garnet international ltd share price Directors report


To

Members,

The Directors present their Forty-First (41th) Annual Report with the Audited Financial Statements for the year ended 31st March, 2023.

1. FINANCIAL RESULTS (under Indian AS)

Financial Results are as under:

(Rs. in Lakhs)
Particulars

Standalone

Consolidated

Year ended 31.03.2023 Year ended 31.03.2022 Year ended 31.03.2023 Year ended 31.03.2022
Income for the year 2161.57 1039.45 5933.09 4384.39
Expense for the year 1975.96 1322.32 5551.43 4470.68
Profit before Tax and Interest 185.62 (282.87) 381.66 (86.29)
Current Tax - - 50.57 55.70
Provisions for Taxation/ Deferred Tax (0.04) 0.39 4.81 (17.07)
Net Profit/(Loss) for the Current Year 185.66 (283.26) 326.27 (124.92)
Minority Interest & Profit from Associate Company - - 42.04 47.34
Net Profit After Tax 185.66 (283.26) 284.23 (172.27)
Transfer to General Reserves - - - -
Balance carried to Balance Sheet 185.66 (283.26) 284.23 (172.27)

2. OPERATIONS

The Standalone Operating Income of the Company is derived from a mix of dividend, interest income, income from derivatives and other income. During the year under review, on Standalone basis your Company recorded a total income of Rs. 2161.57 Lakhs as compared to last years total Income of Rs. 1039.45 Lakhs and Net Profit of Rs. 185.66 Lakhs as compared to last years net loss of Rs. 283.26 Lakhs.

3. DIVIDEND

Board of Directors has decided not to recommend any dividend for the year ended 31st March 2023.

4. TRANSFER TO RESERVES

No amount was transferred to General Reserve during the year.

5. MANAGEMENT DISCUSSION AND ANALYSIS

Global Markets

Global economic growth is estimated to have slumped to 3.4% in 2022, due to tight monetary policy by central banks globally to control the inflation caused by Russia-Ukraine war, which has disrupted supply chain and led to steep surge in commodity and fuel cost triggering energy crisis in Europe and hampered economic activity. Further the rise of new omicron variant caused new lockdowns and travel restrictions in some countries including China which imposed more frequent lockdown under its zero Covid policy and along with stress in the real estate market, has weakened economic growth in China. All these factors had a negative impact on economic growth, which slowed down to 3.4% in 2022 from 6.1% in 2021. According to IMF, global growth is projected to decelerate to 2.9% in 2023 on the back of high and persistent inflation, diminishing policy support, and elevated financial and geopolitical uncertainties.

Further aggressive monetary tightening by US Fed weighed on investment and economic activity and led to decline in business confidence. Global trade remains largely subdued due to global supply chain disruptions and bottlenecks in international freight movement along with weakening external demand. Further, the turbulence in global financial markets has ensued uncertainty in gold prices and has once again made it a safe heaven. With growing demand for gold from central banks, gold prices are testing previous highs around the level of USD 2,000/ounce. The "de-dollarization" strategy being adopted by central banks has led to this incremental demand.

Indian Markets & Economy

Geopolitical conflict between Russia and Ukraine disrupted supply chain and resulted in high food and energy prices. However, the Indian economy remained remarkably resilient to external environment owing to ongoing policy reforms and prudent regulatory measures which ensured strong macroeconomic fundamentals and helped the country navigate global and domestic challenges. The services sector supported growth while manufacturing sector was impacted due to elevated input prices and uneven demand recovery. Higher government spending on infrastructure sector supported investment growth during the year. However, monetary tightening by the RBI, widening of current account deficits and decline in growth of exports capped economic growth prospects.

The growth in the Indian economy is expected to slightly decline to 6.1% in FY24 led by decrease in consumer demand, confidence and business due to rising interest rates. However, growth is expected to pick up in the second half of the fiscal year with revival in manufacturing and trade activity and pick up in credit and investment cycle. The governments initiatives such as PM Gati Shakti, the National Logistics Policy, and the PLI scheme are expected to support economic growth. However, the government must address challenges such as inflationary pressures and promote private investment and growth. Overall, Indias economic outlook remains positive, and the governments proactive measures are expected to support growth in the coming years.

