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Directors Report of Shiva Texyarn Ltd.

Mar 31, 2015

Dear Members,

The Directors have pleasure in presenting the Thirty fourth Annual Report together with Audited Financial Statements of the Company for the year ended 31st March, 2015

FINANCIAL RESULTS

Financial Year (Rs. in lakhs)

2014-2015 2013-2014

Profit before Interest and Depreciation 5506.15 7352.70

Less: Interest 2546.92 2348.54

Profit before Depreciation 2959.23 5004.16

Less: Depreciation 1687.01 2008.74

Profit before Tax 1272.22 2995.42

Less : Provision for Income Tax

* Current Tax 165.54 5.76

* Deferred tax Liability (Net) 217.32 903.39

Profit after Tax 889.36 2086.27

Add : Surplus brought forward from last year 444.24 161.29

Amount available for appropriation 1333.60 2247.56

Appropriations :

Provision for Equity Dividend 216.05 259.25

Provision for Tax on Dividend 45.21 44.06

Transfer to General Reserve 750.00 1500.00

Surplus carried over to Balance Sheet 322.34 444.25

Total 1333.60 2247.56

Dividend

Your Directors are glad to recommend payment of Dividend @ Re.1.00 /- per equity share of Rs. 10/- each (at 10% of the paidup capital). (Last year Rs. 1.20 per share of Rs. 10/- each). The Dividend on Equity Shares together with Distribution Tax on Corporate Dividend will absorb Rs. 261.26 lakhs (' 303.31 lakhs). The Dividend will be free from Income Tax in the hands of Shareholders.

REVIEW OF OPERATIONS

During the year under review, the textile spinning units together in aggregate produced 18756.53 tonnes (18858.80 tonnes) of yarn, of which 2382.88 tonnes (834.40 tonnes) was used to produce knitted fabrics. The textile spinning units, in aggregate sold 16123.67 tonnes (17853.59 tonnes) of yarn and 2369.50 tonnes (846.04 tonnes) as knitted fabrics. Further, during the year under review, the Company sold 5362.98 tonnes (5532.43 tonnes) of waste cotton, of which exports accounted for 1005.15 tonnes (973.40 tonnes).

The Wind Mills, with aggregate installed capacity of 28.795 MW generated 364.21 lakh units of Wind Electricity as against 417.99 lakh units in the last year. The entire power generation by Wind Mills was utilized for captive consumption at the textile mills. As in the previous year, generation from windmills was severely affected due to nonevacuation of Wind power by TANGEDCO during the current year also, resulting in loss of generation of about 56.56 lakh units (101.29 lakh units), depressing the revenue and profits by about Rs. 359.15 lakhs (Rs. 557.07 lakhs).

Your Directors report that the financial performance of the Spinning Units during the year were affected by volatility in prices of cotton and finished products. The prices of cotton witnessed a down trend from July' 2014 onwards, while the Yarn prices also reacted downward keeping pace with the current prices of cotton. Consequently the yarn and fabric produced by the spinning units out of high priced cotton was sold at reduced prices thereby impacting the Profitability which was felt in the second and third quarters of the financial year.

While the restriction and control measures of Tamil Nadu Generation and Distribution Company Limited (TANGEDCO) continued, TANGEDCO failed to evacuate the power generated by the windmills. In spite of the difficulties encountered as narrated above, the Company could achieve maximum utilization and productivity without curtailing the production in the Spinning Units.

The Company's initiatives on technical textile products such as coated and laminated fabrics, intended for use in the field of defence, medical and other industrial applications has started yielding results. The operations of the processing unit at SIPCOT, Perundurai established in the financial year 2012-13 is yet to stabilise.

The overall sales turnover of the Company from all divisions aggregated to Rs. 45745.71 Lakhs (Rs. 49244.10 Lakhs) of which exports amounted to Rs. 9248.26 Lakhs (Rs. 13536.27 Lakhs), the exports contributing 20.22% (27.49%) of the overall sales of the Company.

