annual - bombay stock exchange...sharp & tannan associates, chartered accountants, will hold...

ANNUALREPORT

2016-2017

Garden Silk Mills Limited

1

Annual Report 2016-2017GARDEN SILK MILLS LIMITED

CORPORATE INFORMATIONBOARD OF DIRECTORSPraful A. Shah (DIN: 00218143)Chairman & Managing DirectorAlok P. Shah (DIN: 00218180)Executive Director, CFO & COOSanjay S. Shah (DIN: 00024004)Executive DirectorSuhail P. Shah (DIN: 00719002)Executive DirectorArunchandra N. Jariwala * (DIN: 00024008)Yatish Parekh (DIN: 00168488)Sunil S. Sheth (DIN: 00024033)H. C. Mishra (Nominee of LIC) (DIN: 03111520)Anita Mandrekar (DIN: 00623327)Deepak N. Shah (DIN: 07356807)* up to 21/01/2017

Kamlesh B. VyasCompany Secretary

REGISTERED OFFICE1st Floor, Tulsi Krupa Arcade, Near Aai Mata Chowk,Puna-Kumbharia Road, Dumbhal,Surat 395010.Tel: (0261) 2311197, 2311615.Fax: (0261) 2311029.e-mail : [email protected]: L17111GJ1979PLC003463http://www.gardenvareli.com

CORPORATE OFFICEManek Mahal, 90, Veer Nariman Road,Churchgate, Mumbai 400 020Tel: (022) 2287 3117-19Fax: (022) 2204 8112

STATUTORY AUDITORSNatvarlal Vepari & Co.Chartered Accountants, Surat

COST AUDITORSManubhai & AssociatesCost Accountants, Surat

38th Annual General Meeting on Wednesday, 20th September, 2017 at 11.00 a.m. at Tulsi Krupa Arcade, Puna-Kumbharia Road, Dumbhal, Surat 395010

PLANTS(i) Vareli Complex, Village Vareli Taluka Palsana, Dist. Surat 394 327 Tel: (02622) 271241-47

(ii) Village Jolwa, Taluka Palsana, Dist. Surat 394 305 Tel: (02622) 271287-89

BANKERSBank of BarodaAllahabad BankState Bank of IndiaBank of IndiaState Bank of PatialaCorporation BankUnion Bank of IndiaIDBI Bank LimitedIndian Overseas BankExport Import Bank of India Life Insurance Corporation of IndiaState Bank of TravancoreIndian BankICICI Bank Ltd.

REGISTRARS & SHARE TRANSFER AGENTSKarvy Computershare Private LimitedKarvy Selenium Tower B, Plot 31-32, Gachibowli, Financial District, Nanakramguda,Hyderabad 500032.State: Telengana, India.Phone No. 040 67162222,Fax No. 040 23001153e-mail: [email protected]

CONTENTS PAGE NO.Notice of Annual General Meeting .................................2Directors’ Report and MDA .........................................17Report on Corporate Governance ...............................49Independent Auditors’ Report (Standalone) ................65Balance Sheet (Standalone)..........................................72Statement of Profit and Loss (Standalone) ...................73Cash Flow Statement (Standalone) ..............................74Notes forming part of the Accounts (Standalone)........75Consolidated Financial Statements ..............................99


2

NOTICENotice is hereby given that the 38th Annual General Meeting of the members of GARDEN SILK MILLS LIMITED will be held on Wednesday, 20th September, 2017 at 11:00 a.m. at the registered office of the Company at Tulsi Krupa Arcade, Puna-Kumbharia Road, Dumbhal, Surat 395010, to transact the following businesses:

ORDINARY BUSINESS:

1. Adoption of Financial Statements

To receive, consider and adopt:

(a) the Audited Standalone Financial Statements of the Company for the financial year ended 31st March, 2017, together with the Reports of the Board of Directors and Auditors thereon; and

(b) The Audited Consolidated Financial Statements of the Company for the financial year ended 31st March, 2017, together with the Reports of the Auditors thereon.

2. Appointment of a Director

To appoint a Director in place of Shri Sanjay S. Shah (DIN 00024004), who retires by rotation and being eligible, offers himself for re-appointment.

3. Appointment of Statutory Auditors

To consider and if thought fit, to pass with or without modification(s), the following resolution as an Ordinary Resolution:

“RESOLVED THAT pursuant to the provisions of Section 139, 142 and other applicable provisions, if any, of the Companies Act, 2013, read with the Companies (Audit and Auditors) Rules, 2014, (including any statutory modification(s) or re-enactment(s) thereof, for the time being in force), and such other applicable provisions, if any, Sharp & Tannan Associates, Chartered Accountants, (Firm Registration No.109983W), be and are hereby appointed as the Statutory Auditors of the Company in place of retiring auditors M/s Natvarlal Vepari & Co., Chartered Accountants, (Firm Registration No.123626W) Surat, at such remuneration as may be mutually agreed between the Board of Directors of the Company and the Statutory Auditors based on the recommendation of the Audit Committee.

RESOLVED FURTHER THAT Sharp & Tannan Associates, Chartered Accountants, will hold office as the Statutory Auditors of the Company, for a period of 5 years that will begin from the conclusion of the 38th Annual General Meeting until the conclusion of the 43rd Annual General Meeting to be held in the year 2022, subject to the condition that their appointment as the Statutory Auditors shall be placed for ratification at every Annual General Meeting, if required under the Companies Act, 2013, as amended from time to time.

RESOLVED FURTHER THAT the Board of Directors of the Company and/or Company Secretary be and are hereby severally authorized to do all such acts, deeds, matters and things as may be considered necessary, desirable or expedient to give effect to this resolution.”

SPECIAL BUSINESS:

4. Re-appointment of Shri Sanjay S. Shah as Wholetime Director of the Company

To consider and if thought fit, to pass with or without modification(s), the following resolution as a Special Resolution:

“RESOLVED THAT in accordance with the provisions of Sections 196, 197 and 203 read with Schedule V and any other applicable provisions of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 (including any statutory modification(s) or re-enactment(s) thereof, for the time being in force) (“the Act”), and subject to the requisite approval of the Central Government and such other authorities as may be necessary, consent of the members of the Company be and is hereby accorded to re-appointment and payment of remuneration of Shri Sanjay S. Shah (DIN: 00024004) as a Wholetime Director designated as Executive Director of the Company, for a period of 3 (three) years with effect from 1st July, 2017, upon the terms and conditions as set out in the Explanatory Statement to this resolution annexed to the Notice convening this Meeting and also contained in the draft agreement to be executed between the Company and Shri Sanjay S. Shah, submitted to this Meeting be and is

3


hereby specifically approved and sanctioned including the remuneration to be paid in the event of loss or inadequacy of profits in any financial year, with liberty to the Board of Directors (hereinafter referred to as ‘the Board’ which term shall be deemed to include Nomination and Remuneration Committee constituted by the Board) to review, alter and vary the terms and conditions of the said appointment and/or remuneration as per the provisions of Companies Act, 2013 in such form and manner as the Board may deem fit and agreed to by Shri Sanjay S. Shah.

RESOLVED FURTHER THAT in the event of any statutory amendment(s) or modification(s) or relaxation by the Central Government to Schedule V to the Companies Act, 2013, the Board be and is hereby authorized to vary or increase the remuneration, including the salary, commission, perquisites and other allowances, within such prescribed limit or ceiling without any further reference or approval of the members of the Company in general Meeting.

RESOLVED FURTHER THAT where in any financial year during the term of office of Shri Sanjay S. Shah, the Company has no profits or its profits are inadequate, Shri Sanjay S. Shah shall continue to get the same remuneration as aforesaid as minimum remuneration subject to the provisions of Schedule V of the Companies Act, 2013 and subject to the approval of the Central Government, wherever required.

RESOLVED FURTHER THAT the Board of Directors of the Company (which term shall be deemed to include any Committee of the Board constituted to exercise its powers, including the powers conferred by this Resolution), be and is hereby authorised to do all such acts, deeds and things and execute all such documents, instruments and writings as may be required, with power to settle all questions, difficulties or doubts that may arise in regard to the said appointment as it may in its sole and absolute discretion deem fit and to delegate all or any of its power herein conferred to any director(s) and/or officer(s) of the Company, to give effect to this resolutions.”

5. Ratification of Cost Auditor’s Remuneration

To consider and if thought fit, to pass with or without modification(s), the following resolution as an Ordinary Resolution:

“RESOLVED THAT pursuant to the provisions of Section 148 and all other applicable provisions of the Companies Act, 2013 and the Companies (Audit and Auditors) Rules, 2014 (including any statutory modification(s) or re-enactment(s) thereof, for the time being in force), the Cost Auditor, M/s Manubhai & Associates, Cost Accountants, (Firm Registration No.100756) appointed by the Board of Directors of the Company for conducting the audit of the Company’s cost accounting records for the Financial Year 2017-18 be paid a remuneration as set out in the explanatory statement annexed to the notice convening this Meeting and the same is hereby ratified and approved.

RESOLVED FURTHER THAT the Board of Directors of the Company and/or Company Secretary be and are hereby severally authorized to do all such acts, deeds, matters and things as may be considered necessary, desirable or expedient to give effect to this resolution.”

6. Appointment of Shri Ketan A. Jariwala as an Independent Director

To consider and, if thought fit, to pass with or without modification(s), the following resolution as an Ordinary Resolution:

“RESOLVED THAT pursuant to the provisions of Sections 149, 152 and any other applicable provisions, if any, of the Companies Act, 2013 (“the Act”) and the rules made thereunder (including any statutory modification(s) or re-enactment(s) thereof for the time being in force) read with Schedule IV to the Act, Shri Ketan A. Jariwala (DIN 02095540), who was appointed by the Board of Directors to fill up the casual vacancy caused due to Shri Arunchandra N. Jariwala vacating his office as a Director of the Company before the expiry of his term of office in terms of Section 161(4) of the Act and who is eligible for appointment and has consented to act as a Director of the Company and in respect of whom the Company has received a notice in writing from a Member under Section 160 of the Act proposing his candidature for the office of Director of the Company, be and is hereby appointed an Independent Director of the Company for a term commencing with effect from 30th May, 2017 to 29th May, 2022, not liable to retire by rotation.”

By Order of the Board of DirectorsFor Garden Silk Mills Limited

Kamlesh B. VyasSurat, 30th May, 2017 Company Secretary


4

NOTES:

1. A member entitled to attend and vote at the Annual General Meeting (the “Meeting”) is entitled to appoint a proxy to attend and vote instead of himself and the proxy need not be a member of the Company. Proxy cannot vote on e-voting.

The instrument appointing a proxy, in order to be effective, should however be deposited at the Registered Office of the Company not less than forty-eight hours before the commencement of the Meeting. A proxy form is annexed to this Notice.

A person can act as proxy on behalf of members not exceeding fifty and holding in the aggregate not more than ten percent of the total share capital of the Company. A member holding more than ten percent of the total share capital of the Company carrying voting rights may appoint a single person as proxy and such person shall not act as a proxy for any other person or shareholder. The holder of proxy shall prove his identity at the time of attending the Meeting.

2. The Statement pursuant to Section 102(1) of the Companies Act, 2013 (‘the Act’), relating to the Special Business to be transacted at the Meeting is annexed hereto.

3. The Register of Members and Share Transfer Register Books of the Company will remain closed from Friday, 15th September, 2017 to Wednesday, 20th September, 2017 (both days inclusive).

4. The Register of Directors’ and Key Managerial Personnel and their shareholding, maintained under Section 170 of the Companies Act, 2013 and the Register of contracts or arrangements in which the Directors are interested, maintained under Section 189 of the Companies Act, 2013 will be available for inspection by the members at the Annual General Meeting of the Company.

5. In terms of Section 152 of the Companies Act, 2013 and the Articles of Association of the Company, Shri Sanjay S. Shah (DIN: 00024004), Director retires by rotation and being eligible, offers himself for re-appointment. The Board of Directors commends the aforesaid re-appointment. As per explanation to Section 152(6)(e) of the Companies Act, 2013, total number of Directors for the purpose of determining Directors liable to retire by rotation shall not include Independent Directors, whether appointed under the Act or any other law for the time being in force.

6. Corporate members intending to send their authorised representatives to attend the Meeting pursuant to Section 113 of the Companies Act, 2013 are requested to send a duly certified copy of the relevant Board Resolution together with the respective specimen signature(s) of the representative(s) authorised under the said Board Resolution to attend and vote on their behalf at the Meeting.

7. In case of joint holders attending the Meeting, only such joint holder who is higher in order of names will be entitled to vote.

8. Details in respect of the Directors retiring by rotation / seeking appointment / re-appointment at the Meeting, are provided in the ‘Annexure’ to the Notice pursuant to the provisions of (1) Regulation 36(3) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and (2) Secretarial Standards on General Meeting (‘SS-2’), issued by the Institute of Company Secretaries of India. The Directors have furnished the requisite declarations for their appointment or re-appointment.

9. Members are requested to furnish their Bank Account details, change of address and all other required details to the Registrar & Share Transfer Agent, M/s. Karvy Computershare Private Limited in respect of shares if held in physical form. In case of shares held in electronic form, these details should be furnished to the respective Depository Participants (DPs).

10. The Securities and Exchange Board of India (“SEBI”) has mandated the submission of Permanent Account Number (“PAN”) by every participant in the securities market. Members holding shares in electronic form are therefore, requested to submit their copies of PAN card to their Depository Participants with whom they are maintaining their demat accounts. Members holding shares in physical form can submit their PAN details to the Company/Registrar & Share Transfer Agent.

5


11. For convenience of the Members and for proper conduct of the Meeting, entry to the place of the Meeting will be regulated by way of attendance slip. Members are requested to bring their Attendance Slip, fill up and sign the same at the place provided and hand it over at the entrance of the venue.

12. Members are requested to send all communications relating to shares to the Registrar & Share Transfer Agent of the Company at the following address:

By Post / Courier / Hand Delivery Karvy Computershare Private Limited Karvy Selenium, Tower – B, Plot 31-32, Gachibowli Financial District, Nanakramguda, Hyderabad 500032 Toll Free No. (India) : 1800 345 4001 Phone No. 040 67162222 Fax No. 040 - 23420814 Email: [email protected]

If the shares are held in electronic form, then change of address and change in the Bank Accounts, etc. should be furnished to the respective Depository Participants (DPs).

13. In terms of Section 101 and 136 of the Companies Act, 2013 read together with the Rules made thereunder, the copy of the Annual Report for 2016-17 including Financial Statements, Board’s Report etc. and this Notice of the 38th Annual General Meeting of the Company inter alia indicating the process and manner of e-voting with Attendance Slip and Proxy Form is being sent by electronic mode to all those Members whose email addresses are registered with the Company/Depository Participants for communication purposes unless any Member has requested for a physical copy of the same. For Members, who have not registered their e-mail addresses, physical copies of the Notice convening the 38th AGM of the Company inter alia indicating the process and manner of e-voting along with Attendance Slip and Proxy Form are being sent by the modes permitted under the Companies Act, 2013.

14. Members may also note that the Notice of the 38th Annual General Meeting and the Annual Report for 2016-17 will also be available on the Company’s website www.gardenvareli.com for their download.

15. To support the “Green Initiative”, the Members who have not registered their e-mail addresses are requested to register the same with Registrars and Share Transfer Agent/Depositories.

16. Pursuant to the provisions of Section 124 and 125 of the Companies Act, 2013 (corresponding to Sections 205A to 205C of the Companies Act, 1956), all unclaimed/unpaid monies by way of dividend transferred to the “Unpaid Dividend Account” of the Company that remains unclaimed/ un-encashed for a period of 7 (seven) years from the respective date of such transfer, has to be transferred by the Company to “The Investor Education and Protection Fund” (“IEPF”).

17. The details of Dividends’ ‘paid by the Company and the corresponding due dates for transfer of such unclaimed/unencashed dividend to the aforementioned Fund constituted by the Central Government are furnished hereunder:

Dividend for the year Date of Declaration of Dividend Last Date for Claiming Unpaid Dividend2009-10 31.08.2010 30.08.20172010-11 20.09.2011 19.09.2018

Members who have not encashed/claimed the dividend warrant(s) so far in respect of the above financial years, are therefore, requested to make their claims to Karvy Computershare Private Limited well in advance of the above due dates. It may be noted that once the amounts in the unpaid dividend accounts are transferred to the IEPF, no claim shall lie against the IEPF or the Company in respect thereof and the Members would lose their right to claim such dividend.

18. Voting through electronic means

I. In compliance with the provisions of Section 108 and other applicable provisions, if any, of the Companies Act, 2013 read with Rule 20 of the Companies (Management and Administration) Rules, 2014 and Regulation 44


6

of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company is pleased to provide to its members the ‘remote e-voting’ facility to exercise their rights to vote on resolutions proposed to be considered at the Annual General Meeting (AGM) by electronic means and the business may be transacted through remote e-voting services.

II. The facility for voting through ballot paper shall also be made available at the AGM and the members attending the Meeting shall be able to exercise their rights to vote at the Meeting through ballot paper in case they have not cast their vote by remote e-voting.

III. The Members who have cast their vote by remote e-voting prior to the AGM may also attend the AGM but shall not be entitled to cast their vote again at the AGM.

IV. In terms of requirements of the Companies Act, 2013 and the relevant Rules, voting rights shall be reckoned on the paid-up value of shares registered in the name of the member/beneficial owner (in case of electronic shareholding) as on the cut-off date i.e. Thursday, 14th September, 2017.

V. A person, whose name is recorded in the register of members or in the register of beneficial owners maintained by the depositories as on the cut-off date, i.e. Thursday, 14th September, 2017 only shall be entitled to avail the facility of remote e-voting as well as vote in the 38th Annual General Meeting.

VI. Any person who acquires shares of the Company and become a member of the Company after dispatch of the Notice of the 38th Annual General Meeting and holding shares as on the cut-off date i.e. Thursday, 14th September, 2017, may obtain the User ID and password by writing to the Karvy on the email Id - [email protected] or to Smt. Shobha Anand, Contact No. 040-67162222, at [Unit: Garden Silk Mills Limited] Karvy Computershare Private Limited, Karvy Selenium, Tower-B, Plot 31-32, Gachibowli, Hyderabad 500032. After receipt of the above credentials, please follow all the steps from Sr. No. (i) to (xii) as mentioned in A below to cast the vote.

VII. The remote e-voting period commences on Saturday, 16th September, 2017 (10.00 a.m.) and ends on Tuesday, 19th September, 2017 (5.00 p.m.) during this period, the members of the Company, holding shares either in physical form or dematerialised form, as on the cut-off date of Thursday, 14th September, 2017, may cast their vote by remote e-voting. The remote e-voting module shall be disabled by KARVY upon expiry of the aforementioned period.

VIII. Once the vote on a resolution is cast by the member, such member shall not be allowed to change it subsequently.

IX. A person who is not a member as on cut-off date should treat this Notice for information purpose only.

X. The process and manner for remote e-voting are as under:

A. For Members whose e-mail addresses are registered with the Company / Depositories: Those members whose valid e-mail IDs are registered with the Company / Depository Participant(s) will receive an e-mail from Karvy.

(i) Launch internet browser by typing the URL: https://evoting.karvy.com.

(ii) Enter the login credentials (i.e. User ID and Password mentioned above). Your Folio No./ DP ID-Client ID will be your User ID. However, if you are already registered with Karvy for e-voting, you can use your existing User ID and password for casting your vote. If required, please visit https://evoting.karvy.com or contact toll free number 1-800-3454-001 for your existing password.

(iii) After entering these details appropriately, click on “LOGIN”.

(iv) You will now reach password change Menu wherein you are required to mandatorily change your password. The new password shall comprise of minimum 8 characters with at least one upper case (A-Z), one lower case (a-z), one numeric value (0-9) and a special character (@,#,$, etc.). The system will prompt you to change your password and update your contact details like mobile number, email ID, etc. on first login. You may also enter a secret question and answer of your choice to retrieve your

7


password in case you forget it. It is strongly recommended that you do not share your password with any other person and that you take utmost care to keep your password confidential.

(v) You need to login again with the new credentials.

(vi) On successful login, the system will prompt you to select the E-Voting Event Number for Garden Silk Mills Limited.

(vii) On the voting page, enter the number of shares (which represents the number of votes) as on the cut-off date under “FOR/AGAINST” or alternatively, you may partially enter any number in “FOR” and partially in “AGAINST” but the total number in “FOR/AGAINST” taken together should not exceed your total shareholding as mentioned hereinabove. You may also choose the option ABSTAIN. If the shareholder does not indicate either “FOR” or “AGAINST” it will be treated as “ABSTAIN” and the shares held will not be counted under either head.

(viii) Members holding multiple folios/demat accounts shall choose the voting process separately for each folios/demat accounts.

(ix) Voting has to be done for each item of the Notice separately. In case you do not desire to cast your vote on any specific item it will be treated as abstained.

(x) You may then cast your vote by selecting an appropriate option and click on “Submit”.

(xi) A confirmation box will be displayed. Click “OK” to confirm else “CANCEL” to modify. Once you confirm, you will not be allowed to modify your vote. During the voting period, members can login any number of times till they have voted on the Resolution(s).

(xii) Corporate/Institutional members (i.e. other than Individuals, HUF, NRI, etc.) are also required to send scanned certified true copy (PDF Format) of the Board Resolution/Authority Letter, etc. together with attested specimen signature(s) of the duly authorized representative(s), to the Scrutinizer at e-mail ID: [email protected] with a copy marked to [email protected]. The scanned image of the above mentioned documents should be in the naming format “Corporate Name_ EVENT NO.”

B. For Members whose e-mail addresses are not registered with the Company / Depositories: receive the physical copy of the Notice of Annual General Meeting:

i. Such members (including those Members who have requested for a physical copy) will receive a physical copy of the Notice of AGM. Initial password is provided as below / at the bottom of the Attendance Slip for the AGM:

ii.

E-Voting Even Number USER ID PASSWORD

iii. Please follow all steps from SI. No. (i) to (xii) under heading A above to cast vote through e-voting platform.

XI. In case of any query pertaining to e-voting, please visit Help & FAQ section available at Karvy’s website https://evoting.karvy.com.

XII. The Board of Directors have appointed Shri Kunjal Dalal, Proprietor of K. Dalal & Co., Practicing Company Secretary, as the Scrutinizer for conducting the remote e-voting and the voting process at the 38th Annual General Meeting in a fair and transparent manner and he has communicated his willingness to be appointed and will be available for the same purpose.

XIII. The Scrutinizer, after scrutinizing the votes cast at the 38th Annual General Meeting and through remote e-voting will, not later than three days of conclusion of the 38th Annual General Meeting, make a consolidated scrutinizer’s report and submit the same to the Chairman / Managing Director.


8

XIV. The results declared along with the consolidated scrutinizer’s report shall be placed on the website of the Company www.gardenvareli.com and on the website of Karvy https://evoting.karvy.com. The results shall simultaneously be communicated to the Stock Exchanges.

XV. Subject to receipt of requisite number of votes, the Resolutions proposed in the Notice shall be deemed to be passed on the date of the Meeting that is Wednesday, 20th September, 2017.



9


STATEMENT PURSUANT TO SECTION 102(1) OF THE COMPANIES ACT, 2013 (“THE ACT”)

The following Statement sets out all material facts relating to the Special Business mentioned in the Notice:

Item No. 3:

Pursuant to Section 139 of the Companies Act, 2013 Natvarlal Vepari & Co., (Firm Registration No.123626W), Chartered Accountants, Surat were appointed as Statutory Auditors of the Company at the 35th Annual General Meeting of the Company held on 30th July, 2014, to hold office from the conclusion of the 35th Annual General Meeting until the conclusion of the 38th Annual General Meeting of the Company to be held in the year 2017, subject to ratification of their appointment by the Members at every Annual General Meeting.

The term of appointment of Natvarlal Vepari & Co., as Statutory Auditors, ends at the conclusion of the 38th Annual General Meeting.

Based on the recommendation of the Audit Committee, the Board of Directors of the Company hereby propose to appoint Sharp & Tannan Associates, Chartered Accountants, (Firm Registration No.109983W), as the Statutory Auditors of the Company in place of retiring auditors M/s Natvarlal Vepari & Co. Chartered Accountants, (Firm Registration No.123626W), Surat to hold office from the conclusion of the 38th Annual General Meeting until the conclusion of 43rd Annual General Meeting of the Company to be held in the year 2022, subject to the condition that their appointment as the Statutory Auditors shall be placed for ratification at every Annual General Meeting, if required under the Companies Act, 2013, at such remuneration as may be mutually agreed between the Board of Directors of the Company and the Auditors based on the recommendation of the Audit Committee.

Sharp & Tannan Associates, Chartered Accountants, has furnished a certificate giving their consent to be appointed as the Statutory Auditors, and stating that their appointment if made, at the forthcoming Annual General Meeting, would be in accordance with the conditions laid down under Section 139 and 141 of the Companies Act, 2013 and Rule 4 of Companies (Audit and Auditors) Rules, 2014.

Accordingly the Board recommends the Ordinary Resolution for approval of the Shareholders of the Company, as laid down in item No.3.

Item No.4

At the 32nd Annual General Meeting of the Company held on 20th September, 2011, the Members had approved the re-appointment of Shri Sanjay S. Shah as Wholetime Director designated as Executive Director of the Company for a period of five years with effect from 1st July, 2012, upon the terms and conditions including remuneration as specified in the explanatory statement annexed to the Notice of the said Meeting.

The Board of Directors of the Company (the ‘Board’), at its Meeting held on 30th May, 2017 has, subject to the approval of members, re-appointed Shri Sanjay S. Shah as Wholetime Director designated as Executive Director of the Company for a further period of 3 (three) years from the expiry of his present term i.e. with effect from 1st July, 2017 at the remuneration recommended by the Nomination and Remuneration Committee of the Board and approved by the Board.

Shri Sanjay Shah who is B.A. from Essex University, U.K. has expertise in the field of Yarn Preparatory and Weaving. He possesses wide experience in overall business management particularly with regard to textile industry and has more than three decades of experience in Senior Corporate Management. During these years, he has performed the functions exceedingly well by assisting the Company in HRD and Administrative matters also. With his efforts today the Company has been able to prosper with a well-qualified team in weaving segment.

The Directors are of the view that his experience, leadership qualities and excellent managerial capability will further contribute to the growth of the Company. As Executive Director of the Company, he has been actively involved in the business policy decisions of the Company.

ANNEXURE TO THE NOTICE


10

Keeping in view his active involvement in the affairs of the Company, his expertise and vast experience in the textile industry and his contribution towards the growth of the Company, the Board of Directors of the Company at its Meeting held on 30th May, 2017, has decided to re-appoint him as Wholetime Director designated as an Executive Director with effect from 1st July, 2017.

It is proposed to seek the members’ approval for the re-appointment of and remuneration payable to Shri Sanjay S. Shah as Wholetime Director designated as Executive Director, in terms of the applicable provisions of the Act.

The salient features of the terms and conditions of and remuneration payable to Shri Sanjay S. Shah as set out in the draft agreement placed before this Meeting are as follows:

i) Salary: Upto ` 5,00,000/- per month.

With annual increment upto 15% every year as approved by the Board on the recommendation of Nomination and Remuneration Committee.

ii) Perquisites and Allowances:

(a) in addition to the salary as above, Shri Sanjay S. Shah shall be entitled to perquisites which includes accommodation (furnished or otherwise) or house rent allowance in lieu thereof; house maintenance allowance, together with reimbursement of expenses and/or allowances for utilisation of gas, electricity, water furnishings, repairs, servants’ salaries, society charges and property tax, medical reimbursement, medical/accident insurance, leave travel concession for self and family including dependents; club fees, car(s) with driver and telephone(s) at residence and such other perquisites and/or other allowances as the Board (which includes any committee thereof) may in its absolute discretion determine from time to time provided that the aggregate value of such perquisites shall not exceed 125% of the salary mentioned at i) above.

