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Shiva Mills Ltd.

BSE: 540961 Sector: Industrials
NSE: SHIVAMILLS ISIN Code: INE644Y01017
BSE 15:43 | 19 Sep 33.00 -0.85
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HIGH

33.05

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NSE 15:31 | 19 Sep 35.45 0
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OPEN

35.45

HIGH

35.45

LOW

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OPEN 33.05
PREVIOUS CLOSE 33.85
VOLUME 425
52-Week high 70.00
52-Week low 31.00
P/E 6.42
Mkt Cap.(Rs cr) 29
Buy Price 33.00
Buy Qty 350.00
Sell Price 33.00
Sell Qty 150.00
OPEN 33.05
CLOSE 33.85
VOLUME 425
52-Week high 70.00
52-Week low 31.00
P/E 6.42
Mkt Cap.(Rs cr) 29
Buy Price 33.00
Buy Qty 350.00
Sell Price 33.00
Sell Qty 150.00

Shiva Mills Ltd. (SHIVAMILLS) - Director Report

Company director report

Dear Members

Your Directors have pleasure in presenting the 3rd Annual Reporttogether with Audited Financial Statements of the Company for the year ended 31stMarch2018.

(In lakhs)

Financial Results

2017-18

2016-17

Gross revenue and other income

17146.49

17008.06

Pro t before Interest and Depreciation

1683.19

2162.92

Less: Interest

599.09

629.80

Pro t before Depreciation

1084.10

1533.12

Less: Depreciation

489.30

486.12

Pro t before Tax

594.80

1047.00

Less: Provision for Income Tax
- Current Tax

240.17

571.95

- Deferred Tax Liability (Net)

(-)31.95

27.54

Pro t after Tax

386.58

447.51

Other Comprehensive income

18.40

2.66

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 @14% of the paid up capital.The dividend together with distribution tax will absorb Rs.145.85 lakhs.

IMPLEMENTATION OF INDIAN ACCOUNTING STANDARDS (IndAS)

Financial year 2017-18 is the rst year of implementation of IndianAccounting Standard for the year compared. The Financial Statements for the year ended31.3.2018 have been prepared in accordance with the Indian Accounting Standard (Ind AS)noti ed under Section 133 of the Companies Act 2013 read with Companies (Accounts) Rules2014 and other relevant provisions of the Act. The Financial Statements for the year ended31.3.2017 have been restated in accordance with Ind AS for compliance purposes. Detailedinformation on the impact of the transition from previous GAAP to Ind As is provided inthe annexed Financial Statements.

REVIEW OF OPERATIONS

The performance of the Spinning unit was affected by the steep declinein prices of yarn in the second and third quarters of the nancial year 2017-18 consequentto unwinding of inventory post introduction of Goods & Service Tax (GST) effectivefrom 1st July 2017. The performance of Windmill units continued to be satisfactory duringthe year as TANGEDCO was able to evacuate the wind energy generated with minimum back outwhich helped the Company to reduce its dependence on outside power and also contributed tothe Pro ts of the Company.

During the year under review the spinning unit produced 7202.19 tonnes(7233.11 tonnes) of yarn of which 461.80 tonnes (2270.67 tonnes) was used to produceknitted fabrics. The unit sold 6548.66 tonnes (5165.12 tonnes) of yarn and 580.30 tonnes(2327.79 tonnes) of knitted fabrics out of which exports accounted for 662.66 tonnes(1223.97 tonnes). Further during the year under review the Company sold 2073.44 tonnes(2275.08 tonnes) of waste cotton of which exports accounted for 693.12 tonnes (245.16tonnes).

The Wind Mills with aggregate installed capacity of 10.65 MWgenerated192.30 lakh units (192.52 lakh units) of Wind Electricity during the year. Theentire power generated by the wind mills were utilized for captive consumption at thetextile mill.