PROSPECTS FOR THE CURRENT YEAR

With domestic demand likely to pick up due to improvement in economic conditions, the prospects for the spinning units appear to be stable. The contribution from Windmills on overall performance of the textile mills is dependent on availability of Wind of adequate velocity and arrangements by TANGEDCO for evacuation of wind power.

The contribution from Technical Textile products is likely to improve significantly in the coming years. The processing division is also likely to improve its contribution for earnings of the company, in the years ahead. As part of diversification, the Company has started a Bag unit for manufacture of branded travel and school bags, which has large growing demand.

EVENT SUBSEQUENT TO THE DATE OF FINANCIAL STATEMENTS

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

PUBLIC DEPOSITS

The Company has not accepted any public deposits within the meaning of Section 73 to 76 of the Companies Act, 2013 and the Companies (Acceptance of Deposits) Rules, 2014 during the year under review.

CORPORATE GOVERNANCE

In line with requirements of Clause 49 of the Listing Agreement 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 alongwith a certificate from the Auditors of the Company regarding compliance of conditions of Corporate Governance as stipulated under Clause 49 of the Listing Agreement forms part of this Annual Report.

EXTRACT OF ANNUAL RETURN

An extract of the Annual Return as on Financial Year ended on 31st March, 2015 pursuant to the sub-section (3) of Section 92 of the Companies Act, 2013 and forming part of the report in Form MGT - 9 is enclosed as Annexure - I.

DIRECTORS

Smt A Lalitha (DIN 00003688), was appointed as Additional Director (Woman Director) u/s 149 of the Companies Act, 2013 and Clause 49 of the Listing Agreement with effect from 1.9.2014. She holds office upto the date of ensuing Annual General Meeting, being eligible, offers herself for re-appointment as Director.

Sri S V Alagappan, Managing Director (DIN 00002450) is required to retire by rotation at the ensuing Annual General Meeting, he is eligible and seeks re-appointment.

The term of office of Sri S V Alagappan as Managing Director expires on 26.6.2015. The Board of Directors on the recommendation of Nomination and Remuneration Committee, have appointed him for a further period of 5 years and approved the remuneration payable to him. Such appointment and payment of remuneration are subject to approval of shareholders in the ensuing Annual General Meeting.

Board of Directors on the recommendation of Nomination and Remuneration Committee have proposed to increase the remuneration payable to Sri S K Sundararaman, Executive Director, as stated in the Notice of Annual General Meeting with effect from 30.5.2015 for remaining period of his tenure of office up to 12.8.2017, subject to approval of shareholders in the ensuing Annual General Meeting.

All 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 Clause 49 of the Listing Agreement.

KEY MANAGERIAL PERSONNEL

The Company has appointed the following persons as Key Managerial Personnel during the year.

Sri S V Alagappan Managing Director

Sri S Seshadri Chief Financial Officer

Smt M Shyamala Company Secretary

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(Executive 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.

EVALUATION OF BOARD OF DIRECTORS

Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement, 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, of the individual directors as well as the Committees of Directors.

BOARD MEETINGS

During the year under review, four Board Meetings were conducted. The details of the same have been given in the Corporate Governance Report under Clause 49 of the Listing Agreement, forming part of this Report.

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 Company's code of conduct or ethics. The policy has been posted in the website of the Company viz., www.shivatex.co.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 :

a. 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

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

c. 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.

All the related party transactions that were entered into during the financial 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. Further no materially significant related party transactions were made by the Company with Promoters, Directors, Key Managerial Personnel or other designated persons which may have potential conflict with interest of the company at large. Hence reporting in 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.co.in.

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 Company's operation in future.

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.

AUDITORS

The present Auditors of the Company M/s V K S Aiyer & Co., Chartered Accountants, Coimbatore, were appointed for a term of 3 years, pursuant to the resolution passed by the members at the Annual General Meeting held on 25th August, 2014. A resolution ratifying their appointment in terms of Section 139 is also placed before the shareholders for their approval at the ensuing Annual General Meeting.

