Garnet International Ltd Directors Report.

FOR THE FINANCIAL YEAR ENDED 31ST MARCH, 2019

TO THE SHAREHOLDERS

Your Directors have pleasure in presenting the Thirty Seventh (37th) Directors Report of your Company along with the financial statements for the financial year ended 31st March, 2019.

OPERATING RESULTS

1. Certain key aspects of your Companys performance during the financial year ended 31st March, 2019, as compared to the previous financial year are summarized below:

(Rs. in Lakhs)

Particulars Standalone Consolidated
Year ended Year ended Year ended Year ended
31.03.2019 31.03.2018 31.03.2019 31.03.2018
Income for the year 6811.61 34436.21 8265.17 35557.16
Expense for the year 10719.23 33456.42 12152.43 34600.03
Profit before Tax and Interest (3834.33) 979.79 (3842.66) 957.13
Current Tax - 213.89 - 213.89
Provisions for Taxation/ Deferred Tax 0.5521 (1.17) 2.03 9.78
Net Profit / (Loss) for the Current Year (3858.29) 1166.27 (3868.09) 1132.65
Minority Interest & Profit from Associate Company - - (3.39) 9.98
Net Profit After Tax (3858.29) 1166.27 (3864.70) 1142.63
Transfer to General Reserves - - - -
Balance carried to Balance Sheet (3858.29) 1166.27 (3864.70) 1142.63

2. DIVIDEND AND RESERVES:

Your Directors has not recommend any dividend for the financial year ended 31st March, 2019, as the Company has suffered loss these financial year.

No amount was transferred to General Reserve during the year

INVESTOR EDUCATION AND PROTECTION FUND (IEPF)

In accordance with the applicable provisions of Companies Act, 2013 read with Investor Education and Protection Fund (Accounting, Audit, Transfer and Refund ) Rules, 2016 ("IEPF Rules"), all unclaimed dividends are required to be transferred by the Company to the IEPF, after completion of seven (7) years. Further, according to IEPF Rules, the shares on which dividend has not been claimed by the shareholders for seven (7) consecutive years or more shall be transferred to the demat account of the IEPF Authority. The details relating to amount of dividend transferred to the IEPF and corresponding shares on which dividends were unclaimed for seven (7) consecutive years, are provided on the website of the Company www.garnetint.com.

3. SHARE CAPITAL

During the year under review, there was no change in the Authorized or Paid up Capital of the Company.

Hence the Paid up Capital of the Company which was stood at Rs. 19,52,86,560 consisting of 1,95,28,656 fully paid equity shares of the Company on 31st March, 2019.

4. OVERVIEW OF OPERATIONS:

During the year under review, on Standalone basis your Company recorded a total income of Rs. 6811.61 lakhs as compared to last years total Income of Rs. 34,436.21 lakhs and Net Loss of Rs. 3858.29 lakhs as compared to last years net profit of Rs. Rs. 1166.27 Lakhs.

Management Discussion and Analysis (MDA) as stipulated under the Listing Regulations is presented in a separate section forming part of this Annual Report. It provides details about the overall industry structure, global and domestic economic scenarios, developments in business operations/ performance of the Companys various businesses viz., decorative business, international operations, industrial and home improvement business, internal controls and their adequacy, risk management systems and other material developments during the financial year 2018-19.

5. EXTRACT OF ANNUAL RETURN

The Extract of Annual Return as provided under Section 92(3) of the Companies Act, 2013 ("the Act") and as prescribed in Form No. MGT-9 of the Companies (Management and Administration) Rules, 2014 is appended as Annexure I to the Annual Report.

6. NUMBER OF MEETINGS OF THE BOARD

The Board met 7 (Seven) times in Financial Year 2018-19 (FY 2018-19) viz., on 30th May, 2018, 28th June, 2018, 13th August, 2018, 14th November, 2018, 11th January, 2019, 12th February, 2019, 29th March, 2019.

