Karnika Industries Ltd Directors Report

Dear Members,

The Board of Directors of your Company take immense pleasure in presenting the Third Annual Report on the operational and business performance, along with the Audited Financial Statements for the financial year ended March 31, 2025.

We welcome all our shareholders and thank you for your confidence and support. Were excited to keep moving forward as a team, adding value and generating growth for our investors.

1. Financial Highlights:

(Rs. In Lakhs except in EPS)

Particulars	F.Y. 2024	F.Y. 2023-24
Revenue from operation	17254.85	12727.26
Other Income	373.12	118.39
Total Income	17627.97	12845.65
Profit before interest & depreciation	2976.36	1925.95
Less: Finance Cost	446.38	488.82
Less: Depreciation	112.87	77.79
Profit before tax	2417.10	1359.34
Less: Tax Expenses
- Current Tax*	615.17	357.54
- Deferred Tax	-1.11	-8.68
Profit/(Loss) After Tax (PAT)	1803.04	1010.49
Profit/(Loss) Account Balance at the beginning of the year	1823.30	812.81
Profit available for appropriatio ns	3626.34	1823.30
Appropriations:
Dividend declared during the year	12.40	-
Profit/(Loss) Account balance at the end of the year	3613.94	1823.30
Earnings Per Shares (EP S)
- Basic	14.54	8.15
- Diluted	14.54	8.15

* Current Tax includes Current Tax and Taxes paid / adjustments for earlier years.

2. Performance of the Company

One of the top kids garment manufacturers, Karnika Industries Limited, is known for being a financially stable and well-run business. With a team of highly qualified employees, we believe in creating a broad variety of creative designs for all kinds of childrens clothing, including shorts, joggers, t-shirts, capri, rompers, pyjamas, winter wear, infant wear, etc. The Company has also started a Unit to manufacture jeans for adults.

Total Revenue for the company increased to Rs. 17627.97 Lakhs in the current fiscal year from Rs. 12845.65 Lakhs in the previous year, an increase of 37.23% over the last year. The total spending for the current year was Rs. 15210.87 Lakhs as compared to Rs. 11486.31 Lakhs in the previous year, an increase of 32.43% over the last year.

This led to a notable increase in net profit, which rose to Rs 1803.04 lakhs compared to ^1,010.49 lakhs in the prior year, an increase of 78.43%. This remarkable expansion resulted in an earnings per share of Rs. 14.54. These results reflect the companys ongoing commitment to performance, resilience, and efficiency.

3. Green Initiative

The MCA had undertaken the Green Initiative in Corporate Governance by allowing paperless compliances by companies through electronic mode. We request all the shareholders to support the Green Initiative of the Ministry of Corporate Affairs and the Companys continuance towards greener environment by enabling the service of the Annual Report, AGM Notice and other documents electronically to your email address registered with your Depository Participant/ Registrar and Share Transfer Agent. The Company appeals to you, its Shareholders, who are yet to register the Email addresses that they take necessary steps for registering the same so that you can also become a part of the initiative and contribute towards a greener environment.

4. Website

https://www.karnikaindustries.com/ is the website of the company. All the requisite details including various Policies, Financial Results, Management Team etc., are available on the website of the company.

5. Dividend

During the year under review your directors declared its 1st Interim Dividend of Rs. 0.10 per equity share of Rs 10 each. The Total outgo amounted to Rs. 12.40 Lakhs. This was distributed to shareholders, whose names appeared on the Register of Members as on March 31, 2025.

6. Capital Structure of the Company

During the year under review, no changes took places in the Authorized and Paid-up share capital of the Company.

The Authorized Equity Share Capital of the Company is Rs. 2500.00 Lacs (Rupees Twenty-Five Crores) divided into 2,50,00,000 (Two Crores Fifty Lacs) Equity Shares of Rs. 10/- each.

The Issued, Subscribed and Paid-up Share Capital of the Company is Rs.1239.95 Lacs (Rupees Twelve Crores Thirty-Nine Lacs Ninety-Five Thousand) divided into 1,23,99,500 (One Crore Twenty-Three Lacs Ninety-Nine Thousand Five Hundred) Equity Shares of Rs.10/- each.

