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Garden Silk Mills Ltd.

BSE: 500155 Sector: Industrials
NSE: GARDENSILK ISIN Code: INE526A01016
BSE 00:00 | 25 Jan Garden Silk Mills Ltd
NSE 05:30 | 01 Jan Garden Silk Mills Ltd
OPEN 7.61
PREVIOUS CLOSE 7.61
VOLUME 10483
52-Week high 14.19
52-Week low 7.20
P/E
Mkt Cap.(Rs cr) 32
Buy Price 8.40
Buy Qty 200.00
Sell Price 7.61
Sell Qty 17126.00
OPEN 7.61
CLOSE 7.61
VOLUME 10483
52-Week high 14.19
52-Week low 7.20
P/E
Mkt Cap.(Rs cr) 32
Buy Price 8.40
Buy Qty 200.00
Sell Price 7.61
Sell Qty 17126.00

Garden Silk Mills Ltd. (GARDENSILK) - Auditors Report

Company auditors report

TO THE MEMBERS OF GARDEN SILK MILLS LIMITED

Report on the Audit of the Standalone Financial Statements

 

Qualified Opinion

We have audited the accompanying standalone financial statements of GARDEN SILKMILLS LIMITED (hereinafter referred as "the Company") which comprise thebalance sheet as at 31st March 2020 the statement of profit and loss (including othercomprehensive income) the cash flow statement and the statement of changes in equity forthe year then ended and notes to the standalone financial statements including a summaryof significant accounting policies and other explanatory information.

In our opinion and to the best of our information and according to the explanationsgiven to usexcept for the possible effects of the matter described in the Basis forQualified Opinion section of our report the aforesaid standalone financial statementsgive the informationrequired by the Companies Act 2013 (hereinafter referred as "theAct") in the manner so required and give a true and fair view in conformity with theIndian AccountingStandards prescribed under section 133 of the Act read with the Companies(Indian Accounting Standards) Rules 2015 as amended (hereinafter referred as "IndAS") and other accounting principles generally accepted in India of the stateofaffairs(financialposition) of the Company as at 31st March 2020 and itsloss(financialperformance including other comprehensive income) its cash flows and thechanges in equity for the year ended on that date.

Basis for qualified opinion

As at 31st March 2020 the Company's financial statements include:

a) total bank balances of Rs.200.84 Croreforwhichwehavenotreceiveddirectbalanceconfirmationfrom respective banks; and b) totalborrowings of Rs.1926.73 Crore which have been transferred from various banks and otherlenders to asset reconstruction company viz. InventAssetSecuritisation ReconstructionPvt .Ltd ("Invent ARC")which are subject and to reconciliation. In addition no termsand conditions have been prescribed for amount due to Invent ARC. In light of theaboveweareunabletoquantifytheconsequentialimpact on Company's total bank balance andtotal borrowings as at 31st March 2020 and impact of interest and other changes accruedon the results for the year ended on that date.[Refer note no. 13(A)(b)]

We conducted our audit in accordance with the Standards on Auditing (hereinafterreferred as "SAs") specified under section 143(10) of the Act. Ourresponsibilities under those Standards are further responsibilities for the audit of thestandalone financialstatements section of our report. We are independent of the Company inaccordance with the Code of Ethics issued by the Institute of Chartered Accountants ofIndia together with the ethical requirements that are relevant to our audit of thestandalone financialstatements under the provisions of the Act and the Rules thereunderand we havefulfilledour other ethical responsibilities in accordance with theserequirements and the Code of Ethics.

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our qualified opinion.

Material uncertainty related to going concern

We draw attentionto Note B.1 to the financial statements. During the year the companyhas incurred a net loss of Rs.207.60 Crore resulting in to negative retained earningsofRs.823.57 Crore as at 31st March 2020 wherein assets are liabilities Committee ofCreditors have invited claims from theResolution different set of stakeholders includingclaims from Financial Creditors Operational Creditors Workmen and Employee and othercreditors which is subject to verification and shall be admitted/rejected by the RP in duecourse. Adding the company's ability to continue as a going concern is dependent upon manyfactors including continued support from the financial creditors operational creditorsand submission of a viable resolution plan by the prospective investor. These events orconditions indicate that a material uncertainty exists that may cast significant doubt onthe Company's ability to continue as a going concern. In view of the opinion of theDirectors and KMPs resolution and revival of the company is possible in foreseeablefuture. Further the RP is required to make every endeavour to protect and preserve thevalue of the property of the corporate debtor and manage the operations of the corporatedebtor as a going concern. In view of the aforesaid details and pending outcome of theCIRP the financial statements of the Company have been prepared on going concern basisOur opinion is not modified in respect of thismatter.

