DIRECTORS' REPORT
Dear Members,
Your Directors have pleasure in presenting the 43rd Annual Report together with Audited Financial Statements of the Company for the year ended 31st March, 2024.
Financial Year
(Rs. in lakhs)
DIVIDEND
The Board has not recommended any dividend for the financial year 2023-24.
REVIEW OF OPERATIONS
The Company's turnover from sale of goods and services is Rs.33440.63 Lacs during the year compared to Rs.40985.83 Lacs in the previous year. During the year under review, the spinning unit produced 6101.52 tonnes (8187.45 tonnes) of yarn. The spinning unit sold 6291.43 tonnes (8427.05 tonnes) of yarn and out of which exports accounted for 168.46 tonnes (237.89 tonnes). Further, during the year under review, the Company sold 2220.28 tonnes (2512.63 tonnes) of waste cotton of which exports accounted for 330.62 tonnes (341.24 tonnes).
The Wind Mills, with aggregate installed capacity of 13.195 MW generated 107.50 lakh units of Wind Electricity as against 107.86 lakh units in the last year. The entire power generated by Wind Mills was utilized captively at the spinning unit.
Your Company is continuously putting efforts to widen the Product Mix under Technical Textile segment.
PRESENTATION OF FINANCIAL STATEMENTS
The financial statements for the year ended 31.03.2024 has been prepared in accordance with the Indian Accounting Standard (IndAS) notified under section 133 of the Companies Act, 2013 read with Companies (Accounts) Rules, 2014 and other applicable provisions.
Consolidated Financial Statements pertaining to its Associate M/s. L.K. Distributors Private Limited is attached elsewhere with this report. Form AOC-1 containing salient features of associate company is also attached with this Annual Report.
PROSPECTS FOR THE CURRENT YEAR
Your Company has started concentrating on the manufacture of finer counts of yarn. The Company has secured significant orders from the Government of India, Ministry of Defence for the supply of 75,000 sets of Extreme Cold Weather Clothing System (ECWCS) which will be supplied over a period of 5 years.
Further, an order for the supply of 26,667 nos. of Nuclear Biological and Chemical (NBC Suits) and an order from Controller Procurement, Material Organization (Vizag), Eastern Naval Command, Visakhapatnam, for the supply of 5,513 Nos. of NBC Haversack MK-II, (Special Bags) has been received, which will be supplied during the current year.
MATERIAL CHANGES AND COMMITMENTS, IF ANY AFFECTING THE FINANCIAL POSITION OF THE COMPANY
No such changes during the period under review.
TRANSFER TO RESERVES
During the year under review, the Company has not transferred any amount to General Reserves.
SHARE CAPITAL
During the year under review there were no changes in the capital structure of the Company.
TRANSFER OF UNCLAIMED DIVIDEND/SHARES TO INVESTOR EDUCATION & PROTECTION FUND
The Company is in the process of transferring the unclaimed dividend pertaining to the financial year 2016-17 and the respective shares to the Investor Education and Protection Fund and the details will be hosted in the website of the company.
EXTRACT OF ANNUAL RETURN
Pursuant to the sub-section (3) of Section 92 of the Companies Act, 2013, Annual Return for Financial Year ended on 31st March 2024, is posted on the website of the Company viz., https://www.shivatex.in/shares/annual-returns/.
BOARD MEETINGS
During the year under review, five 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 the applicable accounting standards in the preparation of the annual accounts, 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
Sri. S V Alagappan, Director (DIN:00002450) is required to retire by rotation at the ensuing Annual General Meeting, he is eligible for re-appointment and seeks re-appointment.
The Board of Directors at its meetings held on 26.06.2023 has appointed Smt. V Bhuvaneshwari (DIN:01628512) as an Independent Director of the Company for a period of 5 years w.e.f 26.06.2023 to 25.06.2028 which has been approved by the members of the Company in their meeting held on 21.09.2023 and Sri. Jayaram Govindarajan (DIN:02178416) has been appointed as an Independent Director of the Company for a period of 5 years w.e.f 24.05.2024 to 23.05.2029, subject to the approval of members at this Annual General Meeting.
Sri A Dhananjayan (DIN:08043947) and Sri D Satish Krishnan, (DIN:00052973) Independent Directors of the Company whose period of office ends on 28.05.2024 are being considered for re-appointment for a second term of five consecutive years effective from 29.05.2024 till 28.05.2029 subject to the approval of shareholders. 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 Marusamy (DIN:00610091) was re-appointed as a Non-Executive Independent Director of the Company on 25.08.2019 and his second tenure of office ends on 24.08.2024. Sri S Marusamy was associated with Company for a continuous period of 18 years. The Board recorded the valuable contributions and guidance rendered by Sri S Marusamy during his tenure of office as an Independent Director of the Company.