7. Transfer to Reserves

The Company has not transferred any amount to reserves during the financial year under review. Hence, disclosure under Section 134 (3) (j) of the Companies Act, 2013 is not required.

8. Web Address of Annual Return

Annual Return for the year 2024-25 shall be made available at https://www.karnikaindustries.com/ under

Investor Relations tab Annual Return.

9. Board of Directors and Key Managerial Personnel

In compliance with the applicable provisions of the Companies Act, 2013 and the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (SEBI Listing Regulations), the Company maintains an appropriate and balanced composition of Executive Directors, Non-Executive Directors, and Independent Directors.

The Board of Directors comprises six (6) members, of whom two (2) are Independent Directors.

The Board comprises highly skilled members with diverse and extensive experience in the relevant area of the companys operations. They play a vital role in shaping business policies, guiding strategic decisions, and advising the top management to ensure effective execution of their responsibilities.

Directors and KMPs as on March 31, 2025, are as under:

Sl. No.	Name of Directors and KMPs	Designation
1	Niranjan Mundhra	Managing Director
2	Shiv Shankar Mundhra	Whole-Time Director
3	Mahesh Kumar Mundhra	Whole-Time Director
4	Kirti Mundhra	Non-Executive Women Director
5	Kirti Taparia	Independent Director
6	Shashikant Soni	Independent Director
7	Krishan Kumar Karnani	Chief Financial Officer
8	Muskan Mundhra	Company Secretary and Compliance Officer

In Accordance to Section 152 of the Companies Act, 2013, at least two-third of the total number of Directors (excluding independent directors) shall be liable to retire by rotation.

The Independent Directors are not subject to retirement by rotation and serve for a fixed period of office that does not exceed five years from the date of appointment.

Accordingly, Kirti Mundhra (DIN- 09549207), Non-Executive Director, retires from the Board this year and being eligible, has offered herself for re-appointment.

The annexure to the notice calling the upcoming Annual General Meeting contains a brief resume and other information about Kirti Mundhra (DIN- 09549207), who is recommended for re-appointment. This information is required to be disclosed under Regulation 36(3) of the SEBI (Listing

Obligations and Disclosure Requirements) Regulations, 2015.

10. Changes in Board of Directors and Key Managerial Personnel of the Company:

During the year under review, the designation of Mr. Shashikant Soni (DIN-10570038) changed from Additional Independent Director to Independent Director at an Extra Ordinary General Meeting held on 29th June, 2024 of the Company:

11. Boards Independence

In accordance with Regulation 16(1)(b) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, read together with Section 149(6) of the Companies Act, 2013 and the applicable rules framed thereunder, Independent Directors are classified as Non-Executive Directors.

The Company has received necessary declaration from each Independent Director of the Company stating that:

(i) they meet the criteria of independence as provided in Section 149(6) of the Companies Act, 2013 and there is no change in the circumstances as on the date of this report which may affect their respective status as an independent director

(ii) In compliance with Section 150 of the Companies Act, 2013 and Rule 6 of the Companies (Appointment and Qualification of Directors) Rules, 2014, they have confirmed their enrolment in the Independent Directors Databank maintained by the Indian Institute of Corporate Affairs.

They have confirmed that they are not aware of any circumstance or event that could reasonably be expected to affect or impair their ability to fulfil their responsibilities, in accordance with Regulation 25(8) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations.

Based on the said declarations received from the Directors, the Board believes, that the

Independent Directors fulfil the conditions as specified under Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations and are independent of the management.

In the opinion of the Board, the Independent Directors possess the necessary expertise and experience and are individuals of high integrity and repute. They meet the criteria specified under the Companies Act, 2013 and the rules framed thereunder, and remain independent of the management.

The companys independent directors are as follows:

Ms. Kirti Taparia

Mr. Shashikant Soni

Separate Meeting of Independent Directors

Pursuant to Schedule IV of the Companies Act, 2013 and Regulation 25 of the SEBI Listing Regulations, the Independent Directors met on 07.12.2024 without the presence of Non-Independent Directors and members of the management. During the meeting, they, inter alia, reviewed.

a. the performance of the Chairman, NonIndependent Directors and the Board of Directors as a whole

b. assessed the quality, quantity, and timeliness of the flow of information between the management and the Board, which is essential for the Board to effectively discharge its responsibilities.