Emphasis ofmatter

1. We draw attention to Note 15 to the financial statements which describes that RP isin the process of admitting / verifying claims by the financial creditors. Pending finaloutcome of the CIRP process no adjustments have been made in the books for thedifferential amount in the claims admitted. Hence consequential impact if any on thefinancial results is not currently ascertainable.

2. We draw attention to Note 38 to the financial statements which describes theeconomic and social consequences the entity is facing as a result of Covid-19 which isimpacting operations of the Company supply chains personnel available for work etc.

Our opinion is not modified in respect of these matters of emphasis.

Key audit matters

Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the standalone financial statements of the current period.These matters were addressed in the context of our audit of the standalone financialstatements taken as a whole in forming our opinion thereon and we do not provide aseparate opinion on these matters. In addition to the matter described in the MaterialUncertainty Related to Going Concern section we have determined the key audit mattersas described below: A. Accounting treatment for customer contracts B. Contingentliabilities

A. Accounting treatment for customer contracts

Description of key audit matter

Revenue amounting Rs.2877.09 Crore reported in the company's financial statementspertains to customer to specific contracts and the same are required to satisfy therecognition and measurement criteria as prescribed in IND AS 115 ‘Revenue fromContracts with Customers'. Revenue recognition is considered as an inherent risk and alsoas a fraud risk. In case of revenue recognition risk of material mis-statementsignificantly increases for its cutoffs accuracy completeness and presentation anddisclosure. This can lead to revenue either being recognised in incorrect accountingperiods or at incorrect value thereby impactingthe results. Considering these factors inthe context of our audit this matter was of significance and hence a key audit matter.

Description of Auditor's response

With a view to verify the reasonableness of the revenue accounting we carried outfollowing procedures: a) Understanding the internal control environment for revenuerecognitionand to test check with a view to verify its operating effectiveness; acy ofsales recognition onaccur b) Readtermsofthecontractsandverified c) Discussed with themanagement process of identification of variable consideration if any; d) Verifiedcut-offdocuments to ensure that revenue is recognized in correct accounting othersubstantive procedures; variances; e) Performed f) Ensured that revenue is recognized inaccordance with accounting policy of the Company and Ind AS 115 and necessary disclosuresare made in the financial statements;

B. Contingent liabilities

Description of key audit matter

Contingent liabilities as at31stMarch2020amountedto Rs.97.99 Crore which mainlyinclude pending income-tax matters indirect-taxmattersetc . ContentiousInadditiontherearecertaincasespendingadjudication indirect tax matters relate tointerpretational differences between the company and various tax authorities certainmatters subjected to internal circulars and guidelines within tax authorities irrespectiveof stated legal provisions sometimes requiring decision making only by higher taxauthorities through appellate procedures resulting in outcome. These multiple litigationsby courts requiring the company's management to exercise significant judgement on theseoutcomes to determine the liabilities that are contingent in nature. Considering thesefactors in the context of our audit this matter was of significance and hence a keyaudit matter.

Description of Auditor's response

With a view to ensure that disclosures made by the company in note no. 29 aredetermined appropriately and prudently we obtained information of pending income-tax andindirect-tax matters from the Company and have obtained/verified the documents includingthe communication with the departments provided by the Company. In addition we havecarried out comparison with respect to previous year and obtained/reviewed documentationfor additional direct/indirect tax matters reported if any including matters arisenduring the year. Our tax team has carried out discussions with the Company's internal taxteam on these cases mainly with respect to issues raised by various tax authorities intheir communication to the company to substantiate company's assessment that there are nopresent obligations perceived.