In India, corporate and the services sector has not been substantially negatively impacted due to ongoing geo-political tensions. Even so, the year FY 2022-23 recorded a lower earnings growth for the Nifty 50 companies than what was estimated by analysts at the beginning of the financial year. The Nifty 50 recorded an approximate fall of 2.5%, but showed impressive resilience given the global circumstances & food grain distribution. The world remains behest with nations expressing differences which could escalate further. In the month of April 2023, China initiated naval and air exercises close to Taiwan. The year will be a test for the western world to manage political tensions and economic disruptions. Another geo-political crisis or escalation of the Russian-Ukraine war could be disastrous for the world at large.

Risks and Concerns

The very nature of the Companys business makes it subject to various kinds of risks. The Company encounters credit risk and operational risks in its daily business operations. Further the performance of the Company is dependent on the capital markets for its returns. Even though it is envisaged that Indian stock market will continue to do well, global concerns can result in sharp corrections.

Financial Performance and Operational Review

The paid up equity share capital of the Company as on March 31, 2023 stands at Rs. 19,63,50,000/- divided into 1,96,35,000 fully paid up equity shares of Rs. 10/- each.

Net W orth

The Net Worth of the Company stands at Rs. 2655.39 lakhs.

Total Income

During the year total income was reported at Rs. 2161.57 lakhs.

Credit Facilities

The Company has not availed any credit facility. It has consistently been able to meet its financial needs through internal accruals.

Finance Cost

The finance cost of the Company stands at Nil

Tax Expense

The Company has incurred a tax expense of Nil in the current year.

6. FIXED DEPOSITS

The Company has not accepted any public deposits under the provisions of the Companies Act, 2013 (‘Act).

7. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

The provisions of section 186 of the Act pertaining to investment, guarantee and lending activities are not applicable to the Company since the Company is a Non Banking Financial Company ("NBFC") whose principal business is acquisition of securities.

8. CONSOLIDATED FINANCIAL STATEMENTS

The Consolidated Financial Statements of the Company form part of the Annual Report. The annual accounts of the subsidiary company and related detailed information are available on the website of the Company and the same may be obtained by writing to the Company Secretary at the Registered e-mail ID of the Company: secretarial@garnetint.com

The consolidated financial results reflect the operations of Sukartik Clothing Pvt. Ltd. ("Sukartik") (Subsidiary). The Company has adopted a Policy for determining Material Subsidiaries in terms of Regulation 16(1)(c) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("SEBI Listing Regulations).

The Company has adopted a Policy for determining Material Subsidiaries in terms of Regulation 16(1)(c) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("SEBI Listing Regulations). The Policy, as approved by the Board, is available on the Companys website: www.garnetint.com.

9. SUBSIDIARY COMPANIES

The Company is having one material Subsidiary i.e. Sukartik Clothing Private Limited. There are no associate or Joint Venture Companies within the meaning of Section 2(6) of the Companies Act, 2013.

There has been no material change in the nature of business of the Subsidiaries.

In accordance with the General Circular issued by the Ministry of Corporate Affairs, Government of India, the Balance Sheet, Statement of Profit & Loss and other documents of the Subsidiary Companies are not being attached with the Balance Sheet of the Company. However, the financial information of the Subsidiary Companies is disclosed in the Annual Report in compliance with the said circular in Form AOC 1 as Annexure - A.

10. BOARD AND COMMITTEE MEETINGS

During the year under review, Five Board Meetings were held. The details of the composition of the Board and its Committees and of the Meetings held and attendance of the Directors at such Meetings are provided in the Corporate Governance Report. There have not been any instances during the year when recommendations of the Audit Committee were not accepted by the Board.

11. DIRECTORS RESPONSIBILITY STATEMENT

Based on the framework of internal financial controls and compliance systems established and maintained by the Company, work performed by the internal, statutory and secretarial auditors including audit of internal financial controls over financial reporting by the statutory auditors and the reviews performed by Management and the relevant Board Committees, including the Audit Committee, the Board is of the opinion that the Companys internal financial controls were adequate and effective during the financial year 2022-23.

Accordingly, pursuant to Section 134(3)(c) and 134(5) of the Companies Act, 2013, the Board of Directors, to the best of their knowledge and ability, confirm that: -

a. in the preparation of the annual accounts, the applicable accounting standards have been followed and that there are no material departures;

b. they 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 of the Company for that period;

c. they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d. they have prepared the annual accounts on a going concern basis;

e. they have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and are operating effectively;

f. They have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.

