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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 17.00
52-Week low 5.46
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 17.00
52-Week low 5.46
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) - Director Report

Company director report

#MDStart#

MANAGEMENT'S DISCUSSION AND ANALYSIS

Dear Shareholders

In accordance with the provisions of the Insolvency and Bankruptcy Code 2016 (‘IBC/ Code') the Corporate Insolvency Resolution Process(‘CIRP Process') ofGarden Silk Mills Limited (‘Company') was initiated by Invent AssetsSecuritization and ReconstructionPrivate Limited the assigned financial creditor of theCompany. The Financial to initiate the CIRP process was admitted by the National CompanyLaw Tribunal (‘NCLT') on 24th June 2020 (‘CIRP Commencement Date').Mr. Kuresh Khambati was appointedasInterimResolution (‘IRP') by the NCLT tomanage the affairs of the Company. Mr. Kuresh Khambati was confirmed as the ResolutionProfessional(‘RP') by the Committee of Creditors(‘COC'). Onappointment of the IRP/RP the powers of the Board of Directors of the Company weresuspended.

Further in compliance with the provisions of Section 134(3) of the Companies Act2013 a report containing the details and information on the performance of the Company asrequired to be disclosed in the Board's Report to the shareholders of the Company isprovided hereunder. The Management's Discussion and Analysis Report as required under theSecurities and Exchange Board of India (Listing Obligations and Disclosure Requirements)Regulations 2015 forms part of this report.

This report was discussed in a meeting held with the Key Managerial Personnels andthereafter taken on record by the Resolution Professional. Accordingly the report for thefinancial year ended 31st March 2020

Financial Highlights

The financial performance of the Company for the financial year ended 31st March 2020is summarised below:

Particulars 2020 2019
Revenue from Operations 2877.09 3488.50
Other income 3.55 19.38
Operating Profit / EBITDA (including other income) 61.86 190.63
Less: Finance Costs 202.14 204.10
Profit / (Loss) before Depreciation & Impairment Losses (140.28) (13.47)
Less: Depreciation & Impairment Losses 67.32 72.84
Less: Exceptional Items 0.00 3.46
Profit / (Loss) before tax (207.60) (89.77)

 

* Previous year figures have been recast / restated.

Review of Operations

Owing to the orders issued by Government of India/State Government/Local Administrationfor containment of COVID-19 in the country directing nationwide lock down in the entirecountry w.e.f. 25th March2020 and in consideration of the safety of our workers staffand the surrounding community as well of the continuous process plants the Company wascompelled to shut down its manufacturing facilities at Village Jolva and Village Vareliin a phased manner.

Revenue from operations for FY 20 declined by 17.53% year-on-year (YoY) at Rs.2877.09Crore for FY20 as compared to Rs.3488.50 Crore in the previous fiscal owing primarily to asignificant fall in product prices owing to the material fall in international PTA and MEGprices. Your Company's income from export sales fell to Rs.420.15 Crore in FY20 ascompared to Rs.1094.80 Crore in the previous year. The impending assignments of debt ofthe Company's lenders resulted in reduced working capital facilities.The need to reducethe working capital cycle compelled the Company to increase sales in the domestic marketinstead.

The Company achieved EBITDA (including other income) for FY20 at Rs.61.86 Crore againstRs.190.63 Crore in FY19. The profitability was impacted by a curtailment of workingcapital availability including export bill discounting facility which resulted in beingforced to reduce profitable chips exports and focus instead on the oversupplied domesticchips market. The early part of FY20 was looking to be very positive but the Company wasunable to capitalize adequately owing to a severe supply shortage of domestic PTA. As theyear progressed the unusually large raw material volatility and fall in prices resulted innot just inventory losses but also lower margins as finished prices tend to fall inanticipation of local raw material prices falling. The Covid related fall in internationalprices at the end of the year was severe and resulted in inventory losses along with theforced shutdown in March 2020.

Despite the volatility in raw material prices the demand for polyester filament yarncontinued to grow during FY20 though the high competitive intensity continued to keepindustry margins in check.

Finance costs for FY20 were similar to the previous year. The subdued performancecoupled with high finance costs once again led to negative PAT for the Company.

The overall productionof chips and polyester melt was higher at 327305 MT during FY20as compared to 323360 MT in FY19. Despite the shutdown taken in March the Companyachieved the highest production of polyester chips and melt in 7 years that is since theshutdown taken of CP3. In volume terms sale of chips for FY20 declined to 166656 MT from172398 MT in the previous year. In value terms sale of chips for FY20 declined toRs.1129.62 Crore as compared to Rs.1423.32 Crore in the previous year.

During FY20 the average capacity utilisation level in our Polyester Filament Yarn(PFY) including processed yarn plants were maintained at a high level despite theCovid-related shutdown. The PFY production during FY20 was at 173838 MT as compared to172673 MT in the previous year. The volume of sale of PFY increased in FY20 at 183897 MTas compared to 174193 MT in previous year.

Owing to lower price realisation in POY and processed yarn sales of yarn declined toRs.1624.45 Crore in FY20 as compared to Rs.1897.91 Crore in the previous year.

There was a sharp fall in sale of grey and finished fabrics. During FY20 sale of greyand finished fabrics fell to Rs.37.23 Crore and Rs.53.02 Crore respectively in FY20 ascompared to Rs.66.79 Crore and Rs 66.40 Crore respectively in previous year. The Companycurtailed the production during the year partly to avoid inventory losses due tovolatility of pricesof raw material as well as finished goods. Our finished fabricdivision last year saw a number of large customers shrink sales owing to their financialand market conditions.

The Company continues its leadership in specialty yarns like cationic fine deniermother nylon melange and spandex-based yarns as well in specialty chips for thepolyester film industry The short-term impact of Covid on the polyester textile industryhas activities the home the fear of the virus has also restrained people from working inforcedpeopletorestrict offices travelling for work or leisure and importantly hasaffected social gatherings and events of all kinds. All these significantly affected theimmediate demand for polyester textiles. Once the health concerns about the virus haveabated and restrictions on business and people have been removed the demand for polyesteris widely The value proposition of polyester in thrifty times may only speed up along-term underlying global and local trend replacing costly natural fibres. The low costof international oil has resulted in low raw material costs that will only support demand.As low interest rates are eventually passed on to small manufacturers and traders creditwill increase and greatly support the SME-driven textile industry which has alreadyincurred the one-time impacts of demonetization introduction of GST and now Covid. Weremain very positive about the long-term prospects of the

Dividend

Considering the loss incurred by the Company your Directors do not recommend anydividend on equity shares for the financial year 2019-20.

Transfer to Reserves

In absence of distributable profits / earnings it is not proposed to transfer anyamount to reserves for the financial year 2019-20.

Nature of Business

Garden Silk Mills Ltd. is one of India's leading man-made-fibre based textilecompanies. It is a vertically integrated manufacturer of a wide range of Polyester ChipsPolyester Filament Yarns (PFY) Preparatory Yarns Woven (Grey) Fabric as well as Dyed andPrinted Sarees and Dress Materials. During the year under review there was no change inthe nature of business of the Company.

Corporate Insolvency Resolution Process (CIRP)

A Corporate Insolvency Resolution Plan (CIRP) has been initiated against the Companyvide an order of the National Company Law Tribunal Ahmedabad Bench (‘NCLT') in thematter CP(IB) 453 of 2018 on 24th June 2020 under the provisions of the Insolvency andBankruptcy Code 2016 (‘Code'). Pursuant to the order the powers of the Board ofDirectors stand suspended and are exercisable by Mr. Kuresh Khambati who was appointed asInterim Resolution Professional (IRP) by the NCLT and was consequently confirmed asResolution Professional (RP) by the Committee of Creditors (COC).

As per the Code the RP has to receive collate and admit all the claims submitted bythe creditors of the Company. Such claims can be submitted to the RP during the CIRP tillthe approval of a resolution plan by the COC. The RP is still in the process of collatingand verifying such claims as and when they are received and shall subsequently admitsuch verified claims against the Company as per the Code. Pending admission of the claimsreceived the impact of such claims if any that may arise has not been considered in thepreparation of the audited financial statements.

