respect to situation of theCompany’s registered office from one state to another during the year under scrutiny.

27. the Company has not altered the provisions of the Memorandum with respect to the objects of theCompany during the year under scrutiny.

28. the Company has not altered the provisions of the Memorandum with respect to name of the Companyduring the year under scrutiny .

29. the Company has not altered the provisions of the Memorandum with respect to share capital of theCompany during the year under scrutiny.

30. the Company has altered its Articles of Association during the financial year.31. there was no prosecution initiated against or show cause notices received by the Company and no

fines and penalties or any other punishment was imposed on the Company during the financial year,for offences under the Act.

32. the Company has not received any money as security from its employees during the financial year.

33. the Company has not constituted any Provident Fund pursuant to section 418 of the Act during thefinancial year.

Place : Hyderabad Sd/- D. Hanumanta RajuDate : 27th July, 2011 M.No. 4044; C.P.No. 1709

D. Hanumanta Raju & Co., Company Secretaries.


19

‘ANNEXURE A’

REGISTERS AS MAINTAINED BY THE COMPANY

SI. NAME OF THE REGISTER UNDERNo SECTION

1 Register of Members 150

2 Minutes of Meetings of Board of Directors and Members 193

3 Register of Director, Managing Director and Secretary. 303

4 Register of particulars of contracts in which Directors are interested 301

5 Books of Accounts and Cost Records 209

6 Register of investments or loans made, guarantee given or security provided 372A

7 Register of directors’ shareholding 307

8 Register of Share Transfers

9 Register of Fixed Assets

10 Register of Documents Sealed

11 Register of Renewed and Duplicate Certificates

12 Register of Charges 143

13 Register of Deposits 58A

14 Register of Investments




20

‘ANNEXURE - B’

Forms and returns filed by the Company with Registrar of Companies during thefinancial year ending 31st March 2011.




21

Per our report of even dateFor Brahmayya & Co.,Chartered AccountantsT.V. RAMANAPartner

Camp : TanukuDate : 28-07-2011

(For and on behalf of the Board)E. SATYANARAYANA Managing DirectorP. NARENDRANATH CHOWDARY Director

Balance Sheet as at 31st March, 2011 This Previous

Schedules Year Year No. Rs. Rs.

SOURCES OF FUNDS:1. Shareholders Funds:

a) Capital 1 1050100 1050100b) Reserves & Surplus 2 217729664 158003674

—————— ——————218779764 159053774

—————— ——————2. Loan Funds:

a) Secured loans 3 15160199 6006022b) Unsecured loans 4 905000 6357000

—————— ——————16065199 12363022

3. Differed Tax Liability (Net) (See Note No. 2) 9131931 3851628—————— ——————

TOTAL 243976894 175268425========== ==========

APPLICATION OF FUNDS:1. Fixed Assets: 5

a. Gross Block 164846663 76313748b. Less: Depreciation 49268198 46000064

—————— ——————c. Net block 115578465 30313684

—————— ——————2. Investments 6 53871161 532374873. Deffered Tax Assets (Net) (See Note No.2) — ---4. Current Assets, Loans and Advances:

a) Inventories 7 75552831 55831186b) Sundry debtors 8 15172586 17661911c) Cash and Bank balances 9 1922979 3082331d) Other current assets 10 269888 275853e) Loans and Advances 11 86094850 69106304

—————— ——————179013134 145957585

Less: Current Liabilities and Provisions:a) Liabilities 12 45204872 19514071b) Provisions 13 59280996 34726260

—————— ——————104485868 54240331

—————— ——————Net Current Assets 74527266 91717254

—————— ——————TOTAL 243976894 175268425

—————— ——————NOTE : The schedules, notes, and Statement on Accounting policies form an integral part of Balance Sheet.


22

Profit And Loss Account for the Year Ended 31st March, 2011

Schedules This Year Previous Year No. Rs. Rs.