12. RISK MANAGEMENT

The Company has adopted a Risk Management Policy in accordance with the provisions of the Act and Regulation 17(9) of the SEBI Listing Regulations. It establishes various levels of risks with its varying levels of probability, the likely impact on the business and its mitigation measures.

The Company has a robust Risk Management framework to identify, evaluate business risks and opportunities. This framework seeks to create transparency, minimize adverse impact on the business objectives and enhance the Companys competitive advantage.

13. INTERNAL CONTROL SYSTEMS

The Company maintains appropriate systems of internal controls, including monitoring procedures, to ensure that all assets and investments are safeguarded against loss from unauthorized use or disposition. Company policies, guidelines and procedures provide for adequate checks and balances and are meant to ensure that all transactions are authorized, recorded and reported correctly.

The Internal Auditors reviews the efficiency and effectiveness of these systems and procedures. Added objectives include evaluating the reliability of financial and operational information and ensuring compliances with applicable laws and regulations. The Internal Auditors submit their Report periodically which is placed before and reviewed by the Audit Committee.

14. VIGIL MECHANISM/WHISTLE BLOWER POLICY

The Company has adopted a Whistle Blower Policy to provide a formal mechanism to the Directors and employees to report their concerns about unethical behavior, actual or suspected fraud or violation of the Companys Code of Conduct or ethics policy. The Policy provides for adequate safeguards against victimization of employees who avail of the mechanism and also provide for direct access to the Chairman of the Audit Committee. It is affirmed that no personnel of the Company has been denied access to the Audit Committee Chairman.

15. RELATED PARTY TRANSACTIONS

All Related Party Transactions that were entered into during the financial year were on an arms length basis, in the ordinary course of business and were in compliance with the applicable provisions of the Act and the Listing Regulations. There were no materially significant Related Party Transactions made by the Company with Promoters, Directors, Key Managerial Personnel which may have a potential conflict with the interest of the Company at large.

All Related Party Transactions are placed before the Audit Committee for approval. Prior omnibus approval of the Audit Committee is obtained for the transactions which are repetitive in nature. A statement of all Related Party Transactions is placed before the Audit Committee for its review on a quarterly basis, specifying the nature, value and terms and conditions of the transactions, if any.

16. CORPORATE SOCIAL RESPONSIBILITY

In terms of section 135 and Schedule VII of the Act, the Board of Directors has constituted a CSR Committee under the Chairmanship of Mr. Suresh Gaggar. Mrs. Sandhya Lotlikar, Mr. Shyaam Taaparia and Mr. Ramakant Gaggar are the other members of the Committee.

The Annual Report on CSR activities is annexed herewith as "Annexure B".

17. CHANGE IN NATURE OF BUSINESS

There has been no change in nature of business of the company during the F.Y. 2022-2023. Your company is engaged in other financial services i.e. Investment in securities etc so there is only one segment reporting as per IND AS 108

18. POLICY ON PREVENTION, PROHIBITION AND REDRESSAL OF SEXUAL HARASSMENT AT WORK PLACE

The Company has adopted a policy on Prevention, Prohibition and Redressal of Sexual Harassment at the Workplace, in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act 2013 and the Rules thereunder. The Policy aims to provide protection to employees at the work place and prevent and redress complaints of sexual harassment and for matters connected or incidental thereto, with the objective of providing a safe working environment, where employees feel secure. The Company has also constituted an Internal Complaints Committee, known as the Prevention of Sexual Harassment ("POSH") Committee, to inquire into complaints of sexual harassment and recommend appropriate action.

The Company had no complaints of sexual harassment at the beginning of the year and has not received any complaints during the financial year. Accordingly, there are no complaints pending at the end of the financial year 2022-2023.

19. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS

There are no significant material orders passed by the Regulators/Courts which would impact the going concern status of the Company and its future operations.

20. DIRECTORS AND KEY MANAGERIAL PERSONNEL

Pursuant to the provisions of the Act and the Companys Articles of Association, Mr. Ramakant Gaggar (DIN 01019838), retires by rotation and, being eligible, offers himself for re-appointment. A resolution seeking shareholder approval for his reappointment forms part of the Notice.

Mr. Ramakant Gaggar was appointed as Managing Director of the Company, for a period of five years and his terms was expired on 27th May, 2023. The Board of Directors in their meeting held on 27th May, 2023 approved his re-appointment for a further period of five years with effect from 28th May, 2023 to 27th May, 2028 on the recommendations of Nomination and Remuneration Committee, subject to the approval of the shareholders of the Company.