(b) The said perquisites and allowance shall be evaluated, wherever applicable, as per the provisions of Income-tax Act, 1961 or any rules thereunder or any statutory modification(s) or re-enactment thereof; in the absence of any such Rules, perquisites and allowances shall be evaluated at actual cost.

(c) The Company’s contribution to Provident Fund, Superannuation Fund or Annuity Fund, to the extent these singly or together are not taxable under the Income-tax law, and Gratuity payable and encashment of leave at the end of the tenure, as per the rules of the Company and to the extent not taxable under the Income-tax law shall not be included for the purpose of computation of the overall ceiling of remuneration.

iii) Remuneration based on net profits:

In addition to the salary, perquisites and allowances as set out above, Shri Sanjay S. Shah shall be entitled to receive remuneration based on net profits. Such remuneration based on net profits payable to him as also to the other Wholetime Directors of the Company will be determined by the Board and/or the Nomination and Remuneration Committee of the Board for each financial year.

The overall remuneration payable every year to the Managing Director and the Wholetime Directors by way of salary, perquisites and allowances, incentive / bonus / performance linked incentive, remuneration based on net profits, etc. shall not exceed in aggregate ten percent of the net profits of the Company as computed in the manner laid down in Section 198 of the Act or any statutory modification(s) or re-enactment thereof.

iv) The aggregate of salary, perquisites and commission in any one financial year shall not exceed the overall limits prescribed under Section 197(1) of the Act read with Schedule V to the Act as may for the time being in force.

v) Reimbursement of Expenses:

Reimbursement of expenses incurred for traveling, boarding and lodging including for their spouse and attendant(s) during business trips, any medical assistance provided including for their family members; and provision of car(s) for use on the Company’s business, club membership and telephone expenses at residence shall be reimbursed at actuals and not considered as perquisites.

11


vi) Minimum Remuneration:

In the event of inadequacy or absence of profits in any financial year during his tenure as Executive Director, Shri Sanjay S. Shah will be entitled to the foregoing amount of remuneration along with the perquisites and allowances mentioned above as the minimum remuneration for the year subject to the ceiling as applicable and prescribed under Schedule V of the Act.

vii) Other Terms and Conditions:

(i) The Executive Director will perform his duties as such with regard to all work of the Company and he will manage and attend to such business and carry out the orders and directions given by the Board from time to time in all respects and confirm to comply with all such directions and regulations as may from time to time be given and made by the Board and the functions of the Wholetime Director will be under the overall authority of the Managing Director.

(ii) The Executive Director shall act in accordance with the Articles of Association of the Company and shall abide by the provisions contained in Section 166 of the Act with regard to duties of directors.

(iii) The Executive Director shall adhere to the Company’s Code of Business Conduct & Ethics for Directors and Management Personnel.

(iv) The office of the Executive Director may be terminated by the Company or the concerned Director by giving the other 3 (three) months’ prior notice in writing.

Shri Sanjay S. Shah satisfy all the conditions set out in Part-I of Schedule V of the Act as also conditions set out under sub-section (3) of Section 196 of the Act for being eligible for his re-appointment. Shri Sanjay S. Shah is not disqualified from being appointed as a Director in terms of Section 164 of the Act.

The Directors are of the view that the re-appointment of Shri Sanjay S. Shah as Executive Director will be beneficial to the operations of the Company and the remuneration payable to him is commensurate with his ability and experience. The Nomination and Remuneration Committee of the Board has approved the same remuneration.

The above may be treated as a written memorandum setting out the terms of re-appointment of Shri Sanjay S. Shah under Section 190 of the Act. The copy of draft Letter for his re-appointment is kept open for inspection by any member of the Company under Section 190 of the Act. Other particulars pertaining to the Company, which are required to be disclosed as per section II of Part II of the Schedule V of the Act and Regulation 36 of the SEBI (LODR) Regulations, 2015, are given in Annexure A to this Explanatory Statement.

None of the Directors or Key Managerial Person (KMP) of the Company or their respective relatives is, in any way, concerned or interested, financially or otherwise, in the Resolution set out at Item No.4 of the accompanying Notice, except Shri Sanjay S. Shah, himself as a Director of the Company.

Accordingly the Board recommends the Special Resolution for approval of the Shareholders of the Company, as laid down in item No.4.

ANNEXURE A TO THE EXPLANATORY STATEMENT

Statement as required under Section II of Part II of Schedule V to the Act giving details in respect of revision in the terms of appointment and remuneration of Shri Sanjay S. Shah as Wholetime Director designated as Executive Director.

I General Information

(1) Nature of industry:

The Company is engaged in the business of Textiles.


12

(2) Date or expected date of commencement of commercial production:

The Company was incorporated on 23rd July, 1979 as a private limited Company under the name of Vareli Weaves Private Limited. The name of the Company was changed to Garden Silk Mills Limited with effect from 17th July, 1987. The Company commenced commercial production since 1979.

(3) In case of new Companies, expected date of commencement of activities as per project approved by Financial Institutions appearing in the prospectus: Not applicable.

(4) Financial performance – as per the standalone audited financial results for the year ended 31st March 2017

(` in Crore)Total Revenue from Operations (Gross) 2645.74Earning Before Interest, Tax and Depreciation (EBITDA) 154.35Profit/(Loss) before Depreciation and Tax (20.54)Profit/(Loss) after Tax (94.86)

(5) Export performance and net foreign exchange collaborations:

(` in Crore)FOB value of Exports – 2016-17 388.02Net Foreign Exchange collaborations 0.00

(6) Foreign Investments or collaborators

The Company does not have any foreign investments or collaborators.

II Information about the Appointee

(a) Background details

Shri Sanjay Shah who is B.A. from Essex University, U.K. has expertise in the field of Yarn Preparatory and Weaving. He possesses wide experience in overall business management particularly with regard to textile industry and has more than two decades of experience in Senior Corporate Management.

(b) Past Remuneration: ` 55.45 Lacs per annum for the year 2016-17

(c) Recognition or awards: Nil

(d) Job Profile and his Suitability

Shri Sanjay S. Shah has had a brilliant academic career. He has wide exposure and knowledge in project appraisal, assessing technical feasibility in respect of projects, corporate finance and management etc.

During these years, he has performed the functions exceedingly well by assisting the Company in HRD and Administrative matters also. With his efforts today the Company has been able to prosper with a well-qualified team in weaving segment.

In consideration of the performance of Shri Sanjay S. Shah as Executive Director of the Company over the years, the Board of Directors of the Company in their Meeting held on 30th May 2017 approved the terms of his re-appointment and the remuneration as recommended by the Nomination and Remuneration Committee of Shri Sanjay S. Shah for a period of three years with effect from 1st July 2017 in accordance with the provisions of Sections 196, 197 and 203 read with Schedule V of the Act and subject to the necessary approvals including Central Government, if required.

(e) Proposed Remuneration: Details of the remuneration which is proposed to be paid to Shri Sanjay S. Shah as Wholetime Director designated as Executive Director of the Company for a period of three years with effect from 1st July 2017 has been fully set out in the Special Resolution at item No.4.

13


(f) Comparative remuneration profile with respect to industry, size of the Company, profile of the position and person:

Taking into consideration the size of the Company, the profile of the appointee, managerial personnel, the responsibilities shouldered by him and the industry benchmarks, the aforesaid remuneration proposed to be paid is commensurate with the remuneration package paid to similar senior level counter parts in other companies.

(g) Pecuniary relationship directly or indirectly with the Company, or relationship with the managerial personnel, if any:

Shri Sanjay S. Shah is a promoter group shareholder. The total promoter holding directly and indirectly along with body corporates in the Company as on 31st March, 2017 is 24302230 Equity Shares of ` 10 each which constitutes 57.75% of the paid-up share capital of the Company. None of the Directors and key managerial personnel has any relationship with Shri Sanjay S. Shah.

III Other Information

(a) Reasons for inadequacy of profits

The Company belongs to the GARDEN VARELI Group. The Company is one of India’s leading and most reputed companies. It is a vertically integrated textile Company operating in the man-made textiles that manufactures and sale wide range of Polyester Chips, Polyester Filament Yarns (PFY), Preparatory Yarns, Woven (grey) Fabric as well as Dyed and Printed Sarees and Dress Materials.

At a standalone level, the gross revenue from operations of your Company for FY 2017 increased by about 3.05% to ` 2645.74 crore from ` 2567.31 crore in the previous year.

The operating margins of the Company have been relatively weak over the last few years. This has been due to large volatility in prices of raw materials and finished goods, sluggish domestic demand growth (especially rural), weak global conditions, large capacity additions by industry players and dumping of goods from China. The effect of a debt burden is also one of the reasons for the Company not being able to show its performance with its potential.

In view of above facts, the overall financial performance of the Company was subdued leading to negative PAT.

(b) Steps taken or proposed to be taken for improvement:

Import of raw materials has been minimised owing to better negotiations with local PTA suppliers who have undertaken capacity expansions. Another large PTA plant is expected to come on-stream in the current financial year further improving the supply conditions for PTA in India and boosting global competitiveness for polyester companies.

The Company has emerged as a leader in specialty chips for polyester film industry as well as in cationic, fine denier, melange, mother yarn, nylon and spandex-based yarns.

Over the next two years we expect business conditions to improve for your Company owing to higher utilisation levels and better margins. This is partly owing to moderate industry growth in volume in the next two years at around 6.5% p.a. (PCI). Yet, while the supply overhang will remain for some time to come, the major reason we are hopeful about the Company’s prospects are the breakthroughs we are hoping to make in the specialty chip, yarn and fabric businesses.

(c) Expected increase in productivity and profits in measurable terms.

The continuous efforts for improving product-mix through product innovation through close collaboration between R&D, production and marketing departments has been a key driver for Garden’s productivity in the past and will be continued in future.


14

We remain a price leader for the majority of our products. Our product mix is possibly the best in the industry. Plant efficiency levels are excellent. Low coal and commodity prices have also helped us achieve record low operating costs in some of our key divisions.

With the improvement in overall economic scenario and business environment, stable input costs and commodity prices coupled with domestic demand growth in the Company’s products and the steps proposed to be taken by the Company for rationalisation of manufacturing expenses and other initiatives, the Company expects improvement in performance over the medium to long-term.

IV Disclosures:

The remuneration package along with the corresponding details of Shri Sanjay S. Shah, Executive Director of the Company have been fully described in the respective Resolution and/or Explanatory Statement. The remuneration paid to the all Directors for the year 2016-17 has been disclosed in the Report on Corporate Governance in the annual report. There is no severance fee or stock option available in the case of the aforesaid managerial personnel. The respective tenure of the aforesaid managerial personnel shall be governed by an agreement / contract with a notice period of three months. Shri Sanjay S. Shah shall be liable to retire by rotation.

Item No.5:

The Board of Directors, on the recommendation of the Audit Committee has approved the appointment and remuneration of an amount not exceeding ` 1,50,000 (Rupees One Lac Fifty thousand only) for the financial year 2017-18 payable to the Cost Auditors M/s Manubhai & Associates, Cost Accountants, to conduct the audit of the cost records of the Company for the aforesaid financial year.

In accordance with the provisions of Section 148 of the Companies Act, 2013 and the Companies (Audit and Auditors), Rules, 2014, the remuneration payable to the Cost Auditors as recommended by the Audit Committee and approved by the Board of Directors of the Company has to be ratified by the members of the Company.

Accordingly, consent of the members is sought for passing an Ordinary Resolution as set out at item No.5 of the Notice for ratification of the remuneration payable to the Cost Auditors for the financial year ending 31st March, 2018.

None of the Directors, Key Managerial Personnel and their relatives are, in any way, concerned or interested in this resolution.


Item No.6:

Shri Ketan A. Jariwala was appointed by the Board of Directors of the Company with effect from 30th May, 2017, to fill up the casual vacancy caused due to Shri Arunchandra N. Jariwala, an Independent Director vacating his office as a Director of the Company before the expiry of his term of office in terms of Section 161(4) of the Companies Act, 2013.

Shri Arunchandra N. Jariwala was appointed at the 35th Annual General Meeting held on 30th July, 2014 to hold office for 5 consecutive years from 1st April, 2014 to 31st March, 2019 and that he was not liable to retire by rotation.

Section 161(4) of the Companies Act, 2013 provides that in the case of a public Company, if the office of any director appointed by the Company in general Meeting is vacated before his term of office expires in the normal course, the resulting casual vacancy may, in default of and subject to any regulations in the articles of the Company, be filled by the Board of Directors at a Meeting of the Board.

The proviso to Section 161(4) of the Companies Act, 2013 states that any person so appointed shall hold office only up to the date up to which the director in whose place he is appointed would have held office if it had not been vacated.

Schedule IV of the Companies Act 2013 prescribes manner of appointment of Independent Director (ID). As per paragraph IV(2) of Schedule IV of Companies Act, 2013, the appointment of independent directors of the Company shall be approved at the Meeting of the shareholders.

15


Shri Ketan Jariwala, aged about 55 years is an industrialist and a technocrat engaged in the business of man-made textiles and having more than two decades of experience in the related industry. He is also associated with the activities related to Chamber of Commerce and Industries over the years.

Shri Ketan Jariwala does not have inter-se relationship with any other Director of the Company and he is not holding any shares of the Company.

In terms of Section 149, 152 and other applicable provisions of the Companies Act, 2013, Shri Ketan Jariwala being eligible and offering himself for appointment is proposed to be appointed as an Independent Director for five consecutive years for a term upto 29th May, 2022.

The Company had received from Shri Ketan Jariwala an Intimation in Form DIR 8 in terms of Companies (Appointment and Qualification of Directors) Rules, 2014, to the effect that he is not disqualified under Sub Section (2) of Section 164 of the Companies Act, 2013 and a declaration to the effect that he meets the criteria of independence as provided under Sub Section (6) of Section 149 of the Companies Act, 2013.

In the opinion of the Board, Shri Ketan Jariwala fulfils the conditions specified in the Companies Act, 2013 and rules made thereunder for his appointment as an Independent Director of the Company and he is independent of the management. Copy of the draft letter for appointment of Shri Ketan Jariwala as an Independent Director would be available for inspection without any fee by the members at the Registered Office of the Company during normal business hours on any working days, excluding Saturday and at the venue of the Meeting.

The Board considers that his continued association would be of immense benefit to the Company and it is desirable to continue to avail services of Shri Ketan Jariwala as an Independent Director.

This Explanatory Statement may also be regarded as a disclosure under Regulation 36 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

None of the Directors or Key Managerial Person (KMP) of the Company or their respective relatives are, in any way, concerned or interested, financially or otherwise, in the Resolution set out at Item No.6 of the accompanying Notice, except Shri Ketan Jariwala, himself as a Director of the Company.





16

Particulars of the Directors seeking appointment / re-appointment at the ensuring Annual General Meeting pursuant to Regulation 36(3) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

Name Shri Sanjay S. Shah (DIN: 00024004)

Shri Ketan Jariwala (DIN: 02095540)

Date of Birth 19.02.1956 08.05.1962

Age 61 Years 55 Years

Nationality Indian Indian

Brief Resume – Qualification B.A. (Essex University) U.K. Diploma in Textile Technology (M.S. University, Baroda)

Date of Appointment/Re-appointment

19/02/1990 30/05/2017

Expertise in Specific Functional Areas

Well known industrialist having more than 30 years of experience in the business of manmade textiles.

He is an industrialist and a technocrat engaged in the business of manmade textiles and having more than two decades of experience in the related industry.

Terms and conditions of appointment / re-appointment

As per the policy on Directors Appointment and Remuneration

As per the policy on Directors Appointment and Remuneration

Directorship held in other Public Limited / listed Companies

Kashah Investment Ltd. Rosekamal Textiles Ltd. - ListedBijlee Textiles Ltd. - ListedSurat Textile Mills Ltd. - Listed

Memberships/ Chairmanships of Committees other public companies (include only Audit Committee and Stakeholders Relationship Committee)

Nil Surat Textile Mills Limited Audit Committee – Member and Stakeholders Relationship Committee - Member

No. of shares held in the Company 689660 Nil

Disclosure of relationship He is not related to any of the Directors or Key Managerial Personnel of the Company

He is not related to any of the Directors or Key Managerial Personnel of the Company

Number of Board Meetings Attended

3 Appointed with effect from 30/05/2017



17


DIRECTORS’ REPORT & MANAGEMENT DISCUSSION AND ANALYSISDear Members,

The Board of Directors hereby submit the report of the business and operations of your Company along with the audited financial statements, for the year ended 31st March, 2017. The Management Discussion and Analysis is also included in this Report.

Summarised Financial Results

The Company’s performance during the financial year ended 31st March, 2017 on standalone basis, as compared to the previous financial year, is summarised below.

(` in crores)

2016-17 2015-16Gross Revenue from Operations 2645.74 2567.31Earnings before interest, tax and depreciation (EBITDA) 154.35 102.82Less: Finance Costs 174.89 177.25 Depreciation 64.48 66.82 Extra ordinary items 9.84 0.00Profit / (Loss) before Tax (94.86) (141.25)(Add)/Less: Provision for Tax / (Credit) 0.00 (0.64)Profit / (Loss) after Tax (94.86) (140.61)

Review of Operations

The Company’s standalone gross sales for the year 2016-17 (FY17) was higher at ` 2645.74 Crore as compared to ` 2567.31 Crore for the previous year.

Operating EBITDA (earnings before interest, tax and depreciation) for FY17 increased to ` 154.35 Crore as compared to ` 102.82 Crore in the previous year, registering a growth of 50.1%. Operating profit margins (excluding other income) improved from 3.91% in FY 2016 to 5.85% in FY17 largely owing to an improved product mix in our yarn activity and slightly lower power costs. Utilization levels in our continuous polymerization division also improved to the highest in 4 years resulting in improved sales and operating profits.

Our emphasis on increased product differentiation, along with better operational efficiencies, improved utilisation, timely exports and careful working capital management helped us to remain competitive and improve our profitability at operating level.

Better working capital management helped the Company to reduce the interest cost in FY17 from `177.25 Crore to `174.89 Crore.

With better capacity utilization, the overall production of chips and polyester melt was higher at 277,714 MT during FY17 as compared to 271,649 MT in FY16. Sale of chips for FY17 was higher at 142,254 MT compared to 127,779 MT in the previous year. In value terms also, the sale of chips for FY17 was higher at ̀ 920.91 Crore as compared to ̀ 845.57 Crore in the previous year.

The volume of sale of polyester filament yarn (PFY) including processed yarn declined at 148,393 MT in FY17 as compared to 154,111 MT in the previous year. Sale of yarn in value terms however declined marginally at ` 1502.84 Crore against ` 1519.01 Crore in the previous year. Margins improved significantly in processed yarn while margins in spun yarn remained under some pressure.

We achieved very high performance levels in our polymerization plants leading to historically low heating costs and highest first quality percentage on record. Despite constantly challenging the yarn divisions with new products to be optimized, efficiency


18

levels were very high at all our spinning and processed yarn divisions during FY17. Cost of power and fuel reduced on account of slightly lower coal prices compared to the previous year and improvements made to our thermic-fluid heating systems.

The Company maintained its price and product leadership in the polyester weaving division during FY17. Grey (woven) cloth production in FY17 was 229.17 Lac meters as compared to 223.31 Lac meters in the previous year. We achieved higher sale of grey fabrics of `73.30 Crore in FY17 as compared to `69.91 Crore in the previous year. Margins remained stable during the year.

The finished fabrics segment contributed `103.10 Crore in total sales for FY17 as compared to `114.42 Crore in the previous year. Sales were lower mainly on account of financial distress faced by some of our large and prestigious customers leading to lower purchases on their part. The currency demonetization in November 16 also impacted retail-level sales for over 2 months. Yet, margins improved in FY17.

Despite a competitive and challenging global environment, we achieved higher income from export at `408.23 Crore in FY17 as compared to `342.25 Crore in the previous year, an increase of about 19% on Y-o-Y basis.

Dividend and Reserves

Considering the loss incurred by the Company, your Directors do not recommend any dividend on equity shares for the financial year 2016-17.

In absence of distributable profits / earnings, it is not proposed to transfer any amount to reserves for the financial year 2016-17.

Going Concern Status

No significant material orders has been passed during the year under review by the regulators or court or tribunal impacting the going concern status and Company’s operations in future.

Change in the Nature of Business, if any

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

Textile Industry Scenario

The Indian textile industry is a mainstay of the economy. The industry is the second largest employer after agriculture, providing employment to over 50 million people directly and 60 million people indirectly. India is a major net textile exporting nation and thus a crucial foreign exchange earner as well. The Indian domestic textile market is around $110 billion per annum and is expected to be the fastest growing major textile market in the world. India is the world's second largest exporter of textiles and clothing. Including exports the total size of the textile industry is $150 billion.

Most of the company’s products feed the polyester filament yarn and PFY-based textile industry. The PFY industry has been the fastest growing textile category both worldwide and in India though India has experienced an unexpected slowdown for five years until FY16. After adjusting for demonetisation, growth was clearly in the high single digits in FY17, marking a significant turnaround in fortunes. After adjusting to GST the industry is expected to resume a healthy growth trajectory in a few months’ time. Generally, rising income levels, changing consumer preferences in favour of polyester, low oil and hence low raw material and finished product prices, government-directed subsidies and transfers to the rural sectors all bode well for PFY based textiles. This is likely to support utilisation levels and profitability in the industry.

Within the PFY-based textile industry fully drawn yarn continued to grow particularly rapidly. While weaving industry growth was weak, good growth in warp and circular knitted fabric industry more than compensated.

Overview of the economy

According to the World Economic Outlook (IMF) global GDP growth was 3.1% in 2016 much weaker than the long-term trend rate of 3.5%. Yet, with a significant, broad-based recovery underway it is projected to match or exceed the long-term trend in both 2017 and 2018.

19


The past half-decade has seen a vulnerable world economy with sub-par growth despite significant policy stimulus. Low productivity growth in advanced countries, poor global investment, battered commodity markets, weak global trade, high income inequality and inward-looking politics were both contributors and symptoms of the weakness.

Fortunately, the global outlook has significantly improved for developed countries, emerging markets, commodity exporters and importers alike. On the back of low global interest rates buoyant financial markets are discounting a cyclical recovery in manufacturing, investment, trade and corporate earnings among other things.

Mainly owing to a weak second half, India’s GDP growth slowed markedly to 7.1% in FY17 compared to 8.0% in FY16. The currency demonetization exercise seems to have had a significant impact on growth and incomes, especially in the unorganized industrial and agricultural sectors as well as the labour-intensive construction sector which in turn have adversely affected industries that depend on these sectors. The impact, however, is fading quickly and is widely expected to be temporary.

Political stability, a strong emphasis on building India’s road, rail and power infrastructure, improved ease of doing business, and excellent macroeconomic conditions have been the hallmark of the current central government which bodes well for the country’s economy. India, being heavily dependent on oil-imports, gained an unexpectedly large bounty with international oil prices halving since the new government came to power. This has dramatically lowered inflation as well the fiscal and current account deficits.

A concern that has been highlighted by international rating agencies is the worsening outlook for state deficits given populist tendencies exemplified by farm loan waivers. Yet, increasing purchasing power in the hands of weak segments of society will increase consumption and is an indirect stimulus to the textile industry. The rural economy is vital to the polyester textile industry so improving rural purchasing power bodes well for textiles.

Retail inflation is at a record low which will allow India to reduce its interest rates which are high by international standards. This will boost much-needed investment, especially as abysmal capacity utilisation levels in Indian industry begin to normalise. It will also lower interest costs for borrowing individuals, firms and companies thus boosting sentiment in both markets and the broader economy. Given the significant leverage in the textile industry lower interest rates would be a direct boost for our sector.

The Goods and Services Tax (GST) to be launched w.e.f. 1st July 2017 is a greatly anticipated reform which is expected to contribute to growth in the medium term. The GST will replace various taxes on goods and services levied by the central government and states by a single tax on value added. It will thus reduce tax cascading, facilitate a common national market, encourage voluntary tax compliance, reduced tax collection costs, support investment and generally improve India’s competitiveness.

Yet, it appears likely that the downstream textile trade, which is still dominated by manufacturers, traders and retailers in the unorganized sector, will be affected by the compliances required by the new tax in the short-term. This will consequently impact demand for upstream polyester chip and yarn makers as well.

Opportunities, Challenges, Threats, Risks and Concerns

The resumption of high growth in the PFY industry is widely anticipated to continue after the textile trade fully adjusts to GST. This presents a large opportunity for the company and the industry as a whole. A thriving industry improves sales and margins and also increases risk-taking capacity allowing customers to experiment with new and innovative yarns and fabrics which is aligned with the Company’s strength in developing differentiated products.

New capacities in MEG and PTA in the coming year are expected to improve the raw material situation and boost global competitiveness for Indian polyester companies.

Coal is the major fuel and a key cost for the company, whose price has recently risen considerably compared to average price for FY17. This has raised power costs significantly. While we have been able to take steps to mitigate the cost increase in heating, the increase in power cost appears inevitable until coal prices start reducing in the next few months as is anticipated but is not yet certain.

Dumping of goods from China remains a persistent challenge. In the GST regime the total import duty protection on imported fabric will be much less making these fabrics cheaper still.


20

The Company has been working with industry associations to counter the dumping, but the final outcome is not yet clear. A mitigating factor however is that the Company focuses primarily on specialty products and fine deniers which face relatively less competition from Chinese suppliers.

The Company’s strategic location in the heart of the textile industry of Surat and close to Hazira port minimizes infrastructural weaknesses generally faced by the industry. Its thermal power plants keep its power costs significantly lower than grid power costs. However, the subsidized power available in union territories of Silvassa-Daman remains still cheaper.

The Company’s high debt and interest cost pose a challenge as well. It continues to be engaged with its bankers toward a debt-rework.

The Company is exposed to currency fluctuations with respect to its raw material imports as well as its finished product exports. Our hedging policies minimize this risk.

The passing by the Government of a national goods-and-service tax (GST) will create a common market in the country and is expected to increase economic growth in the medium term. These and other efforts to liberalize the economy and reduce burdensome taxes and regulations will likely help the industry in the long run. The equal tax for polyester and cotton fabric will boost the relative consumption of polyester. However, in the short term implementation challenges remain for the huge unorganized sector that still forms the bedrock for demand in the polyester textile industry for whom GST will increase compliances and costs.

The introduction of GST appears to have brought forward the date of expiry of area-based CST-exemptions of suppliers in certain union territories from end-2017 to 1st July 2017. This will correspondingly improve marketability and price realization for your Company’s products sold outside Gujarat.

Raw material prices fluctuate in line with international prices and will continue to have an impact on the company’s performance as raw materials constitute 70% percent of the Company’s net sales. Small variations do not have much impact and even large increases usually get passed on to customers with a lag. Yet, large variations hurt sentiment and lead to reduced demand and inventory valuation changes. Increased product differentiation as well as maintaining tight inventory has helped us reduce this risk. The presently low oil prices also reduce the downside risk of a price crash.

The Company is exposed to risks attached to various statutes and regulations including the Competition Act. The Company is mitigating these risks through regular review of legal compliances carried out through internal as well as external compliance audits.