Going Concern Status

During the year the company has incurred a net loss increasing its negative retainedearnings as at 31st March 2020 wherein assets are insufficient in comparison toliabilities thereby resulting in erosion of its Net-worth.

The Company's ability to continue as a going concern is dependent upon many factorsincluding continuedsupport from the financial creditors operational creditors andsubmission of a viable resolution plan by the prospective investor. Upon the CIRP aresolution plan needs to be presented to and approved by the COC and thereafter will needto be approved by the NCLT to keep the Company as a going concern. In view of the opinionof the Directors and KMPs resolution and revival of the company is possible inforeseeable future. Further the RP is required to make every endeavour to protect andpreserve the value of the property of the corporate debtor and manage the operations ofthe corporate debtor as a going concern. In view of the aforesaid details and pendingoutcome of the CIRP the financial statements of the Company have been prepared on goingconcern basis.

Resource and Liquidity

The Company had term loan working capital and other financing arrangements fromcertain banks and other lenders.

All these lenders had declared their arrangements with the Company as non-performingasset since the Company had defaulted in repayment of principal interest and other penaldues.

A Deed of Assignment of Debt has been executed on 4th February 2020 between InventAssets Securitization and Reconstruction Private Limited (ARC) (hereinafter referred to asthe "Assignee") and the consortium lenders of the Company (hereinafter referredto as the "Assignors") whereby the consortium debt of Rs.1679.87 Crore payableby Garden Silk Mills Limited has been assigned in favour of the Assignee i.e. ARC. Thesaid Deed of Assignment of Debt describing the terms and conditions of assignment hasbeen registered with the appropriate authority on 4th February 2020. The necessary formsand the documents for modification of charge in favour of the assignee have been filedwith Ministry of Corporate Affairs (MCA) on 28th July 2020.

In view of the various restrictions due to Covid-19 pandemic there have beenconstraints in obtaining complete and correct information from Invent ARC. In light of theabove outstanding balances are subject to reconciliation/adjustments. During major partof the year FY 20 your Company's accounts remained a "non-performing asset"(NPA) with all the consortium lenders. Since majority of the lenders significantlycurtailed working capital availability the operating margins were adversely affected.

Despite these challenges your Company during FY20 repaid Rs.14.40 Crore towardsprincipal component of term loans . Moreover the total outflow towards debt servicingincluding interest and other frombanksandfinancialinstitutions financial charges duringthe year 2019-20 amounted to Rs.131.96 Crore.

Your Company continued to focus on managing cash efficiently and ensured that it hadadequate liquidity and back up lines of credit to run its polyester plants at a relativelyhigh utilization level.

Your Company is not a "Large Corporate" as per the criteria under SEBICircular No. SEBI/HO/DDHS/CIR/P/2018/144 dated 26th November 2018. The necessarydeclaration / undertakinghasbeensubmitted by the Company to the stock exchanges.

Overview of the economy

Indian economy

India's economy slowed down to 3.1% in Q4 on the back of the coronavirus pandemicsuperimposed on a prolonged slowdown. Economic growth slowed to an 11-year low of 4.2% in2019-20 against 6.1% expansion in 2018-19. Risk aversion within the financial sector andconcerns about its health led to weak supply of credit which is the lifeline of theeconomy. On the domestic front both private consumption and private investment showedmaterial weakness in FY20 and are expected to remain vulnerable in FY21 also owing toCovid. Global GDP also slowed to 2.9% in 2019 reducing external support to the countryresulting in weak exports in FY20.

A country-wide lock down was enforced by the government in late March 2020 due to theCOVID-19 pandemic. Manufacturing and services activity came to a grinding halt resultingin unprecedented degrowth in demand. The Government of India has responded to the economicfallout by announcing stimulus packages and liquidity easing measures to fuel the economicactivity. The RBI has also provided enormous and timely monetary support. The lockdown isbeing removed in a phased manner and efforts are being made to revive the manufacturingservices and other productive activities.

Industry Scenario

During the year under review the demand for Polyester Filament Yarn grew briskly yetthe margins remained subdued owing to the excess supply overhang and the substantial fallin raw material prices.

India is the second largest producer of polyester yarn in the world and is expected tocontinue to be one of the fastest growing manufacturers of polyester. Demand for polyestertextiles all over the world is increasing and also continues substitute cotton owing tothe value proposition of polyester as well as changes in global fashion trends. India ispresently adequately supplied in terms of availability of high quality polyester rawmaterials / feedstock. In the recent Union Budget announcement the Government abolishedanti-dumping duty on PTA thus reducing the cost of feedstock.

The economy as a whole and the textile industry in particular are staring at lowerdomestic and international demand mainly due to lockdown and concerns about widespreadsocial interaction owing to the health risks but also due to anticipation of recessionand job losses shortage of workmen due to migration etc. Demand is expected tomeaningfully normalize once Covid has abated and restrictions on activities are lifted.

For the Polyester industry the main raw materials are Purified Terephthalic Acid (PTA)and Mono Ethylene Glycol (MEG). These are derivatives of petrochemical industry. Anychange in crude oil price affects the prices of feedstocks PTA and MEG.

Opportunities Challenges Threats Risks and Concerns

Once the effects of Covid have abated we expect to see improving utilisation levelsand margins in the Company. The market share of polyester filament yarn based textiles isexpected to continue rising and may receive a further boost post-Covid. Import of rawmaterials has been minimised owing to better alternatives with local PTA and MEG supplierswho have undertaken capacity expansion. The Company's strategic location in the heart ofthe textile industry of Surat and close to Hazira Port minimizes logistics costs andinfrastructural weakness.

Yet it may be acknowledged that the Indian textile & clothing industry has beenfacing challenges in the of demonetization GST implementation global economic slowdownand recently the Coronavirus outbreak in India and around the world. The downstreamsector dominated by small and medium-sized enterprises has been plagued by financialtightness. Yet it is believed these are one-off or temporary set-backs and will havelittle bearing of final consumer demand going forward.

While it is difficult to estimate the definitive impact of COVID-19 on the businessbeyond Q1-FY21 the economy is expected to see significant temporary demand constraints.These are primarily driven by reduced social interactions stagnant or lower householdincomes and heightened uncertainty. Further rising risk aversion among banks and NBFCshas meant reduced credit to SMEs which form the bedrock of the textile trade.

On the supply side there are challenges in the short term owing to reduced migrantlabour availability limited working hours in factories and textile markets restrictedcredit availability and costly adherence to COVID-19 safety norms. Having said thatproduction at the suppliers' end is resuming gradually. Also it appears that theagriculture sector will be relatively less impacted supported by several positive factorssuch as record Rabi production higher Government procurement announcement of higher MSPsfor the next Kharif crop outlook of a normal monsoon and record reservoir levels. Thisshould favourably support rural demand which has been a pillar of the polyester industry.

In the textile and garments industry the preferences of the customers undergo rapidchanges. Moreover the consumer is always seeking something new. The Company has anexperienced sales and technical team which cooperate for product innovation and flexibleproduction and is well-positioned to respond to changing customer needs. The company has astrength in specialty products and is also perceived to be a quality and price leaderacross its product segments.

Business Outlook

The post-Covid outlook for the industry and the Company can be viewed with cautiousoptimism.

Low oil prices reduced cost of government debt and generally lower interest rateshigh foreign exchange reserves moderate external debt and a responsive RBI provide astrong macroeconomic backdrop for the economy. The Covid crisis also looks to be focusingminds in the government towards much needed reform.

Very low prices of oil have driven down prices of PTA and MEG raw material which willgreatly support demand once the economy is fully unlocked. Moreover with abolition ofanti-dumping duty on PTA local prices would be better still increasing the competitivenessof Indian polyester producers.

However the outlook is heavily contingent upon the intensity spread and duration ofthe pandemic.