The details of attendance of Director with respect to above meetings are as follows:

Name of Director No. of Meeting eligible to Attend No. of Meeting Attended
Mr. Suresh Gaggar 7 7
Mr. Ramakant Gaggar 7 7
*Mrs. Manju Maheshwari 3 3
*Dr. Jaswantsingh Patil 6 6
Mrs. Sandhya Lotlikar 3 3
Mr. Sharad Rathi 7 7

* Dr. Jaswantsingh Patil was appointed on 28th June, 2018 and Mrs. Sandhya Lotlikar was appointed on 11th January, 2019. Mrs. Manju Maheshwari resigned from the Board w.e.f 14th September, 2018

7. DIRECTORS RESPONSIBILITY STATEMENT

Your Directors hereby confirm that:

i. In the preparation of the annual accounts for financial year ended 31st March, 2019, the applicable accounting standards have been followed along with proper explanation relating to material departures;

ii. The 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 31st March, 2019 and of the loss of the Company for that period.

iii. The 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.

iv. The Directors have prepared the annual accounts for financial year ended 31st March, 2019 on a ‘going concern basis.

v. The Directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and have been operating efficiently.

vi. The Directors have devised proper systems to ensure compliance with provisions of all applicable laws and that such systems were adequate and operating effectively.

8. DECLARATION BY INDEPENDENT DIRECTORS

The Independent Directors of the Company have submitted the declaration of Independence as required under Section 149(7) of the Act, confirming that they meet the criteria of independence under Section 149(6) of the Act, and Regulation

16 (1)(b) of the Securities Exchange board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (Listing Regulations).

9. POLICY ON DIRECTORS APPOINTMENT AND REMUNERATION

The Policy of the Company on Directors appointment and remuneration including criteria for determining qualifications, positive attributes and any other matters as required to be provided for the Independence of a Director as per subsection (3) of Section 178 of the Act and Regulation 19 of Listing Regulations is appended as Annexure II to this Annual Report.

10. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS UNDER SECTION 186

The details of Loans, Guarantees and Investments covered under the provisions of Section 186 of the Act, read with Companies (Meeting of Board and Its Powers) Rules, 2014 as on 31st March, 2019 are given in the notes to the Financial Statements forming part of this Annual report.

11. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES

During the financial year 2018-19, your Company has not entered into transactions with related parties as defined under section 2(76) of the Act, read with the Companies (Specification and Definitions Details), Rules, 2014 and Rules made thereunder and Regulation 23 of the Listing Regulations. All the transactions with the Related Parties are at arms length basis and these transactions are not of material in nature as per Section188 of the Companies Act, 2013 read with Rule 15 of the Companies (Meeting of Board and its Powers) Rules, 2014. The related party transactions are placed before the Audit Committee as also the Board for approval. The Form AOC- 2 of the Companies (Accounts) Rules, 2014 is set out as Annexure III to this Annual Report.

The details of party transactions as required under Accounting Standard-18 are set out in notes to accounts to the Financial Statements forming part of this Annual Report.

The Policy on Related Party Transaction may be accessed on the Companys website at the link: http://garnetint.com/ mdocs-posts/related-party-transactions-policy/.

12. MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY

There have been no material changes and commitments affecting the financial position of the Company which have occurred between the end of the financial year of the Company to which the financial statements relate and the date of the report.

13. PARTICULARS REGARDING CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE

EARNINGS AND OUTGO

The particulars in respect of conservation of energy, technology absorption and foreign exchange earnings and outgo, as required under Section 134(3)(m) of the Act, read with the Companies (Accounts) Rules, 2014 is given in Annexure IV to this Annual Report.

14. BUSINESS RISK MANAGEMENT

The Board of Directors of the Company has constituted a Risk Management Committee to frame, implement and monitor the risk management plan for the Company.

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.