To overcome the challenges and competition, we have taken various initiatives to reduce the operational costs, to develop new value added products, improve the performance and quality of existing value-added products as well as to explore new markets domestically and globally.

Business Outlook

The outlook for industry and the Company in the near term can be viewed with cautious optimism.

After many years of poor rural demand, the industry is widely expecting improved polyester demand on the back of a good monsoon and greater fiscal transfers to rural areas this year. Resumption of high growth in the PFY industry is widely expected to continue once the unorganized downstream trade fully adjusts to and complies with GST. This is expected to improve utilization levels and probably margins as well at the yarn level. Regarding chips, however, given the significant overcapacity, margins are expected to remain under pressure for some more time.

After the industry adjusts to GST, over the next two years we expect business conditions to improve for your Company owing to the generally higher utilisation levels and better margins. Significant industry expansions in circular knitting capacities have helped and will continue to support growth.

The Company appears well positioned in its specialty chip, yarn and fabric businesses. The emphasis is on expanding our market share in differentiated products and continuing to improve our ability to support individual customers’ needs.

The Company has emerged as a leader in specialty chips for polyester film industry as well as in cationic, fine denier, melange, mother yarn, nylon and spandex-based yarns.

21


After having shifted the draw warping department at Vareli to form a single department at Jolva we have reduced energy and overhead costs. The sizing division is also in the process of being shifted from Vareli to Jolva for the same reason.

The Company is in the process of identifying high-quality yarn producers who have idle capacities which it can use to expand the market for its products say through a job-work relationship.

The Union Ministry of Textiles, which has set a target of doubling textile exports in 10 years, plans to enter into bilateral agreements with Africa and Australia along with working on a new textile policy to promote value addition, apart from finalizing guidelines for the revised Textile Up gradation Fund Scheme (TUFS). To promote apparel exports, 12 locations have been approved by the government to set up apparel parks for exports. As per the twelfth Five Year Plan, the Government plans to provide a budgetary support of USD 4.25 billion to textiles. Free trade with ASEAN countries and a proposed agreement with European Union will also help boost exports.

The Indian government has come up with a number of export promotion policies for the textiles sector. It has also allowed 100 per cent FDI in the Indian textiles sector under the automatic route.

Share Capital and disclosure

The Issued, Subscribed and Paid-up equity share capital as on 31st March, 2017 was ̀ 4208.25 Lacs. There was no public issue, rights issue, bonus issue or preferential issue etc. during the year. The Company has not issued shares with differential voting rights, sweat equity shares, nor has it granted stock options. As on 31st March, 2017, none of the Directors of the Company hold instruments convertible into equity shares of the Company.

Disclosures in respect of voting rights not directly exercised by employees

There are no shares held by trustees for the benefit of employees and hence no disclosure under Rule 16(4) of the Companies (Share Capital and Debentures) Rules, 2014 has been furnished.

Material changes and commitments

No material changes and commitments affecting the financial position of your Company have occurred between the end of the financial year of the Company to which the financial statements relate and on the date of this report.

Indian Accounting Standards (IND AS) IFRS Converged Standards

The Ministry of Corporate Affairs (MCA), vide its notification in the Official Gazette dated 16th February, 2015, notified the Indian Accounting Standards (Ind AS) applicable to certain classes of Companies. Ind AS has replaced the existing Indian GAAP prescribed under Section 133 of the Companies Act, 2013, read with Rule 7 of the Companies (Accounts) Rules, 2014. For your Company, Ind AS is applicable from 1st April, 2017, with a transition date of 1st April, 2016.

Presentation of financial statements

Your Company prepares its financial statements in compliance with the requirements of the Companies Act, 2013 and the Generally Accepted Accounting Principles (GAAP) in India. The financial statements have been prepared on historical cost basis.

The estimates and judgments relating to the financial statements are made on a prudent basis, so as to reflect in a true and fair manner, the form and substance of transactions and reasonably present the Company’s state of affairs, loss and cash flows for the year ended 31st March, 2017. The financial statements of the Company have been disclosed as per Schedule III of the Companies Act, 2013.

Subsidiary, Joint Venture and Associate Companies

The Company has one wholly owned overseas subsidiary namely GAIA International FZE, Dubai. GAIA International FZE is a free zone establishment and is registered with the Ajman Free Zone, Ajman, U.A.E. The Company is registered to carry out the business of trading in textile and ready-made garments including import and export.

As per the provisions of Section 129 of the Companies Act, 2013, the consolidated financial statement of the Company and its subsidiary are attached in the annual report. A statement containing brief financial details of subsidiary of the Company


22

for the year ended 31st March, 2017, forms part of the Annual Report. The annual accounts of subsidiary company will be made available to shareholders on request and will also be kept for inspection by any shareholder at the Registered Office of your Company. A statement in Form AOC-1 as Annexure F containing the salient features of the financial statement of the Company’s subsidiary, forms part of this Report.

Consolidated Financial Statements

During the year, the Board of Directors reviewed the affairs of its subsidiary, GAIA International FZE. In accordance with Section 129(3) of the Companies Act, 2013.

The Company has prepared Consolidated Financial Statements (CFS) in accordance with the applicable Accounting Standards as prescribed under the Companies (Accounts) Rules, 2014, of the Companies Act, 2013. The Consolidated Financial Results reflects the results of the Company and its subsidiary. As required under Regulation 34 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Audited CFS together with the Independent Auditors’ Report thereon are annexed and form part of this Report.

The Business Responsibility Reporting as required by Regulation 34(2) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, is not applicable to your Company for the financial year ending 31st March, 2017.

Finance

During FY17, long term export advance of `445.98 Crore was repaid by availing additional facilities from the lenders.

Your Company also repaid `85.83 Crore during FY 2017 towards term loan from banks and financial institutions and fresh term loans were availed of `24.09 Crore out of earlier term loans sanctioned.

The consortium of banks headed by Bank of Baroda continued their support in renewing working capital facilities and other facilities during the year. The Company is in discussions with the lenders to work out a long-term debt rework solution.

Directors and Key Managerial Personnel

The Board of Directors offers its deep condolence for the sad demise of Shri Arunchandra N. Jariwala, who passed away on 21st January, 2017.

Shri Jariwala was a Member (Independent Director) of the Board of Directors of the Company since 1988. Shri Jariwala’s visionary foresight and business acumen had helped to steer the Company on the growth path. His legacy shall continue to guide the Company in the future as well. Shri Jariwala was associated with the Company for over three decades and the Company immensely benefited from his vision and the knowledge he shared during his tenure.

On the recommendations of the Nomination and Remuneration Committee, the Board appointed Shri Ketan A. Jariwala (DIN: 02095540) as an Additional Director (Independent Director) w.e.f. 30th May, 2017 for a period of five years not liable to retire by rotation, to fill up the casual vacancy caused in terms of Section 161(4) of the Companies Act, 2013.

In accordance with the provisions of Section 152 of the Companies Act, 2013 and the Company’s Articles of Association, Shri Sanjay S. Shah (DIN: 00024004), Director retires by rotation at the forthcoming Annual General Meeting and, being eligible offers himself for re-appointment. The Board recommends his re-appointment for the consideration of the Members of the Company at the ensuing Annual General Meeting. The Board of Directors of the Company also re-appointed Shri Sanjay S. Shah as a Wholetime Director designated as Executive Director of the Company for a period of three years w.e.f. 1st July, 2017

Shri Praful A. Shah, Managing Director and CEO (DIN: 00218143), Shri Alok P. Shah, Executive Directors & CFO (DIN: 00218180) and Shri Kamlesh B. Vyas, Company Secretary, are the Key Managerial Personnel of the Company as on the dated of this Report. During the year under review, there was no change in key managerial personnel of the Company.

All Independent Directors have furnished declarations to the Company under Section 149(7) of the Act, confirming that they meet the criteria of independence as laid down under Section 149(6) of the Companies Act, 2013 as well as Regulation 16(b) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

The necessary resolutions for appointment / re-appointment of Shri Ketan Jariwala and Shri Sanjay S. Shah are placed for members’ approval.

23


Managerial Remuneration

Disclosures of the ratio of the remuneration of each director to the median employee’s remuneration and other details as required pursuant to Section 197(12) of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are provided as Annexure C.

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

Report on Corporate Governance

Your Company is committed to adopting and adhering to established corporate governance practices. Your Company always places major thrust on managing its affairs with diligence, transparency, responsibility and accountability.

The compliance report on corporate governance and a certificate from M/s Natvarlal Vepari & Co., Chartered Accountants, Statutory Auditors of the Company, regarding compliance of the conditions of corporate governance, as stipulated in Regulation 34(3) read with Schedule V(c) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 is attached herewith as Annexure H to this report. The auditors certificate for the year 2016-17 does not contain any qualification, reservation or adverse remark.

All Board members and Senior Management personnel have affirmed compliance with the Code of Conduct for the year 2016-17. A declaration to this effect signed by the Managing Director (CEO) of the Company is contained in this Annual Report. The Managing Director and CFO have certified to the Board with regard to the financial statements and other matters as required under regulation 17(8) of the SEBI Listing Regulations, 2015.

Audit Committee

The Audit Committee of Directors comprises of Shri Yatish Parekh (Chairman of the Committee), Shri Sunil Sheth and Shri Deepak N. Shah. During the year under review, Shri Deepak N. Shah was inducted as the Member of the Audit Committee consequent to the vacancy caused due to death of Shri Arunchandra N. Jariwala. The terms of reference and other details of the Audit Committee are available in the Corporate Governance Report forming part of this annual report.

The Board, during the year under review, had accepted all recommendations made to it by the Audit Committee.

Risk Management

Your Company recognizes that the risk is an integral part of business and is committed to managing the risks in proactive and efficient manner. Your Company periodically assesses the risks in the internal and external environment along with treating the risks and incorporates risk management plans in its strategy, business and operational plans.

The business plan for the future are devised and approved by the Board keeping in mind the risk factors which can significantly impact the performance of the particular business. All major capital expenditures commitments are subject to scrutiny by the Board and investments are permitted only on being satisfied about its returns or utility to the Company. There are no risks which in the opinion of the Board threaten the existence of the Company.

Insurance

The Company has taken all the necessary steps to insure its properties and insurable interests, as deemed appropriate and also as required under the various legislative enactments.

Statutory Auditors & Audit Report

Messrs. Natvarlal Vepari & Co., Chartered Accountants, were appointed Auditors for a period of 3 (three) years from the conclusion of the 35th Annual General Meeting (AGM) till the conclusion of the 38th AGM. As such, Messrs. Natvarlal Vepari & Co. retire at the conclusion of the 38th AGM.

Under Section 139 of the Companies Act, 2013 and the Rules made thereunder, it is mandatory to rotate the statutory auditors on completion of the maximum term permitted under the said Section. The audit committee of the Company has proposed, and on 30th May, 2017, the Board of Directors of the Company has recommended the appointment of Sharp &


24

Tannan Associates, Chartered Accountants, (Firm registration number 109983W) as the statutory auditors of the Company. Sharp & Tannan Associates will hold office for a period of 5 (five) consecutive years from the conclusion of the 38th Annual General Meeting of the Company scheduled to be held on 20th September, 2017, till the conclusion of the 43rd Annual General Meeting to be held in the year 2022, subject to the approval of the shareholders of the Company.

The comments on statement of accounts referred to in the report of the Auditors are self explanatory. The Auditors’ Report does not contain any qualification, reservation or adverse remark.

Cost Auditors

Pursuant to the provisions of Section 148 of the Companies Act, 2013 read with the Companies (Cost Records and Audit) Rules, 2014, as amended by notifications / circulars issued by the Ministry of Corporate Affairs from time to time and on recommendation of the Audit Committee, the Board of Directors appointed M/s Manubhai & Associates, Cost Accountants, (Firm Registration Number 100756) as Cost Auditors to audit the cost accounts of the Company for the Financial Year 2017-18.

The Cost Auditor have given a Certificate to the effect that the appointment, if made, will be within the prescribed limits specified under Section 141 of the Companies Act, 2013. The Audit Committee has obtained a certificate from the Cost Auditor certifying their independence and arm’s length relationship with the Company.

As required under the Companies Act, 2013, the remuneration payable to the Cost Auditor is required to be placed before the members in a general meeting for their ratification. Accordingly, a resolution seeking member’s approval for the remuneration payable to the Cost Auditor forming part of the Notice convening the Annual General Meeting for their ratification.

Secretarial Auditor & Secretarial Audit Report

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board has appointed Shri Kunjal Dalal of K. Dalal & Co., Practicing Company Secretaries, (CP No.3863), Surat as secretarial auditor of the Company for the year 2017-18.

The Secretarial Auditors’ Report for the year 2016-17 does not contain any qualification, reservation or adverse remark. The Secretarial Auditors’ Report is enclosed as Annexure E to the Board’s report in this Annual Report.

Internal Auditors

Pursuant to the provisions of Section 138 of the Companies Act, 2013, the Board of Directors of the Company have appointed Shri Piyush Patel, Chartered Accountant (ICAI Membership No. 116769) as Internal Auditors of the Company, for the financial year 2017-18. The audit committee of the Board of Directors in consultation with the Internal Auditor formulates the scope, functioning, periodicity and methodology for conducting the internal audit.

Committees of the Board

Pursuant to requirement under Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Board of Directors has constituted various Committees of Board such as Audit Committee, Nomination and Remuneration Committee, Stakeholders Relationship Committee and Corporate Social Responsibility Committee. The details of composition and terms of reference of these committees are mentioned in the Corporate Governance Report.

Directors’ Responsibility Statement

The Board of Directors acknowledge the responsibility for ensuring compliance with the provisions of Section 134(3)(c) read with Section 134(5) of the Companies Act, 2013 in the preparation of the annual accounts for the year ended on 31st March, 2017 and state that:

a) in the preparation of the annual accounts, applicable accounting standards read with requirements set out under Schedule III to the Act, have been followed along with proper explanation relating to material departures;

b) the directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the Financial Year and of the loss of the Company for that period;

25


c) the directors have taken proper and sufficient care towards maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

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

e) the directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and are operating effectively; and

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

Number of meetings of the Board

During the year, 6 Board Meetings were convened and held. The intervening gap between the meetings was within the period prescribed under the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The Directors actively participated in the meetings and contributed valuable inputs on the matters brought before the Board of Directors from time to time. The details of all Board / Committee meetings held are given in the Corporate Governance Report.

Board evaluation

Pursuant to the provisions of the Companies Act, 2013, the Board has devised a policy on evaluation of performance of Board of Directors, Committees and Individual directors. The policy is also in compliance to Regulation 19 read with Schedule II, Part D of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

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

Pursuant to the provisions of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Board has carried out a formal annual evaluation of its performance and that of its Committees and individual Directors. The evaluation of each of the directors was done, inter-alia, on the basis of their advisory role and contribution in the decision making. Further, the evaluation of the Board as a whole and all the Committees of the Directors was done, inter-alia, on the basis of the overall directions and guidance provided to the senior executives and supervision over their performance.

Separate Meeting of Independent Directors

In compliance with the requirements of Schedule IV of the Companies Act, 2013 and Regulation 25(3) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, a separate meeting of the Independent Directors was held on 14th February, 2017, without the participation of the Executive Directors or management personnel.

The Independent Directors carried out performance evaluation of Non-Independent Directors and the Board of Directors as a whole, performance of Chairman of the Company, the quality, contents and timelines of flow of information between the Management and Board, based on the performance evaluation framework of the Company. The criteria for performance evaluation have been detailed in the Corporate Governance Report forming part of this report.

Declaration of Independent Directors

All Independent Directors have given declarations that they meet the criteria of independence as laid down under Section 149(6) of the Companies Act, 2013 and Regulation 16(1)(b) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and there is no change in their status of independence. As required under Section 149(7) of the Companies Act, 2013, the said declaration was placed in the Board Meeting held on 30th May, 2017.

Familiarisation Programme to Independent Directors

The Company provides suitable familiarisation programme to Independent Directors so as to associate themselves with the nature of the industry in which the Company operates.


26

Directors are periodically advised about the changes effected in the Corporate Laws, Listing Regulations with regard to their roles, rights and responsibilities as Director of the Company. The details of the familiarisation programme have been disclosed and updated from time to time on the Company’s website.

Corporate Social Responsibility (CSR) Initiatives

As required under Section 135 of the Companies Act, 2013 the CSR committee comprising Shri Yatish Parekh, Independent Director as the Chairman of the Committee, Shri Sunil S. Sheth, Independent Director and Shri Suhail P. Shah, Whole-time Director as its members.

The CSR committee has laid down the policy which includes the activities covered under the Companies (Corporate Social Responsibility Policy) Rules, 2014.

The Company has been contributing in the development of the surrounding areas of its plant and office. The Company supports and contributes in activities relating to promotion of education, sports, medical and healthcare, vocational skill development and livelihood enhancement and programmes and activities relating to environment sustainability etc. The details of amount spent on CSR activity undertaken during the year by the Company are given in the Annexure B to this Report. The CSR policy of the Company is also hosted on the website of the Company, www.gardenvareli.com.

Adequacy of Internal Financial Control

The Company has in place adequate internal financial controls with reference to financial statements. Periodic audits are undertaken on continuous basis covering all the major operations. Reports of internal auditors are reviewed by management from time to time and desired actions are initiated to strengthen the control and effectiveness of the system. During the year, such controls were tested and no reportable material weaknesses in the design or operation were observed.

The Company uses Oracle E business suite R12 to process financial transactions and maintain its books of accounts. The ERP system has been setup to ensure adequacy of financial transactions and integrity and reliability of financial reporting.

The Internal Financial Control with reference to financial statements as designed and implemented by the Company are adequate. During the year under review, no material or serious observation has been received from the Internal Auditors of the Company for inefficiency of such controls.

Related Party Transactions

All transactions entered by the Company with Related Parties were in the Ordinary Course of Business and at Arm’s Length pricing basis. There are no materially significant related party transactions made by the Company with Promoters, Directors, Key Managerial Personnel or other designated persons which may have a conflict with the interest of the Company at large.

During the year 2016-17, pursuant to section 177 of the Companies At, 2013 and regulation 23 of SEBI Listing Regulations, 2015, all Related Party Transactions were placed before the Audit Committee for its approval.

Pursuant to section 134 of the Companies Act, 2013 and Rules made thereunder, particulars of transactions with related parties as required under section 188(1) of the Companies Act, 2013, read with Rule 8(2) of Companies (Accounts) Rules, 2014 is annexed with this Report in Form AOC-2 as Annexure E.

During the year under review, the Board of Directors have revised the existing Related Party Transaction policy in line with the recently introduced SEBI (LODR) Regulations, 2015 and Companies (Meetings of Board and its Powers) Second Amendment Rules, 2015.

The policy on related party transactions as approved by the Board is uploaded on the Company’s website. The Company’s management ensures total adherence to the approved Policy on Related Party Transactions to establish Arm’s Length Basis without any compromise.

Suitable disclosures as required under AS-18 have been made in Note 33 of the Notes to the financial statements.

27


Particulars of Employees and Related disclosure

The information required under Section 197(12) of the Companies Act, 2013 read with Rule 5(2) and (3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 forms part of this report. However pursuant to first proviso to Section 136(1) of the Companies Act, 2013, this Report is being sent to the Shareholders excluding the aforesaid information. Any shareholder interested in obtaining said information, may write to the Company Secretary at the Registered Office of the Company and the said information is available for inspection at the Registered Office of the Company.

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

Particulars required pursuant to the provisions of Section 134(3)(m) of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014 in respect of Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo are set out in the Annexure A forming part of this Report.

Vigil Mechanism / Whistle Blower Policy

Your Company believes in promoting a fair, transparent, ethical and professional work environment. The Board of Directors of the Company pursuant to the provisions of Section 177 of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, has framed ‘Whistle Blower Policy’ for Directors and employees of the Company for reporting the genuine concerns or grievances or cases of actual or suspected, fraud or violation of the Company’s code of conduct and ethics policy. The Whistle Blower Policy of the Company has been posted on the website of the Company.

Nomination and Remuneration Policy

On recommendation of Nomination and Remuneration Committee, the Board of Directors have approved a Nomination and Remuneration Policy for the appointment and remuneration of the director, key managerial personnel (KMP) and other employees.

The key objectives of the Policy are to lay down the criteria for appointment and remuneration of Directors, Key Managerial Personnel and Executives at Senior Management level and recommend to the Board their appointment, and also to formulate criteria for evaluation of performance of Independent Directors and the Board and to devise a policy on Board diversity.

The Policy, inter-alia, includes criteria for determining qualifications, positive attributes, independence of a director, and expertise and experience required for appointment of Directors, KMP and Senior Management.

As per the Policy, the remuneration / compensation to the Whole-time Directors shall be recommended by the Nomination and Remuneration Committee to the Board for its approval. However, the remuneration compensation to Whole-time Directors shall be subject to the approval of the shareholders of the Company and Central Government, wherever required. Further, the Non-Executive Directors shall be entitled to the fees for attending meetings of Board and Committees within the limits prescribed in the Companies Act, 2013. The Nomination and Remuneration Policy is available on the company’s website.

Particulars of the Company’s Remuneration Policy and information required under Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rule, 2014 as set out in Annexure D, forming part of this Report.

Deposits

During the year, the Company has not accepted any deposits, within the meaning of Section 73 of the Companies Act, 2013, read with the Companies (Acceptance of Deposits) Rules, 2014 and as such, there are no outstanding deposits in terms of the Companies (Acceptance of Deposits) Rules, 2014.

Extract of Annual Return and other disclosures

Pursuant to the provisions of Section 134(3)(a) of the Companies Act, 2013 read with Rule 8 of Companies (Accounts) Rules, 2014 and Rule 12 of Companies (Management and Administration) Rules, 2014, Extract of Annual Return in Form MGT-9, for the financial year ended 31st March, 2017 made under the provisions of Section 92(3) of the Act is attached as Annexure G which forms part of this Report.


28

Particulars of Loans, Guarantees and Investments

During the year under review, your Company has not directly or indirectly –

a) Given any loan to any person or other body corporate other than usual advances envisaged in a contract of supply of materials, if any;

b) Given any guarantee or provided security in connection with a loan to any other body corporate or person; and

c) Acquired by way of subscription, purchase or otherwise, the securities of any other body corporate.

Anti-Sexual Harassment Policy

The Company has in place an Anti Sexual Harassment Policy in line with the requirements of The Sexual Harassment of Women at the Workplace (Prevention, Prohibition & Redressal) Act, 2013.

The Company has zero tolerance on Sexual Harassment at workplace. No complaint was received from any employee during the financial year 2016-17 and hence no complaint is outstanding as on 31st March, 2017 for redressal. Your Company has laid down Anti Sexual Harassment policy and it is made available on the website of the Company.

Green Initiative

Your Directors would like to draw your attention to Section 20 of the Companies Act, 2013 read with the Companies (Management and Administration) Rules, 2014, as may be amended from time to time which permits paperless compliances and also service of notice / documents (including annual report) through electronic mode to its members. To support this green initiative, we hereby once again appeal to all those members who have not registered their e-mail addresses so far are requested to register their e-mail address in respect of electronic holding with their concerned Depository Participants and/or with the Company.

Internal Control System and their Adequacy

The Internal Control System provides for well documented policies / guidelines, authorizations and approval procedures. Considering the nature of its business and size of operations, your Company through its Internal Auditors carries out periodic audit based on the plan approved by the Audit Committee.

The summary of the Internal Audit observations and status of implementation are submitted to the Audit Committee. The status of implementation of the recommendations is reviewed by the Audit Committee on a regular basis and desired actions are initiated to strengthen the control and effectiveness of the system. Concerns, if any, are reported to the Board.

Financial Performance

Discussion on financial performance with preference to operational performance has been dealt with in this Report in the relevant para which should be treated as forming part of the Management Discussion and Analysis Report.

Health, safety and environment

Your Company recognizes protection and management of environment as one of its highest priority and every effort is made to conserve and protect the environment. During the year, your Company continued its focus in creating an aesthetic, environment-friendly industrial habitat in its factory units, mobilizing support and generating interest among staff and labour for maintaining hygienic and green surrounding.

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 continues to focus on maintenance and performance improvement of related pollution control facility at its manufacturing locations.

Industrial Relations / Human Resources

Your Company maintained healthy, cordial and harmonious industrial relations at all levels during the year under review.

The Company continuously works to nurture this environment to keep its employees highly motivated, result oriented and adaptable to changing business environment. Your Company’s value proposition is based on providing value to our customer, through innovation and by consistently improving efficiency at all levels.

29


Your Directors wish to place on record their appreciation for the dedicated and commendable services rendered by the employees of the Company.

Reward, Recognition & Quality Systems Certification

The Company’s CP Division is certified OSHAS 18001:2007 by Bureau Veritas. Our quality, health and safety processes are now continuously monitored, assessed and improved to meet internationally recognized standards. Each raw-material and product is tested extensively and all manufacturing processes are continually optimized with a strong commitment to energy efficiency, occupational health, environmental responsibility and safety.

Your Company continues to enjoy the status of “Trading House” awarded by the Office of Joint Director General of Foreign Trade, Ministry of Commerce & Industry, Government of India on achieving the required Export targets.

The Company’s Vareli Plant enjoys the unique distinction of being the first in polyester weaving industry to achieve ISO 9002:1994 certification by Bureau Veritas Quality International (BVQI). The processes certified are Draw-Warping and Texturizing, Twisting, Sizing, Warping and Weaving. The scope of audit includes “Manufacture of Woven Greige Fabrics and Processed Yarns”.

The manufacturing of Texturized, Flat Polyester Filament, Polyester Partially Oriented Yarn (POY) and Fully Drawn Yarn (FDY) at Jolva are also ISO 9001:2000 certified by BVQI.

Unclaimed and Unpaid Dividends

As on 31st March, 2017 an aggregate amounts of ` 27.02 Lacs is lying in the unpaid equity dividend account of the Company in respect of the dividend for the financial year 2009-2010 and 2010-2011. Members who have not yet received / claimed their dividend entitlements are requested to contact the Company or the Registrar and Transfer Agents of the Company.

Investor Education and Protection Fund

During the year under review, the Company has credited an amount of ` 10.71 Lacs, which pertains to the dividend for the financial year 2008-09, and remained unpaid or unclaimed for a period of 7 years from the date of declaration, to the Investor Education & Protection Fund (IEPF).

Cautionary Statement

Statements in this Directors’ Report & Management Discussion and Analysis describing the Company’s objectives, projections, estimates, expectations, or predictions may be ‘forward-looking statements’ within the meaning of applicable securities laws and regulations. Since these are based on certain assumptions and expectations of future events, the Company cannot guarantee that these are accurate or will be realised. Actual results could differ materially from those express or implied. Important factors that could make difference to the Company’s operations include raw material availability and its prices, cyclical demand and pricing in the Company’s principle markets, changes in Government regulations, tax regimes and disputes, economic developments, within India and the countries in which the Company conducts business and other ancillary factors. The Company assumes no responsibility to publicly amend, modify or revise any such statements on the basis of subsequent developments, information or events. The Company disclaims any obligation to update these forward-looking statements, except as may be required by law.

Appreciation

Your Directors wish to acknowledge the co-operation and assistance extended to the Company by the Company’s Bankers and State & Central Government agencies. Your Directors also acknowledge with gratitude the support of the shareholders, other investors, customers, dealers, agents and suppliers for their continued faith and support in the Company and its management.

