Garnet Construction Ltd Management Discussions.

INDUSTRY STRUCTURE AND DEVELOPMENT

The construction sector is one of the most globally recognized sectors. In India, real estate is the second largest employer after agriculture and is slated to grow at 30 per cent over the next decade. The real estate sector comprises four sub sectors - housing, retail, hospitality, and commercial. The growth of this sector is well complemented by the growth of corporate environment and demand . The construction industry ranks third among the 14 major sectors in terms of direct, indirect and induced effects in all sectors of the economy.

The Indian real estate market is expected to touch US $ 180 billion by the year 2020. Housing sector is expected to contribute around 11 percent to India GDP by 2020, in the period 2008- 2020 the market size of this sector is expected to increase at a Compound Annual Growth Rate (CAGR) of 11.2 per cent. Retail, Hospitality and commercial real estate sector are also growing significantly, providing the much needed infrastructure for Indias growing needs.

OPPORTUNITIES

To improve the countrys infrastructure and to boost the economy, the Government has taken several steps and your Company is optimistic about capturing the upcoming opportunities. Some of the exciting opportunities that could be addressed include:

i. Housing for ail coupled with the governments credit linked subsidy schemes and a rising middle class will drive demand for affordable houses thus leading to increase in demand of tower cranes.

ii. The GST reform should help in streamlining the manufacturing sector and boost investments and growth.

iii. Central governments Smart City Mission for developing smart cities across India.

iv. With both government and private bodies heavily investing to boost infrastructure development across the country, the construction equipment industry stands to benefit immensely. This will positively impact the business for construction equipment manufacturers, rental companies and the resale market for these machines.

v. We believe that our proactive steps in providing innovative solutions to our customers and implementation of our strategies have prepared us for next leg of growth.

vi. Your company continues to focus on various strategies and initiatives to overcome the existing challenges.

THREATS

i. Any change in the government policy or its budgetary allocation towards the infrastructure sector will have an impact on the Companys business.

ii. Increasing trade protectionism globally poses the risk of trade war which can curb the economic momentum.

iii. There is no consistency in the demand owing to the fluctuations in the market thereby achieving targeted sales figures challenging for the Company.

SEGMENT WISE OR PRODUCT WISE PERFORMANCE

The Company is engaged in construction and sale of industrial as well residential plots only, hence the segment wise reporting is not applicable. Hnancial Performance of the Company for the year under review has already covered under the Directors Report.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

Your Company maintains adequate internal control system and procedures commensurate with its size and nature of operations. The internal control systems are designed to provide a reasonable assurance over reliability in financial reporting, ensure appropriate authorization of transactions, safeguarding the assets of the Company and prevent misuse/ losses and legal compliances. The internal control system includes a well-defined delegation of authority and a comprehensive Management Information System coupled with quarterly reviews of operational and financial performance, a well-structured budgeting process with regular monitoring of expenses and Internal audit. The Internal Audit reports are periodically reviewed by the Management and the Audit Committee and necessary improvements are undertaken, if required. The Company has a proper and adequate system of internal controls, commensurate with its size and business operations to ensure the following:

i. Timely and accurate financial reporting in accordance with applicable accounting standards;

ii. Optimum utilization and safety of assets;

iii. Compliance with applicable laws, regulations, listing applications and management policies; and

iv. An effective management information system and reviews of other systems.

MATERIAL DEVELOPMENTS IN HUMAN RELATIONS / INDUSTRIAL RELATIONS

The company believes that its policies should be dynamic and therefore takes adequate steps to review and realign them to ensure that they address changing workforce trends, best practices, and legislative requirements to help your organization achieve its evolving objectives. The company is focused on its people strategy to create a high performing work culture and fosters a culture that is performance oriented, promotes rewards for results and helps its people grow. Your company recognizes that its workforce is one of the most critical resources and it is working tirelessly to foster a growth driven culture. The focus is on development of employees at professional and personal levels using a pioneering, integrated approach to all its employees. Industrial relations were harmonious and cordial throughout the year.

RISK MANAGEMENT AND GOVERNANCE

The company recognizes that effective risk management is crucial to its continued profitability and long-term sustainability of its business. The company is committed to adopt good corporate governance, which promotes the long-term interests of all stakeholders, creates selfaccountability across its management and helps built trust in the Company. A robust internal financial control system forms the backbone of our risk management and governance. In line with our commitment to provide sustainable returns to our stakeholders, your company has formalized clearly defined systems to manage its risks within acceptable limits by using risk mitigating techniques and have framed policies for timely addressing key business challenges and leveraging of business opportunities.

CAUTIONARY STATEMENT

Management Discussion and Analysis detailing the Companys objectives, outlook and expectations have "forward looking statement" within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied depending upon global and Indian demand supply conditions, changes in Government regulations, tax regimes and economic developments within India and overseas.

For and on behalf of the Board
Kishan Kumar Kedia
Place: Mumbai Managing Director
Date: May 30, 2019 DIN:00205146