Ms. Shipra Rathi was appointed as Company Secretary & Compliance Officer of the Company on October 11, 2022, in place of Ms. Kumkum Shah, who resigned effective October 10, 2022.

Pursuant to the provisions of Section 149 of the Act, the Independent Directors have submitted declarations that each of them meets the criteria of independence as provided in Section 149(6) of the Act along with Rules framed thereunder and Regulation 16(1)(b) of the SEBI Listing Regulations. In terms of Regulation 25(8) of SEBI Listing Regulations there has been no change in the circumstances affecting their status as Independent Directors of the Company. Further, the Non-Executive Directors of the Company had no pecuniary relationship or transactions with the Company.

Pursuant to the provisions of Section 203 of the Act, Mr. Sanjay Raut, Chief Financial Officer continued as Key Managerial Personnel of the Company as on 31st March, 2023.

Details pertaining to Director seeking re-appointment together with other directorships and committee membership have been given in the annexure to the Notice of the AGM in accordance with the requirements of the SEBI Listing Regulations and Secretarial Standard-2 on General Meetings.

21. ANNUAL EVALUATION OF BOARD PERFORMANCE AND PERFORMANCE OF ITS COMMITTEES AND OF INDIVIDUAL DIRECTORS

Pursuant to the provisions of the Act and Listing Regulations, the Board has carried out an annual evaluation of its own performance, performance of the Directors individually as well as the evaluation of the working of its committees.

The Nomination and Remuneration Committee has defined the evaluation criteria, procedure and time schedule for the Performance Evaluation process for the Board, its Committees and individual Directors, including the Chairman of the Company. The above criteria are broadly based on the Guidance Note on Board Evaluation issued by the Securities and Exchange Board of India on 5th January, 2017.

For evaluating the Board as a whole, views were sought from the Directors on various aspects of the Boards functioning such as degree of fulfilment of key responsibilities, Board Structure and composition, establishment, delineation of responsibilities to various committees, effectiveness of Board processes, information and functioning, Board culture and dynamics, quality of relationship between the Board and the management.

Similarly, views from the Directors were also sought on performance of individual Directors covering various aspects such as attendance and contribution at the Board/Committee Meetings and guidance/support to the management outside Board/Committee Meetings. In addition, the chairman was also evaluated on key aspects of his role, including setting the strategic agenda of the Board, encouraging active engagement by all Board members and promoting effective relationships and open communication, communicating effectively with all stakeholders and motivating and providing guidance to the Executive Director.

Areas on which the Committees of the Board were assessed included degree of fulfillment of key responsibilities, adequacy of Committee composition, effectiveness of meetings, Committee dynamics and quality of relationship of the Committee with the Board and the Management.

The performance evaluation of the Independent Directors was carried out by the entire Board. The performance evaluation of the Chairman and the Non-Independent Directors was carried out by the Independent Directors who also reviewed the performance of the Board as a whole. The Nomination and Remuneration Committee also reviewed the performance of the Board, its Committees and of individual Directors.

22. REMUNERATION POLICY

The Board has, on the recommendation of the Nomination & Remuneration Committee framed a policy for selection and appointment of Directors, Senior Management and their remuneration.

23. AUDITORS

(i) Statutory Auditors

M/s. B.M. Gattani & Co., Chartered Accountants, Mumbai, (ICAI Registration No. 113536W) have been appointed as an Auditor of the Company from 37th Annual General meeting of the Company till the Conclusion of the 42th Annual General Meeting of the Company pursuant to provisions of the section 139, 141 and other applicable provisions of the Act and rules issued thereunder (including all statutory modification and amendment made from time to time).