Financial Performance

Operational and Financial Performance

Total gross sales of the Company for FY 20 declined by 17.53% at Rs.2877.09 Crore ascompared to Rs.3488.50 Crore in FY 19 due to the lower industry volumes furtheraccentuated by COVID-19 lockdown from 25 March 2020 which resulted into abrupt closure ofbusiness activities impacting sales and despatch of the products.

During the year FY 20 there was a sharp decline in the EBITDA at Rs.61.86 Crore ascompared to Rs.190.63 Crore in the year FY 19.

Material cost

The material cost as a percentage of revenue has increased marginally from 75.88% inthe previous year to 76.80% in the current year.

Energy Cost

Power and Fuel cost for FY20 constituted 7.12% of total expenses. Optimizing power andfuel costs is one of the major drivers for improving the Company's operationalperformance. The Company constantly endeavors to reduce costs by judicious procurement ofrelatively lower cost fuel higher use of cheaper coal and use of alternative fuels.

Finance costs

The interest expense for the year ended 31 March 2020 is at similar levels as previousyear.

Employee benefits expense

The employee benefits expense or personnel cost as a percentage of revenue hasincreased from 3.62% in the previous year to 4.29% in the current year.

Overall employee costs during the year decreased by 2.17%. The decrease is due tocontinual efforts to productivity and optimize employee cost.

Depreciation amortisation and impairment expense

for the year ended 31st March 2020 are as at similar levels as Depreciation previousyear.

Other expenses

Other expenses as a percentage of revenue has increased from 15.59% in the previousyear to 16.88% in the current year. Stringent fixed cost optimization saw savings in manyfixed cost elements.

Segment Revenue

The Company's businesssegmentconsistsofasinglesegmentof"Textiles"inaccordance with Ind AS 108 - ‘Operation

Segments' notified pursuant to the Companies (Indian Accounting Standard) Rules 2015.The Company is not relied on single major customers having transaction more than 10% oftotal revenue. Information with respect to geographical segment to the extent applicableis as follows:

Particulars

Within India

Outside India

Total

2019-20 2018-19 2019-20 2018-19 2019-20 2018-19
Segment Revenue - Geographic
Segment by Location of Customer 2456.94 2393.70 420.15 1094.80 2877.09 3488.50

Subsidiary Joint Venture and Associate Companies

The Company has no subsidiary / joint venture / associates for the financial year ended31st March 2020. Accordingly the requirements pursuant to Section 129(3) of theCompanies Act 2013 read with Rule 5 of the Companies (Accounts)

Rules 2014 is not applicable.

Indian Accounting Standard (Ind AS)

Affthe Company has adopted Indian Accounting Standards (‘Ind AS') fromAsmandatedbytheMinistryofCorporate

1st April 2017 with a transition date of 1st April 2016. The financial results of theCompany for the year 2019-20 have been prepared in accordance with Indian AccountingStandards (‘Ind AS') notified under section 133 of the Companies Act 2013(‘Act') read with Companies (Indian Accounting Standards - Ind AS) Rules 2014 asamended and other recognised accounting practices and policies to the extent applicable.

These audited financial statements have been prepared by the management of the Companyand certified by Managing Director / Wholetime Director and CFO of the Company. The RP hasrelied upon the assistance provided by the members of the Audit Committee in review of thefinancial statements and Managing Director / Wholetime Director and CFO of the Company inrelation to these Audited Financial Statements. The RP has approved these Audited Accountsonly to the limited extent of discharging the powers of the Board of Directors of theCompany which has been conferred upon him in terms of provisions of Section 17 of theCode.

Corporate Governance

Your Company reaffirms its commitment to Corporate Governance and is fully compliantwith the conditions of Corporate Governance stipulated in Clause ‘C' of Schedule V onAnnual Report pursuant to Regulation 34(3) of SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015. A report on Corporate Governance forms part of the AnnualReport as ‘Annexure G'.

A certificate from M/s Sharp and Tannan Statutory Auditors of the Company confirmingcompliance to the conditions of Corporate Governance as stipulated under SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 is annexed to Report onCorporate Governance. The auditor's certificate for the year 2019-20 does not contain anyqualification reservation adverse remark or disclaimer.

Consolidated Financial Results

- FZE a wholly owned subsidiary at Ajman Free Zone has been voluntarily Thebusinessclosed down in FY 2019 and the said Company is not in existence. Accordingly preparationof consolidation of financial results as stipulated by Regulation 33 of the SEBI

(‘Listing Regulations 2015') is not applicable.

Directors and Key Managerial Personnel

Directors

At the 40th Annual General Meeting of the shareholders of the Company held on 25thSeptember Shah (DIN: 00218143) Managing Director and Mr. Alok P. Shah (DIN: 00218180)Wholetime Directors CFO and COO were re-appointed for a period of 3 (three) years witheffect from 1st September 2019 and 1st June 2019 respectively. On the recommendation ofthe Nomination and remuneration Committee the Board has appointed Ms. Kruti Kothari as anAdditional Non-executive Independent Woman Director of the Company with effect from 22ndMarch 2020 who hold office up to the date of ensuing Annual General Meeting of theCompany in terms of Section 161 of the Companies

Act 2013 and is eligible for appointment.

Mr. Yatish C. Parekh (DIN: 00168488) a Non-Executive Independent Director on the Boardresigned from the directorship of the Company with effect from 16th July 2019 due to hisother personal commitments and prior engagements. The Directors places on record thevaluable contributions madeby Mr. Yatish Parekh during his tenure with the Company. Asrecommended by the Nomination and Remuneration Committee and approved by the meeting ofthe Resolution Professional Directors and Key Managerial Personnel of the Company held on31st July 2020 Mr. Sunil S. Sheth (DIN: 00024033) has been re-appointed as anIndependent Director under Section 149(10) of the Companies Act 2013 and ListingRegulations 2015 to hold office for further 4 (four) years for a second term with effectfrom 9th September 2020 till 12th August 2024 subject to the approval of theshareholders at the ensuing Annual General Meeting In accordance with the provisions ofSection 152 of the Act and the Articles of Association of the Shah (DIN: 00024004) willretire by rotation at the ensuing Annual General Meeting of the Company and beingeligible has offered himself for re-appointment. The Board recommends his re-appointment.

In its meeting held on 17th June 2020 the Board of Directors at the recommendationof Nomination and Remuneration Committee has approved the re-appointment of Mr. Sanjay S.Shah (DIN: 00024004) as Wholetime Director designated as Executive Director of the Companyfor a period of 3 (three) years with effect from 1st July 2020. However Secured Creditorof the Company granted their approval for appointment of Mr. Sanjay S. Shah for a tenureof 1 (one) year with effect from 01/07/2020 upto 30/06/2021 subject to approval ofshareholders of the Company at the ensuing Annual General Meeting.

Your Company has received declarations from all the Independent Directors confirmingthat they meet with the criteria of independence as prescribed under Section 149(6) of theCompanies Act 2013 and under Regulation 16 (1) (b) of the SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015. Further pursuant to Section 164(2) of theCompanies Act 2013 all the Directors have provided declarations in Form DIR- 8 that theyhave not been disqualified to act as a Director.

A brief resume of directors being appointed / re-appointed along with the nature oftheir expertise their shareholding in your Company and other details as stipulated underRegulation 26(4) and 36(3) of the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 is appended as an annexure to the Notice of the ensuing Annual GeneralMeeting.

Key Managerial Personnel (KMP)

The following have been designated as the Key Managerial Personnel of the Companypursuant to Sections 2(51) and 203 of the Companies Act 2013 read with the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014:

(a) Mr. Praful A. Shah - Chairman and Managing Director

(b) Mr. Alok P. Shah - Wholetime Director Chief Financial Officer (CFO) & COO (c)Mr. Kamlesh B. Vyas Company Secretary and Compliance Officer

Independent Directors

In terms of Section 149 of the Act Mr. Deepak N. Shah Mr. Ketan A. Jariwala Mr.Sunil S. Sheth and Ms. Kruti Kothari are the Independent Directors of the Company. TheCompany has received declarations from all the Independent Directors meet the criteria ofindependence as prescribed under Section 149(6) of the Act and Regulation confirming 16(1)(b) of the Listing Regulations and are independent from the management. They are notliable to retire by rotation in terms of Section 149(13) of the Act.