The business risk framework defines the risk identification and its management approach across the enterprise at various levels including documentation and reporting. The framework helps in identifying risks trend, exposure and potential impact analysis on a Companys business.

15. CORPORATE SOCIAL RESPONSIBILITY

The Board has constituted a Corporate Social Responsibility (CSR) Committee in accordance with Section 135 of the Act. Your Companys Annual Report on the CSR activities undertaken during the financial year ended 31st March, 2019, in accordance with Section 135 of the Act and Companies (Corporate Social Responsibility Policy) Rules, 2014 is annexed to this report as Annexure V.

16. VIGIL MECHANISM

The Company has adopted a Vigil Mechanism and Whistle Blower Policy for Directors and Employees in compliance with the provisions of Section 177(10) of the Act and Regulation 22 of the Listing Regulations, to report genuine concerns and to provide for adequate safeguards against victimization of persons who may use such mechanism. The said policy is also available on the Companys website: http://garnetint.com/mdocs-posts/vigil-mechanisim-policy/

17. POLICY ON PREVENTION OF SEXUAL HARASSMENT ATWORKPLACE

The Company has formulated a Policy on Prevention of Sexual Harassment at Workplace for prevention, prohibition and redressal of sexual harassment at workplace in accordance with the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 (hereinafter referred to as "Prevention of Sexual Harassment Act"). Internal Complaints Committees have also been set up to redress any such complaints received. The Company is committed to providing a safe and conducive work environment to all of its employees and associates. The Company periodically conducts sessions for employees across the organization to build awareness about the Policy and the provisions of Prevention of Sexual Harassment Act.

Complaints of sexual harassment received during the financial year 2018-19 by the Company were investigated in accordance with the procedures prescribed and adequate steps were taken to resolve them.

18. ANNUAL EVALUATION OF PERFORMANCE OF THE BOARD

Pursuant to the provisions of the Act, and Regulation 17 of the Listing Regulations, the Board has carried out an annual evaluation of its own performance, performance of the Directors as well as the evaluation of the working of its Committees.

The Nomination and Remuneration Committee has defined the evaluation criteria for the Board, its Committees and Directors.

The Boards functioning was evaluated on various aspects, including inter alia degree of fulfilment of key responsibilities, Board structure and composition, establishment and delineation of responsibilities to various Committees, effectiveness of Board processes, information and functioning.

The Committees of the Board were evaluated after taking inputs from the Committee members on the basis of criteria such as degree of fulfillment of key responsibilities, adequacy of Committee composition and effectiveness of meetings.

The Board and the Nomination and Remuneration Committee reviewed the performance of the individual directors on aspects such as attendance and contribution at 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.

The performance evaluation of the Independent Directors was carried out by the entire Board, excluding the Director being evaluated. 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.

In a separate meeting of independent directors, performance of non-independent directors, performance of the board as a whole and performance of the chairman was evaluated, taking into account the views of executive directors and non-executive directors.

19. SUBSIDIARY COMPANIES

The Company is having one material Subsidiary i.e. Sukartik Clothing Private Limited. Further, Company has also formulated policy for determining material subsidiary and the same is available on Companys website and the same may be accessed at the link: http://garnetint.com/mdocs-posts/policy-for-determining-material-subsidiary/

Further during the year Garnet Valorem Capital Ventures Private Limited was ceased to be the wholly owned subsidiary of the Company on 21st January, 2019.

Pursuant to provisions of Section 129(3) of the Act, a statement containing salient features of the financial statement of the Subsidiary company in Form AOC-1 is attached to the a part of this Report as Annexure- VI.

20. DETAILS RELATING TO DEPOSITS, COVERED UNDER CHAPTER V OF THE COMPANIES ACT 2013

The Company has neither accepted nor renewed any deposits during the Financial Year 2018-19 in terms of Chapter V of the Act.

21. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS

During the year under review, the Company has received the Certificate of Registration from Reserve Bank of India on 05th December, 2018.

