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Shiva Mills Ltd.

BSE: 540961 Sector: Industrials
NSE: SHIVAMILLS ISIN Code: INE644Y01017
BSE 16:00 | 25 Jun 76.45 2.05
(2.76%)
OPEN

75.65

HIGH

78.10

LOW

70.70

NSE 15:59 | 25 Jun 76.25 2.15
(2.90%)
OPEN

75.70

HIGH

77.80

LOW

70.40

OPEN 75.65
PREVIOUS CLOSE 74.40
VOLUME 53944
52-Week high 85.00
52-Week low 20.00
P/E 7.72
Mkt Cap.(Rs cr) 66
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 75.65
CLOSE 74.40
VOLUME 53944
52-Week high 85.00
52-Week low 20.00
P/E 7.72
Mkt Cap.(Rs cr) 66
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Shiva Mills Ltd. (SHIVAMILLS) - Director Report

Company director report

Dear Members

Your Directors have pleasure in presenting the 5th Annual Report togetherwith Audited Financial Statements of the Company for the year ended 31st March2020.

Financial Results 2019-20 2018-19
Gross revenue and other income 16460.33 17602.19
Profit before Interest and Depreciation 1259.65 2031.60
Less: Interest 567.98 751.54
Profit before Depreciation 691.67 1280.06
Less: Depreciation 540.77 520.47
Profit before Tax 150.90 759.59
Less: Provision for Income Tax
- Current Tax 91.02 267.00
- Deferred Tax Liability (Net) written back (54.43) (-)167.56
Profit after Tax 114.31 660.15
Other Comprehensive income 5.50 (-)3.99
Total Comprehensive Income/ (Loss) for the year 119.81 656.16

DIVIDEND

Your Directors have not recommended any dividend for the financial year 2019-2020 dueto steep decrease in profits and adverse impact on the business of the Company by thenationwide lockdown due to COVID-19 pandemic.

PRESENTATION OF FINANCIAL STATEMENTS

The Financial Statements for the year ended 31.3.2020 have been prepared in accordancewith the Indian Accounting Standard (Ind AS) notified under Section 133 of the CompaniesAct 2013 read with Companies (Accounts) Rules 2014 and other relevant provisions of theAct.

REVIEW OF OPERATIONS

During the year under review the spinning unit produced 6598.19 tonnes (7329.93tonnes) of cotton yarn. The unit sold 6948.65 tonnes (7064.69 tonnes) of cotton yarn outof which exports accounted for 599.30 tonnes (511.71 tonnes). Further the Company sold1810.09 tonnes (2170.46 tonnes) of waste cotton of which exports were nil tonnes (160.68tonnes).

Due to decrease in demand for yarn in export market there was glut in yarn availablein domestic market. As a result the price of yarn declined sharply eroding the operatingprofits even though cotton prices also declined during the year.

The Wind Mills with aggregate installed capacity of 10.65 MW generated 161.04 lakhunits (168.37 lakh units) of Wind Electricity during the year. The entire power generatedby the wind mills were utilized for captive consumption at the textile mill. There hasbeen decrease in wind power generation by 4.35% as compared with previous year generation.

The overall sales turnover of the Company aggregated to Rs. 16340.08 Lakhs (17463.15Lakhs) of which exports amounted to Rs.1223.87 Lakhs (Rs.1205.13 Lakhs) the exportscontributing 7.49 % of the overall sales of the Company.

IMPACT OF COVID-19 IN THE BUSINESS OF THE COMPANY

The Company has a spinning unit in Dindigul District Tamil Nadu manufacturing yarnfor domestic and export market. Pursuant to the lockdown announced by the Government onaccount of the Covid-19 Pandemic the manufacturing operations of the Company weresuspended from close of 24th March2020. Necessary measures were taken for thesafety of the employees in compliance of the directions issued by the State and CentralGovernments as well as the concerned Local Authorities.

The Company has resumed production from 11th May2020 with less than 50%labour strength adopting standard operating procedure(SOP) announced by the Government.Production from 1st June2020 is being gradually increased as the StateGovernment has permitted to carry out the operation in full capacity.

Covid-19 pandemic has disturbed the demand-supply situation of yarn market. Our Companyhas no exception to this phenomenon affecting parameters like revenue operating profitetc. in the first quarter.

The adverse impact on the Company's operations due to COVID-19 pandemic cannot bereasonably estimated at this point of time and depends on the extent to which the Indianand Global economy is impacted by the pandemic.

PROSPECTS FOR THE CURRENT YEAR

The Company continues to produce yarn with focus on hoisery and weaving marketsbesides export. The Company is optimistic of achiving more volume of yarn sales during theremaining period after COVID-19 lockdown provided the virus impact is controlled throughthe measures initiated by the Governments. Therefore the performance of the Spinning Unitis likely to be satisfactory. The contribution from Windmills is dependent on availabilityof 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 theCompany subsequent to the end of the financial year.

PUBLIC DEPOSITS

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

CORPORATEGOVERNANCE

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

A separate section is given on Corporate Governance Management Discussion and Analysisalong with a certificate from a Practicing Company Secretary regarding compliance ofconditions of Corporate Governance as stipulated under Regulation 34(3) read with ScheduleV of the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 formspart of this Annual Report.

ANNUALRETURN

An extract of the Annual Return as on Financial Year ended on 31st March 2020pursuant to the sub-section (3) of Section 92 of the Companies Act 2013 and forming partof the report in Form MGT - 9 is enclosed as Annexure - I and is posted on the website ofthe Company viz. www.shivamills.com

DIRECTORS

Smt A Lalitha Joint Managing Director (DIN 00003688) will retire by rotation at theensuing Annual General Meeting; she is eligible for re-appointment and seeksre-appointment.

