Shiva Mills Ltd Directors Report.

Dear Members,

Your Directors have pleasure in presenting the 4th Annual Report together with Audited Financial Statements of the Company for the year ended 31st March, 2019.

(र In lakhs)
Financial Results 2018-19 2017-18
Gross revenue and other income 17,602.19 16,991.55
Profit before Interest and Depreciation 2,031.60 1,683.19
Less: Interest 751.54 599.09
Profit before Depreciation 1,280.06 1,084.10
Less: Depreciation 520.47 489.30
Profit before Tax 759.59 594.81
Less: Provision for Income Tax
- Current Tax 267.00 240.17
- Deferred Tax Liability (Net) written back (-)167.56 (-)31.95
Profit after Tax 660.15 386.59
Other Comprehensive income (-)3.99 18.40
Total Comprehensive Income / (Loss) for the year 656.16 404.99

DIVIDEND

Your Directors are glad to recommend payment of dividend of Rs.1.40/- per equity share of Rs. 10/- each to the equity shareholders i.e., @14% of the paid up capital. The dividend together with distribution tax will absorb Rs.145.85 lakhs.

PRESENTATION OF FINANCIAL STATEMENTS

The Financial Statements for the year ended 31.3.2019 have been prepared in accordance with the Indian Accounting Standard (Ind AS) notified under Section 133 of the Companies Act, 2013 read with Companies (Accounts) Rules, 2014 and other relevant provisions of the Act.

REVIEW OF OPERATIONS

During the year under review, the spinning unit produced 7329.93 tonnes (7202.19 tonnes) of cotton yarn. The unit sold 7064.69 tonnes (6548.66 tonnes) of cotton yarn out of which exports accounted for 511.71 tonnes (662.66 tonnes). Further, the Company sold 2170.46 tonnes (2073.44 tonnes) of waste cotton, of which exports accounted for 160.68 tonnes (693.12 tonnes). The performance of the Spinning Unit during the year under review is considered to be satisfactory.

The Wind Mills with aggregate installed capacity of 10.65 MW generated 168.37 lakh units (192.30 lakh units) of Wind Electricity during the year. The entire power generated by the wind mills were utilized for captive consumption at the textile mill. There has been decrease in wind power generation by 12.50% as compared with previous year generation due to deficit monsoon.

The overall sales turnover of the Company aggregated to Rs. 17463.15 Lakhs (Rs.16889.19 Lakhs) of which exports including Merchant exports amounted to Rs.1205.13 Lakhs (Rs.1477.41 Lakhs), the exports contributing 6.90 % of the overall sales of the Company.

PROSPECTS FOR THE CURRENT YEAR

The Company continues to produce yarn with focus on hoisery and weaving markets, besides export. The performance of the Spinning Unit is likely to be satisfactory. The contribution from Windmills is dependent on availability of Wind of adequate velocity and its evacuation by TANGEDCO.

EVENT SUBSEQUENT TO THE DATE OF FINANCIAL STATEMENTS

There were no material changes and commitments affecting the financial position of the Company subsequent to the end of the financial year.

PUBLIC DEPOSITS

The Company has no public deposits outstanding at the beginning of the year and the Company has not accepted any deposits within the meaning of Section 73 to 76 of the Companies Act, 2013 and the Companies (Acceptance of Deposits) Rules, 2014 during the year under review.

CORPORATE GOVERNANCE

In line with requirements of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 your Company is committed to the principles of good Corporate Governance and continues to adhere good corporate governance practices consistently.

A separate section is given on Corporate Governance, Management Discussion and Analysis along with a certificate from a Practicing Company Secretary regarding compliance of conditions of Corporate Governance as stipulated under Regulation 34(3) read with Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 forms part of this Annual Report.

ANNUAL RETURN

An extract of the Annual Return as on Financial Year Ended on 31st March, 2019, pursuant to the sub-section (3) of Section 92 of the Companies Act, 2013 and forming part of the report, in Form MGT - 9 is enclosed as Annexure - I and is posted on the website of the Company viz., www.shivamills.com

DIRECTORS

Sri S K Sundararaman, Director (DIN 00002691) will retire by rotation at the ensuing Annual General Meeting, he is eligible for re-appointment and seeks re-appointment.

Sri S V Arumugam, Director (DIN 00002458) ceased to be a Director by resignation with effect from 9.11.2018.

The Board wishes to place on record its appreciation for the valuable services rendered by Sri S V Arumugam during the tenure of office as Director for the growth of the Company.