SECRETARIAL AUDIT

Pursuant to provisions of Section 204 of the Companies Act, 2013 and read with 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 annexed herewith as Annexure - II

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, has appointed Sri M Nagarajan, Cost Accountant, Coimbatore as Cost Auditor to conduct Cost Audit of the Company for the financial year 2015 - 2016.

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.

STATEMENT ON RISK MANAGEMENT POLICY

Pursuant to Section 134(3) (n) of the Companies Act, 2013 and Clause 49 of the Listing Agreement, 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 therat 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, 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 with effect from 21.5.2014, consisting of the following Directors.

1. Sri S V Alagappan - Managing Director

2. Sri S K Sundararaman - Executive Director

3. Dr K R Thillainathan - Independent Director

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

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, 2015 relating to Conservation of Energy, etc., is enclosed as Annexure IV.

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, 2015 is provided in Annexure V.

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 organisation.

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 off 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 excellent performance of your company.

By Order of the Board Coimbatore S V ALAGAPPAN 30th May 2015 CHAIRMAN AND MANAGING DIRECTOR


Mar 31, 2014

Dear Members,

The Directors have pleasure in presenting the Thirty Third Annual Report together with Audited Financial Statement of the Company for the year ended 31st March, 2014.

FINANCIAL RESULTS Financial Year

(Rs. in lakhs)

2013-2014 2012-2013

Profit before Interest and Depreciation 7352.70 7749.77

Less: Interest 2348.54 2677.35

Profit before Depreciation 5004.16 5072.42

Less: Depreciation 2008.74 1916.97

Profit before Tax 2995.42 3155.45 Less : Provision for Tax

- Income tax - Current year 5.76 17.27

- Deferred tax - Current year 903.39 908.97

Profit after Tax 2086.27 2229.21

Add : Surplus/(Deficit) brought forward from last year 161.29 (1614.61)

Amount available for appropriation 2247.56 614.60

Appropriations :

Provision for Equity Dividend 259.25 259.25

Provision for Tax on Dividend 44.06 44.06

Transfer to General Reserve 1500.00 150.00

Surplus carried over to Balance Sheet 444.25 161.29

Total 2247.56 614.60

DIVIDEND

Your Directors are glad to recommend payment of Dividend of Rs.1.20/- per equity share of Rs.10/- each (Last year Rs.1.20/- per share of Rs.10/- each). The Dividend on Equity Shares together with Distribution Tax on Corporate Dividend will absorb Rs.303.31 lakhs (Rs.303.31 lakhs). The Dividend will be free from Income Tax in the hands of Shareholders.

REVIEW OF OPERATIONS

During the year under review, the textile spinning units together in aggregate produced 18858.80 tonnes (17068.66 tonnes) of yarn, of which 834.40 tonnes (3433.07 tonnes) was used to produce knitted fabrics. The textile spinning units, in aggregate sold 17853.59 tonnes (13923.87 tonnes) of yarn and 846.04 tonnes (3456.94 tonnes) as knitted fabrics. Further, during the year under review, the Company exported waste cotton for 973.40 tonnes (1118.37 tonnes).

The Wind Mills, with an installed capacity of 28.795 MW generated 417.99 lakh units of Wind Electricity as against 476.80 lakh units in the last year. The entire power generation by Wind Mills was utilized for captive consumption at the textile mills. During the year, generation from windmills was severely affected due to non evacuation of Wind power by TANGEDCO resulting in loss of generation of about 101.29 Lakh units, depressing the revenue and profits by about 1557.07 Lakhs.

Your Directors report that the performance of the textile spinning units during the year was satisfactory as there was stability in Cotton (raw material) and Yarn prices for most part of the year. The emphasis is to produce more value added Yarn by installing Compact systems/Slub attachments for which investments are being made. The restriction and control measures of Tamil Nadu Electricity Generation and Distribution Company (TANGEDCO) continued in the year under review. However the Company could achieve maximum utilization and productivity, by making alternate arrangements of procuring private power.

