shiva mills ltd share price Management discussions


INDUSTRY STRUCTURE AND DEVELOPMENTS Companys Business

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

The global economic growth moderated amidst the pro-longed Russia-Ukraine war, even though the effect of the pandemic has receded. High in ation and the threat of a looming recession in key markets like the US and Europe have led to a slowdown in exports.

Consumers in the USA, Europe and Japan are simply spending less at the retail level on textile purchases to balance their budgets. These countries make up over 80% of Indias exports of textiles across all categories, like readymade garments, apparel fabrics and home textiles. As in ationary conditions cool off and retailers exhaust their stocks, added by growing preference of importers to move away at least part of their sourcing from China, Indian textile exporters should see good demand from the second half of 2023-24.

As per IMF projections, world growth will bottom out at 2.8% this year before rising modestly to 3.0% in 2024 - the lowest medium-term forecast in decades.

Indian Economy

In the year 2022, when countries across the globe were struggling to keep up their economic growth trajectory amidst persistent in ation and rising interest rates, Indias economy continued to grow, posting the strongest growth amongst developing nations. India came across as a bright spot posting a GDP growth of 6.8% (Source: IMF World Economic Outlook Projections, April 2023) in FY23, driven by domestic led growth.

The Monetary Policy Committee of RBI has projected the real GDP growth at 6.5 % in scal year 2023-24

OPPORTUNITIES

Indian Textiles industry plays a vital role in the countrys economy and it is our largest and most labour intensive manufacturing industry. The Indian textile industry was always known for its employment generation capabilities. Contribution of textile industry in GDP in terms of percentage share of industrial output was around 7% during the last three years. Direct Employment in Textiles sector is estimated at 45 million. Foreign Direct Investment (FDI) brought investment of $ 1522.23 million in the textile sector from 2017-2022.

Textile industry is the second largest producer of employment next to agriculture. The sector contributed 12 percent to Indias export earnings. India is the 6th largest exporter of Textiles & Apparel in the world.

SEGMENT-WISE OR PRODUCT - WISE PERFORMANCE

The Company has only one business segment in operation i.e., Textile Business. The performance of the operation of textile business is given under the heading “Review of Operations” of Directors Report.

OUTLOOK

Indian textiles industry continues to grow despite several challenges. Exports to Europe and the EU, which make 80% of Indias market is stagnant at this point. However, the domestic market continues to grow at 15% per annum.

High Volatility in cotton price both in domestic and international markets over last few months have hampered the textile sector business. Now that the prices are reverting to normal, with a good new cotton crop, things should get better.

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 uctuate 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.

HUMAN RESOURCES

The workforce strength of the company as on 31.3.2023 stood at 525 including administrative and management staff. The Company maintained harmonious industrial relations across its spinning and windmill unit during the Financial Year 2022-2023.

SIGNIFICANT CHANGES IN KEY FINANCIAL RATIOS FOR THE FINANCIAL YEAR 2021-22 AND 2022-23

Comparative key financial ratios are furnished below. The ratios for the financial year 2022-23 comparing with previous financial year due to loss during the 2022-23.

S.No Type of Ratio Parameter 2022-23 2021-22 % variance Explanation , if any
1 Debtors Turnover Ratio Times 10.80 16.49 (34.49) Decrease in Turnover and outstanding receivable as on 31st March,2023 as Compared to previous year.
2 Inventory Turnover Times 5.30 5.96 (11.06) Not applicable
3 Interest Coverage Ratio Times (6.85) 27.81 (124.64) Decreased due to loss incurred during the year
4 Current Ratio Times 3.46 3.06 13.01 Not applicable
5 Debt Equity Ratio Times - 0.07 (100.00) Repayment of Term loan outstanding and working capital limit unutilized
6 Operating Pro t Margin (%) % (4.10) 11.95 (134.34) Decreased due to loss incurred during the year
7 Net Pro t Margin (%) % (4.50) 8.29 (154.27) Decreased due to loss incurred during the year

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 ratio during the year at (-)6.53% due to loss as explained in the Directors Report.

MEDIUM TERM AND LONG TERM STRATEGIES

Striving to improve quality continuously keeping in pace with technological developments. Giving priority to the requirement of customers, creating new business opportunities and to focus on value maximisation.

By Order of the Board
S V ALAGAPPAN
Coimbatore CHAIRMAN & MANAGING DIRECTOR
26th June, 2023 DIN 00002450