Apart from the above mentioned information, 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.

22. INTERNAL CONTROL WITH REFERENCE TO FINANCIAL STATEMENTS

The Company has in place adequate internal financial control with reference to financial statements. The Company has adopted accounting policies which are in line with the Accounting Standards prescribed in the Companies (Accounting Standards) Rules, 2006 that continue to apply under Section 133 and other applicable provisions, if any, of the Act read with Rule 7 of the Companies (Accounts) Rules, 2014 and relevant provisions of the Act, to the extent applicable. These are in accordance with generally accepted accounting principles in India.

The Company in preparing its financial statements makes judgments and estimates based on sound policies and uses external agencies to verify/validate them as and when appropriate. The basis of such judgments and estimates are also approved by the Statutory Auditors and Audit Committee.

The Internal Auditor evaluates the efficacy and adequacy of internal control system, accounting procedures and policies adopted by the Company for efficient conduct of its business, adherence to Companys policies, safeguarding of Companys assets, prevention and detection of frauds and errors and timely preparation of reliable financial information etc. Based on the report of internal audit function, process owners undertake corrective action in their respective areas and thereby strengthen the controls. Significant audit observations and corrective actions thereon are presented to the Audit Committee of the Board.

23. DIRECTORS AND KEY MANAGERIAL PERSONNEL

In accordance with the provisions of the Section 149, 152 and 160 of the Act, Mr. Ramakant Gaggar (DIN: 01019838), Director of the Company will retire by rotation at the ensuing Annual General Meeting and being eligible, offers himself for re-appointment.

The Board of Directors, at its meeting held on 28th June, 2018 has appointed Dr. Jaswantsingh Patil, as an Additional Independent Director. Mrs. Manju Maheshwari, women director of the Company has resigned from the Company w.e.f 14th September, 2018 and Mrs. Sandhya Lotlikar, was appointed on 11th January, 2019 on the Board of the Company.

Board places on record its appreciation for the assistance and guidance provided by Mrs. Manju Maheshwari, during his tenure as Director of the Company.

The Board of Director at its meeting held on 29th May, 2019, subject to approval of the Board has appointed Mr. Vishnu Kanth Bhangadia as Additional Director of the Company, in the category of Independent Director. Further at the same meeting the designation of Mr. Sharad Rathi, has been changed from Independent Director of the Company to Non Independent Director, pursuant to declaration given by the Director.

24. AUDITORS

1. Statutory Auditor

M/s. MVK Associates, Chartered Accountants, Mumbai, (ICAI Registration No. 120222W) have appointed as an Auditor of the Company from 35th Annual General meeting of the Company till the Conclusion of the 40th 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).

The Statutory Auditors of the Company MVK Associates, has resigned from the Company w.e.f 16th August, 2019. The Company propose to appoint M/s. B.M Gattani & Co., Chartered Accountants, (Firms Registration No. 113536W), as Statutory Auditor of the Company to fill the Casual Vacancy caused by the resignation of the MVK associates.

The Board of Directors has also proposed the Appointment of M/s. B.M Gattani & Co., Chartered Accountants, (Firms Registration No. 113536W), to the shareholders of the Company as statutory Auditor for a period of 5 years i.e. till the conclusion of the 42nd Annual General Meeting of the Company.

Auditors report for the financial year ended 31st March, 2019 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, 2019:

a. Company has an amount of Rs. 23.13 lakhs remaining to be spent on CSR as required under section 135 of the Companies Act, 2013

b. Subsidiary of the Company, has not made provision for employee benefit as per Accounting Standard 15 which deals with "Employee Benefits".

Management Reply for the Remark given by Statutory Auditor:

The Management has already started making CSR expenses from the year 01st April, 2019. Further the Company is in talk with management of its material subsidiary so that adequate provisions for the employee benefit shall be made.

