Shiva Texyarn Ltd Directors Report.

Dear Members,

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

(र in lakhs)

FINANCIAL RESULTS Financial Year
2018-19 2017-18
Profit before Interest and Depreciation 4302.01 4736.03
Less: Interest 2165.31 1927.62
Profit before Depreciation 2136.70 2808.41
Less: Depreciation 1336.21 1343.64
Profit before Tax 800.49 1464.77
Less : Provision for Income Tax
- Current Tax 162.94 345.00
- Deferred tax Liability (Net) (32.74) (12.53)
Profit after Tax 670.29 1132.30
Add : Other comprehensive income/(Loss) (30.93) 9.97
Total comprehensive income/(Loss) for the year 639.36 1142.27

DIVIDEND

Your Directors are glad to recommend payment of Dividend @ Rs. 1.10/- per equity share of Rs.10/- each (@ 11% of the paid up capital) (Last year Rs. 1.60/- per share of Rs. 10/- each). The dividend on equity shares together with distribution tax on corporate dividend will absorb Rs. 171.90 lakhs (Rs. 250.02 lakhs).

REVIEW OF OPERATIONS

During the year under review, the spinning unit produced 10482.15 tonnes (10763.93 tonnes) of yarn. The spinning unit sold 9868.55 tonnes (10180.08 tonnes) of yarn and out of which exports accounted for 1505.77 tonnes (1964.61 tonnes). Further, during the year under review, the Company sold 3318.23 tonnes (3226.80 tonnes) of waste cotton of which exports accounted for 392.95 tonnes (711.56 tonnes).

The Wind Mills, with aggregate installed capacity of 18.145 MW generated 212.62 lakh units of Wind Electricity as against 230.87 lakh units in the last year. The entire power generated by Wind Mills was utilized for captive consumption at the textile mills.

The performance of the spinning unit in terms of profitability was better compare to last year, and due to less demand in the second half yarn stock level has increased. And wind generated almost equal compare to last year its support to maintain the profitability.

The companys non-spinning technical textile division overall performance in respect of revenue almost equal to last year, in respect of profitability was reduced high material and operational cost. The overall sales turnover of the Company from all divisions aggregated to Rs.35111.33 Lakhs (Rs.35551.51 Lakhs) of which exports including merchant exports amounted to Rs.5690.11 Lakhs (Rs.7301.75 Lakhs), the exports contributing 16.21% (20.53%) of the overall sales of the Company.

PROSPECTS FOR THE CURRENT YEAR

The prospects for the spinning division appear to be stable and strategic shift to higher counts expect reasonable margin. The contribution from windmill also expects to continue in the present level. The contribution from lamination, coating and garments are likely to improve in the coming years.

MATERIAL CHANGES AND COMMITMENTS, IF ANY AFFECTING THE FINANCIAL POSITION OF

THE COMPANY

There are no material changes and commitments affecting the financial position of the Company subsequent to the end of the Financial Year.

TRANSFER TO RESERVES

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

CHANGE IN THE NATURE OF BUSINESS

There was no change in the nature of principal business of the Company during the financial year ended 31st March 2019.

SHARE CAPITAL

During the year under review the Company has not made any fresh issue of shares.

TRANSFER OF UNCLAIMED DIVIDEND / SHARES TO INVESTOR EDUCATION AND PROTECTION FUND

The Company has transferred unclaimed dividend of Rs.5,26,521/- to the Investor Education and Protection Fund and also transferred 9,783 equity shares of Rs.10/- each to the account of Investor Education and Protection Fund, during the year under review.

EXTRACT OF ANNUAL RETURN

An extract of the Annual Return as on 31st March, 2019 pursuant to the sub-section (3) of Section 92 of the Companies Act, 2013 i.e. Form MGT - 9 is available at the weblink:www.shivatex.in.

BOARD MEETINGS

During the year under review, Four Board Meetings of the Company 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.

SECRETARIAL STANDARDS

During the year under review, your Company has complied with all the applicable Secretarial Standards issued by the Institute of Company Secretaries of India from time to time.

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 and loss 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.

DIRECTORS

During the period under review Sri A Dhananjayan (DIN : 08043947) and Sri D Satish Krishnan (DIN : 00052973) were inducted in to the Board on 29.05.2019. Sri S V Kandasami, Director (DIN 00002470) is required to retire by rotation at the ensuing Annual General Meeting, he is eligible and seeks re-appointment. He has also got the approval of members of the Company in the Annual General Meeting held on 24th September 2018 for continuation of office of Director after crossing the age of 75 years. Sri K N V Ramani (DIN 00007931) and Sri S Marusamy (DIN 00610091), Independent Directors of the Company were re-appointed for a second term of five consecutive years effective from 25.08.2019 till 24.08.2024. Suitable resolutions along with explanatory statement and justification for their re-appointment as an Independent Directors have been set out in the Notice to the members. Sri S V Arumugam resigned from the Board with effect from 09.11.2018. Sri K N V Ramani, Sri C S K Prabhu, Sri S Palaniswami, Dr K R Thillainathan and Sri S Marusamy were appointed as Independent Directors at the Thirty Third Annual General Meeting of the Company for a period of five consecutive years effective from 25.08.2014 to 24.08.2019 and their first tenure of office of the said Independent Directors will ends on 24.08.2019. Sri C S K Prabhu, Sri S Palaniswami and Dr K R Thillainathan, Independent Directors of the Company have expressed their unwillingness for seeking re-appointment.