INCOME:

Sales and Job work receipts 424968342 332550002Other Income 14 10818162 970000Increase in Stocks 15 17262572 —

—————— ——————453049076 333520002

—————— ——————EXPENDITURE:Decrease in Stocks 15 — 37356888

Raw Materials consumed 189594052 103706189Payments and benefits to employees 16 37749734 32145566Other Expenses 17 125977308 87084443Interest 18 4344649 3970001Depreciation 3268134 1638551

—————— ——————360933877 265901638

—————— ——————Profit before tax 92115199 67618364Less: Provision for taxation - Current 25200000 22000000

For earlier years (Net) 78227 — Differed 5280303 4769857

—————— ——————Profit / Loss after tax 61556669 40848507

Add: Balance brought forward from previous year 115167117 80155373—————— ——————

Balance available for appropriation 176723786 121003880—————— ——————

APPROPRIATIONS:Proposed Dividend 1575150 1575150Tax on distributable profits 255529 261613Transfer to General Reserve 9000000 4000000Balance carried forward to next year 165893107 115167117

—————— ——————176723786 121003880

=========== ===========Basic and diluted earning per share (See Note No. 19) 586.00 389.00

NOTE : The schedules, notes, and Statement on Accounting policies form an integral part of Profit & Loss Account

Per our report of even dateFor Brahmayya & Co.,Chartered AccountantsT.V.RAMANAPartner

Camp : TanukuDate : 28-07-2011

(For and on behalf of the Board)E. SATYANARAYANA Managing DirectorP. NARENDRANATH CHOWDARY Director


23

SCHEDULE-1 : SHARE CAPITAL :

Schedules annexed to and Forming part of the Balance Sheet

This Previous Year Year

Rs. Rs.

Authorised:

5,000 9.3% Taxable Cumulative Redeemable PreferenceShares of Rs.100/-each 500000 5000002,00,000 Equity Shares of Rs.10/-each 2000000 2000000

—————— ——————2500000 2500000

—————— ——————Issued:

1,05,010 Equity Shares of Rs.10/-each 1050100 1050100—————— ——————

1050100 1050100—————— ——————

Subscribed, Called and Paid up:1,05,010 Equity Shares of Rs.10/-each 1050100 1050100

—————— ——————1050100 1050100

—————— ———-———

SCHEDULE-2 : RESERVES AND SURPLUS:

Capital Redemption Reserve 300000 300000 Capital profits Reserve - Excess of Sale price over cost of the asset - As per last Balance Sheet 2831396 2831396

General Reserve

- As per last Balance Sheet 39705161 Add:- Transferred during the year 9000000 48705161 39705161 Surplus in Profit and Loss Account 165893107 115167117

—————— ——————217729664 158003674

========== ==========


24


Rs. Rs.SCHEDULE-3 : SECURED LOANS:

Working capital loans from State Bank of India 15160199 22392196(Secured by Hypothecation of entirecurrent assets and movable assets of the Company)

The above loans are further collaterally securedby first charge on the entire fixed assets of thecompany.

—————— ——————15160199 22392196

========== ==========

SCHEDULE-4 : UN SECURED LOANS:

Fixed deposits from: Directors * — 2235000 Shareholders * 15000 295000 Public * 890000 3827000

—————— ——————905000 6357000

========== ==========* ( Includes an amount of Rs.7,05,000/- repayable within a period of one year)


25

SCHEDULE-5 : FIXED ASSETS

Cost as at01-04-2010

Rs.

DeductionsDuring the

yearRs.

Cost as at31-03-2011

Rs.