12. Familiarisation Programme for Independent Directors

Pursuant to the provisions of the Companies Act, 2013, and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company has established a program to acquaint Independent Directors with the Companys business model, the industry landscape, and their respective roles, rights, and responsibilities.

Information regarding the familiarization program for Independent Directors is accessible on the Companys website at https://www.karnikaindustries.com.

13. Code of Conduct

The Board of Directors has adopted a Code of Conduct applicable to the Directors and Senior Management of the Company. An annual affirmation of compliance with this Code is obtained from all Directors and Senior Management personnel to whom it applies. The Code of Conduct is also available on the Companys website at https://www.karnikaindustries.com.

14. Board Evaluation

The Nomination and Remuneration Committee (NRC) has formulated a Policy outlining the criteria for the evaluation of the Board and its Committees, which has been duly adopted by the Board.

Pursuant to the provisions of the Companies Act, 2013 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Independent Directors, in their separate meeting, evaluated the performance of the Chairman and the Non-Independent Directors, and also reviewed the overall performance of the Board as a whole.

The evaluation process considered various parameters, including, inter alia, the extent of fulfilment of key responsibilities, the Boards structure and composition, the effectiveness of its processes, and the adequacy of information and overall functioning.

15. Insider Trading

In compliance with the SEBI (Prohibition of Insider Trading) Regulations, 2015, the Company has adopted a Code of Conduct for the Prevention of Insider Trading, which governs the trading of securities by its directors and designated employees. The Insider Trading Policy is available on the Companys website at:

https://www.karnikaindustries.com.

The Code mandates the submission of a Trading Plan and prior clearance for dealing in the Companys securities. It also prohibits Directors and designated employees from trading in the Companys shares while in possession of unpublished price-sensitive information or during periods when the Trading Window is closed. During the financial year 2024-25, there were no instances of non-compliance or violations under this Code.

16. Board Meetings

The Board meets frequently to discuss and decide on the Company/Business policy and strategy, in addition to other Board matters.

All Directors are informed well in advance of the scheduled Board meetings to ensure their active participation.

The quorum and frequency of the meetings were in accordance with the requirements of Secretarial Standard 1 and the provisions of the Companies Act, 2013.

Recording of Minutes of proceedings of Board and Committee meetings

The Company Secretary & Compliance Officer ensures that the minutes of all Board and Committee meetings are accurately recorded in compliance with the applicable provisions of the Companies Act, 2013 and the Secretarial Standards issued by the Institute of Company Secretaries of India.

Selection of agenda items for Board Meetings

The information required under Regulation 17(7) read with Schedule II, Part A of the SEBI Listing Regulations, along with the applicable provisions of the Companies Act, 2013, is provided to the Board as part of the meeting agenda.

Board meetings are generally conducted at the Companys Registered Office located at 6 & 6/1, Gurgola Ghat Road, Bandhaghat, Howrah - 711106.

Number of Meetings of the Board

19 (Nineteen) Board Meetings were held during the year to consider and approve various matters. The meetings were held on

02.04.2024,	08.04.2024,	22.05.2024,
27.05.2024,	31.05.2024,	06.06.2024,
21.06.2024,	15.07.2024,	16.08.2024,
30.08.2024,	05.09.2024,	28.10.2024,
24.12.2024,	26.12.2024,	10.02.2025,
17.02.2025,	07.03.2025,	13.03.2025,
22.03.2025.

The gap between any 2 (two) Board meetings during the year did not exceed 120 (one hundred and twenty) days. The requisite quorum was present for all the meetings.

Attendance of each Director at the Board meetings during the year and last Annual General Meeting and Number of shares held by the directors in the Company.

Name of the Director	No. of Board Meetings		Attendance at last AGM	No. of Shares held in the Company as on March 31, 2025
	Held	Attended
Niranjan Mundhra	19	19	Yes	30,33,000
Shiv Shankar Mundhra	19	19	Yes	30,33,000
Mahesh Kumar Mundhra	19	19	Yes	30,33,000
Kirti Mundhra	19	17	Yes	260
Kirti Taparia	19	17	Yes	0
Shashikant Soni	19	17	Yes	0

17. Business Responsibility and Sustainability Report

In accordance with provisions of Regulation 34(2)(f) of SEBI Listing Regulations the Company being SME listed, requirement of Business Responsibility and Sustainability Report is not applicable to the Company.

