Your Directors have great pleasure in presenting the 78^th Annual Report of the Company along with the Audited Financial statements for the financial year ended 31^st March 2024.

FINANCIAL RESULTS

The Financial Results for the year under review are summarized hereunder:

(Rs. in Cr.)

PERFORMANCE OF THE COMPANY

Exports declined from Rs.682.66 Cr. in 2022 -23 to Rs. 340.21 Cr. in 2023-24. The Company's sales in the domestic market declined from Rs. 625.70 Cr. in 2022-23 to Rs. 580.16 Cr. in 2023-24. Total revenue from operations during the year was Rs. 939.18 cr. against Rs.1,402.89 cr. in 2022-23. The company has incurred net loss of Rs. 42.63 cr. (after taxes) during year.

During the year, your Company has produced 198.72 lakh kg Yarn (269.55 lakh kg - FY 2022-23) 565.82 lakh meter Woven fabric (411.84 lakh meter - FY 2022-23) and 43.64 lakh kg Knitted fabric (104.12 lakh kg - FY 2022-23).

DIVIDEND

As the Company has incurred loss, your Directors have proposed to skip payment of dividend during the year.

SHARE CAPITAL

As on 31^st March 2024, the paid-up share capital of the Company was Rs.4,81,64,460/- comprising 48,16,446 equity shares of Rs.10/- each. There has been no change in the share capital of the Company during the year under review.

During the year, the company has not issued any shares or any convertible instruments.

TRANSFER TO RESERVES

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

MATERIAL CHANGES OCCURED AFTER THE END OF FINANCIAL YEAR

No material changes and commitments which could affect the company's financial position have occurred between the end of the financial year and the date of this report.

MANAGEMENT DISCUSSIONS ON THE INDUSTRY SCENARIO & OUTPUTS

The global Textile and Apparel (T&A) trade is always influenced by various macroeconomic, social, and geopolitical factors. Despite innumerable challenges, trade continue to grow and remain positive.

Post Covid, Textile & Apparel Trade recovered significantly. The Financial year 2021-22 turned to be an year of fortune for Textile Industry. However the buoyancy lasted only for one year. The break out of Russia - Ukraine was in Feb 2022 changed the scenario topsy - turvy. The slowdown in economy in US & Europe and high inventory holding made the buying houses deferring supplies and postpone placement of orders. This scenario continues to prolong.

With the above adverse changes, Indian textile exports started witnessing serious setback right from April 2022. The slowdown in placing of orders and price reversions have impacted the textile industry continuously from Q1 of FY 2022-23.

The ITMF Global Textile Industry Survey (GTIS) conducted in January 2024 has projected positive trend in the Textile Trade. Positive consumer sentiment is expected to support growth. However, factors such as uncertainty and changes in consumer behaviour can impact sentiment and the business performance. Close monitoring of consumer sentiment alongside other market indicators is essential for assessing the trajectory of the textile industry in the coming quarters. The whole process of revival may take at least couple of quarters. Business in second half of FY 2025 is expected to be better.

INDIAN TEXTILE INDUSTRY

The Indian Textiles and Apparel industry occupies a significant position in the National Economy contributing 2.3 percent to the country's GDP, 7 percent of Industrial output, 12 percent to the export earnings.

The Indian Textile and Apparel industry is second largest employer in the country next to Agriculture providing direct employment to 45 million people and 60 million people in allied industries.

India has a share of 4.6% of the global trade in Textiles and Apparel. Export to USA, EU and UK, accounts for approximately 50% of India's Textiles and Apparel exports.

India's textile exports witnessed fall consecutively for two years, FY 2023 and FY 2024. Exports in FY24 is reported at $34.4 billion, compared with $44 billion in FY 2022. In FY24, India has exported $14.5 billion worth of apparels.

Readymade garments, contributing 42 per cent to overall textiles exports, witnessed 10 per cent drop in FY24 over the previous year.

COTTON

Cotton is the most predominant natural fiber and cash crop in India. Cotton plays a dominant role in the industrial and agricultural economy of the country. Cotton plays a major role in sustaining the livelihood to 6 million cotton farmers.

In the raw material consumption, cotton to man-made fibre and filament yarn ratio is estimated as 59:41.

India cultivates the cotton in about 120 lakh hectares of land, 36% of the global cotton cultivation area of 326 lakh hectares.