The Company also focused more on production of technical textile products such as coated and laminated fabrics, intended for use in the field of defence, medical and other industrial applications, as its core area. In order to move up the value chain, the Company established a processing unit at SIPCOT, Perundurai in the financial year 2012-13, to carry out dyeing/printing operations. The overall sales turnover of the Company from all divisions aggregated to ^49244.10 Lakhs (*41139.32 Lakhs) of which exports amounted to *13536.27 Lakhs (Rs.9318.74 Lakhs), the exports contributing 27.49% ( 22.65%) of the overall sales of the Company.

PROSPECTS FOR THE CURRENT YEAR 2013-14

With moderation in cotton prices and stable demand for yarn in both domestic and export markets with adequate velocity, the prospect for spinning units may continue to be satisfactory. The contribution from Windmills on overall performance of the textile mills is dependent on availability of Wind of adequate velocity and arrangements by TANGEDCO for evacuation of wind power.

The contribution from Technical Textile products will increase significantly in the coming years and it is also expected that the processing unit operations will stabilise in the years to come.

PUBLIC DEPOSITS

As at the close of the year, there were 37 public deposits involving an amount ofRs.8.48 lakhs which remained unclaimed, pending receipt of instructions from the deposit holders. Subsequently no claims were received from deposit holders for repayment. Regular follow up is being made to obtain instructions from the deposit holders for repayment. As a management policy no fresh Public deposits are either accepted or renewals made.

DIRECTORS

Sri V Venkata Reddy ceased to be a Director of the Company by resignation with effect from 30.5.2013. The Board wishes to place on record its appreciation for the valuable services rendered by Sri V.Venkata Reddy during his tenure of office as Director in the growth of the Company.

INDEPENDENT DIRECTORS

In compliance of the provisions of The Companies Act, 2013 and the Listing Agreement entered into with the Stock Exchanges in which the Company''s shares are listed, Independent Directors are required to be appointed for a consecutive term of five years besides the other requirements. Accordingly the Board of Directors have proposed to appoint Sri K N V Ramani and Dr K R Thillainathan, Directors, who are retiring by rotation at the ensuing annual general meeting, as Independent Directors for a Term of 5 consecutive years, i.e upto 24th August 2019. Further Sri C S K Prabhu, Sri S Palaniswami and Sri S Marusamy Directors are proposed for appointment as Independent Directors of the Company for a Term of five consecutive years, i.e. upto 24th August 2019. Your Directors recommend their appointment.

AUDIT COMMITTEE

The Audit Committee Comprises of

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

2. Sri S K Sundararaman - Executive Director

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

4. Sri S Palaniswami - Member (Non - Executive Independent Director)

PARTICULARS OF EMPLOYEES

The information required as per Section 217(2A) of the Companies Act, 1956 read with Companies (Particulars of Employees) Rules, 1975 is furnished in Annexure - I and forms part of this report.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO

The particulars required to be included in terms of Section 217(1) (e) of the Companies Act, 1956 with regard to conservation of energy, technology absorption, foreign exchange earnings and outgo is furnished in Annexure-II and forms part of this report.

DIRECTORS'' RESPONSIBILITY STATEMENT

As stipulated in Section 217 (2AA) of the Companies Act, 1956 your Directors confirm that:

(i) Your Directors have followed the applicable Accounting Standards in the preparation of Annual Accounts;

(ii) 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 2013-14 and of the Profit of the Company for that period;

(iii) Your Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

(iv) Your Directors have prepared the annual accounts on a going concern basis.

CORPORATE GOVERNANCE

A separate section on Corporate Governance, Management Discussion and Analysis and a certificate from the Auditors of the Company regarding compliance of conditions of Corporate Governance as stipulated under Clause 49 of the Listing Agreement form part of this Annual Report.

AUDITORS

M/s V K S Aiyer & Co, the present Auditors of the Company will retire at the ensuing Annual General Meeting and are eligible for re-appointment.