Information other than the Standalone Financial Statements and Auditor's Report thereon(hereinafter referred as "other information")

The Company's Management Directors and KMPs are responsible for thepreparationof theother information. The other information comprises the Board's report and managementdiscussion and analysis included in the annual report but does not include the standalonefinancial statements and our Our opinion on the standalone financial statements does notcover the other information and we do not express any form of assurance conclusionthereon.

In connection with our audit of the standalone financial statements our responsibilityis to read the other information above and in doing so consider whether the otherinformation is materially inconsistent with the standalone identified financial statementsor our knowledge obtained during the course of our audit or otherwise appears to bematerially misstated. If based on the work we have performed we conclude that there is amaterial misstatement of this other information we are required to report that fact. Wehave nothing to report in this regard.

Responsibilitiesof Management and Those Charged with Governance for the Standalone

Financial Statements

In accordance with the applicable provisions of the Insolvency and Bankruptcy Code2016 (Code) the Corporate Insolvency Resolution Process (CIRP) of Garden Silk MillsLimited (the Corporate the sole Financial Creditor (namely Invent Assets Securitisation& ReconstructionPvt. Ltd. "Invent ARC") post assignment of debt of theCompany via entering into an assignment agreement dated 4th February 2020. The Ahmedabadbench of National Company Law Tribunal (NCLT) has admitted petition application filed bythe sole financial creditor (Invent ARC) in terms of Section 7 of the Code and the CIRPfor the Company was initiated on 24 June 2020. Mr. Kuresh Khambati has been appointed asInterim Resolution Professional to manage the affairs of the Company. Subsequently Mr.Khambati has been confirmed as the Resolution Professional (RP) by the Committee ofCreditors (COC). Upon appointment of the RP under the Code the powers of the Board ofDirectors of the Company remain suspended and vest with the RP. Further the erstwhilemanagement of the Company including the Directors and KMPs are responsible for the mattersstated in section 134(5) of the Companies Act 2013 with respect to the preparation ofthese standalone Ind AS financial statements that give a true and fair view of thefinancial position financial performance including comprehensive income changes inequity and cash flows of the Company in accordance with the other accounting principlesgenerally accepted in India including Indian Accounting Standard (Ind AS) as the samepertains to the period prior to the commencement of CIRP. This responsibility alsoincludes maintenance of adequate accounting records in accordance with the provisions ofthe Act for safeguarding of the assets of the Company and for preventing and detectingfrauds and other irregularities; selection and application of appropriate accountingpolicies; making judgments and estimates that are reasonable and prudent; and designimplementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the standalone financialstatements that give a true and fair view and are free from material misstatement whetherdue to fraud or error.

In preparing the standalone financial statements Company's Management including theDirectors and KMPs are responsible for assessing the Company's ability to continue as agoing concern disclosing as applicable matters related to going concern and using thegoing concern basis of accounting unless management either intends to liquidate theCompany or to cease operations or has no realistic alternative but to do so.

The Company's Management including the Directors and KMPs are responsible foroverseeing the Company's financial reporting process.

Auditor's Responsibilities for the Audit of the Standalone Financial Statements

Our objectives are to obtain reasonable assurance about whether the standalonefinancial statements as a whole are free from material misstatement whether due to fraudor error and to issue an auditor's report that includes our opinion. Reasonable assuranceis a high level of assurance but is not a guarantee that an audit conducted in accordancewith SAs will always detect a material misstatement when it exists. Misstatements canarise from fraud or error and are considered material if individually or in theaggregate they could reasonably be expected to influence the economic decisions of userstaken on the basis of these standalone financial statements.

As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional skepticism throughout the audit. We also: A. Identify and assess therisks of material misstatement of the standalone financial statements whether due tofraud or error design and perform audit procedures responsive to those risks and obtainaudit evidence that is sufficient and appropriate to provide a basis for our opinion. Therisk of not detecting a material misstatement resulting from fraud is higher than for oneresulting from error as fraud may involve collusion forgery intentional omissionsmisrepresentations or the override of internal control.