The overall sales turnover of the Company aggregated to Rs. 17094.35Lakhs (Rs.16899.84 Lakhs) of which exports including Merchant exports amounted toRs.1477.41 Lakhs (Rs. 2592.75 Lakhs) the exports contributing 8.64% of the overall salesof the Company.

The performance of the Spinning Unit in terms of pro tability wasaffected by steep decline in prices of yarn due to supply/demand mismatch in the secondhalf of the year. However the signi cant improvement in Wind Electricity generated forcaptive use helped the Company to achieve improved Pro ts during the year under review.

PROSPECTS FOR THE CURRENT YEAR

The demand for Cotton yarn in both domestic and export markets hasstarted improving and is expected to remain stable in the current year. Though there hasbeen an increase in prices of Cotton and other overheads the yarn prices are also likelyto stay rm due to the expected increase in demand for yarn. Hence the performance of theSpinning unit is set to improve in the current year as compared to the previous year2017-18. The contribution from Windmills is dependent on availability of Wind of adequatevelocity and its evacuation by TANGEDCO.

EVENT SUBSEQUENT TO THE DATE OF FINANCIAL STATEMENTS

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

PUBLIC DEPOSITS

The Company has not accepted any public deposits within the meaning ofSection 73 to 76 of the Companies Act 2013 read with the Companies (Acceptance ofDeposits) Rules 2014 during the year under review.

SCHEME OF ARRANGEMENT (DEMERGER) - ALLOTMENT OF SHARES

In consideration of Demerger including the transfer and vesting ofDemerged Undertaking in the Resulting Company members of Demerged Company viz. ShivaTexyarn Limited whose name is recorded in the Register of Members on the record date i.e.6.11.2017 were allotted 8641808 equity shares of Rs.10/- each on 23.11.2017 in theratio of 2 (two) fully paid-up equity share of Rs.10/- each in the Resulting Company viz.Shiva Mills Limited for every 5 ( ve) equity share of Rs.10/- each fully paid-up held bysuch member in the Demerged Company.

Further equity share capital for an amount of Rs.500000/- representedby 50000 equity shares of Rs.10/- each held by Shiva Texyarn Limited were cancelled andtransferred to General Reserve as per the Scheme of

Arrangement (Demerger). Consequently Shiva Texyarn Limited ceased to bethe Holding Company of Shiva Mills Limited.

LISTING OF EQUITY SHARES

Stock Exchanges both BSE Limited and National Stock Exchange of IndiaLimited were approved the listing of 8641808 Equity shares with effect from 21.2.2018and the trading commenced w.e.f. 26.2.2018 in both the stock exchanges.

CORPORATE GOVERNANCE

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

A separate section is given on Corporate Governance ManagementDiscussion and Analysis along with a certi cate from a Practicing Company Secretaryregarding compliance of conditions of Corporate Governance as stipulated under Regulation34(3) read with Schedule V of the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 forms part of this Annual Report.

ANNUAL RETURN

Annual Return as on Financial Year ended on 31st March 2018 pursuantto the sub-section (3) of Section 92 of the Companies Act 2013 is posted on the websiteof the Company viz. www.shivamills.com.

DIRECTORS

During the period under review there were no change in the Board ofDirectors.

Sri S V Arumugam Director (DIN 00002458) is required to retire byrotation at the ensuing Annual General Meeting he is eligible and seeks re-appointment.

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

KEY MANAGERIAL PERSONNEL

The Company has appointed the following persons as Key ManagerialPersonnel:

Name of the persons Designation
Sri S V Alagappan Managing Director
Sri S Seshadri * Chief Financial Of cer
Sri M Shanmugam ** Chief Financial Of cer
Smt M Shyamala Company Secretary

* Resigned w.e.f 31.3.2018 ** Appointed w.e.f 1.4.2018

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 Committeefrom 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 2015Independent Directors at their meeting without participation of non-Independent Directorsand management considered and evaluated the Boards' performance performance of theChairman and Managing Director.