COST AUDITOR

Sri M Nagarajan, Cost Accountant, Coimbatore has been appointed as Cost Auditor to conduct Cost Audit of the Company for the Financial year 2013 - 2014 with the approval of the Central Government.

INDUSTRIAL RELATIONS

The relationship with employees continued to remain cordial throughout the year under review.

ACKNOWLEDGMENT

Your Directors place on record their sincere thanks to the Bankers who have granted financial assistance to the Company by way of Term Loans, Working Capital Loan and Cash Credits and for their continued support. Your Directors also thank the customers and suppliers of the Company for their support and to the employees at all levels for their co- operation and dedication.

Coimbatore By Order of the Board 21st May, 2014 S V ALAGAPPAN CHAIRMAN ABD MANAGING DIRECTOR


Mar 31, 2013

Dear Members,

The Directors have pleasure in presenting the Thirty Second Annual Report together with Audited Accounts of the Company for the year ended 31st March, 2013.

Rs. in lakhs

FINANCIAL RESULTS

Financial Year

(Rs. in lakhs) 2012-2013 2011-2012

Profit before Interest and Depreciation 7749.77 1805.89

Less: Interest 2677.35 2798.74

Profit before Depreciation 5072.42 (992.85)

Less: Depreciation 1916.97 1870.33

Profit before Tax 3155.45 (2863.18)

Less : Provision for Tax

- Current tax 17.27 -

- Deferred tax 908.97 (920.83)

Profit after Tax 2229.21 (1942.35)

Add : Surplus/(Deficit) brought forward from last year (1614.61) 327.74

Amount available for appropriation 614.60 (1614.61)

Appropriations :

Provision for Equity Dividend 259.25 -

Provision for Tax on Dividend 44.06 -

Transfer to General Reserve 150.00 -

Surplus carried over to Balance Sheet 161.29 (1614.61)

Total 614.60 (1614.61)



DIVIDEND

Your Directors are glad to recommend payment of dividend at the rate of 12% (Last year Rs.Nil). The Dividend on Equity Shares together with Distribution Tax on Corporate Dividend will absorb Rs.303.31 lakhs (Last year Rs.Nil). The Dividend will be free from Income Tax in the hands of Shareholders.

REVIEW OF OPERATIONS

During the year under review, the textile mills produced in aggregate 17068.66 tonnes (13280.94 tonnes) of yarn and sold 13923.87 tonnes (10194.43 tonnes) of yarn. The sales include 3830.83 tonnes (4317.22 tonnes) of yarn fetching Rs.7762.94 lakhs (Rs.8530.92 lakhs) by export, including merchant export. During the year, the Company also exported waste cotton to an extent of 1118.37 tonnes (1038.70 tonnes) fetching Rs.857.61 lakhs (Rs.795.55 lakhs).

The knitting division with 41 knitting machines produced 3433.19 tonnes of fabric (1355.56 tonnes) and sold 3456.94 tonnes (967.99 tonnes) which included export of 324.74 tonnes (387.91 tonnes). The sales of knitted fabrics amounted to Rs.7132.63 lakhs (Rs.2775.53 lakhs) which included export sales of Rs.698.19 lakhs( Rs.824.98 lakhs). With lower production and sales, the garment division yielded a turnover of Rs.957.47 lakhs (Rs.1665.44 lakhs)

During the year, the Company also ventured into production and sales of technical textile products, which yielded an aggregate revenue of Rs.1557.68 (Rs.Nil) by sales from coated fabrics and laminated fabrics. The Company also established a processing unit at SIPCOT, Perundurai, to create captive source of dyeing and printing activities.

The overall sales of textile products amounted to Rs.41139.32 lakhs (Rs.32506.34 lakhs).

Your Directors report that the performance of the textile spinning units improved considerably as compared to the previous financial year. The prices of cotton (raw material) remained stable during most part of the year as a result of which there was stability in Yarn prices also. The strategy of penetrating alternative markets viz. Corporate buyers, new overseas buyers, woven segment etc in addition to our core market for hosiery yarn helped the Company in improving the working results.