For and on behalf of the Board of Director

Praful A. Shah Chairman & Managing DirectorSurat, 30th May, 2017 DIN: 00218143


30

ANNEXURE – AConservation of Energy, Technology Absorption and Foreign Exchange Earnings and OutgoThe information under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 (3) of the Companies (Accounts) Rules, 2014 for the year ended March 31, 2017 is given below and forms part of the Directors’ Report.A. CONSERVATION OF ENERGY I. Steps taken or impact on conservation of energy. The Company makes an ongoing study to identify and implement energy saving system to reduce energy

consumption and cost of production. Energy consumption across all manufacturing units are reviewed periodically and potential area of energy consumption optimization is explored.

Various initiatives and steps taken by your Company’s manufacturing units are given below: 1. Saving of water wastage with the use of canal water for generation of soft water. 2. Saving of water with recycling of RO reject water for plant miscellaneous washing and other uses. 3. Reduction in the compressed air pressure, required for inter mingling in “Roto” yarns & “ACY” yarns

production, by changing design of the “quick release couplings” & of the jet inserts. 4. Conventional lighting system were replaced with LED lighting in major units resulting in saving energy and

improving lifespan of light. 5. Saving of compressed air generation power by massive compressor overhauling and continuous online

monitoring system. 6. Saving of Specific power consumption after over hauling of electrical chillers and effective water side cleaning. 7. Replacement of APH in coal based thermic fluid heaters, enhancing thermal efficiency of heater and

reducing power for fans. II. The steps taken by the company for utilising alternate sources of energy. The Company during the year continued exploring options available for utilizing alternate sources of energy in

order to reduce the electricity cost with consequent reduction in the cost of production. III. The Capital investment on energy conservation equipment. The Company has not incurred major capital investment on energy conservation equipments but focused on

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 new products in

polyester chips segment. II. The benefits derived like product improvement, cost reduction, product development or import substitution. The Company was able to reduce maintenance and operating cost at manufacturing level more particularly the

conversion cost in chips segment. There was an improvement in quality, customer satisfaction and enlargement of market base.

III. In case of imported technology (imported during the last three years reckoned from 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 and Development incurred

by the Company.

C. FOREIGN EXCHANGE EARNINGS AND OUTGO

Foreign exchange used ` in Lacsi) Raw materials, stores and spare parts, Capital goods and other products 56647.81ii) Expenditure in foreign currency 1601.12Foreign exchange earnedExport of goods on FOB basis, Commission and Service Charges 20860.61

31


Annual Report on Corporate Social Responsibility activities

1 A brief outline of the Company’s 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.

Pursuant to the provisions of Section 135 of the Companies Act, 2013, the Companies (Corporate Social Responsibility) Rules, 2014 and the various notifications / circulars issued by the Ministry of Corporate 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. Yatish Parekh, Independent Director – Chairman

b. Mr. Sunil S. Sheth, Independent Director - Member

c. Mr. Suhail P. Shah, Wholetime Director - Member

3 Average Net Profit of the Company for last three financial years (as per Section 198 of the Companies Act, 2013)

The Company has incurred average net loss during the last three financial years. However the Company has voluntarily incurred an expenditure of ` 11,63,275 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 the last three financial year.

5 Details of CSR spent during the financial year ` 11,63,275

(a) Total amount to be spent for the financial year. Not applicable.

(b) Amount unspent, if any. Not applicable.

(c) Manner in which the amount spent during the financial year.

The Company has voluntarily spent an aggregate amount of ` 11,63,275 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 financial years or any part thereof, the company shall provide the reasons for not spending the amount in its Board report

Not applicable.

Responsibility statement:

The CSR Committee hereby confirms that the implementation and monitoring of CSR policy has been carried out with all reasonable care and diligence and the same is in compliance with the CSR objectives and the policy of the Company.

For and on behalf of the CSR Committee

Yatish ParekhChairman

Surat, 30/05/2017 (DIN 00168488)

ANNEXURE – B


32

ANNEXURE – CPARTICULARS OF EMPLOYEES PURSUANT TO SECTION 134(3)(q) OF THE COMPANIES ACT, 2013 READ WITH RULE 5(1) OF THE COMPANIES (APPOINTMENT AND REMUNERATION OF MANAGERIAL PERSONNEL) RULES, 2014

Sr.No.

Requirement under Rule 5(1) Details

1. The Ratio of the remuneration of each executive Director to the median remuneration of the employees of the Company for the Financial Year.

Mr. Praful A. Shah, Chairman & Managing Director – 4.29Mr. Alok P. Shah, Joint Managing Director & CFO – 4.08Mr. Suhail P. Shah, Wholetime Director – 3.81Mr. Sanjay S. Shah, Wholetime Director – 1.26

2. The Percentage increase in remuneration of each Executive Director, Chief Financial Officer, Chief Executive Officer & Company Secretary in the financial year.

Mr. Praful A. Shah, Chairman & Managing Director - Not applicable.Mr. Alok P. Shah, Joint Managing Director & CFO - Not applicable.Mr. Suhail P. Shah, Wholetime Director - Not applicable.Mr. Sanjay S. Shah, Wholetime Director - Not applicable.Mr. Kamlesh B. Vyas, Company Secretary – 10.32.Note: The overall increase in payment of remuneration to Managing / Wholetime Director was in line with amendment to Schedule V to the Companies Act, 2013.

3. The Percentage increase in the median remuneration of employees in the financial year.

19.10%

4. Number of Permanent Employees on the rolls of the Company as on 31st March, 2017.

5044

5. The Explanation on the relationship between average increase in remuneration and Company performance.

The Company had inadequate profits during the financial year 2016-17 however, in order to retain talent the employees had to be given annual increase.

6 Comparison of the remuneration of the Key Managerial Personnel (“KMP”) (Individually and totally) against the performance of the company.

(i) Aggregate remuneration of Key Managerial Personnel in FY 2016-17 ` 5.92 Crore *

(ii) Total revenue ` 2447.09 Crore(iii) Remuneration of KMPs (as percentage of revenue)

0.24(iv) Profit /(Loss) before tax (` 94.86 Crore)(v) Remuneration of KMPs (as percentage of PBT – Not

applicable.*Remuneration of KMPs includes Managing Director / Wholetime Director. The remuneration paid to Managing Director / Wholetime Director is in accordance with the approval of shareholders’ at the 37th Annual General Meeting held on 14th September, 2016 in view of inadequacy of profits as well as the minimum remuneration subject to the provisions of Schedule V of the Companies Act, 2013.

33


Sr.No.

Requirement under Rule 5(1) Details

7. Average percentile increase made in the salaries of employees other than the managerial personnel in last Financial Year and its comparison with the percentile increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration.

Not applicable.

Justification for variation in the average percentile increase between Non Managerial employees and Managerial employees.

Not applicable.

8. Key parameters for any viable component of remuneration availed by the Directors.

Not applicable.

9. Ratio of the remuneration of the highest paid director to that the employees who are not directors but received in excess of the highest paid director during the year.

None.

10. Affirmation that the remuneration is as per the remuneration policy of the company.

The Company affirms remuneration is as per the remuneration policy of the Company.

11. Variations in the market capitalization. Market capitalization as on 31/03/2017 – ` 135.72 crore.Market capitalization as on 31/03/2016 – ` 90.90 crore.

12. Price earnings ratio as at the closing of 31st March, 2017 and 31st March, 2016.

Not applicable.

13. Percentage increase or decrease in the market quotations of the shares of the company in comparison to the rate at which the company came out with the last public offer.

The Company has not made any public issue or rights issue of securities since last more than 20 years, so comparison has not been made.




34

POLICY RELATING TO THE REMUNERATION FOR THE WHOLE-TIME DIRECTOR, NON-EXECUTIVE/INDEPENDENTDIRECTOR, KMP AND SENIOR MANAGEMENT PERSONNEL

GENERAL:

a. The remuneration / compensation / commission etc. to the Whole-time Director, Non-Executive/Independent Director, KMP and Senior Management Personnel will be determined by the Committee and recommended to the Board for approval.

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

b. The remuneration and commission to be paid to the Whole-time Director shall be in accordance with the percentage / slabs / conditions as per the provisions of the Companies Act, 2013, and the Rules made thereunder.

c. Increments to the existing remuneration / compensation structure linked to performance, should be clear and meet appropriate performance benchmarks and may be recommended by the Committee to the Board which should be within the slabs approved by the Shareholders in the case of Whole-time Director.

d. The Committee does not propose to fix the actual amounts of remuneration that may be payable to each individual keymanagerial personnel or senior management personnel. However, the management, whilst fixing the remuneration 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 responsibilities cast upon such person by reason of his holding that office.

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

5. The perquisites to be given to Whole-time Director/s, KMP & Senior Management Personnel will be as per industry practice and as may be recommended by the Committee to the Board.

Remuneration to Whole-time Director, KMP and Senior Management Personnel:

The Whole-time Director / KMP and Senior Management Personnel shall be eligible for a monthly remuneration as may be approved by the Board on the recommendation of the Committee. The break-up of the pay scale and quantum of perquisites including, employer’s contribution to P.F, pension scheme, medical expenses, club fees etc. shall be decided and approved by the Board on the recommendation of the Committee and approved by the shareholders and Central Government, wherever required, reflecting the short and long term performance objectives appropriate to the working of the Company and its goals.

Remuneration to Non- Executive / Independent Director:

The Non-Executive / Independent Director may receive remuneration by way of fees for attending meetings of Board or Committees thereof as may be recommended by the Committee and approved by the Board provided that the amount of such fees shall not exceed amount prescribed in this behalf by the Central Government from time to time.

The Company has no stock option plans and hence such instrument does not form part of the remuneration package to any Executive Director and/or Non-Executive Director.

ANNEXURE – D

35


FORM No. MR-3SECRETARIAL AUDIT REPORT

For the Financial Year Ended 31st March, 2017[Pursuant to Section 204(1) of the Companies Act, 2013 and Rule No.9 of the Companies

(Appointment and Remuneration of Managerial Personnel) Rules, 2014]

To,The Members,Garden Silk Mills Limited Tulsi Krupa Arcade, 1st Floor,Puna-Kumbharia Road, Dumbhal,Surat 395010

I have conducted the secretarial audit of the compliance of applicable statutory provisions and the adherence to good corporate practices by GARDEN SILK MILLS LIMITED (CIN: L17111GJ1979PLC003463) (hereinafter called “the Company”). Secretarial Audit was conducted in a manner that provided me a reasonable basis for evaluating the corporate conducts/statutory compliances and expressing my opinion thereon.

Based on my verification of the Company’s books, papers, minute books, forms and returns filed and other records maintained by the Company and also the information provided by the Company, its officers, agents and authorised representatives during the conduct of secretarial audit, I hereby report that in my opinion, the Company has, during the audit period covering the Financial Year ended on 31st March,2017 complied with the statutory provisions listed hereunder and also that the Company has proper Board-processes and compliance-mechanism in place to the extent, in the manner and subject to the reporting made hereinafter:

I have examined the books, papers, minute books, forms and returns filed and other records maintained by the Company for the Financial Year ended on 31st March, 2017 according to the provisions of:

(i) The Companies Act, 2013 (the Act) and the Rules made thereunder;

(ii) The Securities Contracts (Regulation) Act, 1956 (‘SCRA’) and the Rules made thereunder;

(iii) The Depositories Act, 1996 and the Regulations and Bye-laws framed thereunder;

(iv) The following Regulations and Guidelines prescribed under the Securities and Exchange Board of India Act, 1992 (‘SEBI Act’) viz.:-

(a) The Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011;

(b) The Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015;

(c) The Securities and Exchange Board of India (Registrars to an Issue and Share Transfer Agents) Regulations, 1993 regarding the Companies Act and dealing with client;

(d) The Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015;

(v) Other laws applicable specifically to the Company as per representations made by the Company: Sick Industrial Companies (Special Provisions) Act, 1985 – (since repealed)

As per the explanations given to me and the representations made by the Management and relied upon by me, during the period under audit, provisions of the following regulations / guidelines were not applicable to the Company:

(i) Foreign Exchange Management Act, 1999 and the rules and regulations made thereunder to the extent of Foreign Direct Investment, Overseas Direct Investment and External Commercial Borrowings;

ANNEXURE – E


36

(ii) The following Regulations and Guidelines prescribed under the The Securities and Exchange Board of India Act, 1992 (‘SEBI Act’):-

(a) The Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009;

(b) The Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999;

(c) The Securities and Exchange Board of India (Issue and Listing of Debt Securities) Regulations, 2008;

(d) The Securities and Exchange Board of India (Delisting of Equity Shares) Regulations, 2009; and

(e) The Securities and Exchange Board of India (Buyback of Securities) Regulations, 1998;

I have also examined compliance with the applicable clauses of the Secretarial Standards issued by The Institute of Company Secretaries of India.

I have relied on the representation made by the Company and its Officers for systems and mechanism formed by the Company for compliance under other applicable Acts, Laws and Regulations to the Company. I report that during the financial year under report, the Company has complied with the provisions of the Act, Rules, Regulations, Guidelines, Standards, etc. mentioned above.

I further report that the Board of Directors of the Company is duly constituted with proper balance of Executive Directors, Non-Executive Directors and Independent Directors including one Woman Director. The changes in the composition of the Board of Directors that took place during the year under review were carried out in compliance with the provisions of the Act.

Adequate notice is given to all directors to schedule the Board Meetings including Committees thereof, along with agenda and detailed notes on agenda were sent at least seven days in advance, and a system exists for seeking and obtaining further information and clarifications on the agenda items before the meeting and for meaningful participation at the meeting by the directors.

All decisions at Board Meetings and Committee Meetings are recorded in the minutes of the meetings of the Board of Directors or Committees of the Board, as the case may be.

I further report that as per the explanations given to me and the representation made by the Management and Report of the Statutory Auditors relied upon by me, there are adequate systems and processes in the Company commensurate with the size and operations of the Company to monitor and ensure compliance with applicable laws, rules, regulations and guidelines.

I further report that during the audit period, there was no other event / action having major bearing on the Company’s affair.

For K. Dalal & Co.Company Secretaries

Kunjal DalalPlace: Surat ProprietorDate: 29th May, 2017 FCS No. 3530 CP No. 3863

Note: This report is to be read with my letter of even date which is annexed as ‘Appendix A’ and forms an integral part of this report.

37


‘Appendix A’

To,The Members,Garden Silk Mills Limited Tulsi Krupa Arcade, 1st Floor,Puna-Kumbharia Road, Dumbhal,Surat 395010

My report of even date is to be read along with this letter.

1. Maintenance of secretarial record is the responsibility of the management of the company. My responsibility is to express an opinion on these secretarial records based on my audit.

2. I have followed the audit practices and processes as were appropriate to obtain reasonable assurance about the correctness of the contents of the Secretarial records. The verification was done on test basis to ensure that correct facts are reflected in secretarial records. I believe that the processes and practices, I followed provide a reasonable basis for my opinion.

3. I have not verified the correctness and appropriateness of financial records and Books of Accounts of the Company.

4. Wherever required, I have obtained the Management representation about the compliance of laws, rules and regulations and happening of events etc.

5. The compliance of the provisions of Corporate and other applicable laws, rules, regulations, standards is the responsibility of management. My examination was limited to the verification of procedures on test basis.

6. The Secretarial Audit report is neither an assurance as to the future viability of the Company nor of the efficacy or effectiveness with which the management has conducted the affairs of the Company.

For K. Dalal & Co.Company Secretaries

Kunjal DalalPlace: Surat ProprietorDate: 29th May, 2017 FCS No. 3530 CP No. 3863


38

ANNEXURE – FFORM AOC-1

(Pursuant to first proviso to sub-section (3) of section 129 read with rule 5 of Companies (Accounts) Rules, 2014)Statement containing salient features of the financial statement of subsidiaries

Part “A”: Subsidiary 31/03/2017

(` in Lacs)

Sr. No.

Name of the subsidiaries GAIA International FZE

1 Reporting period for the subsidiaries concerned, if different from the holding company’s reporting period

Not Applicable

2 Reporting currency and Exchange rate as on the last date of the relevant Financial year in the case of foreign subsidiaries

Reporting currency: USD Exchange rate: USD 1 = ` 64.85

3 Share capital 80.17

4 Reserves & surplus -618.82

5 Total assets 5424.96

6 Total Liabilities 5963.61

7 Investments 0.00

8 Turnover 11626.54

9 Profit/(Loss) before taxation (722.25)

10 Provision for taxation 0.00

11 Profit/(Loss) after taxation (722.25)

12 Proposed Dividend 0.00

13 % of shareholding 100%

Notes:

1. Names of subsidiaries which have been liquidated or sold during the year: No subsidiary has been liquidated or sold during the year.

2. There were no Associates and Joint Ventures of the Company.



39


ANNEXURE – GFORM NO. MGT-9

EXTRACT OF ANNUAL RETURNas on the financial year ended on 31/03/2017

[Pursuant to section 92(3) of the Companies Act, 2013 and rule 12(1) of the Companies (Management and Administration) Rules, 2014]

I. REGISTRATION AND OTHER DETAILS

i) CIN L17111GJ1979PLC003463ii) Registration Date 23/07/1979iii) Name of the Company Garden Silk Mills Limitediv) Category / Sub-Category of the Company Public Company/Limited by shares.v) Address of the Registered office and contact details Tulsi Krupa Arcade, First Floor,

Puna-Kumbharia Road,Dumbhal, Surat 395010Tel. No. 91-261-2311197-98Fax No. 91-261-2311029/502

vi) Whether listed company Yesvii) Name, Address and Contact details Karvy Computershare Private Limited

of Registrar and Transfer Agent, if any Karvy Selenium, Tower – BFinancial District, NanakramgudaSerilingampally MandalRanga Reddy DistrictHyderabad 500032State Telengana, IndiaToll Free No. (India) : 1800 345 4001Phone No. 040 67162222Fax No. 040 – 23420814Email: [email protected]

II. PRINCIPAL BUSINESS ACTIVITIES OF THE COMPANY

All the business activities contributing 10 % or more of the total turnover of the company shall be stated

Sl. No.

Name and Description of main products / services

NIC Code of the Product/service % to total turnover of the company

1 Polyester Chips & Polyester Filament Yarn 203-Manufacture of man-made fibres 91.64

III. PARTICULARS OF HOLDING, SUBSIDIARY AND ASSOCIATE COMPANIES

Sl.No.

Name and address of the Company CIN/GLN Holding/ Subsidiary /

Associate

% of shares held

Applicable Section

1 GAIA International FZE, Ajman Free Zone Area, Dubai

N.A. Subsidiary 1 2(87)(ii)


40

IV.

SHAR

E H

OLD

ING

PAT

TERN

(Equ

ity S

hare

Cap

ital B

reak

up a

s per

cent

age

of T

otal

Equ

ity)

i)

Cate

gory

-wis

e Sh

are

hold

ing

Cate

gory

of S

hare

hold

ers

No. o

f Sha

res h

eld

at th

e be

ginn

ing

of th

e ye

arNo

. of S

hare

s hel

d at

the

end

of th

e ye

ar%

chan

ge

Dem

atPh

ysica

lTo

tal%

of T

otal

Sh

ares

Dem

atPh

ysica

lTo

tal%

of T

otal

Sh

ares

durin

g th

e ye

ar

(A)

Prom

oter

(1)

Indi

an

(a)

Indi

vidu

als

/ H

indu

Und

ivid

ed F

amily

6373

683

0 63

7368

3 15

.15%

6373

683

0 63

7368

3 15

.15%

0.00

%

(b)

Cent

ral G

over

nmen

t / S

tate

Gov

ernm

ent

0 0

0 0.

00%

0 0

0 0.

00%

0.00

%

(c)

Bodi

es C

orpo

rate

1164

3766

0

1164

3766

27

.67%

1164

3766

0

1164

3766

27

.67%

0.00

%

(d)

Fina

ncia

l Ins

tituti

ons

/ Ba

nks

0 0

0 0.

00%

0 0

0 0.

00%

0.00

%

(e)

Any

Oth

er (S

peci

fy)

PART

NER

SHIP

FIR

M62

8478

1 0

6284

781

14.9

3%62

8478

10

6284

781

14.9

3%0.

00%

Sub-

Tota

l (A)

(1)

2430

2230

0

2430

2230

57

.75%

2430

2230

0

2430

2230

57

.75%

0.00

%

(2)

Fore

ign

(a)

Indi

vidu

als

0 0

0 0.

00%

0 0

0 0.

00%

0.00

%

(Non

-Res

iden

t ind

ivid

uals

/ F

orei

gn In

divi

dual

s)

(b)

Bodi

es C

orpo

rate

0 0

0 0.

00%

0 0

0 0.

00%

0.00

%

(c)

Insti

tutio

ns0

0 0

0.00

%0

0 0

0.00

%0.

00%

(d)

Any

Oth

er (S

peci

fy)

0 0

0 0.

00%

0 0

0 0.

00%

0.00

%

Sub-

Tota

l (A)

(2)

0 0

0 0.

00%

0 0

0 0.

00%

0.00

%

Tota

l Sha

reho

ldin

g of

Pro

mot

er a

nd P

rom

oter

Gro

up

(A) =

(A)(1

)+(A

)(2)

2430

2230

0

2430

2230

57

.75%

2430

2230

0

2430

2230

57

.75%

0.00

%

(B)

Publ

ic Sh

areh

oldi

ng

(1)

Insti

tutio

ns

(a)

Mut

ual F

unds

0 48

00

4800

0.

01%

0 48

00

4800

0.

01%

0.00

%

(b)

Fina

ncia

l Ins

tituti

ons

/ Ba

nks

100

8250

83

50

0.02

%11

00

8250

93

50

0.02

%0.

00%

(c)

Cent

ral G

over

nmen

t / S

tate

Gov

ernm

ent(

s)0

0 0

0.00

%0

0 0

0.00

%0.

00%

(d)

Vent

ure

Capi

tal F

unds

0

0 0

0.00

%0

0 0

0.00

%0.

00%

(e)

Insu

ranc

e Co

mpa

nies

0 0

0 0.

00%

0 0

0 0.

00%

0.00

%

(f)

Fore

ign

Insti

tutio

nal I

nves

tors

/Com

pani

es0

1621

5 16

215

0.04

%0

1621

5 16

215

0.04

%0.

00%

41


Cate

gory

of S

hare

hold

ers

No. o

f Sha

res h

eld

at th

e be

ginn

ing

of th

e ye

arNo

. of S

hare

s hel

d at

the

end

of th

e ye

ar%

chan

ge

Dem

atPh

ysica

lTo

tal%

of T

otal

Sh

ares

Dem

atPh

ysica

lTo

tal%

of T

otal

Sh

ares

durin

g th

e ye

ar

(g)

Fore

ign

Vent

ure

Capi

tal I

nves

tors

0 0

0 0.

00%

0 0

0 0.

00%

0.00

%

(h)

Qua

lified

For

eign

Inve

stor

s0

0 0

0.00

%0

0 0

0.00

%0.

00%

(i)An

y O

ther

(Spe

cify

)

i. Fo

reig

n Fi

nanc

ial I

nstit

ution

s/Fo

reig

n N

ation

als

100

250

350

0.00

%10

0 35

0 45

0 0.

00%

0.00

%

Sub-

Tota

l (B)

(1)

200

2951

5 29

715

0.07

%12

00

2961

5 30

815

0.07

%0.

00%

(2)

Non-

Insti

tutio

ns

(a)

Bodi

es C

orpo

rate

4146

832

3504

41

5033

6 9.

86%

3504

304

3084

35

0738

8 8.

33%

-1.5

3%

(b)

Indi

vidu

als

i. In

divi

dual

Sha

reho

lder

s ho

ldin

g

nom

inal

sha

re c

apita

l upt

o `

1 la

kh.

6054

966

1401

822

7456

788

17.7

2%67

0132

5 13

7262

0 80

7394

5 19

.19%

1.47

%

ii. In

divi

dual

Sha

reho

lder

s ho

ldin

g

nom

inal

sha

re c

apita

l in

exce

ss o

f ` 1

lakh

.23

0183

4 0

2301

834

5.47

%26

3917

8 0

2639

178

6.27

%0.

80%

(c)

Qua

lified

For

eign

Inve

stor

s0

0 0

0.00

%0

0 0

0.00

%0.

00%

(d)

Any

Oth

er (S

peci

fy)

i. N

RI w

ith a

nd w

ithou

t rep

taria

tion

3500

246

3201

44

3820

390

9.08

%31

6057

9 31

6039

34

7661

8 8.

26%

-0.8

2%

ii.

Trus

ts/N

BFC

700

0 70

0 0.

00%

340

0 34

0 0.

00%

-0.0

0%

iii.

Clea

ring

Mem

ber

2053

2 0

2053

2 0.

05%

5201

1 0

5201

1 0.

12%

0.07

%

Sub-

Tota

l (B)

(2)

1602

5110

17

2547

0 17

7505

80

42.1

8%16

0577

37

1691

743

1774

9480

42

.18%

-0.0

0%

Tota

l Pub

lic S

hare

hold

ing

(B) =

(B)(1

)+(B

)(2)

1602

5310

17

5498

5 17

7802

95

42.2

5%16

0589

37

1721

358

1778

0295

42

.25%

0.00

%

TOTA

L (A)

+(B)

4032

7540

17

5498

5 42

0825

25

100.

00%

4036

1167

17

2135

8 42

0825

25

100.

00%

0.00

%

(C)

Shar

es h

eld

by C

usto

dian

s and

aga

inst

whi

chDe

posit

ory

Rece

ipts

hav

e be

en is

sued

1.H

eld

by P

rom

oter

/pro

mot

ers

grou

p0

0 0

0.00

%0

0 0

0.00

%0.

00%

2.H

eld

by P

ublic

0 0

0 0.

00%

0 0

0 0.

00%

0.00

%

TOTA

L (C)

0 0

0 0.

00%

0 0

0 0.

00%

0.00

%

GRAN

D TO

TAL (

A)+(

B)+(

C)40

3275

40

1754

985

4208

2525

10

0.00

%40

3611

67

1721

358

4208

2525

10

0.00

%0.

00%


42

ii)

Sh

areh

oldi

ng o

f Pro

mot

ers

Sr.

No.

Nam

e of

the

Shar

ehol

der

Shar

ehol

ding

at

the

begi

nnin

g of

the

year

Shar

ehol

ding

at

the

end

of th

e ye

ar%

ch

ange

No.

of

Shar

es%

of t

otal

shar

esof

the

Com

pany

% o

f sha

res

pled

ged/

encu

mbe

red

to to

tal

shar

es

No.

of

Shar

es%

of t

otal

shar

esof

the

Com

pany

% o

f sha

res

pled

ged/

encu

mbe

red

to to

tal

shar

es

in sh

are

hold

ing

durin

gth

e ye

ar

1In

stro

scop

e Pr

oper

ties

Pvt.

Ltd

.72

3199

6 17

.19%

0.00

%72

3199

6 17

.19%

0.00

%0.

00%

2Pa

lom

ar T

extil

es L

td.

3930

872

9.34

%0.

00%

3930

872

9.34

%0.

00%

0.00

%

3Pr

aful

Am

icha

nd S

hah

Part

ner

Isha

Ent

erpr

ise

3791

965

9.01

%0.

00%

3791

965

9.01

%0.

00%

0.00

%

4Pr

aful

Am

icha

nd S

hah

Part

ner R

ayba

n In

vest

men

ts

2492

816

5.92

%0.

00%

2492

816

5.92

%0.

00%

0.00

%

5Sh

ri P

rafu

l A. S

hah

(Ind)

2059

035

4.89

%0.

00%

2059

035

4.89

%0.

00%

0.00

%

6Sh

ri P

rafu

l A. S

hah

(HU

F)10

0266

7 2.