All Independent Directors have given declarations that they meet the criteria of independence as laid down under Section 149 (6) of the Companies Act, 2013 and Regulation 25(8) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

The company has obtained a certificate from Sri R Dhanasekaran, Company Secretary in practice certifying that none of the Directors on the Board of the company have been debarred or disqualified from being appointed or continuing as Directors of Companies by the Board/ Ministry of Corporate Affairs or any such Statutory Authority.

KEY MANAGERIAL PERSONNEL

The Company has appointed the following persons as Key Managerial Personnel:

Name of the persons Designation
Sri S V Alagappan Managing Director
Sri M Shanmugam Chief Financial Officer
Smt M Shyamala Company Secretary

AUDIT COMMITTEE

The Audit Committee comprises of

Sri K N V Ramani - Independent Director/Chairman
Sri S K Sundararaman - Non Executive Non Independent Director
Sri S Palaniswami - Independent Director

The Board has implemented the suggestions made by the Audit Committee from time to time.

EVALUATION OF BOARD OF DIRECTORS

Pursuant to the provisions of the Companies Act, 2013 and Regulation 17 (10) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, Independent Directors at their meeting without participation of non-Independent Directors and management considered and evaluated the Boards performance, performance of the Chairman and Managing Director.

The Board has carried out an annual evaluation of performance of Board and of individual Directors as well as the Committees of Directors. The evaluation has been conducted internally in the manner prescribed by Nomination and Remuneration Committee.

BOARD MEETINGS

During the year under review, Four Board Meetings were conducted. The details of the same have been given in the Corporate Governance Report under Regulation 17 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, forming part of this Report.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

The Company has not given any loans or guarantees governed under the provisions of Section 186 of the Companies Act, 2013. The details of the investments made by Company are given in the notes to the Financial Statements.

ESTABLISHMENT OF VIGIL MECHANISM / WHISTLE BLOWER POLICY

The Company has established a vigil mechanism for Directors and employees to report concerns about unethical behavior, actual or suspected fraud or violation of the Companys code of conduct or ethics. The policy has been posted in the website of the Company: www.shivamills.com.

POLICY ON NOMINATION AND REMUNERATION COMMITTEE

The Board of Directors have framed a policy setting out the framework for payment of Remuneration to Directors, Key Managerial Personnel and Senior Management Personnel of the Company. The policy is explained as part of the Corporate Governance Report. The Committee ensures that

a. The level and composition of remuneration is reasonable and sufficient to attract, retain and motivate Directors of the quality required to run the Company successfully

b. Relationship of remuneration to performance is clear and meets appropriate performance benchmarks and

c. Remuneration to Directors, Key Managerial Personnel and senior management involves a balance between fixed and incentive pay reflecting short and long-term performance objectives appropriate to the working of the Company and its goals.

RELATED PARTY TRANSACTIONS

All the related party transactions that were entered into during the financial year in the ordinary course of business and the prices were at arms length basis. Hence, the provisions of Section 188(1) of the Companies Act, 2013 are not attracted. Further no materially significant related party transactions were enclosed by the Company with Promoters, Directors, Key Managerial Personnel or other designated persons which may have potential conflict with interest of the company at large. Hence reporting in AOC-2 is not made. Approval of Audit Committee was obtained for transactions of repetitive nature on annual basis. All related party transactions are placed before the Audit Committee and Board of Directors for their review. The policy on Related Party Transactions is available in the website www.shivamills.com.

There were no transactions made with any person or entity belonging to promoter/promoter group which holds 10% or more shareholding in the Company.

SIGNIFICANT/MATERIAL ORDERS PASSED BY THE REGULATORS/COURTS

There are no significant and material orders passed by the Regulators/Courts that would impact the going concern status and the Companys operation in future.

DIRECTORS RESPONSIBILITY STATEMENT

As stipulated in Section 134 (5) of the Companies Act, 2013 your Directors confirm that:

a) Your Directors have followed in the preparation of the annual accounts, the applicable accounting standards with proper explanation relating to material departures;

b) Your Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for that period;

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

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

e) Your Directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and

f) Your Directors have devised proper system to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

AUDITORS

The present Auditors of the Company M/s V K S Aiyer & Co., Chartered Accountants, Coimbatore (Firm Registration No: 000066S), were appointed for a term of 5 years, pursuant to the resolution passed by the members at the Annual General Meeting held on 28th September, 2016. Pursuant to Section 40 of the Companies (Amendment) Act, 2017, the proviso to Section 139 (1) relating to ratification of appointment of Auditors every year has been omitted. Accordingly, the term of office of present Auditors will be continued without ratification.

There is no audit qualification for the year under review.