The Wind Mills, with an installed capacity of 28.795 produced 476.80 lakh units of Wind Electricity as against 419.03 lakh units generated in the last year. The entire power generated by Wind Mills is utilized for captive consumption.

The restriction and control measures of Tamil Nadu Electricity Generation and Distribution Company (TANGEDCO) still continues. However the Company has been able to achieve maximum utilization and productivity by making alternate arrangements of procuring private power although at higher cost resulting in increase in power cost during the year.

Your Directors are glad to report that a Processing unit has been commissioned at SIPCOT Perundurai for carrying out Dyeing/Printing operations which is expected to contribute to the overall performance of the Company in the coming years.

PROSPECTS FOR THE CURRENT YEAR 2013-14

The prospect of spinning units is expected to be satisfactory with moderation in cotton prices and stable demand for yarn in both domestic and export markets. The performance of Windmills is dependent on availability of Wind and infrastructure for evacuation of wind power by TANGEDCO.

PUBLIC DEPOSITS

As at the close of the year, there were 42 public deposits involving an amount of Rs.9.84 lakhs remained unclaimed pending receipt of instructions from the deposit holders. Subsequently no claims were received from deposit holders for repayment. Regular follow up is being made to obtain instructions from the deposit holders for repayment. As a policy no fresh Public deposits are accepted and no renewals are made.

DIRECTORS

In accordance with the provisions of the Companies Act, 1956 the following Directors retire by rotation at the ensuing Annual General Meeting and are eligible for re-appointment :

(i) Sri C S K Prabhu

(ii) Sri S Palanisamy

The Directors recommend their re-appointment.

PARTICULARS OF EMPLOYEES

None of the employees of the Company is in receipt of remuneration exceeding Rs.5,00,000/- per month or Rs.60,00,000/- per annum. Therefore, the particulars required as per Section 217 (2A) of the Companies Act, 1956 are not furnished.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO

The particulars required to be included in terms of Section 217(1) (e) of the Companies Act, 1956 with regard to conservation of energy, technology absorption, foreign exchange earnings and outgo is furnished in Annexure-I and forms part of this report.

DIRECTORS'' RESPONSIBILITY STATEMENT

As stipulated in Section 217 (2AA) of the Companies Act, 1956 your Directors confirm that :

(i) Your Directors have followed the applicable Accounting Standards in the preparation of Annual Accounts;

(ii) 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 2012-13 and of the Profit of the Company for that period;

(iii) Your Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

(iv) Your Directors have prepared the annual accounts on a going concern basis.

CORPORATE GOVERNANCE

A separate section on Corporate Governance, Management Discussion and Analysis and a certificate from the Auditors of the Company regarding compliance of conditions of Corporate Governance has been furnished, as stipulated under Clause 49 of the Listing Agreement which form part of this Annual Report.

AUDITORS

M/s V K S Aiyer & Co, the present Auditors of the Company retire at the ensuing Annual General Meeting and are eligible for re-appointment.

INDUSTRIAL RELATIONS

The relationship with employees continued to remain cordial throughout the year under review.

ACKNOWLEDGEMENT

Your Directors place on record their sincere thanks to the Bankers who have granted financial assistance to the Company by way of Term Loans, Working Capital Loan and Cash Credits and for their continued support. Your Directors also thank the customers of the Company for their support and confidence reposed in the Company and to the employees at all levels for their co-operation and dedication.



By Order of the Board Coimbatore S V ALAGAPPAN

18th May, 2013 CHAIRMAN & MANAGING DIRECTOR


Mar 31, 2012

The Directors have pleasure in presenting the Thirty first Annual Report together with Audited Accounts of the Company for the year ended 31st March, 2012.