The Board is of the opinion that the Independent Directors of the Company possessrequisite qualifications and expertise in the fields of science and technology humanresourcesstrategyauditing tax and risk advisory services financial services corporategovernance business management etc. and that they hold the required standards ofintegrity.

The Independent Directors of the Company are in the process of taking requisite stepstowards the inclusion of their names in the data bank of Independent Directors maintainedwith the Indian Institute of Corporate Affairs in terms of Section 150 of the Act readwith Rule 6 of the Companies (Appointment & Qualification of During the year theNon-Executive Directors of the Company had no pecuniary relationship or transactionsCompany other than sitting fee for the purpose of attending the meetings of the Board andcommittees of the Board of which they are the members.

Separate Meeting of Independent Directors

In terms of requirements under Schedule IV of the Companies Act 2013 and Regulation 25(3) of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 aseparate meeting of the Independent Directors was held on 13th February 2020.

The Independent Directors at the meeting inter alia reviewed the following:-

• Performance of Non-Independent Directors and Board as a whole.

Performance of the Chairman of the Company taking into account the views of ExecutiveDirectors and Non-Executive Directors.

Assessed the quality quantity and timeliness of flow of information between theCompany Management and the Board that is necessary for the Board to effectively andreasonably perform their duties.

Familiarisation Programme for Independent Directors/Non-

All the Independent Directors of the Company are made awareoftheirrolesandresponsibilitiesat the time of their appointment through a formal letter ofappointment which also stipulates engagement.

The Directors are provided with all the documents to enable them to have a betterunderstanding of the Company its various operations and the industry in which itoperates. Executive Directors and Senior Management provide an overview of the operationsand familiarise the new Non-Executive Directors on matters related to the Company's valuesand commitments.

Pursuant to Regulation 25(7) of SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 ("SEBI Listing Regulations") the Company imparted variousfamiliarisation programmes for its Directors including Industry Outlook at the BoardMeetings Regulatory updates at Board and Audit Committee Meetings covering changes withrespect to the Companies Act SEBI Listing Regulations Prevention of Insider TradingRegulations Framework for Related Party Transactions Meeting with Senior Executive(s) ofyour Company etc.

Pursuant to Regulation 46 the details required are available ongardenvareli.com/policies.aspx'.

Declaration by Independent Director

For the Year 2019-20 all the Independent Directors of the Company have given theirdeclaration they meet the criteria of independence as laid down under Section 149(7) readwith Section149(6) of the Companies Act 2013 and Regulation 16 of the ListingRegulationsand affirmed compliance with as required under Regulation 26(3) of SEBI (LODR)Regulations 2015 (as amended). The Appointment and Tenure of the Independent Directorsincluding code for Independent Directors are available on the website of the Company‘https:// www.gardenvareli.com/policies.aspx'.

Code of Conduct for Directors and Senior Management

All Board members and Senior Management personnel have affirmed compliance 2019-20. Adeclaration to this effect signed by the Managing Director of the Company is contained inthis Annual Report. The Managing Director and CFO have certified to the Board with regardto the financial statements and other matters as required under regulation 17(8) of theSEBI Listing Regulations 2015.

Code for Prevention of Insider Trading

Your Company has adopted a Code of Conduct to regulate monitor and report trading bydesignated persons and their immediate relatives as per the requirements under theSecurities and Exchange Board of India (Prohibition of Insider Trading) Regulations 2015.This Code of Conduct also includes code for practices and procedures for fair disclosureof unpublished price sensitive information which has been made available on the Company'swebsite at ‘https://www. gardenvareli.com/policies.aspx'.

Nomination and Remuneration Policy

As per the Policy the remuneration / compensation to the Wholetime Directors shall berecommended by the Nomination and Remuneration Committee to the Board for its approval.However the remuneration compensation to

Wholetime Directors shall be subject to the approval of the shareholders of the Companyand other necessary approvals wherever required. Further the Non-Executive Directorsshall be entitled to the fees for attending meetings of Board and Committees within thelimits prescribed in the Companies Act 2013.

The main objective of the said Policy is to ensure that the level and composition ofremuneration is reasonable and sufficient to attract retain and motivate the DirectorsKMPs and Senior Management employees.

Particulars of the Company's Remuneration Policy and information required under Rule5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rule 2014 asset out in ‘Annexure D' forms part of this

Report.

The said policy has been posted on the website of the Company at‘https://www.gardenvareli.com/policies.aspx'.

Disclosure Relating to Remuneration of Directors and Key Managerial Personnel

The remuneration paid to the Directors is in accordance with the Remuneration Policyformulated in accordance with Section 178 of the Companies Act 2013.

Disclosures of the ratio of the remuneration of each director to the median employee'sremuneration and other details as required pursuant to Section197(12) of the CompaniesAct 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 are provided as ‘Annexure H'.

The details of remuneration paid to the Directors including Executive Directors of theCompany are given in Form MGT-9 forming part of the Board's Report.

Attributes Qualifications & Independence of Directors and their

The Nomination

Remuneration of Directors which inter-alia requires that the Directors shall be ofhigh integrity with relevant expertise and experience to have a diverse Board. The Policyalso lays down the positive attributes criteria while recommending the candidature forthe appointment of a new Director.

Directors are appointed / re-appointed with the approval of the Members for a term inaccordance with the provisions of the law and the Articles of Association. The initialappointment a period of 3-5 years. All Directors other than Independent Directors areliable to retire by rotation unless otherwise specific provided under the Articles ofAssociation or under any statute. One-third of the Directors who are liable to retire byrotation retire at every Annual General Meeting and are eligible for re-appointment.

The NRC has formulated the criteria for determining qualifications positive attributesand independence of Directors in terms of provisions of Section 178 (3) of the Act and theListing . Regulations

Committees of Board

Pursuant to requirement under Companies Act 2013 and SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 the Board of Directors has constituted variousCommittees of Board such as Audit Committee Nomination & Remuneration CommitteeStakeholders Relationship Committee and Corporate Social Responsibility Committee. Thedetails of composition and terms of reference of these Committees are mentioned in theCorporate Governance Report.

Internal audits and controls

The Company has a strong in-house Internal Audit (IA) department which functionallyreports to the Chairman of the Audit Committee thereby maintaining its objectivity andindependence. The scope and authority of the Internal Audit function is defined in theInternal Audit Charter. Over a period of time the IA department has acquired in-depthknowledge about the Company its businesses its systems and procedures.

The IA department carries out risk-focused audits across all locations enablingidentificationof areas where risk management processes may need to be strengthened.Significant audit observations and corrective action plans are presented to the AuditCommittee.

Internal Financial Control System and their Adequacy

Your Company's Financial Statements are prepared on the basis of the SignificantAccounting Policies that are carefully selected by Management and approved by the AuditCommittee and the Board. These Accounting policies are reviewed and updated from time totime.

The Company uses Oracle e business suite ERP systems as a business enabler and tomaintain its Books of Account. The transactional controls built into the Oracle ERPsystems ensure appropriate segregation of approval mechanisms and maintenance ofsupporting records.

Your Company has in placed adequate Internal Financial Controls with reference to theFinancial Statements commensurate with the size scale and complexity of its operations.

The findings of the Internal Audit Report are reviewed by the Audit Committee of theBoard and proper follow-up actions are ensured wherever required. The Statutory Auditorshave evaluated the internal financial controls framework of the Company and have reportedthat the same are adequate and commensurate with the size of the Company and nature of itsbusiness.

Adequate internal control systems safeguard the assets of the Company with timelyidentification and intervention to assuage risks. The internal audit report is discussedwith the Management and members of the Audit Committee to keep a check on the existingsystems and take corrective action to further enhance the control measures.