38%

0.00

%10

0266

7 2.

38%

0.00

%0.

00%

7Sh

ri A

lok

P. S

hah

7546

71

1.79

%0.

00%

7546

71

1.79

%0.

00%

0.00

%

8Su

rat T

extil

e M

ills

Lim

ited

4808

78

1.14

%0.

00%

4808

78

1.14

%0.

00%

0.00

%

9Sh

ri S

anja

y S.

Sha

h68

9660

1.

64%

0.00

%68

9660

1.

64%

0.00

%0.

00%

10Sh

ri P

rafu

l A. S

hah

(Ind)

7301

55

1.74

%0.

00%

7301

55

1.74

%0.

00%

0.00

%

11Sh

ri S

uhai

l P. S

hah

4966

85

1.18

%0.

00%

4966

85

1.18

%0.

00%

0.00

%

12Sm

t. S

hilp

a P.

Sha

h46

0626

1.

09%

0.00

%46

0626

1.

09%

0.00

%0.

00%

13Sm

t. S

hilp

a P.

Sha

h93

699

0.22

%0.

00%

9369

9 0.

22%

0.00

%0.

00%

14Sm

t. S

hyam

a S.

Sha

h68

863

0.16

%0.

00%

6886

3 0.

16%

0.00

%0.

00%

15M

s. A

rchi

ta R

. Sha

h13

424

0.03

%0.

00%

1342

4 0.

03%

0.00

%0.

00%

16Sh

ri R

ajen

P. S

hah

4198

0.

01%

0.00

%41

98

0.01

%0.

00%

0.00

%

17Va

reli

Trad

ing

Co. L

td.

20

0.00

%0.

00%

20

0.00

%0.

00%

0.00

%

Tota

l24

3022

30

57.7

5%0.

00%

2430

2230

57

.75%

0.00

%0.

00%

43


iii

) Ch

ange

in P

rom

oter

s’ S

hare

hold

ing

(ple

ase

spec

ify, i

f the

re is

no

chan

ge)

Sl.

No.

Nam

e of

the

Shar

ehol

der

Shar

ehol

ding

at

the

begi

nnin

g of

the

year

Date

wis

e In

crea

se/D

ecre

ase

in P

rom

oter

s’ sh

are

hold

ing

durin

g th

e y

ear s

peci

fyin

g th

e re

ason

s for

incr

ease

/ d

ecre

ase

(e.g

. allo

tmen

t/ tr

ansf

er /

bo

nus/

swea

t equ

ity e

tc):

Cum

ulati

ve

Shar

ehol

ding

du

ring

the

year

Shar

ehol

ding

at t

he

end

of th

e ye

ar

No.

of

Shar

es%

of t

otal

sh

ares

of

the

Com

pany

Date

Incr

ease

/ De

crea

seRe

ason

No.

of

Shar

es%

of t

otal

sh

ares

of

the

Com

pany

No.

of

Shar

es%

of t

otal

sh

ares

of

the

Com

pany

1In

stro

scop

e Pr

oper

ties

Pvt.

Ltd

.72

3199

6 17

.19%

0 72

3199

6 17

.19%

2Pa

lom

ar T

extil

es L

td.

3930

872

9.34

%0

3930

872

9.34

%

3Pr

aful

A

mic

hand

Sh

ah

Part

ner

Rayb

an In

vest

men

ts

2492

816

5.92

%0

2492

816

5.92

%

4Sh

ri P

rafu

l A. S

hah

(Ind)

2059

035

4.89

%0

2059

035

4.89

%

5Pr

aful

Am

icha

nd S

hah

Part

ner

Isha

En

terp

rise

3791

965

9.01

%0

3791

965

9.01

%

6Sh

ri P

rafu

l A. S

hah

(HU

F)10

0266

7 2.

38%

0 10

0266

7 2.

38%

7Ra

jen

P. S

hah

4198

0.

01%

0 41

98

0.01

%

2Sa

njay

S. S

hah

6896

60

1.64

%0

6896

60

1.64

%

9Sh

ri A

lok

P. S

hah

7546

71

1.79

%0

7546

71

1.79

%

10Su

rat T

extil

e M

ills

Lim

ited

4808

78

1.14

%0

4808

78

1.14

%

11Sh

ri P

rafu

l A. S

hah

(Ind)

7301

55

1.74

%0

7301

55

1.74

%

12Sh

ri S

uhai

l P. S

hah

4966

85

1.18

%0

4966

85

1.18

%

13Sm

t. S

hilp

a P.

Sha

h46

0626

1.

09%

0 46

0626

1.

09%

14Sm

t. S

hilp

a P.

Sha

h93

699

0.22

%0

9369

9 0.

22%

15Sm

t. S

hyam

a S.

Sha

h68

863

0.16

%0

6886

3 0.

16%

16M

s. A

rchi

ta R

. Sha

h13

424

0.03

%0

1342

4 0.

03%

17Va

reli

Trad

ing

Co. L

td.

20

0.00

%0

20

0.00

%


44

iv)

Shar

ehol

ding

Patt

ern

of to

p te

n Sh

areh

olde

rs (o

ther

than

Dire

ctor

s, P

rom

oter

s and

Hol

ders

of G

DRs a

nd A

DRs)

:Sr

. N

o.Fo

r eac

h of

the

Top

10 S

hare

hold

ers

Shar

ehol

ding

at t

he

begi

nnin

g of

the

year

Date

wis

e In

crea

se /

Dec

reas

e in

Sha

re h

oldi

ng d

urin

g th

e ye

ar sp

ecify

ing

the

reas

ons

for i

ncre

ase

/ de

crea

se (e

.g.

allo

tmen

t / tr

ansf

er /

bon

us/

swea

t equ

ity e

tc):

Cum

ulati

ve

Shar

ehol

ding

dur

ing

the

year

Shar

ehol

ding

at t

he

end

of th

e ye

ar

No.

of

Shar

es%

of t

otal

sh

ares

of

the

Com

pany

Date

Incr

ease

/ De

crea

seRe

ason

No.

of

Shar

es%

of t

otal

sh

ares

of

the

Com

pany

No.

of

Shar

es%

of t

otal

sh

ares

of

the

Com

pany

1 IL

and

FS

Trus

t Co

Ltd.

3263

676

7.76

%10

/06/

2016

(500

00)

Tran

sfer

3213

676

7.64

%17

/06/

2016

(108

392)

Tran

sfer

3105

284

7.38

%24

/06/

2016

(130

000)

Tran

sfer

2975

284

7.07

%21

/10/

2016

(180

000)

Tran

sfer

2795

284

6.64

%16

/12/

2016

(230

0)Tr

ansf

er27

9298

4 6.

64%

23/1

2/20

16(1

368)

Tran

sfer

2791

616

6.63

%27

/01/

2017

(209

90)

Tran

sfer

2770

626

6.58

%03

/02/

2017

(200

00)

Tran

sfer

2750

626

6.54

%10

/02/

2017

(219

20)

Tran

sfer

2728

706

6.48

%17

/02/

2017

(540

20)

Tran

sfer

2674

686

6.36

%24

/02/

2017

(505

34)

Tran

sfer

2624

152

6.24

%03

/03/

2017

(732

17)

Tran

sfer

2550

935

6.06

%10

/03/

2017

(375

71)

Tran

sfer

2513

364

5.97

%17

/03/

2017

(403

3)Tr

ansf

er25

0933

1 5.

96%

24/0

3/20

17(4

7034

)Tr

ansf

er24

6229

7 5.

85%

2462

297

5.85

%2

Kesw

ani H

ares

h18

8828

9 4.

49%

0 18

8828

9 4.

49%

3 Ri

cky

Ishw

arda

s Ki

rpal

ani

1182

161

2.81

%21

/10/

2016

(275

000)

Tran

sfer

9071

61

2.16

%17

/03/

2017

(500

00)

Tran

sfer

8571

61

2.04

%85

7161

2.

04%

4 Sh

auna

k Ja

gdis

h Sh

ah70

0000

1.

66%

0 70

0000

1.

66%

5 Ja

gdis

h A

mri

tlal S

hah

3258

77

0.77

%0

3258

77

0.77

%6

Poon

am K

irpa

lani

1908

94

0.45

%0

1908

94

0.45

%7

Kash

ah In

vest

men

t Lim

ited

1350

00

0.32

%0

1350

00

0.32

%8

Pran

av K

umar

pal P

arek

h11

0158

0.

26%

0 11

0158

0.

26%

9 Vi

nodc

hand

ra M

ansu

khla

l Par

ekh

1002

66

0.24

%0

1002

66

0.24

%10

Sa

ntos

h At

mar

am Ja

tia90

000

0.21

%0

9000

0 0.

21%

11

Venk

a Ra

ghav

a Ra

ju0

0.00

%24

/02/

2017

6300

0 Tr

ansf

er63

000

0.15

%03

/03/

2017

1245

4 Tr

ansf

er75

454

0.18

%10

/03/

2017

4475

3 Tr

ansf

er12

0207

0.

29%

17/0

3/20

1763

000

Tran

sfer

1832

07

0.44

%24

/03/

2017

6120

Tr

ansf

er18

9327

0.

45%

31/0

3/20

1747

732

Tran

sfer

2370

59

0.56

%23

7059

0.

56%

45


V)

Shar

ehol

ding

of D

irect

ors a

nd K

ey M

anag

eria

l Per

sonn

el:

Sr.

No.

For e

ach

of th

e Di

rect

ors a

nd K

MP

Shar

ehol

ding

at

the

begi

nnin

g of

th

e ye

ar

Date

wis

e In

crea

se /

De

crea

se in

Sha

re h

oldi

ng

durin

g th

e ye

ar sp

ecify

ing

the

reas

ons f

or in

crea

se /

de

crea

se (e

.g. a

llotm

ent

/ tr

ansf

er /

bon

us/

swea

t eq

uity

etc

):

Cum

ulati

ve

Shar

ehol

ding

du

ring

the

year

Shar

ehol

ding

at

the

end

of th

e ye

ar

No.

of

Shar

es%

of t

otal

sh

ares

of

the

Com

pany

Date

Incr

ease

/ De

crea

seRe

ason

No.

of

Shar

es%

of t

otal

sh

ares

of

the

Com

pany

No.

of

Shar

es%

of t

otal

sh

ares

of

the

Com

pany

1Sh

ri P

rafu

l A. S

hah

(Ind)

Man

agin

g D

irect

or20

5903

5 4.

89%

0 20

5903

5 4.

89%

7301

55

1.74

%0

7301

55

1.74

%

2Sh

ri A

lok

P. S

hah

Join

t Man

agin

g D

irect

or

& C

FO75

4671

1.

79%

0 75

4671

1.

79%

3Sh

ri S

anja

y S.

Sha

hEx

ecuti

ve D

irect

or68

9660

1.

64%

0 68

9660

1.

64%

4Sh

ri S

uhai

l P. S

hah

Exec

utive

Dire

ctor

4966

85

1.18

%0

4966

85

1.18

%

5Sh

ri A

runc

hand

ra N

. Ja

riw

ala

*D

irect

or0

0.00

%0

0 0.

00%

6Sh

ri Y

atish

Par

ekh

Dire

ctor

0 0.

00%

0 0

0.00

%

7Sh

ri S

unil

S. S

heth

Dire

ctor

0 0.

00%

0 0

0.00

%

8Sm

t. A

nita

Man

drek

arD

irect

or0

0.00

%0

0 0.

00%

9Sh

ri D

eepa

k N

. Sha

hD

irect

or0

0.00

%0

0 0.

00%

10Sh

ri H

. C. M

ishr

aN

omin

ee D

irect

or (L

IC)

0 0.

00%

0 0

0.00

%

11Sh

ri K

amle

sh B

. Vya

sCo

mpa

ny S

ecre

tary

0 0.

00%

0 0

0.00

%

*

Ceas

ed to

be

a D

irect

or o

f the

Com

pany

w.e

.f. 2

1/01

/201

7.


46

V. INDEBTEDNESS

Indebtedness of the Company including interest outstanding/accrued but not due for payment(` in Lacs)

Secured Loans excluding deposits

Unsecured Loans

Deposits Total Indebtedness

Indebtedness at the beginning of the financial yeari) Principal Amount 111390.83 921.48 686.74 112999.05 ii) Interest due but not paid 340.93 0.00 0.00 340.93 iii) Interest accrued but not due 206.46 6.72 0.00 213.18 Total (i+ii+iii) 111938.22 928.20 686.74 113553.16 Change in Indebtedness during the financial year• Addition 62748.05 0.00 41.46 62789.51 • Reduction 14236.78 189.68 0.00 14426.46 Net Change 48511.27 189.68 41.46 48363.05 Indebtedness at the end of the financial yeari) Principal Amount 153372.91 733.46 728.20 154834.57 ii) Interest due but not paid 7017.01 0.00 0.00 7017.01 iii) Interest accrued but not due 59.56 5.06 0.00 64.62 Total (i+ii+iii) 160449.48 738.52 728.20 161916.20

VI. REMUNERATION OF DIRECTORS AND KEY MANAGERIAL PERSONNEL

A. Remuneration to Managing Director, Whole-time Directors and/or Manager:

Sr. No.

Particulars of Remuneration Name of MD/WTD/ Manager Total

Shri Praful A. Shah

Shri Alok P. Shah

Shri Sanjay S. Shah

Shri Suhail P. Shah

Amount

1 Gross salary (a) Salary as per provisions contained in

section 17(1) of the Income-tax Act, 1961 188.05 178.80 55.45 166.80 589.10 (b) Value of perquisites u/s 17(2) Income-tax

Act, 19610.83 0.83 0.00 0.83 2.49

(c) Profits in lieu of salary under section 17(3)of the Income-tax Act, 1961 0.00 0.00 0.00 0.00 0.00

2 Stock Option 0.00 0.00 0.00 0.00 0.00 3 Sweat Equity 0.00 0.00 0.00 0.00 0.00 4 Commission

- as % of profit 0.00 0.00 0.00 0.00 0.00 - others, specify... 0.00 0.00 0.00 0.00 0.00

5 Others, please specify 0.00 0.00 0.00 0.00 0.00 Total (A) 188.88 179.63 55.45 167.63 591.59

47


B. Remuneration to other directors:

Sl. No.

Particulars of Remuneration Name of Directors Total Amount

Shri A. N. Jariwala *

Shri Yatish Parekh

Shri Sunil Sheth

Smt. Anita Mandrekar

Shri Deepak N. Shah

Shri H. C.

Mishra1 Independent Directors

• Fee for attending board committee meetings

0.01 1.11 1.11 0.50 0.70 0.00 3.43

• Commission 0.00 0.00 0.00 0.00 0.00 0.00 0.00

• Others, please specify 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Total (1) 0.01 1.11 1.11 0.50 0.70 0.00 3.43 2 Other Non-Executive Directors

• Fee for attending board committee meetings

0.00 0.00 0.00 0.00 0.00 0.60 0.60

• Commission 0.00 0.00 0.00 0.00 0.00 0.00 0.00

• Others, please specify 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Total (2) 0.00 0.00 0.00 0.00 0.00 0.60 0.60 Total Managerial Remuneration (1+2) 0.01 1.11 1.11 0.50 0.70 0.60 4.03 Overall Ceiling as per the Act The Company has not paid any remuneration to Non-executive Directors

except sitting fees.

* Ceased to be a Director of the Company w.e.f. 21/01/2017.

C. Remuneration to key managerial personnel other than MD/Manager/WTD(` in Lacs)

Sl. No.

Particulars of Remuneration

Company SecretaryShri Kamlesh B. Vyas

1. Salary as per provisions contained in section 17(1) of the Income-tax Act, 1961 15.00

Value of perquisites u/s 17(2) Income-tax Act, 1961 0.39

Profits in lieu of salary under section 17(3) of the Income-tax Act, 1961 0.00

2 Stock Option 0.00

3 Sweat Equity 0.00

4 Commission

5 Others 0.00

Total 15.39


48

VII. PENALTIES / PUNISHMENT/ COMPOUNDING OF OFFENCES:

Type Section of the Companies

Act

Brief Description

Details of Penalty /

Punishment/ Compounding fees imposed

Authority [RD / NCL1 /

COURT]

Appeal made, if any

(give Details)

A. COMPANY Not Applicable Not Applicable Not Applicable Not Applicable Not Applicable Penalty Punishment CompoundingB. DIRECTORS Not Applicable Not Applicable Not Applicable Not Applicable Not Applicable Penalty Punishment CompoundingC. OTHER OFFICERS IN DEFAULT Not Applicable Not Applicable Not Applicable Not Applicable Not Applicable Penalty Punishment Compounding



49


ANNEXURE – H

REPORT ON CORPORATE GOVERNANCEA report on Corporate Governance is set out in compliance with the Corporate Governance requirements as stipulated in Regulation 34(3) read with Schedule V of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulation, 2015 (‘Listing Regulations’).

1. THE COMPANY’S PHILOSOPHY ON CORPORATE GOVERNANCE:-

The Company believes that adherence to sound corporate governance principles is the best tool to achieve desired goal for creation of long term wealth with transparency and business ethics for all its stakeholders viz., shareholders, employees, customers etc.

The philosophy of Corporate Governance is a principle based approach as codified in Regulation 34(3) of SEBI Listing Regulations, 2015, encompassing the fundamentals of rights and roles of various shareholders of the Company, disclosure, transparency and board responsibility.

Your Company has complied with all the requirements of Corporate Governance in terms of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (hereinafter referred to as SEBI Listing Regulations, 2015) and the best practices are followed to achieve its goals on Corporate Governance.

2. BOARD OF DIRECTORS:-

(a) Composition:

Your Company has the combination of Executive and Non-Executive Directors in conformity with Regulation 34 of the SEBI Listing Regulations, 2015. The Non-Executive Directors are having diverse backgrounds with considerable professional proficiency, with expertise and experience in technical, general corporate management, finance, banking, legal and other allied fields which enables them to contribute effectively to the Company in their capacity as member of the Board.

The present strength of the Board of Directors is a mix of five Non-Executive Directors and four Executive Directors. Of the five Non-Executive Directors, four are Independent Directors. The Chairman of the Board is an Executive Director.

As per the declarations received by the Company from each of the Directors, none of them are disqualified under Section 164(2) of the Companies Act, 2013.

The Independent Directors of the Company are in compliance with the provision of Regulation 16(b). Further, disclosures have been made by the Directors regarding their Chairmanship / Membership of the mandatory Committees of the Board and that the same are within the maximum permissible limit as stipulated under Regulation 16(b) of the SEBI Listing Regulations, 2015.

The Non-Executive Directors are having diverse backgrounds with considerable professional proficiency, with expertise and experience in technical, general corporate management, finance, banking, legal and other allied fields which enables them to contribute effectively to the Company in their capacity as member of the Board.

Transactions with related parties are disclosed in Note No.33 of ‘Notes to the Financial Statements’ for the year ended 31st March, 2017. There has been no material pecuniary transaction or relationship between the Company and its Non-executive and/or independent Directors during the year 2016-17.

The Senior Management have made disclosures to the Board confirming that there are no material, financial and/or commercial transactions between them and the Company, which could have potential conflict of interest with the Company at large.


50

(b) Board Meetings and attendance of Directors

The Board oversees the entire functioning of the Company and is involved in strategic decision-making on a collective basis. The Board meets at least four times a year and the interval between any such two meetings has not been more than one hundred and twenty days. The Company Secretary under the direction of the Chairman and in consultation with Chief Financial Officer (CFO) prepares the agenda along with the explanatory notes thereto and circulates it to the Directors, along with the notice of the meeting.

During the year under review, 6 Board Meetings were held on 28/05/2016, 10/08/2016, 14/09/2016, 25/10/2016, 14/11/2016 and 14/02/2017.

The details of the composition of the Board, number of Board meetings held, attendance thereat and at the last annual general meeting and the number of other Directorship, Memberships and/or Chairmanship held by each Director of the Board as on 31st March, 2017, are set out below. None of the Directors hold any convertible instrument as on 31st March, 2017.

Name of the Directors Category of Directors

No. of Board

Meeting attended

Whether attended last AGM held on14/09/2016

No. of Other Directorship(s)

**

No. of Membership(s) /Chairmanship(s) of Board Committees in

other Companies#

No. of shares held in the Company

as at 31/03/2017

Shri Praful A. ShahChairman & Managing Director

Promoter-Executive

05 Yes 05 -- 2789190

Shri Alok P. ShahJoint Managing Director

Promoter-Executive

05 Yes 05 -- 754671

Shri Sanjay S. ShahExecutive Director

Promoter-Executive

03 No 01 -- 689660

Shri Suhail P. Shah Executive Director

Promoter-Executive

06 Yes 04 -- 496685

Shri Yatish Parekh Independent Director

Independent - Non Executive

06 Yes -- -- Nil

Shri A. N. Jariwala Independent Director*


00 No -- -- Nil

Shri Sunil S. Sheth Independent Director


06 Yes 01 -- Nil

Smt. Anita MandrekarIndependent Director


04 Yes 01 -- Nil

Shri Deepak N. ShahIndependent Director


06 Yes -- -- Nil

Shri H. C. Mishra (Nominee of LIC)

Non Executive – Non Independent

06 No -- -- Nil


# In accordance with SEBI Listing Regulations, 2015, Memberships / Chairmanships of only the Audit Committees and Shareholders’ / Investors’ Grievance Committees in all Public Limited Companies (excluding Garden Silk Mills Limited) have been considered.

(c) Board Meeting Procedures

The agenda papers with relevant explanatory notes and material documents relating to matters for perusal of the Board / Committee are circulated in advance, so as to facilitate discussion and informed decision-making in the meeting.

51


The routine business brought to the relevant meetings includes, inter alia Annual business plans and budget, Quarterly results and update on operations, Financial results for the relevant period along with limited review report thereon, Minutes of various committee meetings, Shareholding pattern as per Regulation 31 of the SEBI Listing Regulations, 2015, the information on recruitment and remuneration of senior officers just below the Board level and approval of Related Party Transaction etc.

The information as required to be placed before Board of Directors as per Code of Corporate Governance is being made available to the Board as and when applicable. The Board periodically reviews compliance reports of all laws applicable to the Company as well as steps taken by the Company to rectify instances of non-compliance.

(d) Directors’ Tenure, Appointment / Re-appointment and Remuneration

In terms of Section 152 read with Section 149(13) of the Companies Act, 2013 Shri Sanjay S. Shah is liable to retire by rotation. The said Director has offered himself for reappointment and resolution for his reappointment is incorporated in the Notice of the ensuing Annual General Meeting.

The Independent Directors are paid sitting fees for attending meetings of Board / Board Committees.

The brief profile and other information as required under Regulation 36(3) of the SEBI Listing Regulations, 2015 relating to Directors being appointed / reappointed, forms part of the Notice of ensuing Annual General Meeting.

(e) Meeting of Independent Directors

During the year, a meeting of Independent Directors was held on 14th February, 2017 to review the performance of the Board as a whole on parameters of effectiveness and to assess the quality, quantity and timeliness of flow of information between the management and the Board. Shri Yatish Parekh, Chairman of the Meeting presented the views of the Independent Directors on matter relating to Board processes and overall affairs of the Company to the full Board. Four members out of six Independent Directors attended the said meeting.

(f) Familiarization Program for Independent Directors

The Company provides suitable familiarisation programme to Independent Directors so as to associate themselves with the nature of the industry in which the Company operates. Directors are periodically advised about the changes effected in the Corporate Laws, Listing Regulations with regard to their roles, rights and responsibilities as Director of the Company. The details of the familiarisation programme have been disclosed and updated from time to time on the Company’s website.

3. BOARD COMMITTEES:-

During the financial year under review, the Board had five committees viz., Audit Committee, Stakeholders’ Relationship Committee, Corporate Social Responsibility Committee, Nomination & Remuneration Committee and Management Committee. The Board decides the term of reference of these committees and assignment of its Members thereof.

(a) Audit Committee

Presently the Audit Committee comprises of Shri Yatish C. Parekh, Independent Director as Chairman, Shri Sunil S. Sheth, Independent Director and Shri Deepak N. Shah, Independent Director as Members. Shri Arunchandra N. Jariwala, member of the Committee expired on 27th January, 2017. All the members of the Committee are professionals and financially literate within the meaning of Regulation 18 of the SEBI Listing Regulations, 2015.

The terms of reference of the Audit Committee includes the matters specified under Regulation 18 of the SEBI Listing Regulations, 2015 as well as Section 177 of the Companies Act, 2013.

The Audit Committee may call for the Comments of the Auditors about internal control systems, the scope of Audit, including observations and review of financial statements before their submission to the Board and any related issues with internal and statutory auditors and management of the Company.

The Finance Head, Internal Auditor and Statutory Auditors are invitees to the Meeting.


52

The Chairman of the Audit Committee was present at the 37th Annual General Meeting of the Company held on 14th September, 2016. The Minutes of the Audit Committee Meetings were noted at the Board Meetings.

Meetings and attendance

During the financial year 2016-17, the Audit Committee of the Company met four times on 28/05/2016, 10/08/2016, 14/11/2016 and 14/02/2017. The gap between two Audit Committee meetings did not exceed four months. The Committee, in its meeting held on 30/05/2017 reviewed the Annual Accounts for the year ended 31st March, 2017.

The Committee, in addition to other business reviews the quarterly (unaudited) financial results, annual accounts and cost audit report etc. before submitting to the Board of Directors.

The details of composition of the Audit Committee and the attendance of the Members at the Audit Committee Meetings are as under

Sr.No.

Name of Director Status No. of meetings attended

1 Shri Yatish C. Parekh Chairman 04

2 Shri Arunchandra N. Jariwala * Member 00

3 Shri Sunil S. Sheth Member 04

4 Shri Deepak N. Shah ** Member 00


** Inducted as member of the Committee w.e.f. 14/02/2017

(b) Stakeholders’ Relationship Committee

The Company has constituted the Stakeholders’ Relationship and Investors’ Grievance Committee in accordance with the provisions of the Companies Act, 2013 and the Listing Regulations (erstwhile Listing Agreements). The Stakeholder Relationship Committee oversee investors’ grievances and redressal mechanism and recommends measures to improve the level of Investor’s Services.

Presently, the Stakeholder Relationship Committee comprises of Shri Yatish Parekh, Independent Director as Chairman, Shri Sanjay S. Shah, Wholetime Director and Shri Sunil S. Sheth, Independent Director as its Members.

The said Committee also approves cases such as the transfer of shares in physical form, issue of duplicate share certificates and requests regarding Transmission / Consolidation / Split of Share Certificates etc. The powers for the aforesaid has been delegated to the Registrar & Transfer Agents who approves the documents fortnightly. The transfer registers duly signed by the authorised person is placed before the meeting of Stakeholders’ Relationship Committee meetings on quarterly basis.

The terms of reference of the Stakeholders’ Relationship Committee covers the matters specified under Regulation 20 of SEBI Listing Regulations, 2015 with the Stock Exchanges. The minutes of the Stakeholders’ Relationship Committee were noted at the Board Meeting.

Further, as per regulation 40(2) of the Listing Regulation, a report on transfer of shares / deletion of name / issue of duplicate share certificates / transmission of securities is also placed at each meeting of the Board of Directors.

53


A summary of the complaints received, cleared / pending during the financial year under review are given below:

Nature of Complaints Number of ComplaintsAs on 1st

April, 2016Received

during the financial year

Cleared / attended during

the financial year

Pending as on 31st

March, 2017Non-receipt of dividend warrants Nil 68 68 NilNon-receipt of share certificates after transfer, deletion of name, transmission, transposition, consolidation of folios & share certificates, correction of name etc.