Rs. in lakhs

FINANCIAL RESULTS Financial Year

2011-2012 2010-2011

Profit before Depreciation (992.85) 5567.24

Less: Depreciation 1870.32 1765.98

Profit before Tax (2863.18) 3801.26

Less : Provision for Tax

- Income Tax - Current year 0.00 726.44

Prior year 0.00 85.81

- Wealth Tax - Current year 0.00 0.00

Prior year 0.00 2.22

- Deferred Tax - Current year (920.83) 1046.01

- MAT Credit Entitlement - Current year 0.00 (719.70)

Profit after Tax (1942.35) 2660.48

Add : Surplus brought forward from last year 327.74 43.90

Amount available for appropriation (1614.61) 2704.38

Appropriations :

Provision for Equity Dividend 0.00 324.07

Provision for Tax on Dividend 0.00 52.57

Transfer to General Reserve 0.00 2000.00

Surplus carried over to Balance Sheet 0.00 327.74

TOTAL (1614.61) 2704.38

DIVIDEND

Your Directors regret to inform that no dividend has been proposed for the current year (last year Rs.376.64 lakhs including Distribution Tax on Corporate Dividend) as the Company has incurred loss due to external factors .

REVIEW OF OPERATIONS

During the year under review, the textile mills produced 13280.94 tonnes (19066.18 tonnes) of yarn and sold 10194.43 tonnes (18516.40 tonnes) of yarn. The sales include 4317.22 tonnes (4031.09 tonnes) amounting to Rs.8530.92 lakhs (Rs.8111.76 lakhs) by way of export of yarn including Merchant Export. During the year, the Company exported Waste Cotton to an extent of 1038.70 tonnes (1088.81 tonnes) amounting to Rs.795.55 lakhs (Rs.487.70 Lakhs). The total sales of the Spinning Division aggregated to Rs.30116.59 lakhs (Rs.37729.60 lakhs) of which export sales including waste cotton export amounted to Rs.9326.47 lakhs (Rs.8599.46 lakhs) constituting 30.96% (22.84%) of the total revenue.

The Knitting Division with 41 knitting machines produced 1355.56 tonnes of fabric (2101.31 tonnes) and sold 967.99 tonnes (2054.87 tonnes) including 387.91 tonnes (269.36 tonnes) by way of export. The Garment Division produced 516288 pieces (423603 pieces) of Garments and contributed revenue of Rs.1665.44 Lakhs (Rs.1571.41 Lakhs)

The Wind Mills, with an installed capacity of 28.795 produced 419.03 lakh units of Wind Electricity as against 436.78 lakh units (28.345 MW) in the last year. Two Wind Mills with a capacity of 0.45 MW which were under sale to Tamil Nadu Electricity Board category, has been shifted to Captive use category during the course of the year, as a result of which the entire power generation by Wind Mills is utilized for captive consumption.

Your Directors report that the performance of the textile spinning units was impacted seriously due to various adverse factors which affected the textile industry. The prices of cotton (raw material) witnessed a wild fluctuation in the cotton season 2010-11. Frequent changes in the policies of the Central Government on yarn export and also export of cotton, had adverse effect on price realized by sale of yarn and also on the prices of raw materials. The severe economic crisis and recession in the overseas market had adverse impact on producers of garments, resulting in subdued demand for yarn in the domestic market. Consequently the yarn and the fabric produced by the textile units out of high priced cotton was sold at a loss during the first six months of the financial year 2011-12. Even though the prices of cotton decreased substantially, during the second half of the year, the Company could not recover the losses in full.

The restriction and control measures of Tamil Nadu Electricity Generation and Distribution Company (TANGEDCO) also caused disruption in production, affecting the utilization and efficiency of spinning production. The spinning units were to operate at a higher power cost by purchase of power at a higher price from third party.

Hence the Textile Units incurred cash loss on account of reasons described above. Inspite of cash loss suffered, the Company honoured all financial commitments in time for servicing of term loans, by tight control on working capital.

PROSPECTS FOR THE CURRENT YEAR 2012 - 2013

The Spinning units with an aggregate capacity of 89472 spindles have reached optimum production level. The scope for increasing capacity utilization in Knitting division is being explored to maximise profits from the division. The Garmenting Division has stabilized the operations and the volume of business is likely to further increase during the current year.