1. Land 1845300 — — 1845300 — — — — 1845300 18453002. Buildings 6284132 — — 6284132 4242728 143251 — 4385979 1898153 20414043. Plant & Machinery 64229460 86930981 — 151160441 38126474 3042555 — 41169029 109991412 261029864. Furniture & Fittings 1207206 — — 1207206 1164934 5982 — 1170916 36290 422725. Vehicles & Material 2747649 1601935 — 4349584 2465928 76346 — 2542274 1807310 281721

Handling Equipments

TOTAL 76313748 88532916 — 164846663 46000064 3268134 — 49268198 115578465 30313684

PREVIOUS YEAR 61465806 14847942 — 76313748 44361513 1638551 —- 46000064 30313684 17104293

Description

GROSS BLOCK NET BLOCK

AdditionsDuring the

yearRs.

Depreciationup to

31-03-2010

Rs.

Depreciationfor theYear

Rs.

Depreciationup to

31-03-2011

Rs.

Depreciationon

Deductions

Rs.

As at31-03-2011

Rs.

As at31-03-10

Rs.

DEPRECIATION BLOCK

Sree S

atyanarayana Spinning M

ills Ltd.

26


Rs. Rs.SCHEDULE - 6 : INVESTMENTS

Trade and unquoted: (Long Term)1) 402000 Equity Shares of Rs.10/- each fully paid-up

in Andhra Pradesh Gas Power Corporation Ltd., 52637500 52637500

Quoted:- Current Investments 1233661 599987123417.058 Units of Rs.10/- each in SBI Mutual Funds,Market Value - 1234911/-

—————— ——————53871161 53237487

—————— ——————

SCHEDULE - 7 : INVENTORIES

Stores & Spares 8191595 18878715Cotton 29454016 16307823Cotton in Process 13614715 5546782Cotton Waste 2078951 1201445Finished goods 22213554 13896421

—————— ——————75552831 55831186

—————— ——————

SCHEDULE - 8 : SUNDRY DEBTORS(Unsecured, considered good)Debts outstanding for a period exceeding six months 387583 12547

Other debts 14785003 17649364—————— ——————

15172586 17661911—————— ——————

SCHEDULE - 9 : CASH AND BANK BALANCES:

At scheduled Banks in: Current Accounts 797276 402395 [including Rs.71630/-(42699/-)towards Unclaimed Dividends as per Sec 205A of the Companies Act] Fixed Deposits -as security against guarantees --- -U/S 58 A of the Companies Act 800000 - Other Deposits 800000 2178275 Cash on hand 325703 501661

—————— ——————1922979 3082331

—————— ——————


27


Rs. Rs.SCHEDULE - 10 : OTHER CURRENT ASSETS

Interest accrued 269888 275853—————— ——————

269888 275853—————— ——————

SCHEDULE - 11 : LOANS AND ADVANCES

(Recoverable in cash or in kind for value to be received, unsecured, considered good)Advances 11680544 25044798Prepaid expenses 145853 135859Deposits recoverable 5384113 3959113Advance Income Tax and TDS 47101976 23306432Income Tax paid under protest 21782364 16660102

—————— ——————86094850 69106304

—————— ——————SCHEDULE - 12 : LIABILITIES

Sundry Creditors: Micro & Small Enterprises — — Others 44513693 18096188Unclaimed dividends * 42000 36300Managerial Remuneration Payable 615974 1254022Advances received against sales 33205 127561

—————— ——————45204872 19514071

—————— —————— * Not due for remittance to the Invester Education and

Protection Fund, on the date of the Balance sheet

SCHEDULE - 13 : PROVISIONS

For Income Tax 47200000 25000000For Fringe Benefit Tax — 75000For proposed dividend 1575150 1575150For Tax on distributable profits 255529 261613For Gratuity 8000406 5712896For Leave encashment on retirement 2249911 2101601

—————— ——————59280996 34726260

—————— ——————


28

Schedules annexed to and Forming part of the Profit and Loss Account


Rs. Rs.SCHEDULE - 14 : OTHER INCOME

Interest received [TDS Rs. 57961/- (Rs.36995/-)] 664096 346519Miscellaneous receipts 4312372 88548Claims received 5128971 434946Duty Draw Back 13214 —Difference in Exchange 65835 —Dividends from Non - Trade Investments 633674 99987