Nil 27 27 Nil

Non-receipt of Annual Report Nil 24 24 NilLetters from SEBI, Stock Exchanges and Ministry of Corporate Affairs

Nil 02 02 Nil

Total Nil 121 121 Nil

During the Financial Year under review, 121 complaints were received and as on date all of them have been redressed / answered to the satisfaction of the shareholders. No investor grievance remained unattended / pending for resolution for more than 30 days and no request for share transfers and dematerialization received for the financial year under review was pending for more than the time limit prescribed under the Listing Agreement with the Stock Exchanges.

(c) Nomination and Remuneration Committee

The Nomination and Remuneration Committee is fully empowered to determine / approve and revise, subject to necessary approvals, the remuneration of managerial personnel including Managing Director after taking into account the financial position of the Company, trends in the industry, qualifications, experience, past performance and past remuneration etc. The terms of reference of the Nomination and Remuneration Committee includes the matters specified under Regulation 19 of the SEBI Listing Regulations, 2015 as well as under Section 178 of the Act.

Based on the recommendation of the Nomination and Remuneration Committee, the Board of Directors have formulated and adopted Nomination and Remuneration Policy. The details of the remuneration policy are available on the website of the Company www.gardenvareli.com. The Non-Executive Directors are paid sitting fees for every meeting of the Board and its Committees attended by them.

Presently the Nomination and Remuneration Committee comprises of Shri Yatish Parekh, as Chairman, Shri Sunil Sheth and Smt. Anita Mandrekar, Independent Directors as its Members. One meeting of Nomination and Remuneration Committee was held on 25/05/2016. All the members were present at the meeting.

Nomination and Remuneration Policy

On recommendation of Nomination and Remuneration Committee, the Board of Directors have approved a Nomination and Remuneration Policy for the appointment and remuneration of the director, key managerial personnel (KMP) and other employees. The key objectives of the Policy are to lay down the criteria for appointment and remuneration of Directors, Key Managerial Personnel and Executives at Senior Management level and recommend to the Board their appointment, and also to formulate criteria for evaluation of performance of Independent Directors and the Board and to devise a policy on Board diversity. The Policy, inter-alia, includes criteria for determining qualifications, positive attributes, independence of a director, and expertise and experience required for appointment of Directors, KMP and Senior Management.

As per the Policy, the remuneration / compensation to the Whole-time Directors shall be recommended by the Nomination and Remuneration Committee to the Board for its approval. However, the remuneration compensation to Whole-time Directors shall be subject to the approval of the shareholders of the Company


54

and Central Government, wherever required. Further, the Non-Executive Directors shall be entitled to the fees for attending meetings of Board and Committees within the limits prescribed in the Companies Act, 2013. The Nomination and Remuneration Policy is available on the company’s website.

Remuneration to Directors

There has been no materially significant related party transactions, pecuniary relationships or transactions between the Company and its Directors for the financial year under review that may have a potential conflict with the interest of the Company at large.

Remuneration paid to Executive Directors

(Amount in Rupees)

Name of Director Salary & Allowances

Taxable Value of perquisites

Sitting fees

Shri Praful A. Shah 18805000 83106 NilShri Alok P. Shah 17880000 83106 NilShri Suhail P. Shah 16680000 83106 NilShri Sanjay S. Shah 5544648 Nil NilShri Yatish Parekh Nil Nil 111000Shri A.N. Jariwala * Nil Nil 1000Shri Sunil S. Sheth Nil Nil 111000Shri Anita Mandrekar Nil Nil 50000Shri Deepak N. Shah Nil Nil 70000Shri H. C. Mishra Nil Nil 60000Total 58909648 249318 403000


Remuneration paid to Non-Executive Directors

The Company has paid sitting fees to Non-Executive directors for attending meetings of the Board, Audit Committee and Share Transfer Committee meetings. The aggregate amount of sitting fees paid during the financial year 2016-17 was ` 4,03,000/-

The Company has no stock option plans and hence such instrument does not form part of the remuneration package to any Executive Director and/or Non-Executive Director.

Performance Evaluation:

Pursuant to the provisions of Section 178 the Companies Act, 2013 (“Act”) and the corporate governance requirements as prescribed by Securities and Exchange Board of India (“SEBI”) under Regulation 19 of the SEBI Listing Regulations, 2015 as may be applicable, the Board of Directors (“Board”) has carried out an annual evaluation of its own performance and that of its committees and individual directors.

The performance of the Board and individual directors was evaluated by the Board seeking inputs from all the Directors. The performance of the committees was evaluated by the Board seeking inputs from the committee members. The Nomination and Remuneration Committee (“NRC”) reviewed the performance of the individual directors. A separate meeting of Independent Directors was also held to review the performance of non-independent directors; performance of the Board as a whole and performance of the Chairperson of the Company, taking into account the views of executive directors and non-executive directors. This was followed by a Board meeting and discussed the performance of the Board, its committees and individual directors.

55


The criteria for performance evaluation of the Board included aspects like Board composition and structure; effectiveness of Board processes, information and functioning etc. The criteria for performance evaluation of committees of the Board included aspects like composition of committees, effectiveness of committee meetings etc. The criteria for performance evaluation of the individual directors included aspects on contribution to the Board and committee meetings like preparedness on the issues to be discussed, meaningful and constructive contribution and inputs in meetings etc. In addition the Chairperson was also evaluated on the key aspects of his role.

(d) Other Committees of Directors

Management Committee of the Board

The Board of Directors has constituted Management Committee of Directors to approve routine and specific matters delegated by the Board. The composition of the Committee of Directors comprises Shri Alok P. Shah, Wholetime Director as Chairman, Shri Sanjay S. Shah, Wholetime Director, Shri Yatish C. Parekh and Shri Sunil S. Sheth, Independent Director as Member. During the year 2016-17 the Committee met on 14/11/2016 and 16/12/2016 to discuss the matters coming within the Committee’s purview.

(e) Corporate Social Responsibility Committee

The Committee’s constitution and terms of reference are in compliance with provisions of the Section 135 of the Companies Act, 2013.

The composition of the Committee of Directors comprises Shri Yatish Parekh, Independent Director as Chairman, Shri Sunil S. Sheth, Independent Director and Shri Suhail P. Shah, Wholetime Director as Members.

During the year 2016-17 the Committee met once on 14th February, 2017 to discuss the matters coming within the Committee’s purview.

The Committee’s prime responsibility is to assist the Board in discharging its social responsibility by way of formulating and monitoring implementation of the framework of corporate social responsibility policy. The terms of reference of the Corporate Social Responsibility are in accordance with the provisions of the Companies Act, 2013 and Rules made there under.

The Company has also adopted CSR policy in compliance with the aforesaid provisions and the same is placed on the Company’s website at www.gardenvareli.com.

4. MD/CEO/CFO CERTIFICATION:-

As required under Regulation 17(8) of the SEBI Listing Regulations, 2015, the CEO and CFO certification of the Financial Statements, the Cash Flow Statement and the Internal Control Systems for financial reporting for the financial year ended was placed before Board of Directors at its Meeting held on 30th May, 2017.

5. COMPLIANCE OFFICER:-

The Company Secretary is the Compliance Officer under Regulation 6 of the SEBI Listing Regulations, 2015 and other applicable SEBI Regulations and Rules.

6. GENERAL BODY MEETINGS:-

(a) The details of last 3 Annual General Meetings held are as under:

Financial Year Location Date Time2013-14 Garden Mills Complex, Sahara Gate, Surat 30/07/2014 11.00 a.m.2014-15 Tulsi Krupa Arcade, Puna-Kumbharia Road, Surat 09/09/2015 11.00 a.m.2015-16 Tulsi Krupa Arcade, Puna-Kumbharia Road, Surat 14/09/2016 11.00 a.m.

All the resolutions set out in the respective Notices were passed by the requisite majority of the members.


56

(b) Special Resolutions passed at the last 3 Annual General Meetings:

One Special Resolution was proposed and passed at the 35th Annual General Meeting of the Company held on 30th July, 2014, for re-appointment of Shri Alok P. Shah as Joint Managing Director and CFO of the Company for a period of 3 years w.e.f. 11th September, 2014.

Two Special Resolutions were proposed and passed at the 36th Annual General Meeting of the Company held on 9th September, 2015, for re-appointment of Shri Suhail P. Shah as Wholetime Director designated as Executive Director of the Company for a period of 3 years w.e.f. 1st December, 2015 and for revision in terms of appointment and remuneration of Shri Alok P. Shah as Joint Managing Director and CFO.

Three Special Resolutions were proposed and passed at the 37th Annual General Meeting of the Company held on 14th September, 2016, for re-appointment of Shri Praful A. Shah as Chairman and Managing Director designated of the Company for a period of 3 years w.e.f. 1st September, 2016, appointment of Shri Alok P. Shah as Executive Director, CFO and COO of the Company for a period 3 years w.e.f. 1st June, 2016 and for revision in terms of appointment and remuneration of Shri Suhail P. Shah, Wholetime Director designated as Executive Director of the Company with effect from 1st June 2016 up to the remaining period of his tenure ending on 30th November 2018.

(c) Passing of Special Resolutions by Postal Ballot:

During the year under review, one Special Resolution was proposed for issue of convertible warrants to promoters and promoter group of the Company on preferential basis through Postal Ballot in accordance with the procedure described in Section 110 of the Companies Act, 2015 (‘the Act’) read with the Companies (Management and Administration) Rules, 2014 and the same was passed with majority. Result of the said postal ballot process was declared on 16th December, 2016.

None of the Resolutions proposed at the 38th Annual General Meeting is proposed by Postal Ballot.

(d) Transfer of Unclaimed Dividend to IEPF:

Pursuant to the provisions of Section 124 and 125 of the Act (corresponding to Sections 205A to 205C of the Companies Act, 1956), all unclaimed/unpaid monies by way of dividend transferred to the “Unpaid Dividend Account” of the Company that remains unclaimed/ un-encashed for a period of 7 (seven) years from the respective date of such transfer, has to be transferred by the Company to “The Investor Education and Protection Fund” (“IEPF”).

The details of Dividends paid by the Company and the corresponding due dates for transfer of such unclaimed/unencashed dividend to the aforementioned Fund constituted by the Central Government are furnished hereunder:

Dividend for the year Date of Declaration of Dividend Last date for claiming unpaid dividend 2009-10 31.08.2010 30.08.20172010-11 20.09.2011 19.09.2018

Members who have not encashed/claimed the dividend warrant(s) so far in respect of the above financial years, are therefore, requested to make their claims to Karvy Computershare Private Limited well in advance of the above due dates. It may be noted that once the amounts in the unpaid dividend accounts are transferred to the IEPF, no claim shall lie against the IEPF or the Company in respect thereof and the Members would lose their right to claim such dividend.

7. DISCLOSURES

(a) Related Party Transactions

All transactions entered into with Related Parties as defined under the Companies Act, 2013 and Regulation 23 of the SEBI Listing Regulations, 2015 during the financial year were in the ordinary course of business and on an

57


arm’s length pricing basis and do not attract the provisions of section 188 of the Companies Act, 2013. There were no materially significant transactions with related party during the financial year which were in conflict with the interests of the Company at large.

Suitable disclosure as required by the Accounting Standard (AS) 18 has been made in the notes to the Financial Statement.

As required under Regulation 23 of the SEBI Listing Regulations, 2015, the Company has formulated a policy on Related Party Transactions which has been put up on the website of the Company.

Your Company has formulated a Policy on materiality of Related Party Transactions and also dealing with Related Party Transactions. The policy on Related Party Transactions is hosted on the website of the Company.

(b) Disclosure of Accounting Treatments

Your Company has not adopted any alternative accounting treatment prescribed differently from the Accounting Standards.

(c) Material Subsidiary Company

The Company does not have any material unlisted Indian subsidiary, and hence, is not required to nominate an Independent Director of the Company on the Board of any subsidiary. Your Company formulated a Policy on Material Subsidiary as required under Regulation 24 of the SEBI Listing Regulations, 2015 and the Policy is hosted on the website of the Company. Provisions to the extent applicable under the SEBI Listing Regulations, 2015 with reference to subsidiary companies were duly complied.

(d) Risk Management

Your Company has laid down procedure to inform Board members about risk assessment and minimization and has implemented the Risk Management plan and continuously monitors it. Details of Risk Management by the Company have been provided in the Directors’ Report and Management Discussion and Analysis.

(e) Statutory Compliance, Penalties and Strictures

There has neither been any non-compliance of any of the provisions of law by the Company nor any penalty or structure imposed by the Stock Exchange or SEBI or any other statutory authorities on any matters related to capital market during the last 3 years, except a fine of ` 50,000/- plus service tax imposed by BSE Limited during the year 2015-16, for delay in compliance with respect to appointment of Woman Director on the Board of the Company.

(f) Code of Business Conduct & Ethics

Regulation 17(5) of the SEBI Listing Regulations, 2015 requires listed companies to lay down a Code of Conduct for its directors and senior management, incorporating duties of directors as laid down in the Companies Act, 2013.

The Company has adopted Code of Business Conduct & Ethics (“the Code”) which is applicable to the Board of Directors and Senior Management Team (one level below the Board of Directors) of the Company. The Board of Directors and the members of Senior Management Team are required to affirm semi-annual Compliance of this Code. The Code requires Directors and Employees to act honestly, fairly, ethically, and with integrity, conduct themselves in professional, courteous and respectful manner. The Code is displayed on the Company’s website.

(g) Insider Trading Code

The Securities and Exchange Board of India (SEBI) has promulgated the SEBI (Prohibition of Insider Trading) Regulations, 2015 (“The PIT Regulations”). The PIT Regulations has come into effect from May 15, 2015 and replaced the earlier Regulations. The object of the PIT Regulations is to curb the practice of insider trading in the securities of a listed company.


58

The Company has adopted an ‘Internal Code of Conduct for Regulating, Monitoring and Reporting of Trades by Insiders’ (“the Code”) in accordance with the requirements of the PIT Regulations.

The Code is applicable to Promoters and Promoter’s Group, all Directors and such Designated Employees who are expected to have access to unpublished price sensitive information relating to the Company. The Company Secretary is the Compliance Officer for monitoring adherence to the said Regulations.

The Company has also formulated ‘The Code of Practices and Procedures for Fair Disclosure of Unpublished Price Sensitive Information (UPSI)’ in compliance with SEBI (Prohibition of Insider Trading) Regulations, 2015. This Code is displayed on the Company’s website.

(h) Whistle Blower Policy / Vigil Mechanism:

The Company has established a Whistle Blower / Vigil Mechanism through which its Directors, Employees and Stakeholders can report their genuine concerns about unethical behaviours, actual or suspected fraud or violation of the Company’s code of conduct or ethics policy. The said policy provides for adequate safeguard against victimization and also direct access to the higher levels of supervisors.

(i) Preventing Conflict of Interests

Members of Board and Senior Management Team while discharging their duties, avoid their conflict of interest in the decision making process. The members of Board refrain themselves from any discussions and voting in transactions where they have concern or interest.

(j) Reconciliation of Share Capital Audit

A qualified practicing Company Secretary carries out reconciliation of share capital Audit, on quarterly basis to reconcile the total admitted capital with National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL) and the total issued and listed capital The audit confirms that the total issued/paid up capital is in agreement with the total number of shares in physical form and the total number of dematerialized shares held with NSDL and CDSL.

8. MEANS OF COMMUNICATION:

(a) The Quarterly (Unaudited) Financial Results are sent to Stock Exchanges where the Company’s shares are listed and are normally published in The Times of India (English) and Dhabkar (Vernacular), both Surat editions.

(b) Management Discussion and Analysis report forms part of the Directors Report.

9. GENERAL SHAREHOLDER INFORMATION:

(a) 38th Annual General Meeting:

Date : Wednesday, 20th September, 2017

Time : 11:00 a.m.

Venue : Tulsi Krupa Arcade, Puna-Kumbharia Road, Dumbhal, Surat 395010.

(b) Financial Calendar (2017-18):

Results for the quarter ending June 30, 2017 : July/August, 2017

Results for the quarter ending September 30, 2017 : October/November, 2017

Results for the quarter ending December 31, 2017 : January/February, 2018

Results for the year ending March 31, 2018 : April/May, 2018

Book Closure Date : Friday, 15th September, 2017 to Wednesday, 20th September, 2017 (both days inclusive)

59


(c) Listing on Stock Exchanges: The Company’s Equity Shares are listed on the following stock Exchanges:

(1) The Bombay Stock Exchange Limited (BSE)

(2) National Stock Exchange of India Limited (NSE).

The Company has paid the Annual Listing fee for the year 2017-18.

As on 31st March 2017, there were 73317 shareholders of the Company.

(d) Stock Code:

The Bombay Stock Exchange Limited 500155

National Stock Exchange of India Limited GARDENSILK(EQ)

Demat ISIN in NSDL and CDSL for Equity Shares INE526A01016.

Corporate Identity Number (CIN): L17111GJ1979PLC003463

(e) Market Price Data:

(in `)Month Bombay Stock Exchange National Stock Exchange

High Low High LowApril 2016 25.25 21.50 25.30 21.10May 2016 28.80 23.35 31.80 23.30June 2016 39.20 24.50 39.45 24.20July 2016 41.20 34.05 41.35 33.30August 2016 35.15 27.50 35.40 27.00September 2016 34.40 28.65 32.85 28.30October 2016 39.00 29.65 38.85 29.60November 2016 34.95 25.30 34.90 25.20December 2016 32.65 27.35 32.75 26.85January 2017 34.00 28.60 33.85 28.60February 2017 34.75 29.70 34.70 29.50March 2017 34.50 30.00 34.40 29.65

(f) Registrar and Share Transfer Agents:

Karvy Computershare Private Limited, (Unit: Garden Silk Mills Limited), Karvy Selenium, Tower B, Plot 31-32, Financial District, Gachibowli, Nanakramguda, Hyderabad 500032 State: Telangana, India Phone No. 040 67162222, Fax No. 040 23420814, Email: [email protected]

(g) Share Transfer System:

All the share related work is being undertaken by the company’s Registrar & Transfer Agent. A Stakeholders Relationship Committee has been constituted to approve the share transfer, transmission, split and consolidation etc. of shares.

The transfers which are complete in all respects are taken up for approval at least once in a fortnight and the transferred securities dispatched to the transferee within 21 days. The details of transfer / transmission approved by the Committee are noted by the Board at its next meeting.


60

(h) Distribution of shareholding as on 31st March, 2017:

Sr.No.

Category of Members No. of Shares held

% of total Shares

1. Promoters. 24302230 57.752. Indian Public. 10713123 25.463. Banks, Financial Institutions & Insurance

Companies / Mutual Fund14150 0.03

4. NRI’s / Overseas Body Corporate 3476968 8.265. Bodies Corporate 3507388 8.336. Trusts 340 0.007. Clearing Members (NSDL+CDSL) 52011 0.128. Any other 16315 0.05

TOTAL 42082525 100.00

(i) Categorywise Summary of Holders / Holdings as on 31st March, 2017:

Range of Equity Shares Holding No. of Shareholders

% of total Shareholders

No. of Shares held

% of total Shares

1 - 5000 70756 96.51 4196748 9.975001 - 10000 1339 1.83 1125812 2.6810001 - 20000 600 0.82 920020 2.1920001 - 30000 201 0.27 516499 1.2330001 - 40000 94 0.13 338305 0.8040001 - 50000 81 0.11 390874 0.9350001 - 100000 114 0.15 852173 2.03100001 & above 132 0.18 33742094 80.17TOTAL 73317 100.00 42082525 100.00

(j) Depository Services:

The Equity Shares of your Company are traded in compulsory dematerialised form by all the investors. The company has entered into agreements with both the depositories viz., National Securities Depositories Ltd. (NSDL) and Central Depository Services (India) Ltd. (CDSL), enabling the investors to hold shares of the Company in electronic form through the depository of their choice.

(k) Dematerialisation of Shares:

40361167 Equity Shares aggregating to 95.91% of the total Equity Capital is held in dematerialized form as on 31/03/2017 of which 81.31% (34215865 Equity Shares) of total equity capital is held with NSDL and 14.60% (6145302 Equity Shares) of total equity capital is held with CDSL as on 31/03/2017. Trading in equity shares of the Company is permitted only in dematerialized form as per notification issued by the Securities and Exchange Board of India (SEBI).

(l) Outstanding GDRs / ADRs / Warrants or any Convertible instruments, conversion date and likely impact on equity:

As on 31st March, 2017, the Company did not have any outstanding GDRs/ADRs/Warrants or any Convertible instruments.

61


(m) Nomination:

Individual shareholders holding shares singly or jointly in physical form can nominate a person in whose name the shares shall be transferable in case of death of the registered shareholder(s). Nomination facility in respect of shares held in electronic form is also available with the depository participants as per the bye-laws and business rules applicable to NSDL and CDSL. Nomination form can be obtained from the Company’s Registrar and Transfer Agent.

(n) Address for Correspondence:

For Transfer / Dematerialisation of Shares, Payment of Dividend on Shares and any other query relating to the shares of the Company.

(i) For Shares held in Physical Form Karvy Computershare Private Limited,(Unit: Garden Silk Mills Limited),Karvy Selenium, Tower B, Plot 31-32, Gachibowli,Financial District, Nanakramguda,Hyderabad 500032.Toll Free No. (India) : 1800 345 4001Phone No. 040 67162222Fax No. 040 23420814Email: [email protected]

(ii) For Shares held in Demat Form Respective Depository Participants of the shareholders(iii) For query on Annual Report Secretarial Department,

Tulsi Krupa Arcade, 3rd Floor,Puna-Kumbharia Road,Dumbhal, Surat 395010

As required in terms of Regulation 47(f) of the SEBI Listing Regulations, 2015, the Company has designated an e-mail ID exclusively for the purpose of registering complaints by investors. The e-mail ID is [email protected]

(o) Eliminate Duplicate Mailing

If you hold the Equity Shares of the Company in more than one Folio in your name or with the same address as other shareholders of the Company, you may authorize the Company to discontinue mailing of multiple Annual Reports.

(p) Green Initiative:

By virtue of Ministry of Corporate Affairs (“MCA”) Circular Nos.17/2011 and 18/2011 dated April 21, 2011 and April 29, 2011 respectively, read with Rule 11 of the Companies (Accounts) Rules, 2014, service of documents may be made to members through electric mode.

We therefore appeal to the members to be a part of the said “Green Initiative” and request the members to register their name in getting the said documents in electronic mode by sending an email giving their Registered Folio Number and/or DP Id/Client ID to the dedicated email address of [email protected] or login at the R&TA’s website www.gardenvareli.com and register their request.

Those members, who want the above documents in physical form, must indicate their option by sending a letter or an email to the Registrar at the specially created e-mail ID [email protected] or login at the R&TA’s website www.gardenvareli.com quoting their DP ID & Client ID and/or Registered Folio Number.


62

(q) Equity Shares in the suspense account

During the year under review, there were no shares held in the demat suspense account/unclaimed suspense account. The Company has sent reminders to the shareholders to claim their shares returned undelivered and lying in physical form with the Company.

(r) Details of compliance with mandatory requirements and adoption of the non-mandatory requirements

The Company has complied with all the mandatory requirements and have not adopted non-mandatory requirements.

(s) The Company does not have any material subsidiary company.

(t) Policy on dealing with related party transactions is available on the website of the Company.

(u) The Company does not have any foreign exchange exposure; therefore the company has not framed any such policy for activities related thereto.

10. The Company has complied with the requirements of Corporate Governance report as disclosed in paras 1 to 9 above.

11. Compliance of Discretionary requirements under Part E of Schedule II of the Securities Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015.

1. The Board: The Chairperson does not maintain his separate office at the Company’s expense.

2. Shareholder Rights: The Company publishes the financial results in news papers and places on its website and does not send it to shareholders.

3. Modified opinion(s) in audit report: The Audit opinion received by the Company has not been modified.

4. Separate posts of chairperson and chief executive officer: The Company has a Managing Director and a Wholetime Director designated as Executive Director and CFO of the Company.

5. Reporting of internal auditor: The Internal Auditor of the Company directly reports to the Audit Committee of the Company and their Internal Audit Reports are presented in the meeting of the Audit Committee.

12. Compliance with Corporate Governance requirements specified in Regulations 17 to 27 and clauses (b) to (i) of sub-regulation (2) of regulation 46 of the SEBI (LODR) Regulations, 2015.

The Company has complied with Corporate Governance requirements as specified in regulations 17 to 27 relating to Board of Directors; Audit Committee; Nomination and Remuneration Committee; Stakeholders Relationship Committee; Risk Management Committee (voluntarily constituted); Vigil Mechanism, Related Party Transactions, Corporate Governance Requirements, obligations with respect to Independent Directors, other Directors and Sr. Management. The information and documents specified under clause (b) to (i) of sub-regulation (2) of regulation 46 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 have been placed on the website of the Company.

13. Non-Mandatory Requirements

Shareholders’ Rights

The half yearly financial results are published in the newspapers as mentioned above and also they are displayed under the investor relations section on the Company’s website ‘www.gardenvareli.com’. Therefore, the results were not separately circulated to all shareholders.

For Garden Silk Mills Limited

Praful A. Shah Chairman & Managing DirectorSurat, 30th May, 2017 (DIN 00218143)

63


CEO/CFO CERTIFICATION(under Regulation 17(8) of SEBI (LODR) Regulations, 2015)

We the undersigned, in our respective capacities as Managing Director and Chief Financial Officer of Garden Silk Mills Limited (“the Company”) to the best of our knowledge and belief certify that:

(a) We have reviewed financial statement and the cash flow statement for the year ended 31st March, 2017 and that to the best of our knowledge and belief, we state that:

(i) these statements do not contain any materially untrue statement or omit any material fact or contain statements that might be misleading;

(ii) These statement together present a true and fair view of the Company’s affair and are in compliance with the existing accounting standards, applicable laws and regulations.

(b) We further state that to the best of our knowledge and belief, no transactions entered into by the Company during the year, which are fraudulent, illegal or violative of the Company’s Code of Conduct.

(c) We accept responsibility for establishing and maintaining internal controls for financial reporting and we have evaluated the effectiveness of the internal control systems of the Company pertaining to financial reporting and have disclosed to the Auditors and the Audit Committee, deficiencies in the design or operation of internal controls, if any, of which we are aware and the steps we have taken or propose to take to rectify these efficiencies.

(d) We have indicated to the Auditors and the Audit Committee:

(i) significant changes, if any, in internal control over financial reporting during the year;

(ii) significant changes, if any, in accounting policies during the year and that the same have been disclosed in the notes to the financial statements; and

(iii) instances of significant fraud of which they have become aware and the involvement therein, if any, of the management or an employee having a significant role in the Company’s internal control systems over financial reporting.


Praful A. Shah Alok P. Shah Chairman & Managing Director Executive Director, CFO & COOSurat, 30th May, 2017 (DIN 00218143) (DIN 00218180)

CERTIFICATE OF COMPLIANCE WITH THE CODE OF CONDUCT POLICY(Regulation 34(3) read with Schedule V (Part D) of the

SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015)

This is to confirm and certify that the Company has adopted a Code of Conduct for Board member and Senior Management Personnel. As provided under sub-regulation (3) of Regulation 26 of the SEBI (Listing Obligations and Disclosure Requirements) Regulation, 2015, the Board member and Senior Management have confirmed compliance with the Code of Conduct and Ethics for the year ended 31st March, 2017.