Your Company started to make cash profits from the last quarter of the financial year 2011-12 and continues to improve upon its performance in the first quarter of 2012-13. With cotton prices expected to remain subdued due to lower off take by spinning units all over the world, the Company will be able to make reasonable profits in the ensuing period.

However the prospects of the textile industry depends upon revival of the economy and demand from garment making units both in the domestic and export market, which will step up the demand for cotton yarn produced by spinning units. Steps have been taken by your Company to ensure that the spinning units are insulated from supply constraints of TANGEDCO to supply electricity. Further steps are being explored to produce value added yarn and fabrics.

PUBLIC DEPOSITS

As at the close of the year, there were 50 public deposits involving an amount of Rs.12.06 lakhs remained unclaimed pending receipt of instructions from the deposit holders. Subsequently 2 deposits involving an amount of Rs.0.37 lakhs have been repaid or renewed as per claims received from the deposit holders. As on date 48 deposits involving an amount of Rs.11.69 lakhs still remain unclaimed for which regular follow up is being made to obtain instructions from the deposit holders for repayment. As a policy no fresh Public deposits are accepted and no renewals are made.

DIRECTORS

In accordance with the provisions of the Companies Act, 1956 the following Directors retire by rotation at the ensuing Annual General Meeting and are eligible for re-appointment :

(i) Sri S V Arumugam

(ii) Sri S K Sundararaman

(iii) Sri S Marusamy

The Directors recommend their re-appointment.

Dr. S V Balasubramaniam ceased to be a Director of the Company by resignation with effect from 28.12.2011. The Board wishes to place on record its appreciation for the valuable services rendered by Dr. S V Balasubramaniam during his long tenure of office as Director and Chairman and for his guidance in the development and growth of the Company.

PARTICULARS OF EMPLOYEES

The information required under Section 217(2A) of the Companies Act, 1956 read with Companies (Particulars of Employees) Rules, 1975 and forming part of the Director's report is not furnished as none of the employees were drawing remuneration in excess of limits specified therein.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO

The particulars required to be included in terms of Section 217(1) (e) of the Companies Act, 1956 with regard to conservation of energy, technology absorption, foreign exchange earnings and outgo is furnished in Annexure - I and forms part of this report.

DIRECTORS' RESPONSIBILITY STATEMENT

As stipulated in Section 217 (2AA) of the Companies Act, 1956 your Directors confirm that:

(i) Your Directors have followed the applicable Accounting Standards in the preparation of Annual Accounts;

(ii) 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 2011 -2012 and of the Loss incurred by the Company for that period;

(iii) Your Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

(iv) Your Directors have prepared the annual accounts on a going concern basis.

CORPORATE GOVERNANCE

A separate section on Corporate Governance, Management Discussion and Analysis and a certificate from the Auditors of the Company regarding compliance of conditions of Corporate Governance as stipulated under Clause 49 of the Listing Agreement form part of this Annual Report.

AUDITORS

M/s V K S Aiyer & Co, Chartered Accountants, Coimbatore, the present Auditors of the Company retire at the ensuing Annual General Meeting and are eligible for re-appointment.

COST AUDITOR

Sri M Nagarajan, Cost Accountant, Coimbatore has been appointed as Cost Auditor to conduct Cost Audit of the Company for the financial year 2012-2013, subject to approval of Central Government.

INDUSTRIAL RELATIONS

The relationship with employees continued to remain cordial throughout the year under review. ACKNOWLEDGEMENT

Your Directors place on record their sincere thanks to the Bankers who have granted financial assistance to the Company by way of Term Loans, Working Capital Loan and Cash Credits and for their continued support. Your Directors also thank the customers and depositors of the Company for their support and confidence reposed in the Company and to the employees at all levels for their co-operation and dedication.

By Order of the Board

Coimbatore S V ALAGAPPAN

28th May 2012 CHAIRMAN & MANAGING DIRECTOR

 
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