Approximately 62% of India's Cotton is produced on rain-fed areas and 38% on irrigated lands.

During 2022-23, India's productivity was around 443 kg/hectare against the world average of 757 kg/hectare.

The production and consumption of cotton in the earlier years are given below:

(in lakh bales of 170 Kg Each)

Source: Committee on Cotton Production & Consumption (COCPC) Meeting dated 24/06/2024 (P) - Provisional.

The import and export of cotton in the earlier years are given below:

(in lakh bales of 170 Kg each)

Source: Committee on Cotton Production & Consumption (COCPC) Meeting dated 24/06/2024 (P) - Provisional.

Cotton prices fluctuate widely from time to time based on several factors like production estimate announcement from time to time, movement in cotton price index, export and import demand vs supply carried over stock etc.

Inherent challenges and outlook

There is no correlation between cotton price and yarn price. Both the prices are determined independently.

Textile Industry is labour intensive. Labour turnover ratio is also very high in Textile Industry. Shortage and very high labour turnover ratio affects both machine utilisation and productivity.

Volatility in cotton prices, higher labour cost, increasing power tariff year on year, fluctuations in order flow and very thin profit margin are the major challenges continuously being faced by the Textiles mills in the country.

As Clothing is a basic need, there is an opportunity for growth.

The industry is addressing the challenges through continuous improvement in production and cost saving measures.

Loyal Textile Mills focusing on continuous improvement in production and cost reduction measures.

AWARDS

During the year, the company has bagged TEXPROCIL Export Award - Gold trophy for highest export performance in Greige Fabrics under Category III and Gold trophy for highest women employment generation.

RENEWABLE ENERGY

During the year, the company has generated 6.18 Cr. units of wind power against 6.02 Cr. units in the previous year and solar power 1.17 Cr. units against 46.97 lakh units in the previous year. The wind power generation during the year has improved slightly as compared to the previous year due to high wind velocity.

ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

The Particulars required under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014, is furnished in Annexure I to this Report.

CONSOLIDATED FINANCIAL STATEMENT

The consolidated financial statements of the Company are prepared in accordance with the provisions of Section 129(3) of the Companies Act, 2013 read with Rule 5 of the Companies (Accounts) Rules, 2014 and Regulations 33 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 along with a separate statement containing the salient features of the financial performance of subsidiaries and joint ventures is attached to the financial statements in the prescribed format.

BOARD MEETING

The Board met four times during the year on 29^th May 2023, 11^th August 2023, 9^thNovember 2023, and 13^th February 2024.

PASSING OF RESOLUTION BY CIRCULATION

During the financial year, seven resolutions has been passed by the Board of Directors through circulation. The Board confirms that, passing resolutions through circulation have been complied with the provision of Section 175 of Companies Act, 2013 and rules and amendments made thereunder from time to time.

DIRECTORS

1. Mr.B.T.Bangera (DIN: 00432492), was retired as an Independent Director of the company due to completion of his second term of office as an Independent Director on 27/09/2023.

2. Mr.K.Kumaran (DIN: 00801146) was appointed as an Independent Director of the company for a term of three years, pursuant to Section 149 and 152 of the Companies Act, 2013 read with Schedule IV of the Companies Act, 2013, the Companies (Amendment) Act, 2017 and Companies (Appointment and Qualifications of Directors) Rules, 2014.

His appointment was approved by the Shareholders' through Postal Ballot process during the year.

3. Ms.Vishala Ramswami was re-appointed as Executive Director of the Company for a term of five years with effect from 20/11/2023.

4. Mr.R.Kannan was re-appointed as Independent Director of the Company for a second term of three years with effect from 20/11/2023.

5. Mr.Madhavan Nambiar (DIN: 01122411), retires by rotation in this Annual General Meetinge, does not offer himself for re-appointment.

DECLARATION FROM INDEPENDENT DIRECTORS ON ANNUAL BASIS

The Independent directors have submitted their disclosure to the Board confirming that they fulfill the requirements as to qualify for their appointment as an Independent Director under the provisions of Section 149 of the Companies Act, 2013 as well as SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

The Board confirms that the Independent Directors meet the criteria as laid down under the Companies Act, 2013 as well as SEBI Listing Regulations.

STATUTORY AUDITORS

M/s.Brahmayya & Co., Chartered Accountants (Firm Registration No. 000511S), were appointed as statutory auditors of the Company for a period of 5 years in the 76^th Annual General Meeting held on 22^nd September 2022. They will hold office till the conclusion of 81^st AGM.