Directors' Responsibility Statement

Pursuant to the requirements of Section 134(1)(c) read with Section 134(5) of theCompanies Act 2013 and on the basis of explanation and compliance certificate given bythe executives of Annual Accounts and also on the basis of discussions with the StatutoryAuditors of the Company from time to time we state as under:

(a) that in the preparation of the annual accounts for the year ended 31st March 2020the applicable accounting standards read with requirements set out under Schedule III tothe Act have been followed along with proper explanation relating to material departures;

(b) policies thatthedirectorshave selectedsuchaccounting and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the Company as at 31st March 2020 and of the profitof the Company for the year

(c) that the directors have taken proper and sufficient careforthemaintenanceofadequateaccountingrecords in accordance with the provisions of theCompanies Act 2013 for safeguarding the assets of the Company and for preventing anddetecting fraud and other irregularities;

(d) that the directors have prepared the annual accounts on a going concern basis;

(e) that the Board has laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and are operatingeffectively; and

(f) that the directors have devised proper systems to ensure compliance with theprovisions of all applicable laws and that such systems are adequate and operatingeffectively.

Meeting of the Board of Directors

During the year 2019-20 your Company had convened and held 6 (six) Board Meetings.Meeting with regard to their dates and attendance of each of the Directors thereat havebeen provided in the Corporate Governance Report. The intervening gap between the meetingswas within the period prescribed under the Companies Act 2013 and SEBI ListingRegulations.

Performance evaluation of Board

Pursuant to the provisions of the Companies Act 2013 and Regulation 17(10) the Boardhas devised a policy on evaluation of performance of Board of Directors Committees andIndividual directors. The policy is also in compliance to Regulation 19 read with ScheduleII Part D of the SEBI (Listing Obligations and Disclosure Requirements) Regulations2015. The Nomination and Remuneration Committee has defined the evaluation criteria forthe Performance Evaluation of the Board its Committees and individual Directors.

The performance of the Board and individual Directors was evaluated by the Board afterseeking inputs from all the Directors. The criteria for performance evaluation of theBoard was based on the Guidance Note issued by SEBI on Board Evaluation which includedaspects such as Board composition and structure effectiveness of Board processescontribution in the long term strategic planning etc. The result of the evaluation issatisfactory and adequate and meets the requirements of the Company.

The independent directors were highly satisfied with the overall functioning of theBoard its the performance of Executive Directors. They also appreciated the leadershiprole of the Board Chairman in upholding and following the standards of corporategovernance.

Particulars of Employees and Related Disclosures

The details of remuneration of directors KMPs and employees as required 2013 read withRule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules2014 forms part of this Report as ‘Annexure C'. However as per the provisions ofSection 136(1) of the Companies Act 2013 the Annual Report is being sent to the Membersand others entitled thereto excluding the information on employees remunerationparticulars as required under Rule 5(2) and (3) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 which is available for inspection bythe Members at the Registered Company during business hours on working days of the Companyup to the date of the ensuing Annual General Meeting.

If any Member is interested in obtaining a copy thereof such Members may write to theCompany in this regard.

Statutory Auditors

M/s Sharp and Tannan Associates Chartered Accountants (ICAI Firm Registration No.109983W) were appointed as the Statutory Auditors of the Company for a period of 5 yearscommencing from the conclusion of the 38th Annual General Meeting until the conclusion of43rd Annual General Meeting by the shareholders on such remuneration as may be determinedby the Board of Directors.

The Statutory Auditors have confirmed that they hold a valid certificate issued by thePeer Review Board of the Institute of Chartered Accountants of India (ICAI).

The Auditors have also furnished a declaration confirming their independence as well astheir arm's length relationship with the Company as well as declaring that they have nottaken up any prohibited non-audit assignments for the Company. The Audit Committee reviewsthe independence of the Auditors and the effectiveness of the Audit process. The Auditorsattend the Annual General Meeting of the Company. The Auditors report for the financialyear 2019-20 on the financial statements of the Company forms part of this Annual Report.

Explanations or comments by the Board on ‘emphasis of matters' made by thestatutory auditors in their report is dealt as under.

(i) It has been observed by the Statutory Auditors that they have not received directbalance confirmation for total bank balance of Rs.200.84 Crore. In response to the sameDirectors would like to submit that balance confirmation of Rs.200.84 Crore were obtainedby the Company and forwarded to the auditors. However since the banks did not directlyconfirm to the auditors and therefore the said qualification forms part of the AuditorsReport.

(ii) It has been observed by the Statutory Auditors that the total borrowings ofRs.1926.73 Crore which have been transferred from various banks and other lenders toAsset ReconstructionCompany viz. Invent Asset Securitisation and Reconstruction Pvt. Ltd.(‘Invent ARC') are subject to reconciliation. In response to the same Directorswould like to submit that pending availability of necessary information relating to loanrepayment schedule along with the interest rates from the lender they are unable toreconcile and identify the impact.

Further with regard to Auditors' observations in Annexure A para (i) (c) of theirreport the directors wish to state that for part of the land at village Jolwa included ingross block procedure for NA is under process/pending. Hence in case of some land blocksformal transfer of titles is also pending and can be effected subsequently but agreementsto sale have been entered into with the Company. All the land blocks referred to above arein possession of the Company.

Cost Auditors

The Board had appointed Messrs M/s Smit Desai & Associates Cost Accountants (FirmRegistration Number 001876) as Cost Auditor for conductingthe audit of cost records of theCompany for the Financial Year 2019-20 on a remuneration of Rs.2.00 Lakhs plus out ofpocket expenses and applicable taxes. Pursuant to Companies (Cost Records and Audits)

Rules 2014 the Cost Audit Report for the financialyear 2019 was filed with theMinistry of Corporate Affairs on 13th September 2019 vide SRN H89272173.

The ResolutionProfessional Directors and Key Managerial Personnel of the Company attheir meeting held on 31st July 2020 on the recommendation of the Audit Committeeappointed M/s Smit Desai & Associates Cost Accountants (Firm Registration Number001876) as the Cost Auditors of the Company for the Financial Year 2020-21 under Section148 of the Companies Act 2013 and has recommended their remuneration to the Shareholdersfor their ratification at the ensuing Annual General Meeting.

M/s Smit Desai & Associates have confirmed that their appointment is within thelimits of Section141(3)(g) of the Companies Act 2013 and have also certified that theyare free from any disqualifications specified under Section141(3) and proviso toSection148(3) read with Section141(4) of the Companies Act 2013. The Audit Committee hasalso received a Certificate from the Cost Auditors certifying their independence and arm'slength relationship with the

Company.

As per the provisions of the Companies Act 2013 the remuneration payable to the CostAuditor is required to be placed before the Members in a General Meeting for theirratification. Accordingly a Resolutionseeking Members' ratification for the remunerationpayable to M/s Smit Desai & Associates Cost Auditors is included in the Noticeconvening Annual General Meeting.

Cost Records

As per Section 148 of the Companies Act 2013 read with the Companies (Cost Recordsand Audit) Rules

Company is required to maintain cost records and accordingly such accounts and recordsare maintained.

Internal Auditor

Pursuant to the provisions of Section138 of the Companies Act 2013 and Rules madethereunder at the meeting of the Resolution Professional Directors and Key ManagerialPersonnel of the Company held on 31st July 2020 Mr. Piyush

Patel Chartered Accountants (ICAI Membership No.116769) was appointed as InternalAuditors of the Company for the financial year 2020-21.

The scope functioning periodicity and methodology for conducting internal audit wereapproved by the Board of Directors and reviewed by the Audit Committee from time to time.

Secretarial Auditor and Report

Pursuant to the provisions of Section 204 of the Companies Act 2013 and the Companies(Appointment and of Managerial Personnel) Rules 2014 the Board had appointed Mr. KunjalDalal Practicing Company Secretary (CP

No.3863) to carry out Secretarial Audit of the Company. The Report of the SecretarialAuditor in the prescribed form

MR-3 is attached as ‘Annexure E'.

