Shiva Mills Ltd Management Discussions.

COMPANYS BUSINESS

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

INDUSTRY STRUCTURE AND DEVELOPMENTS

Textile Industry is one of Indias oldest industry with a formidable presence in the national economy and has made major contribution to the economy in terms of direct and indirect employment generation, contribution to GDP and net foreign exchange earnings. Textile and Apparel sector is the second largest employment provider in the Country next to Agriculture. Keeping in view the importance of the Industry, the Central Government, have announced several measures including incentives to give fillip to the Textile Industry. Thus the growth and all round development of this Industry has a direct bearing on the improvement of the economy of the Country.

OPPORTUNITIES

India is the largest cotton producer and has the second largest installed spindle capacity in the world. Inspite of having a strong manufacturing base, Indias share in global textile trade is only about 5%. Hence the scope for increasing the share of Indias textile exports is tremendous. Rising per capital income, favorable demographics and shift in preference for branded products offer excellent opportunity for the Industry to drive growth.

OUTLOOK

The outlook for Indian textile industry looks promising buoyed by strong domestic demand and improved market sentiments for exports. Various fiscal incentives offered by the Union Government, Sharing of EPF burden, emphasis on skill development etc offer excellent opportunity for the Industry to perform 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 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 2017-18 AND 2018-19

All the key financial ratios for the Financial Year 2018-19 have improved as compared with previous year ratios.

Type of Ratio Parameter 2018-19 2017-18
1 Debtors Turnover Ratio Times 6.54 8.48
2 Inventory Turnover Times 4.11 3.63
3 Interest Coverage Ratio Times 2.01 1.99
4 Current Ratio Times 1.13 1.07
5 Debt Equity Ratio Times 0.06 0.06
6 Operating profit Margin (%) % 8.65 7.07
7 Net profit Margin (%) % 3.78 2.29

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

Return on net worth has increased from 4.98 % to 7.99% due to increase in profit after tax.

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
Coimbatore S V ALAGAPPAN
29th May, 2019 CHAIRMAN AND MANAGING DIRECTOR
DIN 00002450

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, 2019 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.

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.

R. Dhanasekaran
Company Secretary in Practice
FCS 7070
Coimbatore
29th May, 2019 CP 7745

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 31.3.2019

S V ALAGAPPAN
Coimbatore MANAGING DIRECTOR
29th May, 2019 DIN 00002450