—————— ——————10818162 970000

—————— ——————

SCHEDULE - 15 : INCREASE / DECREASE IN STOCKS :

OPENING STOCKS:Work-in-process 5546782 5752249Finshed goods 13896421 51955687Cotton waste 1201445 293600

—————— ——————20644648 58001536

—————— ——————CLOSING STOCKS:

Work-in-process 13614715 5546782Finshed goods 22213554 13896421Cotton waste 2078951 1201445

—————— ——————37907220 20644648

—————— ——————Increase / Decrease in Stocks 17262572 -37356888

—————— ——————

SCHEDULE - 16 : PAYMENTS AND BENEFITS TO EMPLOYEES

Salaries, Wages and Bonus 30503387 27799420Contribution to Provident, Gratuity and other Funds 4871148 2249581Workmen and Staff welfare expenses 2375199 2096565

—————— ——————37749734 32145566

—————— ——————


29


Rs. Rs.SCHEDULE - 17 : OTHER EXPENSES

Stores consumed (including packing materials) 10561175 7466497Power & Fuel 52983144 36271819Insurance 954917 486928Processing charges paid 2262509 4275239Repairs and Renewals to : a) Buildings 2306095 461027 b) Plant and Machinery 39905908 24797128 c) Other Assets 775991 859840Advertisement 330238 152800Handling, Transport etc. on sales 1355021 1665904Commission on sales 3933936 3230095Hank Yarn obligation fee 1578754 190496Miscellaneous expenses 2243503 2355934Donations — 761250Directors sitting fee 750 1000Managerial Remuneration (Note No.3) 1879917 2373382Payments to Auditors (Note No.4) 180838 177119Tools written off 68562 14063Taxes & Licences 180073 1522461Stocks Written off 4475978 —Diffrence in Exchange — 21461

—————— ——————125977308 87084443

—————— ——————

SCHEDULE - 18 : INTEREST

On Fixed period Loans - to Managing Director 117815 - to Others 236360 354175 869453Others 3990474 3100548

—————— ——————4344649 3970001

—————— ——————


30

Notes Annexed to and forming part of the Accounts As At As At

31-03-2011 31-03-2010 Rs. Rs.

1. Contingent Liabilities not provided for in respect of :a) Claims against the Company not acknowledged as

debts towards:Demand raised by the EPDC OF A.P. LTD towards

electricity charges —- 21481381

b) Disputed Sales Tax demands for the years 1995-96,1996-97 and 2001-02(Rs.876511 (Rs.8,76,511)paid under protest against the demands andgrouped under loans and advances.) 2030434 2030434

c) (i) Disputed Income Tax demands for the assesment year 1989-90 [Rs.2150580/- (Rs.2150580/-) paid under protest against the demands and grouped under loans and advances] 2884527 2884527

(ii) Disputed Income Tax demands for the assesment year 2005-06 [Rs.14509522/- (14509522/-)paid under protest against the demands and grouped under loans and advances] 14509522 14509522

(iii) Disputed Income Tax demands for the assesment 10122762 —- year 2008-09 [Rs.5122262/- ( -Nil- ) paid under protest

against the demands and grouped under loans and advances]

2. Major components of deferred tax assets and liabilitiesarising on account of timing differences as on 31-03-2011

Deferred Tax Deferred TaxAsset Liability

Rs. Rs.