Management Response to Secretarial Auditor's observations

Your Director wish to inform you that the observations made by the secretarial Auditorare self-explanatory need no further clarification except the following:

There was a non-compliance under Regulation 17 of SEBI (LODR) Regulations 2015 withrespect to compositionof Board of Directors consequent to resignation of a woman directoron the Board since March 2019. The Board of Directors wish to submit that delay inappointment was caused since the account of the Company was NPA and proceedings were goingon in NCLT under Section 7 of Insolvency and Bankruptcy Code (IBC). Therefore the Companywas unable to identify an appropriate candidate during the intervening period.

Annual Secretarial Compliance Report

The Company has undertaken an audit for the Financial Year 2019-20 for all applicablecompliances as per Securities and Exchange Board of India Regulations andCirculars/Guidelines issued thereunder. The Annual Secretarial Compliance Report dulysigned by Mr. Kunjal Dalal Practicing Company Secretary (ICSI Membership No.FCS 3530) hasbeen submitted to the Stock Exchanges and is annexed at Annexure IV to this Board'sReport.

Audit Committee

The Audit Committee comprises of 3 Independent Directors viz. Mr. Deepak N. ShahChairman and Mr. Sunil S. Sheth and Mr. Ketan A. Jariwala as Members. All the Members ofthe Committee possess strong accounting andfinancial management knowledge. The CompanySecretary of the Company is the SecretaryoftheCommittee.

All the recommendations made by the Audit Committee during the year were accepted bythe Board.

Vigil Mechanism

The Vigil Mechanism as envisaged in the Companies Act 2013 the Rules prescribedthereunder and the SEBI (Listing Obligations and Disclosure Requirements) Regulations2015 is implemented through the Company's Whistle Blower Policy to enable the Directorsemployees and all stakeholders of the Company to report genuine concerns to provide foradequate safeguards against victimization of persons who use such mechanism and makeprovision for direct access to the Chairman of the Audit Committee.

Whistle Blower Policy of your Company is available on the Company's website at‘https://www.gardenvareli.com/ policies.aspx'.

Contracts or Arrangements with Related Parties

All transactions entered into with Related Parties as defined under Section 2(76) ofthe Companies 23 of the Securities and Exchange Board of India (Listing Obligations AndDisclosure Requirements) Regulations 2015 ("The Listing Regulations") duringthe financial year were in the ordinary course of business and at an arm's length pricingbasis and do not attract the provisions of Section 188 of the Companies Act 2013.Suitable disclosure as required by the Indian Accounting Standards (Ind AS 24) has beenmade in the notes forming part of the Financial Statements.

The Company has formulated a policy on materiality of Related Party Transactions anddealing with Related Party Transactions which has been uploaded on the Company's websiteat ‘https://www.gardenvareli.com/policies.aspx'. Pursuant to Regulation 23(9) of theListing Regulations your company has filed half yearly report on Related PartyTransactions with the stock exchanges.

No material related party transactions (transactions crossing 10% of sales) wereentered into during the financial year by the Company. Accordingly the disclosure ofrelated party transactions as required under Section 134(3)(h) of the Act in Form AOC-2 isnot applicable to the Company for FY 2019-20.

All transactions with related parties were reviewed and approved by the AuditCommittee.

The Company has formulated a Policy on Related Party Transactions and manner of dealingwith related party transactions which is available on the Company's website at‘https://www.gardenvareli.com/policies.aspx'.

Reporting of Frauds

During the year under review neither the statutory auditors nor the secretarialauditors has reported to the Audit Committee under Section 143(12) of the Companies Act2013 any instances of fraud committed against the Company by its officers or employeesthe details of which needs to be mentioned in this Report.

Energy technology and foreign exchange

Informationon theconservationof energy technology absorption foreign exchangeearnings and outgo as required to be given pursuant to the provisions of Section 134 ofthe Act read with the Companies (Accounts) Rules 2014 which is marked as ‘AnnexureA' and forms part of this report.

Prevention of Sexual Harassment (‘POSH')

ed an Internal Complaints Committee under section 4 of the Sexual Harassment of womenconstitut TheCompanyhas at workplace (Prevention prohibition and Redressal) Act 2013.During the year no complaint was filed before the said Committee.

The Company has a Policy on "Prevention of Sexual Harassment of Women atWorkplace" and matters connected therewith or incidental thereto covering all theaspects as contain under "The Sexual Harassment of Women at Workplace (PreventionProhibition and Redressal) Act 2013". of Sexual Harassment of Women atWorkplace" of the Company is available on the website ThePolicyofthe"Preventionof the Company at ‘https://www.gardenvareli.com/policies.aspx'.

During the year under review there were no cases filed pursuant to the SexualHarassment of Women at Workplace (Prevention Prohibition and Redressal) Act 2013.

Corporate Social Responsibility (CSR)

The Company has constituted a Corporate Social Responsibility (CSR) Committee inaccordance with Section 135 of the Companies Act 2013. The CSR Committee comprises of Mr.Sunil S. Sheth as the Chairman Mr. Ketan Jariwala and Mr.

Suhail P. Shah as Members.

The CSR Committee of the Company has laid down the policy to meet the Corporate SocialResponsibility. The CSR Policy includes any activity that may be prescribed as CSRactivity as per the Rules of the Companies Act 2013. The CSR Committee met on 23rd March2020 to review the Corporate Social Responsibility Policy. For the financial year 2019-20as the average profits for the last three years is negative the requirements for spendingbased on average profits is not applicable. However the Company has voluntarily spent anamount of Rs.0.83 Lakhs towards various education promotion and social welfare relatedprograms during the year.

Towards the end of the financial year the Company took various initiatives towardsfinancial medical and community support in the fight against Covid-19 pandemic. Thisincluded financial support towards the relief funds of local authorities.

Corporate Social Responsibility Report pursuant to clause (o) of sub section (3) ofSection 134 of the Act and Rule 9 of the Companies (Corporate Social Responsibility)Rules 2014 including salient features mentioned under outline of

Company's CSR policy forms part of this Report as ‘Annexure B'.

The CSR Policy of the Company is available on the website of the Company at‘https://www.gardenvareli.com/policies. aspx'.

CEO and CFO certification.

Pursuant to the Listing Regulations Managing Director and CFO Certification isattached with Annual Report. Managing Director and CFO also provide quarterlycertification on financial results while placing the financial results before the Boardin terms of the Listing Regulations.

Nodal Officer

During the year under review Mr. Kamlesh B. Vyas Company Secretary has been appointedas Nodal Officer of the Company under the provisions of IEPF and details of Nodal Officerare available on the website of the Company at‘https://www.gardenvareli.com/policies.aspx'.

Health safety and environment

Your Company believe that organisations'sustainability is directly proportionalmanagement. We endeavour to demonstrate environmental and social responsibility at everystep.

We are devoted to benefit communities workforce public and environment. Our safetyhealth and environment objectives include complying with all applicable laws relevant tothe responsibility throughout the hierarchy in conforming to the existing laws.

The Company obtained necessary approvals from concerned Government Department /Pollution Control Board and all required environment clearances / safety clearances /stipulations are complied with at Plant facilities of the Company. The Company continuesto focus on maintenance and performance improvement of related pollution control facilityat its manufacturing locations.

Your Company has adopted several measures to maintain ecological balance in and aroundour production facilities particularly with regard to solid hazardous waste management.

Polymer waste is sold to authorised parties for reuse and we ensure that hazardouswastes reach the registered recyclers. We sustained our various efforts to protect theenvironment.

Industrial Relations / Human Resources

The industrial relations scenario continued to be largely positive across themanufacturing was also laid towards raising awareness on health and wellness of employeesthrough annual medical check-ups and health awareness activities.

In line with the ‘Go Green' philosophy your Company is continuouslyadopting newtechniques to eliminate and minimise the overall environmental impact. The Companycontinuously works to nurture this environment to keep its employees highly motivatedresult oriented and adaptable to changing business environment. Your Company's valueproposition is based on providing value to our customer through innovation andefficiencyat all levels. byconsistentlyimproving Your Directors wish to place on recordtheir appreciation for the dedicated and commendable services rendered by the employees ofthe Company. The strength of permanent employees as on 31st March 2020 was 4351 Nos.