18. Directors Responsibility Statement

In accordance with Section 134(5) of the Companies Act, 2013, it is confirmed that the Annual Financial Statements for the year ended March 31, 2025, have been prepared in compliance with the applicable accounting standards and the requirements specified under Schedule III of the Act, without any material deviations.

a. In the preparation of the annual accounts, the applicable accounting standards have been followed with proper explanation relating to material departures, if any;

b. the directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent 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 the year under review;

c. the directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

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

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

19. Auditors and Auditors Report

a. Statutory Auditors

M/S AAAJ & Associates, Chartered Accountants (Firm Registration No. 0322455E) were appointed as

Statutory Auditors of the Company for 5 (five) consecutive years, at the 1st Annual General Meeting held on September 28, 2023 till the conclusion of the Annual General Meeting to be held in the calendar year 2028. Accordingly, they have conducted Statutory Audit for the F. Y 2024-25.

The Statutory Auditors have confirmed that they are not disqualified from continuing as Auditors of the Company for the F.Y 2024-25.

As required under Regulation 33(d) of the SEBI (LODR) Regulation, 2015, the auditor has confirmed that they hold a valid certificate issued by the Peer Review Board of the Institute of Chartered Accountants of India.

The Auditors Report does not contain any qualification, reservation or disclaimer. The Notes to the financial statements referred in the Auditors Report are self-explanatory and do not call for any further comments.

b. Cost Auditors-

Maintenance of cost records and requirement of cost audit as prescribed under the provisions of Section 148(1) of the Companies Act, 2013 are not applicable to the business activities carried out by the Company.

c. Secretarial Auditors

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board had re-appointed Mrs. Poonam Binani, Company Secretary, [ICSI

Membership No. FCS-A33638 & Certificate of Practice No. 12552] in the Board Meeting held on 27th May, 2025 to conduct Secretarial Audit of the Company for a period of 5 consecutive Financial Years ending on 2029-30. The Secretarial Audit Report for the financial year ended March 31, 2025, is annexed and marked as Annexure-IV to this Report.

The Secretarial Audit Report does not contain any qualification, reservation or disclaimer. The observation(s) referred in the Secretarial Audit Report are self-explanatory and do not call for any further comments.

d. Internal Auditors

Pursuant to Section 138 of the Companies Act, 2013 read with the Companies (Accounts) Rules, 2014 (as amended), the Board of Directors, on the recommendations of the Audit Committee, of the Company, has reappointed M/s Ajay Mundhra & Associates, Chartered Accountants, [ICAI Firm Registration No.- 329704E], as the Internal Auditors of the Company for the financial year 2024-25.

The Internal Audit Findings and Report submitted by the said Internal Auditors, for the financial year, to the Audit Committee and Board of Directors of the Company, do not contain any adverse remarks and qualifications hence do not call for any further explanation by the Company.

20. Reporting of Fraud

During the year under review, the Statutory Auditors, and Secretarial Auditors have not reported any instances of fraud committed in the Company by its officers or employees under Section 143(12) of the Companies Act, 2013.

21. Particulars of Loans, Guarantees or Investments

During the year under review, the Company has not given any guarantee. Further, the particulars of loans and investments covered under the provisions of Section 186 of the Companies Act, 2013 form part of the notes to the standalone financial statements.

22. Particulars of Contracts or Arrangements with Related Parties

During the year under review:

a. all contracts / arrangements / transactions entered by the Company with related parties were in the ordinary course of business and on an arms length basis and also approved by the Audit Committee.

b. contracts / arrangements / transactions which were material, were entered into with related parties in accordance with the Policy of the Company on Materiality of Related Party Transactions and on dealing with Related Party Transactions. The Company does not have any related party transactions, which may have potential conflict with the interests of the Company.