In terms of Regulation 17(1A) of SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 a Special Resolution for continuation of present term of Directorshipof Sri S Marusamy (DIN 00610091) NonExecutive Independent Director is proposed who hasattained the age of 75 years.

All Independent Directors have given declarations that they meet the criteria ofindependence as laid down under Section 149 (6) of the Companies Act 2013 and Regulation25(8) of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015.

The Company has obtained a certificate from Sri R Dhanasekaran Company Secretary inPractice certifying that none of the Directors on the Board of the Company have beendebarred or disqualified from being appointed or continuing as Directors of Companies bythe 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 totime.

EVALUATION OF BOARD OF DIRECTORS

Pursuant to the provisions of the Companies Act 2013 and Regulation 17 (10) of theSEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 IndependentDirectors at their meeting without participation of non-Independent Directors andmanagement considered and evaluated the Board's performance performance of the Chairmanand Managing Director.

The Board has carried out an annual evaluation of performance of Board and ofindividual Directors as well as the Committees of Directors. The evaluation has beenconducted 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 thesame have been given in the Corporate Governance Report under Regulation 17 of the SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 forming part of thisReport.

PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS

The Company has not given any loans or guarantees governed under the provisions ofSection 186 of the Companies Act 2013. The details of the investments made by Company aregiven 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 reportconcerns about unethical behavior actual or suspected fraud or violation of the Company'scode 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 ofRemuneration to Directors Key Managerial Personnel and Senior Management Personnel of theCompany. The policy is explained as part of the Corporate Governance Report. The Committeeensures that

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

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

c. Remuneration to Directors Key Managerial Personnel and senior management involves abalance between fixed and incentive pay reflecting short and long-term performanceobjectives 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 inthe ordinary course of business and the prices were at arm's length basis. Hence theprovisions of Section 188 (1) of the Companies Act 2013 are not attracted. Further nomaterially significant related party transactions were made by the Company with PromotersDirectors Key Managerial Personnel or other designated persons which may have potentialconflict 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 annualbasis. All related party transactions are placed before the Audit Committee and Board ofDirectors for their review. The policy on Related Party Transactions is available in thewebsite www.shivamills.com.

There were no transactions made with any person or entity belonging topromoter/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 wouldimpact the going concern status and the Company's operation in future.

DIRECTORS' RESPONSIBILITY STATEMENT

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

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

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

c) Your Directors have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of this Act for safeguarding theassets 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 theCompany and that such internal financial controls are adequate and were operatingeffectively; and

f) Your Directors have devised proper system to ensure compliance with the provisionsof 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 AccountantsCoimbatore (Firm Registration No: 000066S) were appointed for a term of 5 years pursuantto the resolution passed by the members at the Annual General Meeting held on 28thSeptember 2016. Pursuant to Section 40 of the Companies (Amendment) Act 2017 theproviso to Section 139 (1) relating to ratification of appointment of Auditors every yearhas been omitted. Accordingly the term of office of present Auditors will be continuedwithout 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 appointedMr R Dhanasekaran Practicing Company Secretary to undertake the Secretarial Audit of theCompany. The report is annexed herewith as Annexure - II

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

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

COMPLIANCE OF SECRETARIAL STANDARDS

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

COST AUDITOR

Pursuant to section 148 of the Companies Act 2013 read with the Companies (CostRecords and Audit) Rules 2014 as amended from time to time the Board of Directors on therecommendation of Audit Committee has appointed Sri M Nagarajan Cost AccountantCoimbatore as Cost Auditor to conduct Cost Audit of the Company for the financial year2020 - 2021. The Company has maintained such accounts and cost records as required underSection 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 ofthe Companies (Accounts) Rules 2014. Hence no reporting of the same in Form AOC -1 hasbeen made.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

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

The Company has an Internal Audit Department which monitors and evaluates theefficiency and adequacy of internal control system in the Company its compliance withoperating systems accounting procedures and policies at all locations of the Company. Thescope and authority of the Internal Audit function is defined in the Internal AuditManual. To maintain its objectivity and independence the Internal Audit function reportsto the Chairman of the Audit Committee and to the Chairman and Managing Director of theCompany.

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

STATEMENT ON RISK MANAGEMENT POLICY

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

CORPORATE SOCIAL RESPONSIBILITY

The Company has constituted Corporate Social Responsibility Committee which shallrecommend to the Board the activities to be undertaken by the Company as specified inSchedule VII recommend the amount of expenditure to be incurred on such activities andmonitor the CSR policy of the Company. The company has fully spent the amount stipulatedunder the requirements of the Act. The CSR activities and its related particulars isenclosed 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 termsof 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 2020 relating to Conservation ofEnergy etc. is enclosed as Annexure IV.

II. Remuneration of Directors and other details - The information required underSection 197(12) of the Companies Act 2013 read with Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 and forming part of the Directors'Report for the year ended 31st March 2020 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 TheSexual Harassment of Women at the Workplace (Prevention Prohibition & Redressal) Act2013 and an Internal Complaints Committee (ICC) has constituted to redress complaints ofsexual harassment as provided therein. All employees (permanent contractual temporarytrainees) are covered under this policy.

a. No.of complaints filed during the financial year 2019-20-Nil

b. No.of complaints disposed off during the financial year 2019-20-Nil

c. No.of complaints pending as on end of financial year 2019-20-Nil

ACKNOWLEDGEMENT

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

By Order of the Board
S V ALAGAPPAN
Coimbatore CHAIRMAN AND MANAGING DIRECTOR
25th June 2020 DIN 00002450