Shiva Mills Ltd’s record is clean on audit: seven years of unqualified opinions, no Key Audit Matters, no fraud, and no wilful default. The business, however, has shrunk, revenue halved from its FY22 peak and the company has posted losses in four of the last five years. Two governance features stand out: the promoter family holds 74.94% with zero pledge, and the father-daughter managing director duo draw a guaranteed minimum salary regardless of losses.
Key findings
- Revenue has halved from its peak and customer concentration has returned
Minor- Revenue fell from ₹213 crore in FY22 to ₹139 crore in FY26, while operating margin compressed from 14.24% to 4.08% over the same period. Trade receivables dropped to ₹12.25 crore in FY26 from ₹26.92 crore in FY25, yet the company stated in FY26, FY24, and FY23 that no provision for credit risk was made on trade receivables based on estimates. Despite that statement, the company reported an expected credit loss allowance of ₹3.05 lakhs as at 31.03.2025 and ₹12.45 lakhs as at 31.03.2024. - Operating cash flow is volatile and disconnected from earnings
Minor- FY26 cash from operations was ₹16.24 crore against a net loss of ₹0.09 crore, while FY24 saw an outflow of ₹17.31 crore against a loss of ₹3.25 crore. The Board did not recommend a dividend for FY26, FY25, or FY24, and return on capital employed was negative in each of the last four years, standing at -0.08% in FY26. A ₹15 crore modernisation programme announced in FY22 was to be funded from internal cash accruals, but capital work-in-progress stood at just ₹0.09 crore in FY26. - Promoter family holds 74.94% with zero pledge, and executive pay is guaranteed regardless of losses
Minor- Promoter shareholding stood at 74.94% as of FY26 with zero pledge. Sri S V Alagappan (Managing Director) and Smt A Lalitha (Joint Managing Director), father and daughter, have served as the two executive directors continuously from at least FY20 through FY26. In FY22, shareholders approved their 5-year re-appointment at a basic salary of Rs.3,00,000 per month plus allowances and commission, with minimum remuneration payable even if the company has no or inadequate profits, a period in which the company reported losses in FY23, FY24, FY25, and FY26. - Contingent liabilities are small and routine, while unpaid MSME dues are rising
Minor- Disputed claims of TANGEDCO for energy supply stood at ₹52.18 lakhs as at 31.03.2025, unchanged from the prior year, and capital commitments fell to 5.62 crore from 6.62 crore. The principal amount remaining unpaid to MSME suppliers rose to 1.79 crore as at 31.03.2025, up from ₹96.49 lakhs a year earlier. The company assessed the four Labour Codes notified on November 21, 2025 and concluded there is no material incremental liability.
What to watch
- Modernisation programme. The ₹15 crore programme announced in FY22 had only ₹0.09 crore of capital work-in-progress in FY26, with no formal update on its status.
- MSME dues. Unpaid principal to MSME suppliers reached 1.79 crore as at 31.03.2025, with no scheduled payment date disclosed in the FY25 annual report.
- CARE Ratings review. The next review of bank facilities follows the 16 Jul 2026 reaffirmation at CARE BBB; Stable / CARE A3+.
- JMD re-appointment. Smt A Lalitha retires by rotation at the ensuing AGM, as stated in the FY26 annual report.
- MD and JMD tenure expiry. The current 5-year term for both executive directors ends on 30.8.2027, requiring fresh shareholder approval for re-appointment and remuneration.
Bottom line: This is a shrinking but audit-clean business with no hidden skeletons. The risk is not fraud but stagnation, a halved revenue base, persistent losses, and a stalled modernisation programme sit alongside guaranteed promoter pay and rising MSME dues. Watch whether the modernisation plan revives or is formally abandoned, and how the board handles executive remuneration when the current term expires in August 2027.