The Policy on Materiality of Related Party Transactions and on dealing with Related Party Transactions as approved by the Board is available on the Companys website and can be accessed at https://www.karnikaindustries.com.There were no materially significant related party transactions which could have potential conflict with the interests of the Company at large. Members may refer to Note 33 of the Standalone Financial Statement which sets out related party disclosures pursuant to AS - 18.

23. Committees of Board Audit Committee

As on 31st March 2025, the Audit Committee of the Company comprises three Members, two of whom are Independent Directors. They are financially literate and possess appropriate expertise in the areas of finance, risk management, and corporate governance.

Senior Management personnel, including the Internal Auditor, are regularly invited to attend Audit Committee meetings to provide inputs and clarifications.

During the fiscal year under review, the Audit Committee met four times to discuss a variety of issues. The meetings were held on 27.05.2024, 05.09.2024, 14.11.2024 and 05.02.2025

The terms of reference of the Committee, inter alia, include:

• Overseeing the Companys financial reporting process and disclosure of financial information to ensure that the financial statements are correct, sufficient and credible.

• Reviewing with the management, the half yearly and annual financial statements and auditors report thereon before submission to the Board for approval.

• Reviewing the Statutory Auditors independence and performance and effectiveness of audit process

• Reviewing, approving, or subsequently modifying transactions of the Company with related parties

• Evaluating the Companys internal financial controls and risk management systems.

• Reviewing the adequacy of the internal audit function and the outcomes of any internal investigations conducted by the internal auditors.

• Ensuring that the internal control systems for compliance with the SEBI

(Prohibition of Insider Trading) Regulations, 2015 are adequate and functioning effectively.

• Reviewing the functioning of the Vigil Mechanism

Composition of the Audit Committee and attendance of the members

Name of Members	Designation	Position	No. of Meetings held during the period	No. of Meetings attended
Mr. Shashikant Soni	Independent Director	Chairman	4	4
Mrs. Kirti Taparia	Independent Director	Member	4	4
Mrs. Kirti Mundhra	Non-Executive Women Director	Member	4	4

The Company Secretary and Compliance Officer of the Company acts as the secretary to the Audit Committee.

Stakeholders Relationship Committee (SRC)

The Stakeholders Relationship and Grievance Committee has been constituted under Section 178 of the Companies Act, 2013. The committee consists of four directors: two Independent Directors and One Whole-time Director and One NonExecutive Director.

The terms of reference, inter alia, include:

• Monitor and resolve the grievances of security holders.

• Oversee the performance of the

Companys Registrar and Transfer

Agents;

• Review the Companys activities related to Health, Safety, and Sustainability initiatives.

A meeting of the Stakeholders Relationship and Grievance Committee was held on

04.02.2025.

Composition of the SRC and attendance of the members for the year:

Name of Members	Designation	Position	No. of Meetings held during the period	No. of Meetings attended
Mr. Shashikant Soni	Independent Director	Member	1	1
Mrs. Kirti Taparia	Independent Director	Member	1	1
Mrs. Kirti Mundhra	Non-Executive Women Director	Member	1	1
Mr. Shiv Shankar Mundhra	Whole-Time Director	Member	1	1

The Company Secretary and Compliance Officer of the Company acts as the secretary to the SRC. No complaint was received from the Stakeholders throughout the year under review.

Nomination and Remuneration Committee (NRC)

The Nomination and Remuneration Committee of the Company was constituted in accordance with Section 178 of the Companies Act, 2013.

The terms of reference, inter alia, include:

• Determination and recommendation of criteria for the appointment of Executive, Non-Executive, and Independent Directors to the Board, as well as recommending to the Board the appointment or re-appointment of Key Managerial Personnel.

• Review and approve the compensation or remuneration payable to Senior Management Personnel, Executive and Non-Executive Directors, and recommend the same to the Board, along with recommending the Remuneration Policy of Key Managerial Personnel and other employees.

• Recommend to the Board the setup and composition of the Board and its Committees.

• Examine and evaluate the performance of the Board of Directors and Senior Management Personnel, including Key Managerial Personnel

• Succession planning for Board of Directors and Senior Management Employees;

• Oversee familiarization programs for Directors.