The Auditor's Report to the Shareholders on the Standalone and Consolidated financial statement for the year ended March 31, 2024 does not contain any qualification, observation or adverse comment.

SECRETARIAL AUDITOR

Pursuant to Section 204 of the Companies Act, 2013 and read with Rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014, the Company has appointed Mr.K.J.Chandra Mouli, Partner, M/s. BP & Associates, Company Secretaries, Chennai to undertake the secretarial audit of the company for the financial year ended 31^st March, 2024.

The Report of the Secretarial Auditor is appended in this report as Annexure II.

The Secretarial Audit Report contains the following remarks:

i. Mr. B.T.BANGERA who was Non-Executive - Independent Director of the Company had retired from Board due to completion of the tenure i.e. on 27th September 2023. Subsequently Mr. KUMARAN. K was appointed as NonExecutive - Independent Director only with effect from 10th October 2023. Therefore there is in a non-compliance of Regulation 17(1) of SEBI LODR 2015 for the quarter ended 31st December 2023 .

Management reply: Mr.Kumaran K was appointed as Non-Executive Independent Director with effect from 10^th October 2023. There by the non-compliance has been made good.

ii. The Company has implemented an in house software with respect to Structural Digital Database under the Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015. The existing software, maintained inhouse by the Company, has certain gaps in with respect to recording the audit trails and its functioning. The same requires further improvements and modifications to comply with the Regulation of SEBI (PIT) Regulation 2015.

Management reply: The Company has maintaining the inhouse SDD software and recording the details of persons with whom Unpublished Price Sensitive Information (UPSI) is shared along with their PANs. However, during the audit, the Secretarial Auditor have pointed out to include the details of the Cost Auditor, Internal Auditor, Secretarial Auditor in the SDD software and suggested to implement mobile OTP authentication by the Company Secretary along with existing mechanism of USER ID and Password for Login into the SDD software.

The company has included the details of the Cost Auditor, Internal Auditor, Secretarial Auditor in the SDD software and informed the in-house IT department to develop the mobile OTP mechanism along with existing USER ID and Password for Login into the SDD software.

The company has already taken steps to implement the points given by the Secretarial Auditor regarding SDD software.

iii. As per Regulation 31(4) read with Regulation 31(5) the promoters of every target company shall declare on a yearly basis that he, along with persons acting in concert, has not made any encumbrance, directly or indirectly, other than those already disclosed during the financial year shall intimate to the stock exchange within 7 working days from the end of each financial year. The promoters/Company has intimated the same to the stock exchange on 10th May 2023.

Management Reply: During the period, the Promoter has not made encumbrance directly or indirectly. The Promoter has provided the necessary declaration on 10th May 2023 and the same has been submitted to the Stock Exchange.

COST AUDITOR

Mr. B. Venkateswar, Practicing Cost Accountant was appointed as Cost Auditor for auditing the cost accounts of the Company for the year ended 31^st March, 2024. The Cost Audit Report for the financial year 2023-24 will be submitted to the Central Government before due date.

The Board of Directors of the Company have appointed Mr.B.Venkateswar, Practicing Cost Accountant, holding Membership No.27622 as Cost Auditor for the year ending 31^st March 2025.

In accordance with the provisions of Section 148(3) of the Companies Act 2013 read with Rule 14 of the Companies (Audit and Auditors) Rules, 2014, the remuneration payable to the Cost Auditors has to be ratified by the Shareholders. Accordingly, resolution seeking ratification for the remuneration payable to Cost Auditors is included at Item No.3 of the Notice convening the AGM.

INTERNAL AUDITORS

The company has appointed M/s. Capri Assurance and Advisory Services, as External Internal Auditors for the financial year 2024-25.