Depreciation 10966535Disallowance U/s 43B of the I.T.Act,1961 1834604

—————— ——————1834604 10966535

—————— ——————

Net Deferred tax Liability 9131931

3. a) Computation of Net profits in accordance withSection 349 of the Companies Act, 1956

Net Profit as per Profit & Loss account 92115199 Add:Managerial remuneration 1879917 Directors sitting fees 750 1880667

—————— ——————93995866

Net Profit in accordance with Sec.349 93995866——————

2% of the net profits 1879917——————


31

b) Details of Managerial Remuneration:Salary 900000 690000Contribution to provident and gratuity fund 9360 9360Other perquisites 525000 385000Commission 445557 1289022

—————— ——————1879917 2373382

—————— ——————

4. Payments to Auditors Comprise :

Statutory Audit Fee 48532 44120Tax Audit and taxation matters Fee 26472 24817Certification Fee 76659 79072Reimbursement of out of pocket expenses 1600 2000

—————— ——————153263 150009

Fee to Cost Auditors 27575 22060Reimbursement of out of pocket expenses —- 5050

—————— ——————180838 177119

—————— ——————

2010 - 2011 2009 - 2010 Quantity Value Quantity Value

Kgs. Rs. Kgs. Rs.5. Turnover:

Cotton Yarn 1154976 411713344 1269299 327013133Waste 316322 10694504 166206 4749682Job Work receipts 56400 2560494 19200 787187

—————— ——————424968342 332550002

—————— ——————

6. Raw Material Consumed:Cotton - Used in Own Manufacturing 1511106 189594052 1332209 103706189Cotton - Used in Contract Processing 66100 — 22500 —

7. Opening Stock of Finished Goods:Yarn 59826 13896421 235042 51955687Waste 58601 1201445 20578 293600


32

8. Closing Stock of Finished Goods:Yarn 74789 22213554 59826 13896421Waste 42033 2078951 58601 1201445

9. Particulars regarding Capacity andProduction:Licenced capacity: Spindles 50000 50000

Rotors 672 672 (As registered with the Textile Commissioner)

Installed Capacity: Spindles 39296 33536 Rotors 336 336

Note: The installed capacities are as certified by the Managing Director on which the Auditors have relied.

A. Actual Production: Kgs. Kgs.

Yarn 1226338 1113283 (Including 56400 Kgs.(19200 Kgs.) Converted for others)

Salable Waste 307805 204229(Including Fire accident stock written off - 8051 Kgs.)

10. Comparison between consumption of imported and indigenous raw material during the year:

2010 - 2011 2009 - 2010

Value % Value % Rs. Rs.

Imported — — 4908358 4.73Indigenous 189594052 100.00 98797831 95.27

—————— —————— —————— ——————189594052 100.00 103706189 100.00

—————— —————— —————— ——————

11. Comparison between consumption of imported and indigenous spare parts and componentsduring the year (charged to appropriate heads)

2010 - 2011 2009 - 2010

Value % Value % Rs. Rs.

Imported 7339839 20.01 8664166 22.44Indigenous 29337414 79.99 29941032 77.56

—————— —————— ————— —————36677253 100.00 38605198 100.00

—————— —————— ————— —————


33

12. Value of imports during the year calculated on CIF basis

2010 - 2011 2009 - 2010

Stores and spares 5589114 15727828 Capital Goods 34608120 —

13. Earnings in Foreign Currency during the year Rs. : NIL

14. Details of expenditure incured in foreign currency - NIL

15. Disclosures on payments and dues to “suppliers” as defined in Micro,Small and Medium Enterprises Development Act,2006(‘The Act’)

Particulars Current Year Pr. Year1. Amount remaining unpaid, beyond the appointed/agreed day,

at the end of the year,(a) Principal amount of bills to be paid -Nil- -Nil-(b) Interest due thereon -Nil- -Nil-

2. (a) Payments made to suppliers, during the year, but beyondappointed/agreed day -Nil- -Nil-

interest thereon in terms of Sec 16 of the Act.(b) Interest paid along with such payments during the year. -Nil- -Nil-(c )Interest due and payable at the end of the year, on suchpayments made during the year. -Nil- -Nil-

3. Amount of interest, for the year, u/s 16 of the Act, accruedand remaining unpaid, at the end of the year. -Nil- -Nil-

4. Total amount of interest, u/s 16 of the Act, including thatarising in earlier years,accrued and remaining -Nil- -Nil-unpaid at end of the year.