The Board placed its sincere appreciation on record for the valuable contributions made by Sri S V Arumugam, who was associated with the Company for a continuous period of 38 years as an active member of the Board and guided the growth of the Company to its present status as a prominent and key player in the domestic yarn segment. His vision and professional approach has always been of great support to the Board.

The Board also recorded the valuable contributions and guidance rendered by Sri C S K Prabhu, Sri S Palaniswami and Dr K R Thillainathan during their tenure of office as an Independent Directors of the Company.

DECLARATION OF INDEPENDENT DIRECTORS

All the Independent Directors have given declarations that they meet the criteria of independence as laid down under Section 149 (6) of the Companies Act, 2013.

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 its own performance and performance of the individual Directors as well as the Committees of Directors.

KEY MANAGERIAL PERSONNEL

The Company has not appointed any Key Managerial Personnel during the year under review.

AUDIT COMMITTEE

The Audit Committee comprises of

1. Sri K N V Ramani - Chairman (Non- Executive Independent Director)

2. Sri C S K Prabhu - Member (Non- Executive Independent Director)

3. Sri S K Sundararaman - Member (Managing Director) and

4. Sri S Palaniswami - Member (Non- Executive Independent Director) The Board has implemented the suggestions made by the Audit Committee from time to time.

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 behaviour, 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 viz., www.shivatex.in.

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:

1. 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

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

3. 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 related party transactions that were entered into during the financial year in the ordinary course of business were on arms length basis. Hence provisions of Section 188 of the Companies Act, 2013 are not attracted. Further no materially significant related party transactions were made by the Company with Promoters, Key Managerial Personnel or other designated persons which may have potential conflict with interest of the company at large. Hence reporting under Form AOC-2 is not required. 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.shivatex.in.

SUBSIDIARY COMPANY

The Company has no subsidiary during the year under review.

PUBLIC DEPOSITS

The Company has not accepted any public deposits within the meaning of Section 73 to 76 of the Companies Act, 2013 read with 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 the Practicing Company regarding compliance with conditions of Corporate Governance, as stipulated under Regulation 34(3) read with Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 which forms part of this Annual Report.

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.

AUDITORS

As per Section 139 of the Companies Act, 2013 M/s Deloittee, Haskin & Sells LLP Chartered Accountants were appointed as Auditors for a term of 5 years in the 36th Annual General Meeting held on 25th December, 2017 and will hold office up to 41st Annual General Meeting without further ratification every year as per the provisions of Companies (Amendment) Act, 2017.

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 attached herewith as

Annexure I.

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

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, have appointed Sri M Nagarajan, Cost Accountant, Coimbatore as Cost Auditor to conduct Cost Audit of the Company for the financial year 2019 - 2020 with remuneration. As required under the Companies Act, 2013, a resolution seeking members approval for the remuneration payable to the Cost Auditor forms part of the Notice convening Annual General Meeting.

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 & Managing Director.

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.

INTERNAL AUDITOR

The Company has appointed M/s. B.M Associates as Internal Auditor to conduct the internal audits of the Company.

STATEMENT ON RISK MANAGEMENT POLICY

Pursuant to section 134(3) (n) of the Companies Act, 2013 and Regulation 21 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company has constituted a Risk Management Committee. The Committee has developed a Risk Management Policy and implemented the same. The details of the Committee and its terms of reference are set out in the Corporate Governance Report forming part of the Boards Report. At present the Company has not identified any element of risk which may threat the existence of the Company.

CORPORATE SOCIAL RESPONSIBILITY COMMITTEE

The Company has constituted Corporate Social Responsibility Committee (CSR), which shall recommend to the Board, the activities to be undertaken by the Company as specified in Schedule VII of the Companies Act, 2013, recommend the amount of expenditure to be incurred on such activities and monitor the CSR policy of the Company. The company has partially spent the amount stipulated under the requirements of the Act.

Corporate Social Responsibility Committee constituted by the Board with effect from 21.05.2014, comprised of the following Directors.

1. Sri S V Alagappan - Chairman
2. Sri S K Sundararaman - Managing Director
3. Dr K R Thillainathan - Independent Director

The CSR activities and its related particulars is enclosed as Annexure II

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 III

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 as Annexure IV to this report.

HUMAN RESOURCES AND INDUSTRIAL RELATIONS

During the year under review the human relations continued to be very cordial. The Board of Directors wishes to acknowledge the contribution of the employees at all levels of the organization.

The Company has in place an Anti-Sexual Harassment Policy in line with the requirements of The Sexual Harassment of Women at the Workplace (Prevention, Prohibition & Redressal) Act, 2013. Internal Complaints Committee (ICC) has been set up to redress complaints for sexual harassment. All employees (permanent, contractual, temporary, trainees) are covered under this policy. The Company has not received any complaints for disposal during the year.

ACKNOWLEDGEMENT

Your Directors acknowledge with gratitude the timely assistance and help extended by the Bankers for having provided the required bank facilities. Your Directors wish to place on record their appreciation of the contributions made by the employees at all levels for the continued good performance of your company.

By Order of the Board
S V ALAGAPPAN
Coimbatore CHAIRMAN
29th May, 2019
(DIN 00002450)