Auditors report for the financial year ended 31st March, 2023 forms part of this Annual Report. Following mentioned remarks are given by the Auditors of the Company in their Audit Report for the year ended 31st March, 2023:

a) The Holding Company has granted interest free unsecured loan to its subsidiary company (parties covered under section 186 of the Companies Act, 2013), which is in non- compliance of provisions of Section 186(7) of the Act.

b) The Holding Company has granted interest free unsecured Inter-Corporate loan (parties covered under section 186 of the Companies Act, 2013) of Rs. 1,22,00,000/-, which is in non- compliance of provisions of Section 186(7) of the Act.

c) The Holding Company has neither paid nor provided interest on its borrowings during the financial year. Had such interest been recognised, the finance cost and interest liability for the year ended March 31, 2023 would have been further increased to that extent. Consequently, the reported Profit after Other Comprehensive Income by the Company for the year would have been further reduced to that extent.

d) The Subsidiary company has not made provision for Employee benefits as per IND-AS19 which deals with "Employee Benefits".

e) The Subsidiary Company has neither paid nor provided interest on its borrowings during the financial year. Had such interest been recognised, the finance cost and interest liability for the year ended March 31, 2023 would have been further increased to that extent. Consequently, the reported Profit after Other Comprehensive Income by the Holding Company for the year would have been further reduced to that extent.

f) Due to technical error on the RBI Portal, the Holding Company was unable to digitally sign all the mandatory RBI returns for the year ended 2022, already filed on the portal.

g) Some of the balances of Trade Receivables, Deposits, Loans and Advances, Advance received from customers and Trade payable are subject to confirmation from the respective parties and consequential reconciliation/adjustment. The Consequential impact thereof on the account is not ascertainable.

Management Reply for the Remark given by Statutory Auditor:

The Company is in talk with management of its material subsidiary so that adequate provisions for the employee benefit shall be made. Company ensures to recover the interest from subsidiary company in next financial year. The Company also ensure to take corrective for other matters.

(ii) Secretarial Auditors

Pursuant to the provisions of Section 204 of the Act and The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed M/s. Siddharth Sharma & Associates, Practicing Company Secretaries to undertake the Secretarial Audit of the Company. The Report of the Secretarial Auditor is annexed herewith as "Annexure C"

Pursuant to the provisions of Section 204 of the Act and the Rules made thereunder, the Board of Directors of Sukartik Clothing Private Limited (Sukartik), material subsidiary of the Company, had appointed M/s. Siddharth Sharma & Associates, Practicing Company Secretaries to undertake the Secretarial Audit of Sukartik for the year ended 31st March, 2023. The Secretarial Audit Report of Sukartik is given as "Annexure D".

(iii) Cost Records and Cost Auditors

The provisions of Cost Audit and Records as prescribed under Section 148 of the Act, are not applicable to the Company.

24. SECRETARIAL STANDARDS OF ICSI

The Company is in compliance with the Secretarial Standards on Meetings of the Board of Directors (SS - 1) and General Meetings (SS - 2) issued by the Institute of Company Secretaries of India and approved by the Central Government.

25. CORPORATE GOVERNANCE

The Annual Report contains a separate section on the Companys corporate governance practices, together with a certificate from the Companys Auditors confirming compliance, as per SEBI Listing Regulations.

26. BUSINESS RESPONSIBILITY REPORTING

Regulation 34 (2) (f) of SEBI (LODR) Regulations related to Business Responsibility Report is not applicable to the Company.

27. ANNUAL RETURN

Pursuant to Section 92(3) read with Section 134(3)(a) of the Act, the Annual Return in Form MGT-7 for FY 2022-23 will be uploaded on the Companys website: www.garnetint.com.

28. REPORTING FRAUD

During the year under review, the Statutory Auditor and Secretarial Auditor have not reported any instances of frauds committed in the Company by its Officers or Employees, to the Audit Committee under Section 143(12) of the Act details of which needs to be mentioned in this Report.

29. PARTICULARS REGARDING CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

Since the company is a Investment Company and has no manufacturing activity or other operations. Therefore, the provisions of Section 134 (3) (m) of the Companies Act, 2013 read with Companies (Accounts) Rules, 2014 are not applicable. There were no foreign exchange earnings or outgoing during the financial year ended 31st March, 2023.

30. PARTICULARS OF EMPLOYEES AND REMUNERATION

The information required under Section 197(12) of the Act read with Rule 5(1) of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is annexed as "Annexure E".

Details required under the provisions of section 197(12) of the Act read with rule 5(2) and (3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, will be made available to any member on request, as per provisions of section 136(1) of the Act.

31. ACKNOWLEDGEMENTS

The Board wishes to place on record their sincere appreciation for the continued support which the Company has received from all its stakeholders and above all, its employees.

For and on behalf of the Board of Directors

Suresh Gaggar

Chairman

DIN: 00599561

Mumbai, 14th July, 2023.