For the purpose of the above details the Status of the ‘Suppliers’ under the Act has beendetermined to the extent of and based on the information furnished by the respective parties,and has accordingly been relied upon by the company and its auditors.

16. As the Company is engaged in manufacture of a single line of products, identification of the Company’sbusiness into segments does not arise, as contemplated in the Accounting Standard (AS 17),“Segment Reporting” issued by the Institute of Chartered Accountants of India.


34

17) DISCLOSERS REQUIRED BY ACCOUNTING STANDARD-15 (REVISED) - EMPLOYEE BENEFITS

2010-11 2009-10GRATUITY LEAVE GRATUITY LEAVE

a) Reconcilation for present ENCASHMENT ENCASHMENTvalue of obligations

Present value of obligations as at 23591721 2101601 24936588 1288766beginning of yearInterest Cost 1887338 147848 1994927 89447Current Service Cost 1014584 227499 879086 374981Benefits paid 2504084 (507004) 2112258 (341356)Acturarial loss on obligation 966329 279967 -2106622 689763Present value of obligations asat end of year 24955888 2249911 23591721 2101601

b) Reconcilation for Fair Value of Plan Assets

Fair value of plan assets at beginning of year 17878825 9560639Expected return on plan assets 1580741 1034507Contributions —- 9395937Benefits paid 2504084 2112258Actuarial gain on plan assets —- —Fair value of plan assets at the end of year 16955482 17878825

c) Expenses Recognised in statement of Profit & loss a/c

Current Service cost 1014584 227499 879086 374981Interest Cost 1887338 147848 1994927 89447Expected return on plan assets 1580741 —- 1034507 —Net Actuarial loss recognized in the year 966329 279967 -2106622 689763Expenses to be recognised in the profit & loss 2287510 655314 -267116 1154191

d) Net Liabilaty Recognised in the Balance Sheet

Present value of obligations as at theend of year 24955888 2249911 23591721 2101601Fair value of plan assets as at theend of the year 16955482 — 17878825 —Funded status 8000406 — 5712896 —

Net Liability Recognized in theBalance Sheet 8000406 2249911 5712896 2101601

e) Acturial Assumptions

Assumptions

Discount Rate 8.00% 8.00% 8.00% 8.00% Salary Escalation 7.00% 6.00% 7.00% 6.00% Attrition Rate — 6.00% — 6.00%

Mortality Rate LIC (1994-96)Ultimate Mortality Table


35

18. Earning per share - Numerators and Denominators used to calculateBasic and Diluted Earning Per Share for the year

2010-11 2009-10Particulars Rs. Rs.

Profit attributable to the Share Holders 61556669 40848507

Basic/weighted average number of equity shares

outstanding during the year 105010 105010

Nominal Value of Equity Shares 10.00 10.00

Basic/Diluted earning per share 586.00 389.00

19. Related party disclosures :

Name of related parties :

1. Key Managerial Personnel

Sri E. Satyanarayana, Managing Director

2. Relatives of Key Managerial Personnel

Sri. E.Sidhaarth, Son of Sri.E.Satyanarayana, Managing Director.Kum. E.Shilpa, Daughter of Sri.E.Satyanarayana, Managing Director.Smt. E.Rajeswari, Wife of Sri.E.Satyanarayana, Managing Director.Sri. E.Ranga Rao, Brother of Sri.E.Satyanarayana, Managing Director.Sri. E.Sailesh, Brother of Sri.E.Satyanarayana, Managing Director.Smt. E.Rama Lakshmi, Mother of Sri.E.Satyanarayana, Managing Director.Smt. L.Nagaswarna, Sister of Sri.E.Satyanarayana, Managing Director.