The Board has carried out an annual evaluation of its own performanceof the individual Directors as well as the Committees of Directors.

BOARD MEETINGS

During the year under review 13 Board Meetings were conducted. Thedetails of the same have been given in the Corporate Governance Report under Regulation 17of the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 formingpart of this Report.

PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS

The Company has not given any loans or guarantees governed under theprovisions of Section 186 of the Companies Act 2013. The details of the investments madeby 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 andemployees to report concerns about unethical behavior actual or suspected fraud orviolation of the Company's code of conduct or ethics. The policy has been posted in thewebsite of the Company: www.shivamills.com.

POLICY ON NOMINATION AND REMUNERATION COMMITTEE

The Board of Directors have framed a policy setting out the frameworkfor payment of Remuneration to Directors Key Managerial Personnel and Senior ManagementPersonnel of the Company. The policy is explained as part of the Corporate GovernanceReport. The Committee ensures that a. The level and composition of remuneration isreasonable and suf cient to attract retain and motivate Directors of the quality requiredto run the Company successfully b. Relationship of remuneration to performance is clearand meets appropriate performance benchmarks and c. Remuneration to Directors KeyManagerial Personnel and senior management involves a balance between xed and incentivepay re ecting short and long-term performance objectives appropriate to the working of theCompany and its goals.

RELATED PARTY TRANSACTIONS

All the related party transactions that were entered into during thenancial year in the ordinary course of business and the prices were at arm's length basis.Hence the provisions of Section 188 of the Companies Act 2013 are not attracted. Furtherno materially signi cant related party transactions were made by the Company withPromoters Directors Key Managerial Personnel or other designated persons which may havepotential con ict with interest of the company at large. Hence reporting in AOC-2 is notmade. Approval of Audit Committee was obtained for transactions of repetitive nature onannual basis. All related party transactions are placed before the Audit Committee andBoard of Directors for their review. The policy on Related Party Transactions is availablein the website www.shivamills.com.

SIGNIFICANT/MATERIAL ORDERS PASSED BY THE REGULATORS/COURTS

There are no signi cant and material orders passed by theRegulators/Courts that would impact the going concern status and the Company's operationin future.

DIRECTORS' RESPONSIBILITY STATEMENT

As stipulated in Section 134 (5) of the Companies Act 2013 yourDirectors con rm that:

a) Your Directors have followed in the preparation of the annualaccounts the applicable accounting standards with proper explanation relating to materialdepartures;

b) Your Directors have selected such accounting policies and appliedthem consistently and made judgments and estimates that are reasonable and prudent so asto give a true and fair view of the state of affairs of the Company at the end of thenancial year and of the pro t of the Company for that period;

c) Your Directors have taken proper and suf cient care for themaintenance of adequate accounting records in accordance with the provisions of this Actfor safeguarding the assets of the Company and for preventing and detecting fraud andother irregularities;

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

e) Your Directors have laid down internal nancial controls to befollowed by the Company and that such internal nancial controls are adequate and wereoperating effectively; and

f) Your Directors have devised proper system to ensure compliance withthe provisions of all applicable laws and that such systems were adequate and operatingeffectively.

AUDITORS

The present Auditors of the Company M/s V K S Aiyer & Co CharteredAccountants Coimbatore were appointed for a term of 5 years pursuant to the resolutionpassed by the members at the Annual General Meeting held on 28th September 2016. Pursuantto Section 40 of the Companies (Amendment) Act 2017 the proviso to Section 139 (1)relating to rati cation of appointment of Auditors every year has been omitted.Accordingly the term of of ce of present Auditors viz. M/s V K S Aiyer & Co.Chartered Accountants Coimbatore (Firm Registration No: 000066S) will be continuedwithout rati cation. A resolution for this purpose is also placed before the shareholdersfor their approval at the ensuing Annual General Meeting.

There is no audit quali cation for the year under review.