Currently, the Nomination and Remuneration Committee consists of one non-executive and two independent directors. The meeting was held on 04.02.2025

Composition of the NRC and attendance of members:

Name of Members	Designation	Position	No. of Meetings held during the period	No. of Meetings attended
Mr. Shashikant Soni	Independent Director	Chairman	1	1
Mrs. Kirti Taparia	Independent Director	Member	1	1
Mrs. Kirti Mundhra	Non-Executive Women Director	Member	1	1

The Company Secretary and Compliance Officer of the Company acts as the secretary to the NRC.

The Remuneration Policy is accessible on the Companys website at https://www.karnikaindustries.com.

24. Share Transfer System/

Dematerialization of shares.

The Companys equity shares have been admitted into the dematerialisation system by both the depositories — National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL).

As of March 31, 2025, a total of 1,23,99,500 equity shares had been dematerialised, representing 100% of the Companys issued, subscribed, and paid-up share capital. The Company has been assigned the ISIN INE0MGA01012. The status of the securities as on March 31,2025, is as follows:

	CDSL	NSDL	TOTAL
Shares in Demat (in Nos.)	21,65,600	1,02,33,900	1,23,99,500
Physical Shares (in Nos.)	Nil	Nil	Nil

According to the terms of the Companies Act of 2013 and its rules, the transfer of shares in physical form is not permitted.

25. Deposits

The Company has not accepted any deposits from the public. Hence the directives issued by the Reserve Bank of India & the Provision of Section 73 to 76 of the Company Act 2013 or any other relevant provisions of the Act and the Rules there under are not applicable.

26. Investor Education and Protection Fund (IEPF)

The Company has paid all the dividends declared by it to the beneficiaries within 30 days. However, there are a few unpaid dividends as on the date of these report, and the list of unpaid dividends has been uploaded on the Companys website. Since the prescribed period has not yet lapsed in respect of these unpaid dividends, no amount has been transferred to the Investor Education and Protection Fund.

27. Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo

Pursuant to Section 134(3)(m) of the Act read with Rule 8(3) of the Companies

(Accounts) Rules, 2014, relevant details are given hereunder.

A. Conservation of Energy

The company has been making sustained and intensified efforts to enhance its energy efficiency.

Regular servicing, updates, and overhauls are carried out to maintain machinery and equipment in peak condition, leading to reduced energy usage.

B. Technology Absorption

a. The Company remains committed to embracing advanced technologies to boost productivity and improve product quality.

b. In case of imported technology (imported during the last three years reckoned from the beginning of the financial year): The Company has invested in Imported Machinery during the Financial Year 2023-24 to upgrade the technology to give value to its product. The Machine became fully operational during the same year

c. The expenditure incurred on Research and Development:

	FY 2024-25	FY 2023-24	FY 2022-23
Capital Expenditure	Nil	Nil	Nil
Revenue Expenditure	Nil	Nil	Nil

C. Foreign Exchange Earnings and Outgo:

Amount in Lakhs

	F.Y. 2024-25	F.Y. 2023-24
Earnings	1591.45	1423.45
Outgo	1.68	169.32

28. Risk Management Policy

Risk Management involves identifying, assessing, and prioritizing risks, followed by coordinated actions aimed at minimizing, monitoring, and controlling the likelihood or impact of adverse events, while also enhancing the potential to seize opportunities

The Company places a strong emphasis on maintaining an effective, consistent, and sustainable risk management system as an integral part of its organizational culture. A structured risk management framework is in place, encompassing risk identification, mapping, trend analysis, exposure assessment, potential impact evaluation, and mitigation strategies. The objective is to minimize the impact of identified risks and proactively implement measures to address them.

This framework operates on a dual assessment of the probability of occurrence and the potential severity of impact. A comprehensive risk assessment process is actively underway to identify, evaluate, monitor, and manage both business and nonbusiness risks, ensuring resilience and longterm sustainability.

29. Corporate Social Responsibility

In accordance with Section 135 of the Companies Act, 2013 and the rules framed thereunder, the Company has implemented a Corporate Social Responsibility (CSR) Policy to ensure the fulfilment of its social responsibilities. The CSR Policy is available on the Companys website at https://www.karnikaindustries.com.