Certifications/Recerti fications

All Plants of your Company have obtained certification under standard ISO 45001: 2018and recertification of ISO 14001: 2015. Further all plants are in the process ofimplementing Integrated Management System (IMS) along with adopting the updated standardISO 45001:2018.

The Company revises its targets under SOH&E year on year and the performancesagainst these targets are reviewed periodically by senior management. Focused initiativesinvolving all stakeholders coupled with management reviews have helped to improve theSOH&E performance of your Company in the period 2019-20.

Information Technology

To ensure smooth operations during the COVID-19 Pandemic extended the VPNfunctionality to key Users across all functional areas. This has led to a safer andefficient way of handling SUN servers which were hosting Oracle ERP had got absolute as itwere running for more than were replaced with more efficient IBM servers. Entire migrationof ERP from SUN servers to IBM servers was also done.

Information technology is a driving force of the business and the digitaltransformation journey is a continued process. As a part of its digital transformationprocess IT team along with functional users has developed and implemented barcode-baseddispatch system for POY and FDY products to enable faster and error free transactions.system is already implemented for CHIPS product.

Secretarial Standards

The Directors have devised proper systems and processes for complying with therequirements of applicable Secretarial Standards issued by the Institute of CompanySecretaries of India and that such systems were adequate and operating effectively.

Significant / Material Orders passed by the Regulators

National Company Law Tribunal Ahmedabad Bench (‘NCLT') in the matter CP(IB) 453 of2018 has on 24th June 2020 pronounced the order for admission of reference filed byInvent Assets Securitisation & Reconstruction Pvt. Ltd. initia Insolvency ResolutionProcess (‘CIRP') against Garden Silk Mills (assignedfinancialcreditor)for Limited(Corporate Debtor) in terms of Section 7 of the Insolvency and Bankruptcy Code 2016 (IBC)read with the rules and regulations framed thereunder (‘Code').

Except the above no significant material orders have been passed during the year underreview by the regulators or courts or tribunals impacting the goingconcernstatusandCompany'soperationsinfuture.

Material Changes and commitments

The rampant spread of COVID-19 outbreak across borders and geographies has severelyimpacted almost the whole world and triggered significant downside risks to the overallglobal economic outlook. Due to the lockdown announced by the Government of India from25th March 2020 entire operations of the Company came to a halt. Although there areuncertainties due to the pandemic the Company is taking several measures to mitigate theadverse impact by optimising costs and continuously realigning the cost-structures to theactivity level.

ExcepttheimpactofCOVID-19asmentionedin this report no material changes and commitmentsaffecting the financial position of your Company have occurred between the end of thefinancial year of the Company to which the financial statements relate and on the date ofthis report.

Risk Management

Your Company periodically assesses the risks in the internal and external environmentalong with treating the risks and incorporates risk management plans in its strategybusiness and operational plans. Your Company recognizes that the risk is an integral partof business and is committed to managing the risks in proactive and efficient manner. Thebusiness plan for the future are devised and approved by the Board keeping in mind therisk factors which can significantly impact the performance of the particular by the Boardand investments are permitted only on being satisfied about its returns or utility to theCompany. There are no risks which in the opinion of the Board threaten the existence ofthe Company.

Insurance

The Company has taken all the necessary steps to insure its properties and insurableinterests as deemed appropriate and also as required under the various legislativeenactments.

Policies

The details of the Key Policies adopted by the Company are mentioned in the CorporateGovernance Report as Annexure to the Board's Report.

Deposits from Public

Your Company has not accepted any deposits within the meaning of Section 73 to 76 ofthe Companies Act 2013. Hence the disclosures required as per Rule 8 (5) (v) & (vi)of the Companies (Accounts) Rules 2014 are not applicable to your

Company.

Particulars of Loans/Advances/Investments

There were no transaction(s)with a company belonging to the promoter/promoter groupwhich hold(s) more than 10% shareholding in the Company as required pursuant to para A ofSchedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015is disclosed separately in the Financial Statements of the Company.

Extract of Annual Return

Pursuant to Section134(3)(s) of the Companies Act 2013 read with Rule 12(1) of theCompanies (Management and

Administration) Rules 2014 an extract of the Annual Return in Form MGT-9 referred toin Section attached as ‘Annexure F' to this Report.

The Annual Return will be hosted on website of the Company at‘https://www.gardenvareli.com/policies.aspx' after necessary certification and filingthe same with the authority.

Business Responsibility Report

The Business Responsibility Reporting as required by Regulation 34(2) of the SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 is not applicable toyour Companyforthefinancialyear ended 31st March 2020.

Statutory compliance

Mr. Kamlesh B. Vyas Company Secretary and Compliance Officer makes a declaration ateach the compliance with the provisions of various statutes after obtaining confirmationfrom all the He also ensures compliance accordance to SEBI regulations and Companies Act2013 and rules thereof and all other applicable statutes.

The Company has identified the following ratios as key financial ratios:

Sr. No. Particulars FY 2019-20 FY 2018-19
(times 1 DebtorsTurnoverRatio) 32.47 22.20
(times 2 InventoryTurnoverRatio) 8.05 7.79
(times ) 3 InterestCoverageRatio) 0.31 0.93
(times 4 CurrentRatio) 3.09 0.53
(times 5 DebtEquityRatio) -3.73 -2.28
6 Operating Profit Margin (%) -0.31% 2.82%
7 Net Profit Margin (%) -7.22% -2.57%
8 Return on Net Worth (%) -40.20% -29.63%

General

Your Directors state that no disclosure or reporting is made with respect to thefollowing items as there were no transactions duringthe

1. The issue of equity shares with differential rights as to dividend voting orotherwise.

2. The issue of Shares to employees of the Company under any Scheme [(Including SweatEquity Shares and Employees Stock Option Schemes(ESOS)] referred to in this Report.

3. Voting rights which are not directly exercised by the employees in respect of sharesfor the subscription/purchase of which loan was given by the Company (as there is noscheme pursuant to which such persons can beneficially hold shares as envisaged underSection 67(3) (c) of the Companies Act 2013).

4. There is no change in the share capital structure of the Company during the yearunder review.

5. There was no revision in the financial statements.

Caution Statement

Statements in the Board's Report and the Management Discussion and Analysis describingthe Company's objectives expectations or predictions may be forward looking within themeaning of applicable securities laws and regulations. Actual results may differmaterially from those expressed in the statements. Crucial factors that could influencethe Company's operations includes global and domestic demand and supply conditionsaffecting selling prices new capacity addition availability of critical materials andtheir cost changes in government policies and tax laws economic development of thecountries and other factors that are material to the business operations of the Company

Appreciation

Your Directors wish to acknowledge the co-operation and assistance extended to theCompany by the Company's Bankers and State & Central Government agencies.

Your Directors also acknowledge with gratitude the support of customers dealersagents and suppliers and all other stakeholders for their continued faith and supportwhich has helped the Company to sustain its growth even during these challengingtimes.

The Boards of Directors also wish to place on record its sincere appreciation for thecommitted services by the Company's executives staff and workers. Your Directors alsoappreciate and acknowledge the confidence reposed in them by shareholders and otherinvestors of the Company.

Alok P. Shah

Executive Director & CFO

DIN: 00218180

Surat 31st July 2020

Taken on record

Kuresh Khambati Resolution

Mumbai 31st July 2020

Annexure A

Conservation of Energy Technology

The information under Section134(3)(m) of the Companies Act 2013 read with Rule 8 (3)of the Companies (Accounts) Rules 2014 for the year ended 31st March 2020 is given belowand forms part of the Directors' Report.

A. CONSERVATION OF ENERGY

The Company makes an ongoing study to identify and implement energy saving system toreduce energy consumption and cost of production.

I. Energy Conservation measures taken and its impact

(a) Power saving:-

a) Quench coil of spinning F HVAC is replaced saving power due to reduced pressuredrop.

b) Replacement of MS piping with PPRC pipes in utility damage due to corrosion.

c) Replacement of LED lights in the factory premises continued during the year to saveenergy.

d) Use of water treatment plant reject water for use in non critical areas liketoilets floor washing and other plant areas resulted in fresh water savings.