B. Obtain an understanding of internal control relevant to the audit in order to designaudit procedures that are appropriate in the circumstances. Under section 143(3)(i) of theAct we are also responsible for expressing our opinion on whether the Company hasadequate internal financial controls system in place and the operating effectiveness ofsuch controls.

C. Evaluate the appropriateness of accounting policies used and the reasonableness ofaccounting estimates and related disclosures made by management.

D. Conclude on the appropriateness of management's use of the going concern basis ofaccounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the Company'sability to continue as a going concern. If we conclude that a material uncertainty existswe are required to draw attention in our auditor's report to the related disclosures inthe standalone financial statements or if such disclosures are inadequate to modify ouropinion. Our conclusions are based on the audit evidence obtained up to the date of ourauditor's report. However future events or conditions may cause the Company to cease tocontinue as a going concern. [Refer above para "Material Uncertainty Related toGoing Concern"]

E. Evaluate the overall presentationstructure and content of the standalone financialstatements including the disclosures and whether the standalone financial statementsrepresent the underlying transactions and events in a manner that achieves fairpresentation.

Materiality is the magnitude of misstatements in the standalone financial statementsthat individually or in aggregate makes it probable that the economic decisions of areasonably knowledgeable user of the standalone financial statements may be influenced. Weconsider quantitative materiality and qualitative factors in (i) planning the scope of ouraudit work and in evaluating the results of our work; and (ii) to evaluate the effect ofany identified misstatements in the standalone financial statements.

We communicate with those charged with governance regarding among other matters theplanned scope and timing of the audit and significant audit findings including anysignificant deficienciesin internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have compliedwith relevant ethical requirements regarding independence and to communicate with themall relationships and other matters that may reasonably be thought to bear on ourindependence and where applicable related safeguards.

From the matters communicated with those charged with governance we determine thosematters that were of most significance in the audit of the standalone financial statementsof the current period and are therefore the key audit matters. We describe these mattersin our auditor's report unless law or regulation precludes public disclosure about thematter or when in extremely rare circumstances we determine that a matter should not becommunicated in our report because the adverse consequences of doing so would reasonablybe expected to outweigh the public interest benefits of such communication.

Other matter

Due to the Covid-19 pandemic and the lockdown and other restrictions imposed by theGovernment and local administration the audit processes carried out subsequent tocommencement of lockdown were based on the remote access and evidence shared digitally.

Our opinion is not modified in respect of this other matter.

Report on other legal and regulatory requirements

1. As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the central government of India in terms of sub-section (11) ofsection143oftheActwegiveinthe "Annexure A" a statement on the mattersspecified in paragraphs 3 and 4 of the Order to the extent applicable.

2. As required by section 143 (3) of the Act and based on our audit we report that: forqualified opinion paragraph

a) Exceptforthe we have sought and obtained all the information and explanationswhich to the best of our knowledge and belief were necessary purposes of our audit;

b) Except for the effects if anyofthemattersdescribed qualifiedopinion thebasisforin our opinion proper books of account as required by law have been kept by theCompany so far as it appears from our examination of those books;

c) The balance sheet the statement of profit and loss (including other comprehensiveincome) statement of changes in equity and the statement of cash flows dealt with by thisreport are in agreement with the books of account;

d) In our opinion the aforesaid standalone financial statements comply with the Ind ASspecified under section 133 of the Act read with rule 7 of the Companies (Accounts)Rules 2014;

e) On the basis of the written representations received from the directors as on 31stMarch 2020 taken on record by the Directors and KMPs none of the directors isdisqualified as on 31st March 2020 from being appointed as a director in terms of section164 (2) of the Act;

f) With respect to the adequacy of the internal financial controls over financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate report in "Annexure B"; our report expresses an unmodifiedopinion on the adequacy and operating effectiveness of the Company's internal financialcontrols over financial reporting;

g) With respect to the other matters to be included in the auditor's report inaccordance with the requirements of section 197(16) of the Act as amended we report thatin our opinion and to the best of our information and according to the explanations givento us the remuneration paid by the Company to its directors during the year is inaccordance with the provisions of section 197 of the Act; and

h) With respect to the other matters to be included in the auditor's report inaccordance with rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinionand to the best of our information and according to the explanations given to us:

i. The Company has disclosed the impact of pending litigations as at 31st March 2020on its financial position in its standalone financial statements - refer note 29 to thestandalone financial statements.

ii. The Company has made provision as required under the applicable law or Ind AS formaterial foreseeable loses if any on long term contracts including derivative contracts.

iii. There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company.

