Shiva Mills Ltd Management Discussions.

The Companys principal line of business is manufacturing and marketing of Cotton Yarn. The Company has a spinning unit near Dindigul, Tamil Nadu with an installed capacity of 39072 spindles and 22 Windmills with an installed capacity of 10.65 MW.

GLOBAL ECONOMY

2020 was a highly volatile and challenging year. Covid-19 changed almost every aspect of human lives in ways never imagined. The economic toll from the pandemic was unprecedented. Operational challenges mounted due to restricted movement and disrupted supply lines. As the Covid-19 cases continued to rise exponentially, the economy declined sharply.

A global economic recovery depends to a great extent on the pandemic being brought under control, containment measures being scaled back and trade and manufacturing activities being gradually restored.

INDIAN ECONOMY

Amid Coronavirus Pandemic, Indias GDP grew at 1.6% in the last quarter of the fiscal year 2020-21, but witnessed a contraction of 7.30% for the entire fiscal year. Taking into consideration of all factors like spread of second wave of Covid-19, urban, rural and global demand conditions, conducive external conditions and other relevant factors, the Monetary Policy Committee of RBI has projected the real GDP growth at 9.5% in fiscal year 2021-22

OPPORTUNITIES

Indian Textiles industry plays a vital role in the countrys economy and it is our largest and most labour intensive manufacturing industry. Textile industry is one of the oldest industries in India and, in spite of significant automation and modernization in recent years, around 80% of the industry is still in the SME sector, providing livelihood level employment to artisans and rural workers.

Indias textiles industry contributed seven per cent of the industry output (in value terms). It contributed 4 per cent to the GDP of India and employed more than 45 million workers directly, mostly the rural poor and women. Textile industry is the second largest producer of employment next to agriculture. The sector contributed 15 per cent to Indias export earnings.

OUTLOOK

The future for the Indian textiles Industry looks promising, buoyed by strong domestic consumption as well as export demand. Ultimately spurt in demand is expected for cotton yarn both in domestic and export markets.

RISKS AND CONCERNS

Availability of Cotton, the main raw material for manufacture of Cotton Yarn, is subject to the vagaries of nature and the prices also fluctuate wildly based on supply/demand in the World market. Availability of skilled labour, competition from low cost producing Countries having preferential trade agreement with developed economies, fluctuations in foreign exchange markets are some of the risks faced by the textile Industry.

INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY

The Company has adequate internal control procedures and systems commensurate with its size and nature of its business for purchase of raw materials, plant and machinery, components and other items and sale of goods. The checks and controls are reviewed by the Audit Committee for improvement in each of these areas on a periodical basis. The internal control systems are improved and modified continuously to meet with changes in business conditions, statutory and accounting requirements.

FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE

The financial performance of the Company has been discussed at length in Directors Report to the Members.

SIGNIFICANT CHANGES IN KEY FINANCIAL RATIOS FOR THE FINANCIAL YEAR 2019-20 AND 2020-21

Comparative key financial ratios are furnished below. The ratios for the financial year 2020-21better indicative comparing with previous financial year due to increase in profitability.

S.No Type of Ratio Parameter 2020-21 2019-20
1 Debtors Turnover Ratio Times 13.12 6.20
2 Inventory Turnover Times 4.57 4.53
3 Interest Coverage Ratio Times 6.08 1.27
4 Current Ratio Times 2.21 1.19
5 Debt Equity Ratio Times 0.02 0.04
6 Operating Profit Margin (%) % 10.67 4.40
7 Net Profit Margin (%) % 6.20% 0.70%

DETAILS OF ANY CHANGE IN RETURN ON NETWORTH AS COMPARED TO IMMEDIATELY PREVIOUS FINANCIAL YEAR ALONG WITH A DETAILED EXPLANATION THEROF

Return on net worth has increased by 10.44%duetosignificant profitas explained in the Directors Increasein

Report.

MEDIUM TERM AND LONG TERM STRATEGIES

Striving to improve quality continuously keeping in pace with technological developments.

Giving priority to the requirement of customer, creating new business opportunities and to focus on value maximisation.

CERTIFICATE ON CORPORATE GOVERNANCE

To

The Members of Shiva Mills Limited

(CIN: L17111TZ2015PLC022007)

I have examined the compliance of conditions of Corporate Governance by Shiva Mills Limited (‘the company), for the year ended on 31st March, 2021 as referred in Regulation 15(2) of the Securities Exchange Board of India (SEBI) Listing Obligations and Disclosure Requirements (LODR) Regulations, 2015.

The compliance of conditions of Corporate Governance is the responsibility of the Management. My examination was limited to a review of the procedures and implementation thereof adopted by the Company for ensuring the compliance with the conditions of the Corporate Governance as stipulated in the said Listing Regulations. It is neither an audit nor an expression of opinion on the financial statements of the Company.

In my opinion and to the best of my information and according to the explanations given to me and based on the representations made by the Directors and the Management, I certify that the Company has complied with the conditions of Corporate Governance as stipulated in the Securities Exchange Board of India (SEBI) Listing Obligations and Disclosure Requirements (LODR) Regulations, 2015, except that one of the Non-Executive

Independent Directors of the Company continued in Office after attaining the age of 75 years on 14.5.2020 and a Special Resolution under Regulation 17(1A) of SEBI LODR 2015 for consent of Members for his continuance in office after attaining the age of 75 years was passed only on 28.9.2020

I further state that such compliance is neither an assurance as to future viability of the Company nor the efficiency or effectiveness with which the management has conducted the affairs of the Company.

DECLARATION ON CODE OF CONDUCT

The Members of Shiva Mills Limited

In compliance with the requirements of Regulation 34(3) read with Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 with the Stock Exchanges, I declare that the Board of Directors and members of senior management have affirmed the compliance with the code of conduct during the financial year ended 31.3.2021

By Order of the Board
S V ALAGAPPAN
Coimbatore CHAIRMAN AND MANAGING DIRECTOR
23rd June, 2021 DIN 00002450