Garnet International Ltd Management Discussions.

INDUSTRY STRUCTURE DEVELOPMENT

The financial year 2020-21 will be remembered in the years to come with memories of Shock & Awe. In the start of year itself, the world received an unprecedented Shock with Covid-19 becoming a global pandemic, the lockdown of all activities to "Flatten the Curve" and to protect the people from the spread of the virus brought about unprecedented fall in activities. The continued liquidity crunch, uncertain and volatile credit environment and slow economic growth created headwinds. The COVID-19 pandemic and subsequent lockdowns have impacted the businesses and aggravated the prevailing sectoral challenges. Non- Banking Financial Companies (NBFCs), today, are confronted with multiple challenges. The unprecedented business environment has put to test the resilience, prudence and adaptability of any business model and having said that, the fiscal year has been full of learnings.

The Company continues to closely observe the situation. Over the course of last year, vaccination drives raised hopes, whereas renewed waves and new virus variants continue to pose concerns for the outlook. The continued spread of the COVID-19 pandemic and the subsequent synchronized lockdown across major cities in India resulted in shrinking of the capital market lending business.

OPPERTUNITIES & THREATS

Despite the optimism surrounding the ongoing vaccination drive, the recent resurgence in the countrys COVID-19 infections has raised the threat of fresh pandemic restrictions. As of April 2021, many states had enforced complete lockdown thus, posing a risk to a smooth economic recovery. Company being a NBFC, having investment in group companies, which are strategic investments and exposed to risk associated with the performance of the group companies. The company is confident to improve its performance on the strength of its long experience and its strong emphasis on the fundamentals. However, strong and stable government at center, the capital market prospect would significantly improve.

SEGMENT WISE / PRODUCT WISE PERFORMANCE

The Company is engaged in investment activities during the year under review, hence the requirement of segment-wise reporting is considered irrelevant.

OUTLOOK

World over, the support from the governments and the central banks, has brightened the global growth outlook for 2021. As per the International Monetary Funds projection, the global economy is anticipated to expand by approximately 6%, on a lower base of estimated 3.3% degrowth. With massive vaccination drives underway, risks to recovery are likely to abate, thus leading to a gain in the momentum of economic activities.

But with the second wave of COVID-19 and the emergence of newer virus variants have made India the new hotspot of infections – adding uncertainty to the anticipation of a smooth recovery. Various multilateral organizations and rating agencies have projected the Indian economy to grow at around 8%. The economic growth is likely to be aided by a very low statistical base, mass vaccination drive and a supportive fiscal stance.

The Pandemic had a severe impact on the Capital market. The Company carries shares and securities in its books. The effect of mark to market profit / losses thereon have been taken into account in the Statement of Profit and Loss for the year. The Company believes that it has taken into account the impact of known events arising out of COVID-19 pandemic in the preparation of financial results resulting out of fair valuation of these investments. However the impact assessment of COVID-19 is a continuing process given its nature and duration. The Company will continue to monitor for any material changes to future economic conditions

During the lockdown your company migrated to 100% work from home scenario and all the business operations continue to run smoothly.

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.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has an adequate system of internal controls to ensure accuracy of accounting records, compliance with all laws & regulations and compliance with all rules, procedures & guidelines prescribed by the management. An extensive internal audit is carried out by independent firm. An internal team of inspection also regularly visits branches for ensuring regulatory compliance. Post audit reviews are also carried out to ensure follow up on the observations made.

HUMAN RESOURCES

During the year under review there has been no material development on the Human Resource/Industrial Relations front during the year. The Company places significant importance to its human capital. As on March 31, 2021 there are 9 employees employed by the Company.

The Company has been paying special attention to improve the skill set of the employees.

FINANCIAL PERFORMANCE AND OPERATIONAL REVIEW

The paid up equity share capital of the Company as on March 31, 2021 stands at Rs. 19,63,50,000/- divided into 1,96,35,000 fully paid up equity shares of Rs. 10/- each.

Net Worth

The Net Worth of the Company stands at Rs. 2751.62 lakhs.

Total Income

During the year total income was reported at Rs. 129.06 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 Rs. 0.96 lakhs.

Tax Expense

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

INVESTMENT IN SUBSIDIARIES

The company continues to have one subsidiary in the name of Sukartik Clothing Private Limited. There has not been any fresh investment in the company during the year.

CAUTIONARY STATEMENT

Statements in this Management Discussion and Analysis describing the Companys objectives, projections, estimates and expectations may be forward looking within the meaning of applicable laws and regulations. Actual results may differ from those expressed or implied. Investors are advised to exercise due care and caution while interpreting these statements.