For Sharp & Tannan Associates

Chartered Accountants Firm's Registration no. 109983W by the hand of

Tirtharaj Khot

Partner Membership no.(F) 037457 UDIN:20037457AAAABR6002

Pune 31st July 2020

ANNEXURE A TO THE INDEPENDENT AUDITOR'S REPORT

(Referred to in paragraph 1 under the heading "Report on Other Legal andRegulatory Requirements" of our report on even date) (i) (a) The Company ismaintaining proper records showing full particulars including quantitative details andsituation of fixed assets.

(b) The fixed assets are being physically verified by the management at regularintervals based on the programme of verification which in our opinion is reasonable. Nomaterial discrepancies were identified during such physical verification.

(c) The title deeds of the Company's certain immovable properties consisting offreehold land were pledged with the lenders as a security against the loan. During theyear the lenders have assigned its debts to Invent ARC. According to the records i.e.photocopies/ scanned copies examined by us to the extent provided by the Company'smanagement and information and explanations given to us the title deeds of immovableproperties are held in the name of the company except as mentioned below.In additiondetails of the land for which NA procedure is pending are also included below:

Sr. No. Land details

Gross Block Amount (Rs. In Crore*)

Remarks

1 Jolwa land (part of land)

8.06

Title is in Sellers name (majority of them are promoters and their family members) however agreement to sale has been entered into. Land is in the possession of the Company. NA procedure is pending.

2 Jolwa land (part of land)

1.86

Title is in the name of Company. Also the possession of land is with the Company but NA procedure is pending.

*Note: Further one portion of agriculturallandisinthepossessionoftheCompanyandconsiderationpaid of

Rs.0.17 Crore appears under capital advances and not capitalised as asset.

(ii) As explained to us physical verification of inventory has been conducted bythe management at reasonable intervals and noticedon such physical verificationbetween the physical stock materialdiscrepancieswere and the books of accounts.

(iii) The Company has not granted any loans secured or unsecured to companies firmslimited liability register maintained under Section 189 of the Act. Accordingly reportingon orotherparties paragraph 3(iii) (a) (b) & (c) of the Order is not applicable.

(iv) According to information and explanation provided to us the Company has compliedwith provisions of section 185 and section 186 of the Act to the extent applicable.

(v) According to information and explanation provided to us the Company has notaccepted deposits hence the directives issued by the Reserve Bank of India and theprovisions of Sections 73 to 76 of the Act and the rules framed there under are notapplicable to it. According to information and explanation provided to us no order hasbeen passed by Company Law Board or National Company Law Tribunal or Reserve Bank of Indiaor any court or any other tribunal in the current year. Accordingly reporting on para3(v) is not applicable.

(vi) The Central Government has specified maintenance of cost records under section148(1) of the Act. We have broadly reviewed these records relating to materials labourand other items of cost maintained by the Company and are of the opinion that primafacie; the prescribed accounts and records have been made and maintained. We have nothowever made a detailed examination of records with a view to determine whether they areaccurate and complete.

(vii) (a) The Company is generally regular in depositingundisputed statutory duesincluding provident fund employees' state insurance income-tax goods and service taxsales-tax service tax duty of customs duty of excise value added tax cess and anyother statutory dues as applicable with the appropriate authorities. According to theinformation and explanation provided to us no undisputed amounts payable in respect ofstatutory dues were in arrears as at 31st March 2020 for a period of more than sixmonths from the date they became payable.