Praful A. Shah Chairman & Managing DirectorSurat, 30th May, 2017 (DIN 00218143)


64

AUDITORS CERTIFICATE ON COMPLIANCE OF CONDITIONS OF CORPORATE GOVERNANCE

To the Members of Garden Silk Mills Limited

1. We have examined the compliance of conditions of Corporate Governance by Garden Silk Mills Limited (“the Company”), for the year ended 31st March, 2017, as per Regulations 17 – 27, clauses (b) to (i) of regulation 46(2) and paragraph C, D and E of Schedule V of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (‘Listing Regulations’).

2. The compliance of conditions of Corporate Governance is the responsibility of the Management. Our examination was limited to the procedures and implementation thereof, adopted by the Company for ensuring the compliance of the conditions of Corporate Governance. It is neither an audit nor an expression of opinion on the financial statements of the Company.

3. We have examined the relevant records of the Company in accordance with the Generally Accepted Auditing Standards in India, to the extent relevant, and as per the Guidance Note on Certification of Corporate Governance issued by the Institute of Chartered Accountants of India.

4. In our opinion and to the best of our information and according to our examination of the relevant records and the explanations given to us, we certify that the Company has complied with the conditions of Corporate Governance as specified in Regulations 17 to 27, clauses (b) to (i) of sub-regulation (2) of regulation 46 and paragraph C, D and E of Schedule V of Listing Regulations, as applicable.

5. We state that such compliance is neither an assurance as to the future viability of the Company nor as to the efficiency or effectiveness with which the Management has conducted the affairs of the Company.

For NATVARLAL VEPARI & CO.Chartered Accountants

Firm Registration Number: 123626W

R. N. VEPARIPlace: Surat Partner30th May, 2017 Membership No.: 6728

65


INDEPENDENT AUDITORS’ REPORTTo the Members of Garden Silk Mills Limited,

Report on the Standalone Financial Statements1. We have audited the accompanying standalone financial statements of Garden Silk Mills Limited (“the Company”),

which comprise the Balance Sheet as at 31st March, 2017, the Statement of Profit and Loss, the Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information.

Management’s Responsibility for the Standalone Financial Statements2. The Company’s Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013

(“the Act”) with respect to the preparation of these standalone financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the standalone financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility3. Our responsibility is to express an opinion on these standalone financial statements based on our audit.

4. We have taken into account the provisions of the Act and the Rules made thereunder including the accounting and auditing standards and matters which are required to be included in the audit report.

5. We conducted our audit in accordance with the Standards on Auditing specified under Section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the standalone financial statements are free from material misstatement.

6. An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Company’s preparation of the standalone financial statements that give a true and fair view, in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Company’s Directors, as well as evaluating the overall presentation of the financial statements.

7. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the standalone financial statements.

Opinion8. In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone

financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India of the state of affairs of the Company as at 31st March, 2017, its loss, and its cash flows for the year ended on that date.

66


Report on Other Legal and Regulatory Requirements9. As required by the Companies (Auditor’s Report) Order, 2016 issued by the Central Government of India in terms of

sub-section (11) of section 143 of the Act (hereinafter referred to as the “Order”), and on the basis of such checks of the books and records of the Company as we considered appropriate and according to the information and explanations given to us, we give in the Annexure A, a statement on the matters specified in paragraphs 3 and 4 of the Order to the extent applicable.

10. As required by Section 143 (3) of the Act, we report that:

(a) We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit.

(b) In our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books.

(c) The Balance Sheet, the Statement of Profit and Loss and the Cash Flow Statement dealt with by this Report are in agreement with the books of account.

(d) In our opinion, the aforesaid standalone financial statements comply with the Accounting Standards specified 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 31st March, 2017 taken on record by the Board of Directors, none of the directors is disqualified as on 31st March, 2017 from being appointed as a director in terms of Section 164 (2) of the Act.

(f) With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate Report in Annexure B.

(g) With respect to the other matters to be included in the Auditor’s Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our knowledge and belief and according to the information and explanations given to us.

i. the Company has, in accordance with the generally accepted accounting principal, disclosed the impact, if any, of pending litigations as at 31st March, 2017 on its financial position in its standalone financial statements -Refer Note 34;

ii. the Company did not have any long-term contracts including derivatives contracts as at 31st March, 2017, hence the question of commenting on any material foreseeable losses thereon does not arise;

iii. there has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company during the year ended 31st March, 2017; and

iv. the Company has provided requisite disclosures in its standalone financial statements as to holdings as well as dealings in Specified Bank Notes during the period from 8th November, 2016 to 30th December, 2016. Based on audit procedures and relying on the management representation we report that the disclosures are in accordance with books of account maintained by the Company and as produced to us by the Management -Refer Note 35.



R. N. VEPARI PartnerSurat, 30th May, 2017 Membership No.: 6728

67


ANNEXURE A TO THE INDEPENDENT AUDITOR’S REPORTReferred to in paragraph 9 of the Independent Auditors’ Report of even date to the members of Garden Silk Mills Limited on the standalone financial statements as at and for the year ended 31st March, 2017

(i) (a) The Company is maintaining proper records showing full particulars, including quantitative details and situation, of fixed assets.

(b) The fixed assets are physically verified by the Management at reasonable intervals. According to the information and explanations given to us, no material discrepancies have been noticed on such verification.

(c) According to the information and explanations given to us and on the basis of our examination of the records of the Company, the title deeds of immovable properties, as disclosed in Note 12 on fixed assets to the financial statements, are held in the name of the Company.

(ii) As per the information and explanations given to us, the inventories have been physically verified by the management at reasonable intervals during the year. In our opinion, the frequency of verification is reasonable. The discrepancies noticed on physical verification of inventory as compared to book records were not material in relation to the operations of the Company and the same have been appropriately dealt with in the books of accounts.

(iii) The company has not granted any loans, secured or unsecured to companies / firms / Limited Liability Partnerships / Other parties covered in the register maintained under section 189 of the Act. Therefore, the provisions of clause 3(iii), (iii)(a) and (iii)(b) of the said Order are not applicable to the Company.

(iv) The Company has neither granted any loans nor provided any guarantees or security to the party covered under section 185 of the Act nor made any investment covered under section 186 of the Act.

(v) The Company has not accepted any deposits from the public within the meaning of Sections 73, 74, 75 and 76 of the Act and the Rules framed there under to the extent notified.

(vi) We have broadly reviewed the books of account maintained by the Company pursuant to the Rules made by the Central Government for the maintenance of cost records under section 148(1) of the Act in respect of its products to which the said rules are made applicable, and are of the opinion that, prima facie the prescribed accounts and records have been made and maintained. We have not, however, made a detailed examination of the records with a view to determine whether they are accurate or complete.

(vii) a) According to the information and explanations given to us and the records of the Company examined by us, in our opinion, the Company is generally regular in depositing undisputed statutory dues including provident fund, employees’ state insurance, income-tax, sales tax, value added tax, customs duty, excise duty, service tax, cess and other material statutory dues, as applicable, with the appropriate authorities.

b) According to the information and explanations given to us and the records of the Company examined by us, there were no undisputed amounts payable in respect of income tax, provident fund, employees’ state insurance, value added tax, cess and other material statutory dues in arrears as at 31st March, 2017, for a period of more than six months from the date they became payable. The particulars of dues of sales tax, customs duty and Excise Duty / Service Tax as at 31st March, 2017 which have not been deposited on account of disputes, are given below:

68


Name of Statute Nature of dues Amount(` in Lacs)

Period to which the amount relates

Forum where the dispute is pending

Amount deposited against the

dispute(` in Lacs)

Central Excise Act, 1944 Excise Duty/ Service Tax

25.00 1994-95 Mumbai High Court 10.00


114.72 2006-07 to2008-09

Central Excise and Service Tax Appellate Tribunal (Ahmedabad)

–


2610.00 2008-09 Gujarat High Court (Ahmedabad) 650.00


523.07 2006-07 to 2010-11


65.00

Central Excise Act,1944 Excise Duty/ Service Tax

96.61 2012-13 Central Excise and Service Tax Appellate Tribunal (Ahmedabad)

-----


77.75 2008-09 to 2012-13


2.92


37.40 2010-11 to 2013-14


1.40


4,283.11 1994-95 Gujarat High Court (Ahmedabad) -----


120.64 1997-98 Central Excise and Service Tax Appellate Tribunal (Ahmedabad)

4.53

Customs Act, 1962 Custom Duty 126.93 2013-14 Central Excise and Service Tax Appellate Tribunal (Ahmedabad)

126.93


2.37


4.50

Gujarat Sales Tax Act, 1969

Gujarat Sales Tax

80.51 2004-05 The Joint Commissioner of Commercial Tax, Appeal (2), Baroda

22.33

(viii) According to the records made available to us and the information and explanations given by the management, the Company has defaulted in repayment of the following dues to financial institutions, banks, Government or debenture holders as at the date of Balance Sheet:

Sr. No. Particulars Amount of default (` in Lacs)

Period of Default

Principal Interest1. Allahabad Bank 615.24 430.25 2016-172. Bank of Baroda 1,035.45 1,088.19 2016-173. Bank of India 778.10 813.82 2016-174. Corporation Bank 1,009.20 1,026.22 2016-175. EXIM Bank 427.35 382.30 2016-176. ICICI Bank 135.93 126.85 2016-177. IDBI 767.76 388.87 2016-178. Indian Bank 97.95 83.38 2016-17

69


Sr. No. Particulars Amount of default (` in Lacs)

Period of Default

Principal Interest9. Indian Overseas Bank 281.40 275.89 2016-1710. LIC of India 174.64 151.15 2016-1711. State Bank of India 647.40 610.38 2016-1712. State Bank of Patiala 350.84 390.04 2016-1713. State Bank of Travankore 231.90 230.72 2016-1714. Union Bank of India 1,040.93 1,018.96 2016-17

(ix) The Company has not raised any monies by way of initial public offer or further public offer (including debt instruments) and term loans during the year. Accordingly, the provisions of clause 3 (ix) of the Order is not applicable to the Company.

(x) During the course of our examination of the books and records of the Company, carried out in accordance with the generally accepted auditing practices in India, and according to the information and explanations given to us, we have neither come across any instance of material fraud by the Company or on the Company by its officers or employees, noticed or reported during the year, nor have we been informed of any such case by the Management.

(xi) According to the information and explanations given by the management, the Company has paid / provided for managerial remuneration in accordance with the requisite approvals mandated by the provisions of Section 197 read with Schedule V to the Act.

(xii) As the Company is not a Nidhi Company and the Nidhi Rules, 2014 are not applicable to it, the provisions of Clause 3(xii) of the Order are not applicable to the Company.

(xiii) The Company has entered into transactions with related parties in compliance with the provisions of Sections 177 and 188 of the Act. The details of such related party transactions have been disclosed in the standalone financial statements as required under Accounting Standard (AS) 18, Related Party Disclosures specified under section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.

(xiv) The Company has not made any preferential allotment / private placement of shares during the previous year under review, in compliance with the requirement of Section 42 of the Act. Accordingly, the provisions of Clause 3(xiv) of the Order are not applicable to the Company.

(xv) According to the information and explanations given by the management, the Company has not entered into any non-cash transactions with its directors or persons connected with him. Accordingly, the provisions of clause 3(xv) of the Order are not applicable to the Company.

(xvi) The Company is not required to be registered under section 45-IA of the Reserve Bank of India Act, 1934. Accordingly, the provisions of Clause 3(xvi) of the Order are not applicable to the Company.




70


ANNEXURE B TO THE INDEPENDENT AUDITORS’ REPORTReferred to in paragraph 10(f) of the Independent Auditors’ Report of even date to the members of Garden Silk Mills Limited on the standalone financial statements for the year ended 31st March, 2017

Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section 143 of the Act1. We have audited the internal financial controls over financial reporting of Garden Silk Mills Limited (“the Company”) as

of 31st March, 2017 in conjunction with our audit of the standalone financial statements of the Company for the year ended on that date.

Management‘s Responsibility for Internal Financial Controls2. The Company’s management is responsible for establishing and maintaining internal financial controls based on the

internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India (ICAI). These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to company’s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Act.

Auditors’ Responsibility3. Our responsibility is to express an opinion on the Company’s internal financial controls over financial reporting based

on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (the “Guidance Note”) and the Standards on Auditing, and deemed to be prescribed under section 143(10) of the Act to the extent applicable to an audit of internal financial controls, both applicable to an audit of internal financial controls and both issued by the ICAI. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects.

4. Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.

5. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Company’s internal financial controls system over financial reporting.

Meaning of Internal Financial Controls Over Financial Reporting6. A company’s internal financial control over financial reporting is a process designed to provide reasonable assurance

regarding the reliability of financial reporting and the preparation of standalone financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal financial control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of standalone financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorisations of management and directors of the Company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition, use, or disposition of the Company’s assets that could have a material effect on the financial statements.

71


Inherent Limitations of Internal Financial Controls Over Financial Reporting7. Because of the inherent limitations of internal financial controls over financial reporting, including the possibility of

collusion or improper management override of 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 financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Opinion8. In our opinion, the Company has, in all material respects, an adequate internal financial controls system over financial

reporting and such internal financial controls over financial reporting were operating effectively as at 31st March, 2017, based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India.




72


Balance Sheet as at 31st March, 2017

As per our attached report of even date For and on behalf of the Board of Directors For NATVARLAL VEPARI & CO. PRAFUL A. SHAH Chairman & Managing DirectorChartered Accountants ALOK P. SHAH Executive Director, CFO & COOFirm Registration No. 123626W SUNIL SHETH DirectorR. N. VEPARI KAMLESH B. VYAS Company SecretaryPartnerMembership No. 6728Surat, 30th May, 2017 Surat, 30th May, 2017

(` in Lacs)Particulars Note No. As at

31st March 2017As at

31st March 2016I EQUITY AND LIABILITIES

(1) Shareholders’ Fundsa) Share Capital 2 4208.25 4208.25 b) Reserves and Surplus 3 (16291.17) (6805.42)

(12082.92) (2597.17)(2) Non-Current Liabilities

a) Long-Term Borrowings 4 119339.84 90618.11 b) Deferred Tax Liabilities (Net) 5 0.00 0.00 c) Other Long-Term Liabilities 6 728.20 43690.74 d) Long-Term Provisions 7 660.98 621.09

120729.02 134929.94 (3) Current Liabilities

a) Short-Term Borrowings 8 11051.99 5686.98 b) Trade Payables 9 30375.34 24689.68 c) Other Current Liabilities 10 32219.90 17331.43 d) Short-Term Provisions 11 1760.48 954.27

75407.71 48662.36 TOTAL 184053.81 180995.13

II ASSETS(1) Non-Current Assets

a) Fixed Assets :(i) Tangible Assets 12(A) 109352.40 114742.01 (ii) Intangible Assets 12(B) 17.51 32.20 (iii) Capital Work-in-Progress 12(C) 3084.04 3116.76

112453.95 117890.97 b) Non-Current Investments 13 1420.70 1420.70 c) Long-Term Loans and Advances 14 1769.58 3232.64

115644.23 122544.31 (2) Current Assets

a) Inventories 15 39229.85 29346.16 b) Trade Receivables 16 14483.27 14940.45 c) Cash and Bank Balances 17 5093.84 2633.37 d) Short-Term Loans and Advances 18 8119.24 10372.64 e) Other Current Assets 19 1483.38 1158.20

68409.58 58450.82 TOTAL 184053.81 180995.13 Summary of Significant Accounting Policies 1The accompanying notes are an integral part of the standalone financial statements

73


Statement of Profit and Loss for the year ended 31st March, 2017


(` in Lacs)

Particulars Note No. 2016-17 2015-16I Gross Revenue from Operations 20 264574.06 256731.31

II Other Income 21 991.74 983.65

III TOTAL REVENUE (I+II) 265565.80 257714.96

IV EXPENSES

a) Cost of Materials Consumed 22 178692.58 167438.24

b) Purchases of Stock-in-Trade 23 1799.30 1409.15

c) Changes in Inventories of Finished Goods,

Work-in-Progress and Stock-in-Trade 24 (7867.64) 2737.39

d) Employee Benefits Expense 25 12413.94 11694.92

e) Finance Costs 26 17489.29 17725.13

f) Depreciation and Amortisation Expense 12 6447.42 6681.43

g) Excise Duty 27 20855.81 19182.96

h) Other Expenses 28 44236.63 44970.50

TOTAL EXPENSES 274067.33 271839.72

V Profit/(Loss) before extra ordinary items and tax (III-IV) (8501.53) (14124.76)

VI Extraordinary Items 29 984.22 0.00

VII Profit/(Loss) before tax (V+VI) (9485.75) (14124.76)

VIII Tax Expense:Tax in respect of earlier years 0.00 (64.09)

IX Profit/(Loss) for the year (VII-VIII) (9485.75) (14060.67)

X Earnings per equity share of ` 10 each 30

(a) Basic (in `) (22.54) (33.41)

(b) Diluted (in `) (22.54) (33.41)

Summary of Significant Accounting Policies 1

The accompanying notes are an integral part of the standalone financial statements

74



Cash Flow Statement for the year ended 31st March, 2017 (` in Lacs)

Year ended 31st March, 2017

Year ended 31st March, 2016

A. Cash Flow from Operating Activities:Profit/(Loss) before tax (9485.75) (14124.76)Adjustments for:Depreciation and Amortisation Expense 6447.42 6681.43 Finance Costs 17489.29 17725.13 Interest Income (141.38) (215.48)Net gain on sale of current investments (217.59) (433.97)Provision for Diminution in value of Investment 0.00 16.54 Credit Balance no longer required (525.45) (71.76)Bad Debts written off 1217.03 453.35 Capital Advance written off (extra ordinary item) 984.22 0.00 Provision for Bad and Doubtful debts 0.00 389.12 Dividend Income (0.58) (75.94)(Profit) / Loss on disposal of fixed assets (net) (23.79) (3.71)

25229.17 24464.71 Operating Profit before Working Capital Changes. 15743.42 10339.95 (Increase) / decrease in Trade and Other Receivables 391.53 4702.65 (Increase) / decrease in Inventories (9883.69) 1456.29 (Decrease) / Increase in Trade and Other Payable (35313.63) 3888.29

(44805.79) 10047.23 Cash Generated from Operations (29062.37) 20387.18 Direct Taxes (Paid) / Refund. (34.87) 77.00 Net Cash Flow from Operating Activities (A) (29097.24) 20464.18

B. Cash Flow from Investing Activities:Purchase of Fixed Assets (977.81) 489.05 Sale of Fixed Assets 148.01 57.13 Purchase of Investments (10000.00) (35000.00)Investment in Subsidiaries 0.00 (43.67)Sale of Investments 10217.59 35433.97 Dividend Income 0.58 75.94 Other Loans and Advances 609.87 213.36 Net Cash Inflow from Investing Activities (B) (1.76) 1225.78

C. Cash Flow from Financing Activities:Proceeds from Long Term Borrowings 46687.70 3382.48 Repayment of Short Term Borrowings 5365.00 6.50 Repayment of Long Term Borrowings (10258.65) (8311.78)Interest and Other Finance Charges Paid (10234.58) (18670.95)Net Cash Outflow from Financing Activities (C) 31559.47 (23593.75)Net Increase / (Decrease) in Cash and Cash Equivalents (A+B+C) 2460.47 (1903.79)Cash and Cash Equivalents at the beginning of the year 2633.37 4537.16 Cash and Cash Equivalents at the end of the year 5093.84 2633.37

Note: (i) Bank balances include unclaimed dividend ` 27.02 Lacs (Previous Year: ̀ 37.77 Lacs) which is not available for use by the Company as they represent corresponding unpaid dividend liability.

(ii) Figures in the bracket () denominates outflow.

75


Notes annexed to and forming part of the Financial StatementsNote 1 : Basis of Preparation and Summary of Significant Accounting Policies1.01 Basis of accounting and preparation of financial statements The financial statements are prepared and presented under the historical cost convention in accordance with the

Generally Accepted Accounting Principles (GAAP) and the provisions of the Companies Act, 2013. The Company follows the mercantile system of accounting and recognizes Income and Expenditure on accrual basis. Accounting policies not referred to otherwise are consistent with the GAAP.

1.02 Use of Estimates The preparation of financial statements in conformity with GAAP requires estimates and assumptions to be made that

affect the reported amounts of assets and liabilities on the date of the financial statements, the reported amounts of revenues and expenses during the reported period and the disclosures relating to contingent liabilities as of the date of the financial statements. Difference between actual results and estimates are recognised in the period in which the results are known or materialise.

1.03 Fixed Assets: Tangible Assets Fixed Assets are recorded at cost of acquisition or construction, net of CENVAT / VAT and include amounts added /

reduced on revaluation, less accumulated depreciation and impairment loss, if any. The cost of fixed assets includes interest on borrowings attributable to acquisition of fixed assets up to the date of commissioning of the assets and other incidental expenses incurred up to that date. Fixed Assets acquired and put to use for project purpose are capitalised Project under commissioning and other Capital Work-in-Progress are carried at cost, comprising direct cost, related incidental expenses and attributable interest.

Intangible Assets Intangible assets ate stated at cost of acquisition less accumulated amortisation.

1.04 Capital Work-in-Progress Projects under commissioning and other capital Work-in-Progress are carried at cost, comprising direct cost, related

incidental expenses and attributable interest.

1.05 Impairment of Assets The carrying amount of assets are reviewed at each balance sheet date in respect of Cash Generating Unit if there is any

indication of impairment based on internal/external factors. An impairment loss is recognized wherever the carrying amount exceeds its recoverable amount. The recoverable amount is the greater of the asset’s selling price and value in use.

Reversal of an impairment loss for an asset is recognised as income in the statement of profit and loss, which was earlier shown as an expense.

1.06 Investments Investments are classified into Current and Long-term Investments. Current investments are stated at lower of cost and

fair value. Long-term investments are stated at cost. Provision for diminution in the value of Long-term investments is made only if such a decline is other than temporary.

1.07 Inventories Inventories are valued in accordance with the requirements of revised Accounting Standard (AS) 2 on “valuation of

inventories” issued by The Institute of Chartered Accountants of India (ICAI). Mode of working of cost is weighted average while any item of inventory is valued at Net Realisable Value if the same is less than cost. Inventories are specifically identified, wherever possible in respect of traded goods.

Inventory valuation is determined on the following basis :

(i) Raw Materials, Stock in Process, Finished goods, Stock in Trade and Stores Spares & Chemicals are valued at cost or Net realisable value whichever is lower.

76


(ii) Waste is valued at net realisable value.

(iii) By product is valued at net realisable value.

1.08 Foreign Currency Transactions Transactions denominated in foreign currencies are recorded at a rate prevalent on the date of transaction.

At each Balance Sheet date, unrealized gains or losses on foreign currency transactions on revenue account as a result of increase or decrease in rupee liability as a result of exchange difference between the Balance Sheet date conversion rate and the transaction rate are recorded to the Profit & Loss account, and accordingly, assets or liabilities are adjusted.

Difference between forward rate and the exchange rate at the inception of a forward contract is recognized as income or expense over the life of a contract, and any unrealized gains or losses on account of fluctuations in the exchange rate pertaining to forward contracts at the Balance sheet date arising out of difference between the forward contract rate and year-end rate are recognised in Statement of Profit & Loss.

1.09 Depreciation and Amortisation Depreciation on the fixed assets is calculated on Straight Line Method, except on the Factory Buildings and Plant &

Machineries pertaining to Draw Winding & Draw Twisting section, specific Power Projects situated at Jolwa, Draw Warping & Gas Based Power Project situated at Vareli which is on Written Down Value method. Depreciation on revalued Assets is charged by dividing the unamortised depreciable amount over the residual useful life of the Assets. Depreciation on incremental cost arising on account of translation of foreign currency liabilities for acquisition of fixed assets is provided over the residual life of the assets. Intangible asset is amortised over the useful life of the underlying asset.

1.10 Revenue Recognisation Revenue from operations includes sale value of goods, net of sales returns, discounts, rate difference and Sales Tax /

Value Added Tax (VAT). Sales also include, sales of scrap, waste, rejection etc. and profits from property held as stock in trade.

1.11 Expenses All material known liabilities are provided for, on the basis of available information / estimates.

1.12 CENVAT: (i) The purchase cost of raw materials and other expenses are considered net of CENVAT available on inputs.

(ii) The CENVAT benefits attributable to acquisition / construction of fixed assets are netted off against the cost of fixed assets in accordance with the guidance note issued by the ICAI.

1.13 Excise Duty and VAT Excise Duty / Service tax has been accounted on the basis of both, payments made in respect of goods cleared as also

provision made for goods lying in bonded warehouses and the same has been treated as part of the cost of respective stock as per the revised Guidance Note on Accounting treatment for Excise Duty. However, this has no effect on the Profit for the year. Amount of Excise Duty shown as deduction from Sales is the total Excise Duty for the year except the duty related to difference between Closing Stock & Opening Stock. Excise duty related to the difference between Closing Stock & Opening Stock is recognised separately in Statement of Profit & Loss.

1.14 Employees Benefits Contributions are made to Provident Fund as per the Provident Fund Act. Contribution to Gratuity Fund are made

on the basis of actuarial valuation report as at the year end. Provision for Leave encashment benefit is provided in accordance with the Accounting Standard (AS)15 “Employee Benefits” issued by the Institute of Chartered Accountants of India (ICAI).

Notes annexed to and forming part of the Financial Statements (Contd.)

77


(i) Short Term Employee Benefits All employee benefits falling due within twelve months of rendering of service are classified as short term

employee benefits. The benefits like salaries, wages, bonus, leave salary ex-gratia are recognised in the period in which employee renders the related services.

(ii) For Defined Contribution Plans (PF, FPF and ESI) Contributions to Defined Contribution Plans are recognized as expenses in the Profit and Loss Account as they incur.

(iii) For Defined Benefit Plans As per requirement defined in Accounting Standard 15 - “Employee Benefits” issued by the Institute of Chartered

Accountants of India, the entity relies on the Actuarial valuation undertaken by a certified actuary for the present value of obligation.

1.15 Research and Development All revenue expenditure on research and development are charged to the Profit and Loss Account for the year in which

they are incurred.

1.16 Inter-divisional Transfers Internal transfers of goods between departments as captive consumption are shown as contra items in the Profit and

Loss Account to reflect the true economic value of the production. Any unrealised profit on unsold stock is ignored while valuing inventories.

1.17 Borrowing Cost Interest and other borrowing costs that are directly attributable to the acquisition or construction of qualifying assets

are capitalised as part of the cost of such assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for intended use. Other interest and borrowing costs are charged to revenue.

1.18 Provision for Current and Deferred Tax Provision for current tax is made on the basis of the assessable income at the tax rate which is applicable to the relevant

assessment year as per the Income Tax Act, 1961. The deferred tax asset and deferred tax liability is calculated by applying tax rate and tax laws that have been enacted or substantively enacted as on the Balance Sheet date.

Deferred tax assets arising mainly on account of brought forward losses and unabsorbed depreciation under tax laws, are recognised, only if there is a virtual certainty of their realisation, supported by convincing evidence. Deferred tax assets on account of other timing differences are recognised only to the extent there is a reasonable certainty of their realisation. Deferred tax asset is recognised and carried forward only to the extent that there is a virtual certainty that the asset will be realised in future. At each Balance Sheet date, the carrying amount of deferred tax assets are reviewed for reassessment.

1.19 Provisions, Contingent Liabilities and Contingent Assets Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation

as a result of past events and it is probable that there will be an outflow of resources.

Liabilities which are material, and whose future outcome cannot be ascertained with reasonable certainty, are treated as contingent, and disclosed by way of notes to the accounts.