.fittings

e) Installation ofLEDStreetLights placeofconventionalLight

(b) Others:-

a) Use of canal water directly for the process resulted in to power savings in RO plantoperation and bore well pump operation.

b) Auto cut off lighting in warehouses at night to save energy and as safe practice.

c) Energy conservation is an ongoing process in our organisation.Continuous developmentand modifications for energy conservation are done at the plants.

d) Replacement of inefficient motors with energy efficient

e) Energy Audit is also being carried out by external agencies.

f) Maintenance of the machines as per schedule.

(c) Impact of measures at (a) (b) & (c) for reduction of energy consumptioncost of production of goods.

- Improvement in specific energy consumption & cost

II. The steps taken by the company for utilising alternate sources of energy.

a) The Company during the year continuedexploring options available for energy in orderto reduce the electricity cost with consequent reduction in the cost of production.

b) The Company continuedefforts for improving energy efficiency through innovativemeasures to reduce wastage and optimize consumption.

III. The Capital investment on energy conservation equipment.

The Company has not incurredmajorcapitalinvestment conservationequipments butfocused on energy optimum utilisation of available resources.

B. TECHNOLOGY ABSORPTION

I. The efforts made by the Company towards technology absorption

The Company made required efforts for productivity enhancement and development of newproducts in polyester chips segment and polyester yarn segment.

II. The benefitsderived like product improvement cost reduction productdevelopment or import substitution.

The Company was able to reduce maintenance and operatingcost at manufacturing levelmore particularly conversion cost in chips segment. There was an improvement in qualitycustomer satisfaction and enlargement of market base.

III. In case of imported technology (imported during the last three years reckonedfrom the beginning of the financial year) NOT APPLICABLE.

IV. The expenditure incurred on Research and Development.

During the year under review there were no major expenses pertaining to Research andDevelopment incurred by the Company.

C. FOREIGN EXCHANGE EARNINGS AND OUTGO (Rs. In Crore)

(i) Total Foreign exchange used: 2019-20 2018-19
(a) Raw materials stores and spare parts Capital goods and other products on CIF basis. 311.37 547.57
(b) Expenditure in foreign currency 3.98 10.01
(ii) Total Foreign exchange earned:
(a) Sales Export of goods 420.15 1094.80
Initiatives taken to increase (iii) exports development of export market for product and services and export plans: New export markets are being developed and emphasis is being placed on export of value added products also

Annual Report on Corporate Social Responsibility activities

1 A brief outline of the Company's (a) Focus areas:
CSR policy including overview of projects or programs proposed to be undertaken and a reference to the web-link to the CSR policy and projects or programs. The Company supportsvariousbodiesincarryingoutactivities in the areas of rural development education health care etc.
(b) CSR Objectives:
es in a professional and integrated manner objectiv ToattainitsCSR the main objectives are:
(1) Topromotecarryoutsupportactivities relating to Education and Training Health care Employment enhancing Vocational skills Conversion of Natural Resources and Promotion & Development of Art etc.
(2) To promotecarryoutsupportanyactivitiescovered in Schedule VII to the Companies Act2013asamendedfromtimeto time.
In the financial year 2019-20theCompanyhasundertakenactivities relating to Promoting Education Social Welfare Health care and Sanitation etc.
(c) Web-Link to the CSR Policy: http://www.gardenvareli.com/policies.aspx
(d) Pursuant to the provisions of Section 135 of the Companies Act 2013 the Companies (Corporate Social Responsibility) Rules 2014 and the/ circulars issued by the Ministry of Corporate various notifications Affairs the Company has also adopted a CSR policy in compliance with the aforesaid provisions and the same is placed on the Company's website at www.gardenvareli.com
2 Composition of CSR Committee The CSR Committee comprises the following members:
a. Mr. Sunil S. Sheth Independent Director: Chairman
b. Mr. Suhail P. Shah Executive Director: Member
c. Mr. Ketan A. Jariwala Independent Director: Member
3 Average Net Profitof the Company for last three financial years (as per of the Companies Act Section 2013) The Company has incurred average net loss during the last three financial years. However the Company has voluntarily incurred an expenditure of Rs.83000/- towards education promotion and social welfare etc.
4 Prescribed CSR Expenditure (two per cent of the amount as in item 3 above) The Company is not required to spend any amount in view of average net loss during thelastthreefinancialyear.
5 Details of CSR spent during the financial year
(a) Total amount to be spent for the financial year. Rs.83000/-
(b) Amount unspent if any. Not applicable.
(c) Manner in which the amount The Company has voluntarily spent an aggregate amount of Rs.83000/- spent during the financial year. towards various education promotion and social welfare related programs during the year.
6 In case of company has failed to spend the two per cent of the average net profit of the last three financialyears or any part thereof the company shall provide the reasons for not spending the amount in its Board report Not applicable.

Responsibility statement:

The CSRCommitteeherebyconfirmsthat the implementation and monitoring of CSR policy hasbeen carried out with all reasonable care and diligence and the same is in compliance withthe CSR

For and on behalf of the CSR

Sunil S. Sheth

Chairman (DIN 00024033)

Surat 31st July 2020.

PARTICULARS OF EMPLOYEES PURSUANT TO SECTION 134(3)(q) OF THE COMPANIES ACT 2013 READWITH RULE 5(1) OF THE COMPANIES (APPOINTMENT AND REMUNERATION OF MANAGERIAL PERSONNEL)RULES 2014

Praful A. Shah

Chairman & Managing Director

DIN: 00218143

Surat 31st July 2020.

POLICY RELATING TO THE REMUNERATION FOR THE WHOLETIME DIRECTOR NON-EXECUTIVE/INDEPENDENT DIRECTOR KMP AND SENIOR MANAGEMENT PERSONNEL

General:

a. The remuneration / compensation / commission etc. to the Wholetime DirectorNon-Executive/Independent Director KMP and Senior Management Personnel will be determinedby the Committee and recommended to the Board for approval.

The remuneration / compensation / commission etc. shall be subject to the prior/postapproval of the shareholders of the Company and Central Government wherever required.

b. The remunerationand commission to be paid to the Wholetime Director shall be inaccordance with the percentage / slabs / conditions as per the provisions of the CompaniesAct 2013 and the Rules made thereunder.

c. Increments to the existing remuneration/ compensation structure linked toperformance should be clear and meet appropriate performance benchmarks and may berecommended by the Committee to the Board which should be within the slabs approved by theShareholders in the case of Wholetime Director. d.ee does not propose to fix the actualamounts of remuneration that may be payable to each individual Committ The key managerialpersonnel or senior management personnel. However the management whilstfixingtheremuneration of any such key personnel must consider the following:

1. The Industry practice for the same level of employment/office.

2. Past performance/seniority of the concerned appointee.

3. The nature of duties and responsibilitiescast upon such person by reason of hisholding that office.

4. The remunerationshould be such that it provides adequate incentive to the person togive his best to the Company and feel essence of high satisfaction with his employment.

5. The perquisites to be given to Wholetime Director/s KMP & Senior ManagementPersonnel will be as per industry practice and as may be recommended by the Committee tothe Board.

Senior Management Personnel: Remuneration

The Wholetime Director / KMP and Senior Management Personnel shall be eligible for amonthly remuneration as may be approved by the Board on the recommendation of theCommittee. The break-up of the pay scale and quantum of perquisites including employer'scontribution to P.F pension scheme medical expenses club fees etc. shall be decided andapproved by the Board on the recommendation of the Committee and approved by theshareholders and Central Government wherever required reflecting the short and long termperformance objectives appropriate to the working of the Company and its goals.

Remuneration to Non-

The Non-Executive / Independent Director may receive remuneration by way of fees forattending Committees thereof as may be recommended by the Committee and approved by theBoard provided that the amount of such fees shall not exceed amount prescribed in thisbehalf by the Central Governmentfromtimeto time.

The Company has no stock option plans and hencesuchinstrumentdoesnotformpartoftheremunerationpackage to any Executive Director and/orNon-Executive Director.

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