EXTRACT OF ANNUAL RETURN

Pursuant to Section 92(3) read with Section 134(3) (a) of the Companies Act, 2013 the Annual return as on March 31, 2024 is available on the Company's website at www.lovaltextiles.com

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to the requirement under section 134(5) of the Companies Act, 2013, with respect to Directors' Responsibility Statement, it is hereby confirmed that:

a. In the preparation of the annual accounts for the year ended March 31, 2024, the applicable accounting standards have been followed along with proper explanation relating to material departures;

b. the Directors have selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company for the year ended March 31, 2024 and of the profit of the company for the year ended on that date;

c. the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

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

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

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

CORPORATE SOCIAL RESPONSIBILITY (CSR)

In terms of Section 135 and Schedule VII of the Companies Act, 2013 the Board of Directors of the Company have constituted a CSR Committee. The Committee comprises of three Directors comprising of two Independent Directors and one Whole Time Director. The company spends 2% of the average net profit of the previous three years for CSR activities. The CSR activities are mainly focused on Education and Health Care. The CSR Policy is available on the website of the company.

During the year, the company has contributed a sum of Rs.108.38 Lakhs in accordance with the provisions of Section 135 of the Companies Act, 2013 for spending towards CSR activities. Annual Report on CSR activities is enclosed as Annexure III.

RELATED PARTY TRANSACTIONS

Related party transactions that were entered during the financial year were on an arm's length basis and were in the ordinary course of business. There were no materially significant related party transactions with the Company's Promoters, Directors, Management or their relatives, which could have had a potential conflict with the interests of the Company. Transactions with related parties entered by the Company in the normal course of business are periodically placed before the Audit Committee for its approval.

Particulars of contracts or arrangements with related parties referred to in section 188(1) of the Companies Act, 2013 in the prescribed Form AOC-2 is attached as Annexure IV. Also Refer Note No.41 of Financial statement which sets out the transactions with related parties.

The Board of Directors of the Company, has on the recommendation of the Audit Committee, adopted a policy to regulate transactions between the Company and its Related Parties, in compliance with the applicable provisions of the Companies Act 2013, the Rules there under and the Listing Regulations. This Policy was considered and approved by the Board has been uploaded on the website of the Company. https://lovaltextiles.com/wp-content/uploads/2020/09/related-partv-transaction-policv.pdf

PARTICULARS OF EMPLOYEES

No employee of the Company was in receipt of remuneration of not less than Rs.1.02 Cr. during the year or Rs.8.50 lakhs per month during any part of the said year as per Section 197 of the Companies Act, 2013 read with Rule 5 (2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.

RATIO OF REMUNERATION OF DIRECTOR

As per Section 197 (12) of the Companies Act 2013 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014, the details of Ratio of Remuneration to each Director to the median employee's remuneration is furnished as Annexure V.

CEO / CFO CERTIFICATION

In accordance with Regulation 17(8) of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015, a certificate on the Financial Statements and Cash Flow Statement of the company for the year ended March 31, 2024 duly signed by CEO and CFO was submitted to the Board of Directors and the same is attached as Annexure VI.

CORPORATE GOVERNANCE

The Company has in place a system of Corporate Governance. Corporate Governance is about maximizing shareholder value legally, ethically, and sustainably. The company has taken adequate steps to adhere to all the conditions laid down in SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 as amended from time to time with respect to Corporate Governance. A report on Corporate Governance is included as part of this annual report as Annexure VII.

A Certificate from the Statutory Auditors of the Company confirming the compliance of conditions of Corporate Governance as stipulated in SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 forms part of this Annual report.

BOARD EVALUATION

As required under the provisions of Section 134(3) (p) of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015, the Board has carried out a formal annual evaluation of its own performance, and that of its committees and individual directors based on the guideline formulated by the Nomination & Remuneration Committee.

The performance evaluation of the Directors was completed during the year under review. The performance evaluation of the Chairperson and the Non-Independent Directors was carried out by the Independent Directors and Non-Executive Director. The Board of Directors expressed their satisfaction with the evaluation process.

FAMILIARISATION PROGRAMME FOR INDEPENDENT DIRECTORS

Pursuant to Regulation 25 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Board has adopted a policy on Familiarisation Programme for Independent Directors of the Company.

The Policy on Familiarisation Programme as approved can be viewed on the Company's website.

VIGIL MECHANISM / WHISTLE BLOWER POLICY

In pursuant to the provisions of section 177(9) & (10) of the Companies Act, 2013, the company has framed a Vigil Mechanism / Whistle Blower Policy. The Vigil Mechanism Policy has been posted on the website of the Company. It is affirmed that no personnel of the Company has been denied access to the Audit Committee. No complaint has been received from any employee during this year.

