Eastern Silk Industries Ltd Management Discussions

(In terms of Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015)

The Company is principally engaged in the business of manufacturing of textile and allied products currently from developing yarn to producing premium fashionable fabrics and related products. The factory operations in the year under review had been severely impacted due to the Corporate Insolvency Resolution Process (CIRP) against the Company. The overall performance of the Company for the year under review has significantly gone down wherein "Revenue from Operations" of the Company registered decrease in the sales, compared to the previous year.

The performance of the Company during the year under review showed decrease in the sales due to the nonsupportive markets and varied changes in the customer preferences and impacted due to the initiation of Corporate Insolvency Resolution Process (CIRP). The infusion of the new machineries and technology would be required to bring down the cost of production. The company is developing standard designs in common warps for regular products to reduce cost and it is hoped that these measures will bring the positive results for the future. The equilibrium in demand supply will take some time

The Company is engaged in manufacturing of textile and allied products currently from developing yarn to producing premium fashionable fabrics. Keeping itself updated on fashion and market trends worldwide, the company is today globally recognized for its deep understanding of silk. The threat is from small players who will enter the market and existing players creating competition in these segments due to which the margins will be under pressure in the future

The Honble Adjudicating Authority, i.e., National Company Law Tribunal, Kolkata Bench, admitted the Company Petition i.e. C.P. No. (IB) No.588/Kb/2020 on June 10, 2022, filed by the Financial Creditor, Export-Import Bank of India initiating Corporate Insolvency Resolution Process ("CIRP") under Insolvency & Bankruptcy Code, 2016 (hereinafter referred to as "Code") in the matter of M/s. Eastern Silk Industries Ltd. The Adjudicating Authority appointed Mr. Anil Agarwal as Interim Resolution Professional (IRP) vide its said order dated June 10, 2022.

The Committee of Creditors ("CoC") in its first meeting held on July 08, 2022 approved the appointment of Mr. Anil Kohli as Resolution Professional ("RP"). Thereupon, the CoC filed before Honble NCLT an application for the appointment of Mr. Anil Kohli as Resolution Professional in the captioned matter. Subsequently, the Honble NCLT allowed the application and appointed Mr. Anil Kohli as Resolution Professional in this matter vide its Order dated July 29, 2022 (copy of the same was received on August 04,2022).

The CIRP is being carried out by the Resolution Professional as per the provisions of the Code and during CIRP, the resolution plan, as submitted by Mr. Ajay Bikram Singh through Baumann Dekor Private Limited (SRA- Successful Resolution Applicant), in terms of the applicable provisions of the Code, was approved by the CoC in its 11^th Meeting held on March 03, 2023.

After approval of the resolution plan from the CoC, the Resolution Professional filed the CoC approved Resolution Plan with Honble National Company Law Tribunal, Kolkata Bench on March 9,2023 and the same was approved by the Honble National Company Law Tribunal, Kolkata Bench vide its order dated January 31,2024. In accordance with the provisions of the Code and the said NCLT order, the approved Resolution Plan became binding on the Company and all its employees, members, creditors, guarantors, and other stakeholders.

Pursuant to the approval of the plan and for the purpose of its implementation, a monitoring committee was constituted in terms of the approved Resolution Plan, and post constitution, the monitoring committee, in terms of the approved Resolution Plan, reconstituted the Board of the Company, thereby appointing a new Board of Directors of the Company along with the removal/vacation of the existing Board of Directors.

The Resolution Plan was successfully implemented within a period of 18 months from the date of its approval by the Honble NCLT. The Successful Resolution Applicant has made full and final payments to all stakeholders, including Financial Creditors, Operational Creditors, and Government authorities /departments, as stipulated in the approved Plan.

Pursuant to the implementation of the Plan, the entire existing subscribed and paid-up share capital of the Company was extinguished. Consequent to such extinguishment, 50,00,000 new equity shares of Rs.2/- each were issued and allotted to the Successful Resolution Applicant and its nominees.

Further, in compliance with the requirements of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("Listing Regulations"), the new Promoter diluted 5% of its shareholding through an Offer for Sale (OFS) to the public shareholders

As the resolution plan of the Company is approved as aforesaid, and new management have taken over the Company, the Company hopes to turn around its performance in forthcoming years.

The Companys business activities falls within a single primary segment viz. Textiles. The Company does not have any other segment as of now. The products and dealings are closely related with textiles and its allied products.

The Company has been addressing various risks impacting the Company and the policy of the Company. During the year, your Directors and RP made sure that all the risks that the organization faces such as strategic, financial, credit, market, liquidity, security, property, IT, legal, regulatory, reputational and other risks have been identified and assessed and there is an adequate risk management infrastructure in place capable of addressing those risks.

The Company monitors, manages and reports on the principal risks and uncertainties that can impact its strategic long term objectives. The risk management process is reviewed periodically in order to keep it aligned with the emerging risks across the globe. Various programs involve risk identification, assessment and risk mitigation planning for strategic, operational, and financial compliance related risks across various levels of the organization.

The Board is successfully, identifying the elements of risks involved along with its severity and their impact on the existence of the Company.

The Company has established Internal Financial Control System for ensuring the orderly and efficient conduct of the business including adherence to Companys Policies, the safeguarding of assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records and the timely preparation of reliable Financial Statements.

The Company has in place adequate internal financial controls with reference to financial statements. During the year, such controls were tested and no reportable material weaknesses in the design or operation were observed.

The Company strongly believes in the importance of Human Capital and nurturing the same. To match with the fast paced technological changes and also the changes in their business environment, the employees are provided regular training for upgradation of skills. The Company understands the importance of multi-skilling and job rotation and hence scientifically moves its employees in various roles thereby creating a versatile work force.

In accordance with SEBI (Listing Obligations and Disclosure Requirements) (Amendment) Regulations 2018, the Company is required to provide details of significant changes (a change of 25% or more as compared to the previous financial year) in key financial ratios, along with detailed explanations thereof. The key financial ratios are given below:

The reason of the Operating Profit and Net Profit Margin/Ratio is more than 25% or more as compared to the previous financial year due to decrease in the sales, non-supportive markets, varied changes in the customer preferences and initiation of CIRP by NCLT wide order dated 10th June 2022 which effected the marketability of the Company. As the global textile market is interconnected, this outbreak has a global impact on the business.

Certain statements in this report on Management Discussion and Analysis describing the Companys view about the industry, objectives, projections, estimates, expectations or predictions may be forward looking within the meaning of applicable laws and regulations. Actual results may differ from those implied therein. Important factors that could make a difference include economic developments within India and countries with which the Company conducts business, government regulations and tax regime, availability of raw materials and prices and other incidental factors.