Further, the Audit Committee and Board of Directors of the Company recommends to the members of the Company for ratification of appointment of statutory auditor of the Company from this ensuing Annual General Meeting till the conclusion of the 40th Annual General Meeting of the Company.

2. Secretarial Auditor

Pursuant to the provisions of Section 204 of the Act and The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board of Directors of the Company had appointed M/s Siddharth Sharma & Associates, Practicing Company Secretaries to undertake the audit of the secretarial records for the financial year 2018 - 19.

The Secretarial Audit Report for the financial year ended 31st March, 2019 under Companies Act, 2013, read with Rules made thereunder and Regulation 24A of the Listing Regulations (including any statutory modification(s) or re-enactment(s) thereof for the time being in force) is set out in the as Annexure VII (A) to this Annual Report.

M/s Kamlesh Jain & Associates, were appointed as Secretarial Auditor of the Material Subsidiary of the Company. The secretarial Audit report of material subsidiary is also annexed as Annexure VII (B).

There are no qualifications, reservations or adverse remarks or disclaimers made by Secretarial Auditor of the Company, in his secretarial audit report.

25. CORPORATE GOVERNANCE

Pursuant to Listing Regulations, the Management Discussion & Analysis Report and Corporate Governance Report together with Certificate from Practicing Chartered Accountant, on compliance with the conditions of Corporate Governance as lay down, forms a part of this Annual Report.

26. AUDIT COMMITTEE OF THE COMPANY:

The Companys Audit Committee comprises the following Directors:

1. Mr. Vishnu Kanth Bhangadia (Chairman);

2. Mr. Ramakant Gaggar;

3. Mrs. Sandhya Lotlikar

4. Dr. Jaswantsingh Patil

The composition of the Audit Committee is in compliance with the requirements of Section 177 of the Act, and Regulation 18 of the Listing Regulations.

All members of the Audit Committee are financially literate and have experience in financial management.

All the recommendations made by the Audit Committee were accepted by the Board of Directors of the Company.

27. PARTICULARS OF EMPLOYEES

In terms of the provisions of Section 197(12) of the Act read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, a statement showing the names and other particulars of the employees drawing remuneration in excess of the limits, top 10 employees in terms of remuneration drawn and other Disclosures pertaining to remuneration are provided in Annexure VIII to this Annual Report.

Having regard to the provisions of the proviso to Section 136(1) of the Act and as advised, the Annual Report excluding the afore said information is being sent to the members of the Company, the said information is available for inspection at the registered office of the Company during working hours and any member interested in obtaining such information may write to the Company Secretary and the same will be furnished on request.

28. OTHER DISCLOSURES

a. The Company has complied with Secretarial Standards issued by the Institute of Company Secretaries of India on Meetings of the Board of Directors and General Meetings;

b. The Managing Director of the Company has not received any remuneration or commission from any of the subsidiary companies;

c. None of the Auditors of the Company have reported any fraud as specified under the second proviso of Section 143 (12) of the Companies Act, 2013 (including any statutory modification(s) or re-enactment(s) thereof for the time being in force);

d. The Company does not have any scheme or provision of money for the purchase of its own shares by employees/ Directors or by trustees for the benefit of employees/ Directors; and

e. The Company has not issued equity shares with differential rights as to dividend, voting or otherwise.

29. ACKNOWLEDGEMENTS

Your Directors express their sincere appreciation of the co-operation received from shareholders, bankers and other business constituents during the year under review. Your Directors also wish to place on record their deep sense of appreciation for the commitment displayed by all executives, officers and staff, resulting in the successful performance of the Company during the year.

For and on behalf of the Board of Directors
Suresh Gaggar
Chairman
DIN: 00599561
Mumbai,16th August, 2019
Registered Office:
901, Raheja Chambers, Nariman Point, Mumbai – 400021
CIN :L74110MH1995PLC093448
EmailID:secretarial@garnetint.com
Website:www.garnetint.com
Tel No :91-022-22820714