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

In order to comply with provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and Rules framed thereunder, the Company has formulated and implemented a policy on prevention, prohibition and redressal of complaints related to sexual harassment of women at the workplace. All women employees either permanent, temporary or contractual are covered under the above policy. An Internal Committee (IC) has been set up in compliance with the said Act. During the year under review, there were no cases filed pursuant to the provisions of the Act. Necessary annual returns have been filed with respective collectorate.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS

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

INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY

The Company has adequate system of internal control to safeguard and protect from loss, unauthorized use or disposition of its assets. All the transactions are properly authorized, recorded and reported to the Management. The Company is following all the applicable Accounting Standards for properly maintaining the books of accounts and reporting financial statements. The internal auditor of the company checks and verifies the internal control and monitors them in accordance with policy adopted by the Company.

RISK MANAGEMENT

The company takes utmost care in managing the risks and it helps to improve operations and production. Risk management framework has been formulated. The Board members are regularly informed of the risk assessment and risk mitigation measures. The forex exchange risk is actively managed within the framework laid down by the Forex management policy approved by the Board.

TRANSFER TO INVESTOR EDUCATION AND PROTECTION FUND

During the year, the company has transferred Rs.14,74,700/-being the dividend amount which was due and payable and remained unclaimed and unpaid for a period of 7 years to Investor Education and Protection Fund as per the requirements of the Companies Act, 2013.

Pursuant to the provisions of Section 124 and rules and regulation made thereunder and other applicable provisions of the Companies Act, 2013, the dividends which remain unpaid or unclaimed for a period of 7 years from the respective dates of transfer to the unpaid dividend account of the company are due for transfer to the Investor Education and Protection Fund (IEPF).

Due dates for transfer of Unclaimed Dividends to the IEPF is given below:

Members who have so far not encashed the dividend warrants for the above years are advised to submit their claim to the Company's RTA immediately quoting their folio number / DP ID and Client ID.

PUBLIC DEPOSITS

During the year the company has not accepted deposit from the public falling within the ambit of Section 73 of the Companies Act 2013 and the Companies (Acceptance of deposits) Rules, 2014 and the amendments made thereunder.

PARTICULARS OF LOANS GIVEN, INVESTMENTS MADE, GUARANTEES GIVEN AND SECURITIES PROVIDED

Particulars of loans given, investments made, guarantees given and securities provided along with the purpose for which the loan or guarantee or security is proposed to be utilized by the recipient are provided in the Standalone Financial statement.

CREDIT RATING

Credit Rating for Company's Banking facilities has been revised by the Credit Rating agency “CARE Ratings Limited” as Long Term facilities from CARE BBB ; Stable to CARE BBB; Stable and Short term facilities from CARE A3 to CARE A3.

LISTING

The Company's equity shares are listed on National Stock Exchange India Limited (NSE) and Bombay Stock Exchange (BSE).

ENHANCING SHAREHOLDERS' VALUE

The company believes in the importance of its Members who are among its most important stakeholders. Accordingly, the company's operations are committed to the goal of achieving high levels of performance and cost effectiveness, growth

building, enhancing the productive asset and resource base and nurturing overall corporate reputation. The company is also committed to creating value for its stakeholders by ensuring that its corporate actions have positive impact on the socioeconomic and environmental growth and development.

ACKNOWLEDGEMENT

The Board has pleasure in recording its appreciation for the assistance, cooperation and support extended to the company by the banks and the government departments.

The Board also places on record its sincere appreciation of the response received from the company's valuable customers and thank them for their continued support.

The company is grateful to all the employees for their continued co-operation extended to the company. Their contribution has been outstanding and the Directors place on record their appreciation for the same.

The Directors also thank the shareholders for their support and for the confidence they have reposed in the company.

CAUTIONARY STATEMENT

Statements in the Board's report and the Management Discussion & Analysis describing the Company's objectives, expectations or forecasts may be forward - looking within the meaning of applicable securities, laws and regulations. The Company cannot guarantee the accuracy of assumptions and the projected future performance of the Company. The actual results may materially differ from those expressed or implied in this report. Important factors that could influence the company's operations include global and domestic demand and supply conditions affecting selling price of finished goods, input availability and prices, changes in government regulations, tax laws, economical developments within the country and other factors such as litigation and industrial relations.

For and on behalf of the Board

Valli M Ramaswami M.E. Manivannan

Chairperson & Whole Time Director Whole Time Director Place: Chennai (DIN:00036508) (DIN: 02229808)

Date : 29^th May, 2024