SECRETARIAL AUDIT

Pursuant to provisions of section 204 of the Companies Act 2013 andthe Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 theCompany has appointed Mr R Dhanasekaran Practicing Company Secretary to undertake theSecretarial Audit of the Company. The report is annexed herewith as

Annexure - I

No adverse quali cations/comments have been made in the said report bythe Practicing Company Secretary.

COMPLIANCE OF SECRETARIAL STANDARDS

The Company has complied with all applicable Secretarial Standardsissued 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 theCompanies (Cost Records and Audit) Rules 2014 as amended from time to time the Board ofDirectors have appointed Sri M Nagarajan Cost Accountant Coimbatore as Cost Auditor toconduct Cost Audit of the Company for the nancial year 2018 - 2019 with remuneration. Asrequired under the Companies Act 2013 a resolution seeking members' approval for theremuneration payable to the Cost Auditor forms part of the Notice convening Annual GeneralMeeting.

JOINT VENTURE ASSOCIATE AND SUBSIDIARIES

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

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

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

The Company has an Internal Audit Department which monitors andevaluates the ef ciency and adequacy of internal control system in the Company itscompliance with operating systems accounting procedures and policies at all locations ofthe Company. The scope and authority of the Internal Audit function is de ned in theInternal Audit Manual. To maintain its objectivity and independence the Internal Auditfunction reports to the Chairman of the Audit Committee and to the Chairman and ManagingDirector of the Company.

Based on the report of internal audit function corrective actions aretaken in the respective areas and thereby strengthen the controls. Signi cant auditobservations and recommendations along with corrective actions thereon are presented tothe Audit Committee of the Board.

STATEMENT ON RISK MANAGEMENT POLICY

The Company has developed a Risk Management Policy and implemented thesame. At present the Company has not identi ed any element of risk which may threat theexistence of the Company.

CORPORATE SOCIAL RESPONSIBILITY

According to Section 135(5) of the Companies Act 2013 the Company hasto discharge its obligation towards Corporate Social Responsibility during the FinancialYear 2018-19.

The Company has constituted Corporate Social Responsibility Committeewhich shall recommend to the Board the activities to be undertaken by the Company asspeci ed in schedule VII recommend the amount of expenditure to be incurred on suchactivities and monitor the CSR policy of the Company. Corporate Social ResponsibilityCommittee constituted consisting of the following Directors:

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

The CSR policy of the Company is available in the weblink:www.shivamills.com

STATUTORY DISCLOSURES

I. Conservation of Energy and others - The particulars requiredto be included in terms of Section 134(3)(m) of the Companies Act 2013 read with Rule8(3) of the Companies (Accounts) Rules 2014 for the year ended 31stMarch 2018 relating toConservation of Energy etc. is enclosed as

Annexure II.

II. Remuneration of Directors and other details - Theinformation 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 theDirectors' Report for the year ended 31st March 2018 is provided in

Annexure III.

HUMAN RESOURCES AND INDUSTRIAL RELATIONS

During the year under review the human relations continued to be verycordial. The Company wishes to acknowledge the contribution of the employees at all levelsof the organisation.

The Company has placed an Anti Sexual Harassment Policy in line withthe requirements of The Sexual Harassment of Women at the Workplace (PreventionProhibition & Redressal) Act 2013. Internal Complaints Committee (ICC) has been setup to redress complaints for sexual harassment. All employees (permanent contractualtemporary trainees) are covered under this policy. The Company has not received anycomplaints for disposal off during the year.

ACKNOWLEDGMENT

Your Directors acknowledge with gratitude the timely assistance andhelp extended by the Bankers for having provided the required bank facilities. YourDirectors wish to place on record their appreciation of the contributions made by theemployees at all levels for the excellent performance of your company.

By Order of the Board

S V ALAGAPPAN CHAIRMAN AND MANAGING DIRECTOR

DIN 00002450

Coimbatore 28th May 2018

(Formerly STYL TEXTILE VENTURES LIMITED)