(b) According to the information and explanation provided to us dues of income taxsales tax service tax duty of customs duty of excise value added tax or cess whichhave not been deposited on account of dispute are as follows:

Sr. No. Name of Statute Nature of dues Forum where dispute is pending Period to which amount relates Amount Involved (Rs. in Crore) Amount Unpaid (Rs. in Crore)
1 Central Excise Excise Duty / Gujarat High Court (Ahmedabad) 2008-09 26.10 19.60
t2 Act 1944 Service Tax Customs Excise and Service Tax Appellate Tribunal (Ahmedabad) 2011-12 0.41 0.41
3 Customs Excise and Service Tax Appellate Tribunal (Ahmedabad) 2009-10 0.03 0.00
4 Gujarat High Court (Ahmedabad) 2000-01 3.36 0.00
5 Customs Excise and Service Tax Appellate Tribunal (Ahmedabad) 2008-13 0.78 0.75
6 Gujarat High Court (Ahmedabad) 1994-95 42.93 42.93
7 Customs Excise and Service Tax Appellate Tribunal (Ahmedabad) 2006-09 1.15 1.15
8 Customs Excise and Service Tax Appellate Tribunal (Ahmedabad) 2006-11 5.23 4.97
9 Central Excise Excise Duty / Gujarat High Court (Ahmedabad) 2005-09 60.38 60.38
10 Act 1944 Service Tax Gujarat High Court (Ahmedabad) 2005-09 0.65 0.65
11 Supreme Court 2005-13 392.01 392.01
12 Customs Act 1962 Customs Duty Customs Excise and Service Tax Appellate Tribunal (Ahmedabad) 2012-13 1.27 0.00
13 Customs Excise and Service Tax Appellate Tribunal (Ahmedabad) 2012-13 0.36 0.31
14 Customs Excise and Service Tax Appellate Tribunal (Ahmedabad) 2012-13 0.34 0.31
15 Income Tax Income tax C.I.T. (Appeals) Surat. 2010-15 6.08 6.08
16 Act 1961 Income Tax Appellate Tribunal 2002-04 0.05 0.05
17 Income Tax Appellate Tribunal 2008-09 0.03 0.03
18 Income Tax Appellate Tribunal 2008-09 0.05 0.05

* Show cause notices for excise duty amountingRs.to226.51 Crore (not included above)have been received by the company against which responses have been filed. However asinformed to us authorities initiated any further proceedings against such responses.

(viii) During the year the Company has defaulted on repayment of loans includinginterest to banks financial institutions and other lenders. As informed to us totalborrowings including interest thereon due to various banks financial institutions andother lenders have been assigned to asset reconstruction company viz. Invent AssetSecuritisation and Reconstruction Pvt. Ltd ("Invent ARC") on 4th February 2020.Nospecific terms and conditions have been prescribed by ARC hence we are unable tocomment/report on para 3(viii) of the Order. The Company does not have any debentureholders and has not borrowed from government. (also refer basis for qualified opinionabove).

(ix) According to information and explanation provided to us the Company has notraised moneys by way of initial public offer or further public offer (including debtinstruments) and term loans during the year.

(x) Based upon the audit procedures performed by us and according to the informationand explanations provided to us no material fraud by the Company or any material fraud onthe Company by its officers or employees has been noticed or reported during the year.

(xi) According to the information and explanation provided to us the managerialremuneration has been paid or provided in accordance with the requisite approvals mandatedby the provisions of Section 197 read with Schedule V to the Act.

(xii) The Company is not a Nidhi Company. Accordingly reporting on para 3(xii) is notapplicable.

(xiii) According to the information and explanation provided to us all transactionswith the related compliance with Sections 177 and 188 of the Act wherever applicable andthe details have been disclosed in the standalone financial statements as required by theapplicable Ind AS.

(xiv) According to the information and explanation or private placement of shares orfully or partly convertible debentures during the year under review. Accordinglyreporting on para 3(xiv) is not applicable.

(xv) According to the information and explanation provided to us the Company has notentered into any non-cash transactions with directors or persons connected with them asreferred to in section 192 of Companies Act 2013. Accordingly reporting on para 3(xv) isnot applicable.

(xvi) According to the information and explanation provided to us the Company is notrequired to be registered under Section 45-IA of the Reserve Bank of India Act 1934.Accordingly reporting on para 3(xvi) is not applicable.