DETAILS OF FRAUDS REPORTED BY AUDITORS

There were no frauds reported by the Statutory Auditors under provisions of Section 143 (12) of the Companies Act, 2013 and rules made thereunder.

SECRETARIAL AUDIT

Pursuant to provisions of section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 the Company appointed Mr R Dhanasekaran, Practicing Company Secretary to undertake the Secretarial Audit of the Company. The report is annexed herewith as Annexure - II

Further the company has obtained an Annual Compliance Report from Sri R Dhanasekaran, Practicising Company Secretary in terms of SEBI Circular No. CIR/CFD/CMD1/27/2019 dt: 08.02.2019.

No adverse qualifications/comments have been made in the said report by the Practicing Company Secretary.

COMPLIANCE OF SECRETARIAL STANDARDS

The Company has complied with all applicable Secretarial Standards issued by the Institute of Company Secretaries of India from time to time.

COST AUDITOR

Pursuant to section 148 of the Companies Act, 2013 read with the Companies (Cost Records and Audit) Rules 2014 as amended from time to time, the Board of Directors, on the recommendation of Audit Committee, has appointed Sri M Nagarajan, Cost Accountant, Coimbatore as Cost Auditor to conduct Cost Audit of the Company for the financial year 2019 - 2020. The Company has maintained such accounts and cost records as required under Section 148 (1) of the Companies Act, 2013.

JOINT VENTURE, ASSOCIATE AND SUBSIDIARIES

The Company does not have Joint Venture, Associate and Subsidiaries as per Rule 6 of the Companies (Accounts) Rules, 2014. Hence, no reporting of the same in Form AOC -1 has been made.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has an Internal Control System, commensurate with the size, scale and complexity of its operations.

The Company has an Internal Audit Department, which monitors and evaluates the efficiency and adequacy of internal control system in the Company, its compliance with operating systems, accounting procedures and policies at all locations of the Company. The scope and authority of the Internal Audit function is defined in the Internal Audit Manual. To maintain its objectivity and independence, the Internal Audit function reports to the Chairman of the Audit Committee and to the Chairman and Managing Director of the Company.

Based on the report of internal audit function, corrective actions are taken in the respective areas and thereby strengthen the controls. Significant audit observations and recommendations along with corrective actions thereon are presented to the Audit Committee of the Board.

STATEMENT ON RISK MANAGEMENT POLICY

The Company has developed a Risk Management Policy and implemented the same. At present the Company has not identified any element of risk which may be of threat to the existence of the Company.

CORPORATE SOCIAL RESPONSIBILITY

The Company has constituted Corporate Social Responsibility Committee which shall recommend to the Board, the activities to be undertaken by the Company as specified in Schedule VII, recommend the amount of expenditure to be incurred on such activities and monitor the CSR policy of the Company. The company has fully spent the amount stipulated under the requirements of the Act. The CSR activities and its related particulars are enclosed as Annexure III. The committee consists of the following Directors :

1. Sri S V Alagappan - Managing Director
2. Smt A Lalitha - Joint Managing Director
3. Sri S Palaniswami - Independent Director

STATUTORY DISCLOSURES

I. Conservation of Energy and others - The particulars required to be included in terms of Section 134(3)(m) of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014 for the year ended 31st March 2019 relating to Conservation of Energy, etc., is enclosed as Annexure IV.

II. Remuneration of Directors and other details - The information required under Section 197(12) of the Companies Act, 2013 read with Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 and forming part of the Directors Report for the year ended 31st March, 2019 is provided in Annexure V.

HUMAN RESOURCES AND INDUSTRIAL RELATIONS

During the year under review the human relations continued to be very cordial.

The Company has an Anti Sexual Harassment Policy in line with the requirements of The Sexual Harassment of Women at the Workplace (Prevention, Prohibition & Redressal) Act, 2013 and an Internal Complaints Committee (ICC) has been constituted to redress complaints of sexual harassment as provided therein. All employees (permanent, contractual, temporary, trainees) are covered under this policy.

a. No. of complaints led during the financial year 2018-19 - Nil
b. No. of complaints disposed off during the financial year 2018-19 - Nil
c. No. of complaints pending as on end of financial year 2018-19 - Nil

ACKNOWLEDGMENT

Your Directors acknowledge with thanks the financial assistance extended by the Bankers providing the required bank facilities to the company. Your Directors wish to place on record their appreciation of the contributions made by the employees at all levels for the good performance of your company.

By Order of the Board
S V ALAGAPPAN
Coimbatore CHAIRMAN AND MANAGING DIRECTOR
29th May, 2019 DIN 00002450