Sri S K Sundararaman, Managing Director of Shiva Texyarn Ltd is eligible for a commission of 5% on the net profits of the Company. He is also holding the position of Managing Director in M/s. Vedanayagam Hospital Private Ltd (Holding Company) without any remuneration.
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 / disqualified from being appointed or continuing as Directors of the Company by the Board / Ministry of Corporate Affairs or any such statutory authority.
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, and Regulation 16(1)(b) of SEBI (Listing Obligations and Disclosure Requirements), Regulations, 2015.
ANNUAL EVALUATION OF BOARD, COMMITTEES AND INDIVIDUAL 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.
COMPOSITION OF AUDIT COMMITTEE
The Audit Committee comprises of the following members:-
The Board has implemented the suggestions, if any, made by the Audit Committee from time to time.
PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS
The Company has not granted 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 Company's code of conduct or ethics. The policy has been posted in the website of the Company viz., https:// www.shivatex.in/shares/595/policies/.
COMPANY'S POLICY ON DIRECTORS APPOINTMENT AND REMUNERATION
Your Company is covered under the provisions of Section 178(1) of the Companies Act, 2013. The Board of Directors have framed a policy setting out the framework for appointment and 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 Nomination and Remuneration 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 Charter on Nomination and Remuneration can be accessed at Company's website https:// www.shivatex.in/ shares/129/policies/.
PARTICULARS OF CONTRACTS AND Arrangements & RELATED PARTY TRANSACTIONS
All related party transactions that were entered into during the financial year in the ordinary course of business were on arm's length basis. Form AOC-2 is annexed elsewhere in this annual report. 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.
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 https:// www.shivatex.in/shares/542/policies/.
CERTAIN ADDITIONAL INFORMATION AND DETAILS REQUIRED AS PER RULE 8(5) OF THE COMPANIES (ACCOUNTS) RULE, 2014, ARE FURNISHED HEREIN BELOW:
v. The details relating to deposits, covered under Chapter V of the Act
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 Secretary 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.
AUDITORS
As per Section 139 of the Companies Act, 2013 M/s. VKS Aiyer & Co., Chartered Accountants, Coimbatore (Firm Registration No. 000066S) were appointed as Statutory Auditors of the Company for a term of 5 consecutive years in the 41st Annual General Meeting held on 12.09.2022 and will hold office up to 46th Annual General Meeting without requirement of further ratification every year as per the provisions of Companies (Amendment), Act, 2017. The Audit Committee and Board has recommended a revision in the remuneration payable to M/s. VKS Aiyer & Co., from the existing amount of Rs.14,00,000/- per annum (Rupees: Fourteen Lakhs Only) to Rs.15,40,000/- per annum (Rupees: Fifteen Lakhs Forty Thousand Only) payable from the conclusion of 43rd Annual General Meeting till the conclusion 46th Annual General Meeting subject to the approval of shareholders. The resolution seeking members' approval for the increase in the remuneration payable to M/s. VKS Aiyer & Co., Chartered Accountants, Statutory Auditors forms part of the Notice convening Annual General Meeting.
DETAILS OF FRAUDS REPORTED BY AUDITORS
There were no frauds reported by the Statutory Auditors under the provisions of Section 143(12) of the Companies Act, 2013 and rules made thereunder during the year under review.
No adverse qualifications/comments have been made by the Statutory Auditor Report during the year under review.
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 Secretarial Audit report is attached herewith as Annexure - I.
No adverse qualifications/comments have been made in the said report by the Practicing Company Secretary.
The Certificate of non-disqualification of Directors pursuant to Regulation 34(3) and Schedule V Para C clause (10)(i) of the SEBI (Listing Obligations and Disclosure Requirements), Regulations 2015 are attached with this report.
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 2024-25 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 AUDITOR
The Company has appointed M/s. B.M Associates, Chartered Accountants as Internal Auditor to conduct the internal audit of the Company and the Audit Committee, in consultation with Internal Auditor formulate the scope, functioning, periodicity for conducting Internal Audit.
STATEMENT ON RISK MANAGEMENT POLICY
Your company is not required to constitute a Risk Management Committee as per Regulation 21 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (only applicable to top 1000 listed entities based on the market capitalization as on 31.03.2024). Pursuant to Section 134(3) (n) of the Companies Act, 2013, the Company have a Risk Management Policy including identification therein of elements of risk, if any, which in the opinion of the Board may threaten the existence of the Company.
Company's Risk Management Policy can be accessed at Company's website https:// www.shivatex.in/shares/130/ policies.
CSR INITIATIVES AND COMPOSITION OF 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 CSR provisions are not applicable to the Company for the financial year 2023-24 and hence the spending towards CSR obligation does not arise during the year under review.
Corporate Social Responsibility Committee constituted by the Board with effect from 21.05.2014, presently comprised of the following Directors.
Company Secretary of the Company is the Secretary of this Committee. Managing Director and Chief Financial Officer are attending the Committee as invitees. The CSR activities and its related particulars are 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, 2024 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, 2024 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.
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.