Based on the Companys profitability and turnover, it was obligated to undertake CSR activities during the financial year 2024— 2025, as mandated under Section 135 of the Companies Act, 2013. Accordingly, the Company has undertaken various initiatives under the banner of Corporate Social Responsibility (CSR), the details of which are provided in Annexure — II. These activities are in full compliance with Schedule VII of the Companies Act, 2013 and are aligned with the objectives outlined in the Companys CSR Policy.

30. Vigil Mechanism/ Whistle Blower Policy

In accordance with the provisions of Section 177 of the Companies Act, 2013 and Regulation 22 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015, the Company has put in place a Vigil Mechanism / Whistle Blower Policy. This mechanism is designed to enable Directors, Employees, Vendors, Customers, and other Stakeholders to report concerns related to unethical behaviour, irregularities, misconduct, actual or suspected fraud, or any violation of the Companys policies.

The Vigil Mechanism ensures adequate safeguards against victimization of individuals who raise such concerns and provides for direct access to the Chairperson of the Audit Committee in appropriate or exceptional circumstances. The Whistle Blower Policy is available on the Companys website at https://www.karnikaindustries.com.

31. Details of Subsidiary, Joint Venture or an Associate Companies

During the year under review, no Company became or ceased to be subsidiaries, joint ventures or associates of the Company.

There are no subsidiaries, joint ventures or associates of the Company.

32. Internal Financial control & its adequacy

The Companys internal financial control systems are adequate and commensurate with the size and nature of its operations. These controls are designed to provide reasonable assurance regarding the safeguarding of assets from unauthorized use or disposition, the proper authorization and execution of transactions, and the maintenance of accurate and reliable financial and operational information.

The systems also ensure compliance with applicable accounting standards, relevant statutory requirements, and adherence to Company policies. Furthermore, the Company has established a well-defined framework for delegation of authority, including specific limits for approving capital and revenue expenditures.

33. Details of Remuneration of Directors and KMPs and Particulars of Employees

The disclosures pertaining to the remuneration of Directors and Employees, as required under Section 197 of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, are provided in Annexure — III, which forms an integral part of this Report.

Additionally, a statement containing the particulars of employees as required under Section 197 of the Companies Act, 2013 read with Rule 5(2) and (3) of the said Rules is also annexed to this Report as part of Annexure - III.

34. Changes in Nature of Business

The Company is engaged in the Business of Manufacturing and Trading in Children wear. During the year under review, the Company has started its operation for manufacturing of jeans for adults.

35. Material Changes and Commitments affecting financial position between the end of the Financial Year and date of the report.

The Company increased its Authorised Share Capital from Rs. 25 Crores to Rs. 70 Crores by a Ordinary Resolution passed at the Extra Ordinary General Meeting held on 18th August, 2025. The Company also issued 4,95,98,000 Bonus Equity Shares in the ratio 4:1 on 01st September, 2025. Accordingly, the Paid-up Share Capital of the Company increased from Rs. 12,39,95,000/- to Rs. 61,99,75,000/-

36. Details of Significant and Material Orders Passed by the Regulators, Courts and Tribunals

During the year under review there has been no significant and material orders passed by the Regulators or Courts or Tribunals impacting the going concern status and companys operations in future.

37. Disclosures under Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013

The Company has adopted a policy for prevention of sexual harassment at the workplace, in line with the requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 (POSH Act). An Internal Complaints Committee (ICC) has been duly constituted as per the provisions of the POSH Act to redress complaints regarding sexual harassment at the workplace.

During the financial year under review, the Company has complied with all the provisions of the POSH Act and the rules framed thereunder. Further details are as follow:

a.	Number of complaints of Sexual Harassment received in the Year	0
b.	Number of Complaints disposed off during the year	0
c.	Number of cases pending for more than ninety days	0

38. Maternity Benefits

The Company affirms that it has duly complied with all provisions of the Maternity Benefit Act, 1961, and has extended all statutory benefits to eligible women employees during the year.

39. Grievance Redressal Mechanism [Sebi Complaints Redress System (SCORES)]:

The investor complaints are processed in a centralized web-based complaints redress system. The salient features of this system are the centralized database of all complaints, online upload of Action Taken Reports (ATRs) by the concerned companies and online viewing by investors of actions taken on the complaint and its current status. Your Company has been registered on SCORES and makes every effort to resolve all investor complaints received through SCORES or otherwise within the statutory time limit from the receipt of the complaint. The Company had received no complaints on the SCORES during the financial year 2024-25.