3. Enterprises in which key management personnel have significant influence :

M/s Sidhaarth Cotton Yarn Processors Pvt. Ltd.,M/s. Sidhaarth Exports Pvt LtdM/s. Sree Dinakar Fabrics Pvt Ltd.,

Amount in Rupees---------------------------------------------------------------------------------------------------------------------------------------

Nature of transaction Key Managerial Relatives of Enterprisespersonnel Key managerial in which key

personnel managerialpersonnel having

significantinfluence

(1) (2) (3)--------------------------------------------------------------------------------------------------------------------------------------- a) Purchase of Goods From Sree Dinakar Fabrics Pvt Ltd — — —-

— — (3955) Sidhaarth Exports Pvt Ltd — — —

— — (168300)

b) Sale of Goods to Sidhaarth Exports Pvt Ltd — — 36079 Sree Dinakar Fabrics Pvt Ltd —- —- 3081394

—- —- (939229) c) Services rendered to Sree Dinakar Fabrics Pvt Ltd —- —- 2592894


36

—- —- (831287) d) Services rendered by Sidhaarth Cotton Yarn Processors (P) Ltd —- —- 944011

—- —- (3015738) e) Remuneration ( including Commission) paid to Sri E.Satyanarayana 1879917 —- —-

(2373382) —- —- f) Interest paid to Sri E.Satyanarayana 117815 —- —-

(314297) —- —- Smt. E.Rajeswari —- 21587 —-

—- (34491) —- g) Dividend paid to Sri E.Satyanarayana 232335 —- —-

(144890) —- —- Smt. E.Rajeswari —- 73200 —-

—- (48800) —- Sri E.Sidhaarth —- 21900 —-

—- (14600) —- Smt. E.Ramalakshmi —- 7500 —-

—- (5000) —- Sri. E.Ranga Rao —- 82965 —-

—- (55310) —- Sri. E.Sailesh —- 63855 —-

—- (42570) —- Smt. L.Nagaswarna —- 6630 —-

—- (4420) —- h) Amount outstanding as on date of Balance Sheet

i. Fixed Deposits Sri E.Satyanarayana —- —- —-

(2235000) —- —- Smt. E.Rajeswari —- —- —-

—- (280000) —- ii. Share capital held by Sri E.Satyanarayana 154890 —- —-

(144890) —- —- Smt. E.Rajeswari —- 48800 —-

—- (48800) —- Sri E.Sidhaarth —- 14600 —-

—- (14600) —- Smt. E.Ramalakshmi —- 5000 —-

—- (5000) —- Sri. E.Ranga Rao —- 55310 —-

—- (55310) —- Sri. E.Sailesh —- 42570 —-

—- (42570) —- Smt. L.Nagaswarna —- 4420 —-

—- (4420) —- iii. Amount due to Sidhaarth Cotton Yarn Processors (P) Ltd —- —- 1070524

—- —- (138631) iv. Amount due from Sree Dinakar Fabrics Pvt Ltd —- —- 1301538

—- —- (1649036) Sidhaarth Exports Pvt Ltd —- —- 54930

—- —- (34612)

v. Remuneration Payable - Sri E.Satyanarayana 445557 —- —-(1254022) —- —-

---------------------------------------------------------------------------------------------------------------------------------------

20. There were no transactions during the year or balancesoutstanding at the date of the balance sheet, that requiredisclosure in terms of clause 32(B) (IV) of the listing Agreement.

21. Paise have been rounded off to the nearest rupee.

22. Previous year figures have been regrouped whereever necessary.

23. Figures in brackets denote those for previous year.


37

Additional information as required under Part-IV of Schedule-VI to the Company’sAct, 1956

(Amount in Rupees Thousands)