For Sharp & Tannan Associates

Chartered Accountants Firm's Registration no. 109983W by the hand of

Tirtharaj Khot

Partner Membership no.(F) 037457 UDIN:20037457AAAABR6002

Pune 31st July 2020

ANNEXURE B TO THE INDEPENDENT AUDITOR'S REPORT

(Referred to in paragraph 2 (f) under the heading "Report on other legal andregulatory requirements" of our report on even date)

Report on the Internal Financial Controls

[under Clause (i) of sub-section 3 of section 143 of the Companies Act 2013 ("theAct")]

Opinion

We have audited the internal financial controls over financial reporting ofGardenSilk Mills Limited (hereinafter referred as "the Company") as of 31st March2020 in conjunction with our audit of the standalone financial statements of the Companyfor the year ended on that date.

In our opinion and to the best of our information and according to the explanationsgiven to us the Company has in all material respects an adequate internal financialcontrols system over financial reporting and such internal financial controls overfinancial reporting were operating effectively as at 31st March 2020 based on theinternal financial control over financial reporting criteria established by the Companyconsidering the essential components of internal control stated in the Guidance Note onAudit of Internal Financial Controls Over Financial Reporting (hereinafter referred as"the guidance note") issued by the Institute of Chartered Accountants of India(hereinafter referred as "ICAI").

Management's responsibility for internal financial controls

The Company's Management Directors and KMPs are responsible for establishing andmaintaining internal financial controls based on the internal control over financialreporting criteria established by the Company considering the essential components ofinternal control stated in the guidance note. These responsibilities include the designimplementation and maintenance of adequate internal financial controls that were operatingeffectively for ensuring the orderly and efficient conduct of its business includingadherence to the Company's policies the safeguarding of its assets the prevention anddetection of frauds and errors the accuracy and completeness of the accounting recordsand the timely preparation of reliable financial information as required under the Act.

Auditor's responsibility

Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting based on our audit. We conducted our audit in accordancewith the guidance note and the Standards on Auditing issued by ICAI and deemed to beprescribed under section 143(10) of the Act to the extent applicable to an audit ofinternal financial controls. Those Standards and the Guidance Note require that we complywith ethical requirements and plan and perform the audit to obtain reasonable assuranceabout whether adequate internal financial controls over financial reporting wasestablished and maintained and if such controls operated effectively in all materialrespects. Our audit involves performing procedures to obtain audit evidence about theadequacy of the internal financial system over financial reporting and their operatingeffectiveness. Our audit of internal financialcontrols over financial reporting includedobtaining an understanding of internal financialcontrols over financial that a materialweakness exists and testing and evaluating the design and operating effectiveness ofinternal control based on the assessed risk. The procedures selected depend on theauditor's judgment including the assessment of the risks of material misstatement of thestandalone financial statements whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on theCompany'sinternalfinancialcontrolssystemoverfinancialreporting.

Meaning of internal financial controls over financial reporting

A Company's internal financial control over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and thepreparation of standalone financial statements for external purposes in accordance withgenerally accepted accounting principles. A company's internal financial control overfinancial reporting includes those policies and procedures that

(1) pertain to the maintenance of records that in reasonable detail accurately andfairly reflect the transactionsand dispositions of the assets of the company;

(2) provide reasonable assurance that transactions are recorded as necessary to permitpreparation of standalone financial statements in accordance with generally acceptedaccounting principles and that receipts and expenditures of the company are being madeonly in accordance with authorizations of management and directors of the company; and

(3) provide reasonable assurance regarding prevention or timely detection ofunauthorized acquisition use or disposition assets that could have a material effect onthe standalone financial statements.

Inherent limitations of internal financial controls over financial reporting

Because of the inherent limitations of internal financial controls overfinancialreporting including the possibility of collusion or improper management overrideof controls material misstatements due to error or fraud may occur and not be detected.Also projections of any evaluation of the internal financial controls over financialreporting to future periods are subject to the risk that the internal financial controlover financial reporting may become inadequate because of changes in conditionsthat thedegree of compliance with the policies or procedures may deteriorate. or

For Sharp & Tannan Associates

Chartered Accountants Firm's Registration no. by the hand of

Tirtharaj Khot

Partner Membership no.(F) 037457 UDIN:20037457AAAABR6002

Pune 31st July 2020

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