40. Details of Proceedings under the Insolvency and Bankruptcy Code, 2016

During the year, no application was made or proceeding pending under the Insolvency and Bankruptcy Code, 2016 against the Company

41. Difference between Valuation on One Time Settlement and while availing Loan from Banks and Financial Institution:

During the year under review, the Company did not enter into any one-time settlement with any bank or financial institution. According ly, the disclosure regarding the difference between the amount of valuation at the time of such settlement and the valuation at the time of availing loans from banks or financial institutions is not applicable.

42. Corporate Governance & Management Discussion and Analysis Report

The Company is committed to upholding the highest standards of corporate governance and transparency. It continuously endeavours to adopt and implement best practices in governance, with the objective of enhancing long-term shareholder value in a legal, ethical, and sustainable manner.

The Company considers it a fundamental responsibility to provide timely, accurate, and comprehensive disclosures regarding its operations and performance. In all business decisions, it remains focused on creating value for shareholders while ensuring the protection of minority shareholders rights. Pursuant to Regulation 34(2)(e) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, and other applicable provisions, a detailed review of the operations, performance, and future outlook of the Company and its business is provided in the Managements Discussion and Analysis (MDA) Report. This report forms an integral part of the Annual Report and is annexed and marked as Annexure — I.

Your company is listed on the Emerge Platform of the National Stock Exchange of India Limited (NSE) under Regulation 15 of the SEBI (Listing Obligation and Disclosure Requirements) Regulations, 2015. However, the Company is not required to comply with the Corporate Governance provisions outlined in Regulations 17-27, Clause (b) to (i) and (t) of sub-regulation (2) of Regulation 46, and Para C, D, and E of Schedule V.

Therefore, the Corporate Governance Report is not included in this Report.

43. Education, Training and Development

In todays dynamic corporate landscape, training and development are not merely supportive functions—they are strategic imperatives. At Karnika, management views training as a vital investment to broaden employee capabilities and foster a culture of continuous learning.

Our structured training and development programs ensure that every team member gains consistent experience and a strong foundation of knowledge. These initiatives are designed to align individual growth with organizational objectives, enhancing both competence and confidence.

We take a results-driven approach, treating training as a capital investment. The Karnika team prioritizes achieving tangible business outcomes, including increased productivity, operational efficiency, and enhanced effectiveness across functions.

Our ongoing commitment to upskilling and reskilling not only accelerates employee development but also strengthens our competitive edge in the market.

44. Disclosure about Secretarial Standard

The Board of Directors affirms that it has established appropriate systems to ensure compliance with all applicable Secretarial Standards issued by the Institute of Company Secretaries of India (ICSI). These systems are deemed adequate and are functioning effectively.

45. Business Responsibility & Sustainability Report (BRSR)

The Business Responsibility & Sustainability Reporting as required by regulation 34(2)(f) of the SEBI (listing obligations and disclosure requirement) regulations, 2015 is not applicable to the company for the financial year ending, March 31, 2025.

46. Other Disclosures

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

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

The Company has not issued any sweat equity shares/ESOP/ RSUs to its directors or employees; and

There was no revision of financial statements and the Boards report of the Company during the year under review.

47. Appreciation

The Board of Directors extends its sincere gratitude to the Companys shareholders, clients, bankers, and all stakeholders for their continued trust and support throughout the year. The Directors also place on record their deep appreciation for the unwavering dedication, commitment, and hard work demonstrated by employees at all levels, which has been instrumental in the Companys performance and growth.

The Company believes that its leadership team possesses the essential experience, strategic insight, and capabilities required to guide the organization through the next phase of sustained expansion. We are continuously enhancing our skillsets and strengthening our resource base to support evolving business needs. This ongoing investment in leadership and operational excellence positions the Company to deliver consistent and dependable results in the years ahead.

For and on behalf of Board of Directors of
Karnika Industries Limited
Sd/-	Sd/-
Niranjan M undhra	Mahesh Kumar Mundhra
Managing Director	Whole-Time Director
DIN: 05254448	DIN: 08577538
Place: Howrah
Date: 06.09.2025