I. Registration Details:Registration No./CIN L18101AP1962PLC000919State Code 01Balance Sheet Date 31-03-2011

II. Capital Raised during the yearPublic Issue NILRight Issue NILBonus Issue NILPrivate placement NIL

III. Position of Mobilisation and Deployment of Funds:Total Liabilities 348463Total Assets 348463Sources of Funds:Paid-up capital 1050Reserves & surplus 217730Secured Loans 15160Unsecured Loans 905Net deferred tax liability 9132Total 243977 Application of Funds:Net Fixed Assets 115578Investments 53871Net Current Assets 74527Net deferred tax Asset —Total 243977

IV. PERFORMANCE OF THE COMPANY:

Turnover 424968Other Income 28081Total Expenditure 360934Profit before tax 92115 Profit after tax 61557Earning/Share in Rs. (See Note No.18) 586.00Dividend Rate % 150%

V. Generic Names of Three Principal Products/Services of Company:(As per monetary terms)

Item Code No. ITC No. Product Description 1. 5205 520515.01 Cotton Yarn

2. 5509 550953.00 Polyester Cotton Yarn3. 5510 551030.01 Viscose Yarn


38

CASH FLOW STATEMENT FOR THE YEAR ENDED 31.03.2011

This Year Previous YearA. CASH FLOW FROM OPERATING ACTIVITIES:

Net profit before tax and extra ordinary items 92115199 67618364Add/Less: Adjustments forDepreciation 3268134 1638551Interest paid 4344649 3970001Interest received -664096 -346519Dividends from Non - Trade Investments -633674 -99987

—————— ——————Operating profit before working capital changes 98430212 72780410Trade and other receivables 14424548 -16246566Inventories -19721645 20834321Trade Payables 28126621 -14390885

—————— ——————Cash generated from operations 121259736 62977280Income Tax paid -32071033 -23233116

—————— ——————Net cash flow from operating activities before

extra ordinary items 89188703 39744164—————— ——————

Net cash flow from operating activities (A) 89188703 39744164—————— ——————

B. CASH FLOW FROM INVESTING ACTIVITIES:

Investment in Fixed assets -88532916 -14847942Purchase of Investments in Mutual Funds -80633674 -35099987Sale of Investments in Mutual Funds 80000000 34500000Profit on Sale of Investments 633674 99987Interest received 664096 346519

—————— ——————Net cash used in Investing activities (B) -87868820 -15001423

—————— ——————

C. CASH FLOW FROM FINANCING ACTIVITIES:Loans from Banks & Institutions 3702177 -19828174Dividends paid -1575150 -1050100Dividend Tax Paid -261613 -178464Interest paid -4344649 -3970001

—————— ——————Net cash from Financing activities (C) -2479235 -25026739

—————— ——————Net increase/ decrease(-) in Cash and its equivalents (A+B+C) -1159352 -283998

—————— ——————Opening balance of Cash and cash equivalents 3082331 3366329Closing balance of Cash and cash equivalents 1922979 3082331

—————— ——————-1159352 -283998

—————— ——————

(For and on behalf of the Board)E.SATYANARAYANA Managing DirectorP. NARENDRANATH CHOWDARY Director


SREE SATYANARAYANA SPINNING MILLS LIMITEDRegistered Office:

Venkatarayapuram - 534 215,TANUKU.

FORM OF PROXY

I/We ______________________________________________________________________________

of _________________________________________________________________ in the District of

_________________________________________being a member(s) of the above named Company,

hereby appoint ___________________________________________________________________ of

___________________________in the District of ________________________________or failing him

_________________________________ of _________________________________in the District of

_____________________________________as my/our Proxy, to vote for me/us, on my/our behalf at

the 48th Annual General Meeting of the Company to be held on Wednesday, the 7th September, 2011at 10.00 a.m. and at any adjournment thereof.

Signed this__________________________day of ____________________________september, 2011

Signature

Note: 1) Every instrument of proxy should contain proper identification of the non-member proxyholder by verification of his specimen signature on the proxy by the member concerned.

2) This instrument of proxy shall be deposited at the Registered Office of the Companynot less than 48 hours before the time for holding the meeting.

Affix 30 psRevenueStamp