Contingent Assets are neither recognized nor disclosed in the financial statement. Provisions, Contingent Liabilities and Contingent Assets are reviewed at each Balance Sheet date.

1.20 Earning Per Share Basic Earnings per share is calculated by dividing the net profit or loss for the period attributable to equity shareholders

by weighted average number of equity shares outstanding during the year.

Diluted Earning per share is calculated by considering potential equity shares that have been converted, from the beginning of the period.


78



(` in Lacs)As at

31st March, 2017As at

31st March, 2016Note 2 : Share CapitalAuthorised5,00,00,000 (5,00,00,000) Equity Shares of ` 10/- each 5000.00 5000.00 1,00,00,000 (1,00,00,000) Preference Shares of ` 10/- each 1000.00 1000.00 TOTAL 6000.00 6000.00

Issued, Subscribed and Paid up 4,20,82,525 (4,20,82,525) Equity Shares of ` 10/- each fully paid up 4208.25 4208.25 TOTAL 4208.25 4208.25

2.1 Reconciliation of Equity Shares outstanding

As at 31st March, 2017 As at 31st March, 2016No. of Shares ` in Lacs No. of Shares ` in Lacs

Balance at the beginning of the year 42082525 4208.25 42082525 4208.25 Shares issued during the year 0 0.00 0 0.00 Outstanding at the end of the year 42082525 4208.25 42082525 4208.25

2.2 Shareholders holding more than 5% of Paid-up Equity Share Capital

As at 31st March, 2017 As at 31st March, 2016No. of Shares % of holding No. of Shares % of holding

Introscope Properties Pvt. Ltd. 7231996 17.19 7231996 17.19 Shri Praful A. Shah (Indl.) 2789190 6.63 2789190 6.63 Shri Praful A. Shah Partner of Isha Enterprises 3791965 9.01 3791965 9.01 IL & FS Trust Co. Ltd. 2462297 5.85 3263676 7.76 Rayben Investments 2492816 5.92 2492816 5.92 Palomar Textiles Ltd. 3930872 9.34 3930872 9.34

2.3 Rights, Preferences and Restrictions attached to SharesEquity Shares:The Company has one class of shares referred to as equity shares having a par value of Rs.10 each. Each shareholder is entitled to one vote per share held. The dividend as and when proposed by the Board of Directors is subject to the approval of the shareholders at the Annual General Meeting. In the event of liquidation, Equity Shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding.

79



(` in Lacs)As at


31st March, 2016Note 3 : Reserves and SurplusSecurities Premium ReserveBalance at the beginning of the year 25219.06 25219.06 Balance at the end of the year 25219.06 25219.06

General ReserveBalance at the beginning of the year 3359.70 3359.70 Balance at the end of the year 3359.70 3359.70

Surplus in Statement of Profit and LossBalance at the beginning of the year (35384.18) (21323.51)Add/Less: Profit/(Loss) for the year (9485.75) (14060.67)Balance at the end of the year (44869.93) (35384.18)TOTAL (16291.17) (6805.42)

(` in Lacs)As at 31st March, 2017 As at 31st March, 2016

Non-Current Current Non-Current CurrentNote 4 : Long-Term BorrowingsSecuredTerm Loans from banks Rupee Loans 117255.27 23144.64 88112.67 13231.29 Foreign Currency Loans 0.00 0.00 0.00 2380.66 Rupee Term Loans from financial institutions 1513.53 407.48 1746.38 232.85

118768.80 23552.12 89859.05 15844.80

UnsecuredTerm Loans from foreign banks 571.04 162.42 759.06 162.42

571.04 162.42 759.06 162.42 TOTAL 119339.84 23714.54 90618.11 16007.22

80


Notes annexed to and forming part of the Financial Statements (Contd.)4.1 Note on Secured Long-Term Borrowings: a) Term Loans from Banks and Financial Institutions are secured by first mortgage on pari passu basis on all

immovable properties (except those specifically excluded by lenders, of Rupee Term Loans as per Note (b) below), both present and future and first charge by way of hypothecation of all movables (except book debts) both present and future subject to prior charges created/to be created in favor of Bankers for working capital borrowings.

b) Of the Rupee Term Loans from banks: i) Loans from Bank of India to the extent of ` 206.25 Lacs (Previous year ` 212.29 Lacs) are secured by

hypothecation of specific machinery of Fully Drawn Yarn (FDY) Project at Jolwa. ii) Loans from Bank of India to the extent of ` 982.86 Lacs (Previous year ` 1012.61 Lacs) are secured by

hypothecation of specific Building and machinery of Texturising plant and Draw Twisting plant at Jolwa. iii) Term loans from ICICI Bank, Kotak Mahindra Prime Limited and Axis Bank Ltd aggregating to ` 65.27 Lacs

(Previous year ` 111.95 Lacs) under vehicle finance scheme are secured by an exclusive charge by way of hypothecation of specific vehicles purchased under the arrangements.

iv) Housing Loan of ` 366.51 Lacs (Previous year ` 472.97 Lacs) from ICICI Bank is secured by hypothecation of residential flat at Mumbai.

v) Loans from Corporation Bank to the extent of ` 3003.00 Lacs (Previous Year ` 3094.00 Lacs) are secured by hypothecation of movable fixed assets of Specific Continuous Polymerisation Project at Jolwa.

vi) Loan from Union Bank of India to the extent of ` 4330.15 Lacs (Previous Year ` 4461.40 Lacs) is secured by hypothecation of specific machinery of Coal Based Thermal Power Project at Jolwa.

4.2 Maturity profile of Secured and Unsecured Term Loan is set out as below :(` in Lacs)

Maturity Profile as at 31/03/2017Rate of Interest

ranged betweenduring 31/03/2017

1-2 years 2-3 years 3-4 years Beyond 4 years

Secured Term LoansRupee Loans 8% - 13.25% 21312.43 23443.56 25200.80 47298.49 Rupee Term Loans from financial institutions 8.25% - 11.00% 349.28 349.28 349.28 465.70

21661.71 23792.84 25550.08 47764.19 Unsecured Term LoansTerm Loans- from foreign banks 5.69% 162.42 162.42 246.20 0.00

162.42 162.42 246.20 0.00 TOTAL 21824.13 23955.26 25796.28 47764.19

81


(` in Lacs)As at


31st March, 2016Note 6 : Other Long-term LiabilitiesAdvance received against Export 0.00 43004.00 Trade Deposits 728.20 686.74 TOTAL 728.20 43690.74

(` in Lacs)As at


31st March, 2016Note 7 : Long-term ProvisionsProvision for Employee Benefits (Refer Note 25.2) 660.98 621.09 TOTAL 660.98 621.09


(` in Lacs)As at


31st March, 2016Note 5 : Deferred Tax Liability (net)(a) Deferred Tax Liability on account of :

Difference between book value and tax written Down Value of Fixed Assets 18813.68 18106.68 TOTAL 18813.68 18106.68

(b) Deferred Tax Asset on account of :Disallowances under section 43B of the Income Tax Act, 1961 2661.57 140.45 Provision for Diminution in Value of Investments 0.00 9.16 Carried forward tax losses 30895.15 29325.49 Provision for Doubtful Debts 27.72 0.00 TOTAL 33584.44 29475.10

Deferred Tax Liability / (Asset) (Net) (Refer Note 5.1) (14770.76) (11368.42)Current year (Credit)/ Charge to the extent of liability 0.00 0.00 Current year (Credit)/ Recognised at balance amount 0.00 0.00

5.1 The Company has unabsorbed depreciation and carried forward losses under Tax laws. In absence of virtual certainty of sufficient future taxable income, net deferred tax assets have not been recognised considering prudence in accordance with Accounting Standard (AS) 22 “Accounting for Taxes on Income” issued by the Institute of Chartered Accountants of India.

82



(` in Lacs)As at


31st March, 2016Note 8 : Short-term Borrowings SecuredLoan repayable on demand- Cash Credit Facilities (Refer Note 8.1) 11051.99 4401.01 OthersBuyers Credit 0.00 1285.97 TOTAL 11051.99 5686.98

8.1 Cash Credit facilities are part of Working Capital facilities availed from Consortium of Banks and are secured with hypothecation by way of first pari passu charge on all company’s current assets and by way of second pari passu charge on immovable and all movable properties (excluding current assets) of the Company. Rate of Interest on Cash Credit facilities ranged between 10.90% to 11.30%

(` in Lacs)As at


31st March, 2016Note 9 : Trade PayablesTrade payables:a) Payable to Micro and Small enterprises (Refer Note 32) 61.59 64.41 b) Payable to Others i) Acceptances 22160.48 18586.99 ii) Others including creditors for expenses 8153.27 6038.28

30375.34 24689.68

Note 10 : Other Current LiabilitiesCurrent Maturities of Long term debt (Refer Note 4) 23714.54 16007.22 Overdrawn Bank Balances 820.48 0.00 Interest Accrued and Due on Borrowings 7017.01 340.93 Interest Accrued but not Due on Borrowings 64.62 213.17 Unclaimed Dividends 27.02 37.77 Other Payables - Creditors for Capital Expenditure 122.03 133.28 - Payable to related parties towards purchase of fixed assets 30.00 30.00 - Statutory Dues - TDS and VAT 423.73 568.69 - Other Advances 0.47 0.37 TOTAL 32219.90 17331.43

Note 11 : Short-term ProvisionsProvision for Employee Benefits (Refer Note 25.2) 149.23 198.21 Other Provisions (Refer Note 11.1) 1611.25 756.06 TOTAL 1760.48 954.27

11.1 The Company had recognised liability based on substantial degree of estimation for excise duty payable on clearance of goods lying in stock as on 31st March, 2016 of ` 756.06 Lacs as per the estimated pattern of dispatches. On the analogy, provision for such liability works out to be ` 1611.25 Lacs as on 31st March, 2017. Actual outflow is expected in next financial year.

83


Not

es a

nnex

ed to

and

form

ing

part

of t

he F

inan

cial

Sta

tem

ents

(Con

td.)

Not

e 12

: Fi

xed

Asse

ts(`

in L

acs)

Gro

ss B

lock

Depr

ecia

tion/

Amor

tisati

onN

et B

lock

Parti

cula

rsA

s at

01

/04/

2016

Add

ition

sD

educ

tions

/ A

djus

tmen

tsAs

at

31/0

3/20

17A

s at

01

/04/

2016

For

the

Year

Ded

uctio

ns/

Adj

ustm

ents

Upt

o 31

/03/

2017

As a

t 31

/03/

2017

As

at

31/0

3/20

16

12

35

67

810

1112

13

(A) T

angi

ble

Asse

ts:

Free

hold

Lan

d60

00.5

1 0.

00

0.00

60

00.5

1 0.

00

0.00

0.

00

0.00

60

00.5

1 60

00.5

1

Build

ing

3463

1.11

17

.32

5.08

34

643.

35

1381

0.42

11

68.4

2 1.

42

1497

7.42

19

665.

93

2082

0.69

Plan

t and

Mac

hine

ry16

4595

.90

1040

.88

517.

83

1651

18.9

5 78

736.

39

4784

.37

402.

98

8311

7.78

82

001.

17

8585

9.51

Furn

iture

& F

ixtu

res

900.

97

14.4

5 (0

.20)

915.

62

547.

09

63.7

6 0.

00

610.

85

304.

77

353.

88

Mot

or V

ehic

les

1099

.16

48.0

8 62

.42

1084

.82

677.

31

96.6

8 56

.96

717.

03

367.

79

421.

85

Offi

ce E

quip

men

ts49

3.02

14

.86

5.08

50

2.80

39

7.84

28

.64

4.63

42

1.85

80

.95

95.1

9

Com

pute

r &

Dat

a Pr

oces

sing

Uni

ts86

1.78

18

.15

0.00

87

9.93

78

6.97

20

.86

0.00

80

7.83

72

.10

74.8

2

Labo

rato

ry E

quip

men

ts21

3.23

11

.96

0.00

22

5.19

19

7.79

4.

77

0.00

20

2.56

22

.63

15.4

4

Elec

tric

al In

stal

latio

n &

Equ

ipm

ents

2733

.37

0.31

0.

00

2733

.68

1633

.23

263.

90

0.00

18

97.1

3 83

6.55

11

00.1

2

Tota

l Tan

gibl

e As

sets

2115

29.0

5 11

66.0

1 59

0.21

21

2104

.85

9678

7.04

64

31.4

0 46

5.99

10

2752

.45

1093

52.4

0 11

4742

.01

(B) I

ntan

gibl

e As

sets

:

Soft

war

e61

4.92

1.

33

0.00

61

6.25

58

2.72

16

.02

0.00

59

8.74

17

.51

32.2

0

Tota

l Int

angi

ble

Asse

ts61

4.92

1.

33

0.00

61

6.25

58

2.72

16

.02

0.00

59

8.74

17

.51

32.2

0

Tota

l21

2143

.97

1167

.34

590.

21

2127

21.1

0 97

369.

76

6447

.42

465.

99

1033

51.1

9 10

9369

.91

1147

74.2

1

Tota

l Pre

viou

s Yea

r21

0201

.15

2365

.41

422.

58

2121

43.9

8 91

057.

49

6681

.43

369.

15

9736

9.77

11

4774

.21

1191

43.6

6

(C) C

apita

l Wor

k-in

-Pro

gres

s30

84.0

4 31

16.7

6

Tota

l11

2453

.95

1178

90.9

7

Not

es:

12.1

Bu

ildin

gs in

clud

e `

40.5

9 La

cs (P

revi

ous

Year

` 4

0.59

Lac

s) b

eing

cos

t of s

hare

s re

latin

g to

ow

ners

hip

flat i

n a

Co-O

pera

tive

Soci

ety.

12.2

Pl

ant

& M

achi

neri

es in

clud

e fo

reig

n cu

rren

cy fl

uctu

ation

cap

italis

ed d

urin

g th

e ye

ar a

ggre

gatin

g to

` 5

8.16

Lac

s (P

revi

ous

Year

` 1

16.5

6 La

cs) i

n ac

cord

ance

with

Pa

ra 4

6A o

f Acc

ounti

ng S

tand

ards

11

rela

ting

to ‘T

he e

ffect

s of

cha

nges

in F

orei

gn E

xcha

nge

Rate

s’.

12.3

D

urin

g th

e pr

evio

us y

ear,

7233

7 Sq

. Mtr

s La

nd a

t Va

reli

Show

n as

sto

ck in

tra

de (

Prop

erty

und

er D

evel

opm

ent)

of

` 47

8.36

lacs

has

bee

n co

nver

ted

into

Fix

ed

Ass

ets.

84



(` in Lacs)As at


31st March, 2016

Note 13 : Non-current InvestmentsLong Term Investments (At Cost)Other InvestmentsIn Equity Shares of Associate Company – (Quoted, Fully paid-up)

14500000 (14500000) Equity Shares of Surat Textile Mills Ltd. of ` 1 each 1282.92 1282.92

In Equity Shares (Unquoted, Fully paid-up)108 (108) Equity Shares of New Piece Goods Bazaar Co. Ltd. of ` 100 each 1.57 1.57

50000 (50000) Equity Shares of Amitabh Bachchan Corporation Ltd. of ` 10 each 40.00 40.00

4943832 (4943832) Equity Share of Salora Shinsung Textile Co Ltd. of ` 10 each 549.17 549.17

100 (100) Equity Shares of Electrex India Ltd. of ` 10 each 0.02 0.02

206667 (206667) Equity Share of Icent Ltd. of ` 10 each 62.00 62.00

500 (450) Equity Shares of Majestic Land Developers Pvt. Ltd. of ` 100 each 32.41 32.41

Investment in Wholly Owned Subsidiary Company1 (1) Equity Share of GAIA International FZE, Dubai of 477000 AED 80.17 80.17

In Government Securities-Unquoted 6 Years National Savings Certificate (Deposited with Sales Tax Authorities) 0.15 0.15

2048.41 2048.41

Less : Provision for diminution in value of investments 627.71 627.71

TOTAL 1420.70 1420.70

Aggregate Value of Unquoted Investments 137.78 137.78

Aggregate Value of Quoted Investments 1282.92 1282.92

Aggregate Market Value of Quoted Investments 581.45 348.00

Notes:-The break up of provision for diminution in value of investments is as under:

i) Equity Shares of Salora Shinsung Textile Co. Ltd. 549.17 549.17

ii) Equity Shares of Icent Ltd. 62.00 62.00

iii) Equity Shares of Majestic Land Developers Pvt. Ltd. 16.54 16.54

TOTAL 627.71 627.71

85



(` in Lacs)As at


31st March, 2016Note 14 : Long-term Loans and Advances(Unsecured and Considered Good)Capital Advances 32.93 1173.96 Security Deposits 77.18 391.81 Advance Income Tax (Net of Provision for Tax) 174.15 139.28 Employee Advances 10.01 17.92 Loans and Advances to a related party (Refer Note 33 (i) & (ii) ) 1474.27 1506.21 Other Loans and Advances 1.04 3.46 TOTAL 1769.58 3232.64

(` in Lacs)As at


31st March, 2016Note 15 : InventoriesRaw Materials 10326.95 7575.28 Raw Materials in Transit 2211.67 4133.43 Stock-in-Process 387.37 327.44 Finished Goods 19129.46 10466.56 Stores, Spares and Chemicals 5897.37 5566.42 Stock-in-Trade (Art & Artifacts) 1277.03 1277.03 TOTAL 39229.85 29346.16

(` in Lacs)As at


31st March, 2016Note 16 : Trade Receivables(Unsecured and Considered Good)Outstanding for a period exceeding six months from the date they are due for payment 419.21 1824.55 Others 14147.90 13505.02

14567.11 15329.57 Less: Provision for Bad Debts 83.84 389.12 TOTAL 14483.27 14940.45

86


(` in Lacs)As at


31st March, 2016Note 17 : Cash and Bank BalancesCash and Cash Equivalents:Bank Balances in :- Current Accounts 1533.23 636.82 - Deposit Accounts (with maturity less than 12 months) 242.54 4.92 Margin Money Account 3220.45 1615.77 Cash on hand 48.05 91.92

5044.27 2349.43 Other Bank Balances:Earmarked balances with Banks in Unpaid Dividend Account 27.02 37.77 Deposit Accounts (with maturity more than 12 months) 22.55 246.17

49.57 283.94 TOTAL 5093.84 2633.37

(` in Lacs)As at


31st March, 2016Note 18 : Short-term Loans and Advances(Unsecured and Considered Good)Loans to employees 10.81 13.62 Advance to Suppliers 2221.96 4922.84 Security Deposits 318.93 569.09 Advance Recoverable in cash or in kind or for value to be received 258.03 1163.91 Balance with Customs, Central Excise Authorities etc. 5309.51 3703.18 TOTAL 8119.24 10372.64

(` in Lacs)As at


31st March, 2016Note 19 : Other Current AssetsInterest Subsidy and interest receivable 255.98 300.03 Export Incentives receivable 3.42 47.66 Insurance Claim receivable 63.90 20.00 Benefits receivable against Advance Licence received 325.00 308.60 VAT receivable 174.91 174.91 Discount on Raw material receivable 660.17 307.00 TOTAL 1483.38 1158.20


87


Notes annexed to and forming part of the Financial Statements (Contd.)(` in Lacs)

2016-17 2015-16Note 20 : Gross Revenue from OperationsSale of Products 264574.06 256731.31 TOTAL 264574.06 256731.31

Particulars of Sale of ProductsChips 92090.79 84557.27 Yarn (Includes POY & Processed yarn) 150284.47 151901.23 Fabrics 17640.11 18433.10 P.T.A. 15.07 10.46 M.E.G. 2647.30 72.83 Spin Finish Oil 55.89 0.00 Others 1840.43 1756.42

264574.06 256731.31

(` in Lacs)2016-17 2015-16

Note 21 : Other IncomeNet gain on sales of current Investment 217.59 433.97 Net surplus on disposal of Fixed Assets 23.79 3.71 Interest Income 141.38 215.48 Rent Income 10.15 1.70 Credit Balances Write back (net) 525.45 71.76 Bad Debts Recovery 8.00 0.00 Dividend Income 0.58 75.94 Miscellaneous Income 64.80 181.09 TOTAL 991.74 983.65

(` in Lacs)2016-17 2015-16

Note 22 : Cost of Materials ConsumedRaw Materials Imported 29.58% 52851.05 31.44% 52649.19 Indigenous 70.42% 125841.53 68.56% 114789.05

100.00% 178692.58 100.00% 167438.24

(` in Lacs)2016-17 2015-16

22.1 : Particulars of materials consumedP.T.A. 108200.86 104139.57 M.E.G. 48510.20 46902.14 Carbon Black Powder 100.72 244.23 Polyester Chips 16101.93 7284.92 Yarn 3149.94 6158.25 Cloth 2628.93 2709.13 TOTAL 178692.58 167438.24

88


(` in Lacs)2016-17 2015-16

Note 23 : Purchases of Stock-in-tradeFabrics 1220.32 1392.90 MEG 453.70 0.00 YARN 108.60 0.00 Readymade 16.68 16.25 TOTAL 1799.30 1409.15

(` in Lacs)2016-17 2015-16

Note 24 : Changes in Inventories of Finished Goods, Work-in-Progressand Stock-in-TradeOpening Stock Finished Goods and Stock-in-trade 11743.59 14796.77 Work-in-Progress 327.44 357.26

12071.03 15154.03 Closing Stock Finished Goods and Stock-in-trade 20406.49 11743.59 Work-in-Progress 387.37 327.44

20793.86 12071.03

Add: Variation in Excise duty on opening and closing stock of finished goods 855.19 (345.61)TOTAL (7867.64) 2737.39


89



(` in Lacs)2016-17 2015-16

Note 25 : Employee Benefits ExpenseSalaries and Wages 11263.75 10477.85 Contribution to Provident and Other Funds 767.22 684.36 Gratuity 203.32 394.32 Staff Welfare Expenses 179.65 138.39 TOTAL 12413.94 11694.92

25.1 During the previous year, the Central Government vide its letter dated 28th April, 2015, granted its approval for payment of total remuneration @ ` 1,43,71,000/- (Rupees One Crore Forty-three Lacs Seventy -one Thousand only) per annum to Shri Praful A. Shah for the period from 01/04/2014 to 31/08/2016.

25.2 Employee Benefits as per AS 15: Brief description : The type of defined benefit plans is as follows

Gratuity : The employee gratuity fund is managed by “Garden Silk Mills - Employees Gratuity Fund”. The present value of

obligation is determined based on actuarial valuation. The liability is fully funded.

Leave Encashment: The present value of obligation for Leave encashment is determined based on actuarial valuation and is unfunded.

(` in Lacs)Gratuity (Funded) Leave Encashment

(Unfunded)2016-17 2015-16 2016-17 2015-16

A. Amounts recognised in Balance Sheet:i. Present Value of Defined Benefit Obligation

- Wholly Funded 3253.59 2920.82 0.00 0.00 - Wholly Unfunded 0.00 0.00 706.89 649.99 Less: Fair Value of Plan Assets 3150.27 2751.50 0.00 0.00 Amount recognised in Balance Sheet as Liability or (Asset) 103.32 169.32 706.89 649.99

ii. Amount Reflected in Balance Sheet - Liability 103.32 169.32 706.89 649.99

B. Expenses recognised in statement of Profit and Loss:Current Service Cost 224.26 210.32 219.14 203.39 Interest Cost 213.51 189.29 48.96 50.10 Expected return on Plan assets (209.08) (222.87) 0.00 0.00 Actuarial (Gain)/Loss (25.37) 217.58 244.16 268.39 Net Cost 203.32 394.32 512.26 521.88

90



C. Changes in present value of defined benefit obligation representing Reconciliation of opening and closing balances of fair value of Plan Assets.


(Unfunded)2016-17 2015-16 2016-17 2015-16

Opending value of present value of defined benefit obligation 2920.82 2559.40 649.99 659.18Add :Current Service Cost 224.26 210.32 219.14 203.39 Add: Interest Cost 213.51 189.29 48.96 50.10 Add : Actuarial Losses / (Gains) 80.01 149.26 244.15 268.39

3438.60 3108.27 1162.24 1181.06 Less : Benefits paid 185.01 187.45 455.35 531.07 Closing value of present value of defined benefit obligation 3253.59 2920.82 706.89 649.99

D. Principal Actuarial Assumptions at the Balance Sheet Date (expressed as Weighted Averages) (` in Lacs)

Gratuity (Funded) Leave Encashment (Unfunded)

2016-17 2015-16 2016-17 2015-16

Discount Rate (p.a.) 7.20% 7.70% 7.20% 7.70%Expected Rate of Return on Assets (p.a.) 7.20% 7.70% – –Rate of escalation in salary (p.a.) 7.00% 8.00% 7.00% 8.00%

(` in Lacs)2016-17 2015-16

Note 26 : Finance CostsInterest Expenses 16114.19 14287.74 Other Financial Charges 1075.12 1231.33 Foreign Exchange Loss/(Gain) 640.33 2548.98

17829.64 18068.05 Less : Interest and other financial income 340.35 342.92 TOTAL 17489.29 17725.13

91



(` in Lacs)2016-17 2015-16

Note 27 : Excise DutyExcise Duty Expense 20855.81 19182.96 TOTAL 20855.81 19182.96

(` in Lacs)2016-17 2015-16

Note 28 : Other ExpensesManufacturing expenses

Consumption of Stores, Spares and Chemicals 9128.83 8646.02 Power and Fuel 17756.77 18516.72 Packing Charges 5301.70 5443.52 Conversion and Processing Charges 450.28 352.91 Repairs to Machinery 1632.84 1530.99 Repairs to Buildings 173.69 106.41 Repairs-others 124.67 168.88

Selling and Distribution ExpensesCommission and Discount 1868.99 2749.68 Freight, Octroi, Carting, Loading Unloading etc. 2013.57 2189.64 Advertisement 393.95 415.17 Other Selling and Distribution Expenses 470.38 443.18

Establishment ExpensesGeneral Charges 3117.71 2988.99 Insurance 187.89 175.95 Rent 298.83 281.75 Rates and Taxes 58.40 70.14 Auditors’ Remuneration 37.14 22.32 Debit Balances Written off 1217.03 453.35 Provision for Bad and Doubtful debts 0.00 389.12 Provision for Diminution in value of Investment 0.00 16.54 Loss due to Fire 3.96 4.08 Loss on Investment in Subsidiary 0.00 5.14

TOTAL 44236.63 44970.50

2016-17 2015-16% (` in Lacs) % (` in Lacs)

28.1 Value of Stores, Chemicals and Component ConsumedImported 43.58 3978.50 47.66 4120.58 Indigenous 56.42 5150.33 52.34 4525.44

100.00 9128.83 100.00 8646.02

92



(` in Lacs)2016-17 2015-16

28.2 Value of Imports on CIF basis in respect ofRaw Materials 46681.79 51275.91 Stores, Spare parts, Components and Chemicals 9966.02 10907.81

(` in Lacs)2016-17 2015-16

28.3 Payment to Auditors as :(a) Auditor: Statutory Audit Fees 20.10 17.50 Tax Audit Fees 3.32 3.31 (b) Cost Audit Fees 1.58 1.51 (c) Other services 12.14 0.00 TOTAL 37.14 22.32

(` in Lacs)2016-17 2015-16

28.4 Expenditure in Foreign CurrencyInterest Expenses 1227.45 1290.06 Brokerage on Exports 330.78 366.90 Commission on Imports 0.00 482.46 Travelling Expenses 31.71 47.20 Others 11.18 32.16

93


Notes annexed to and forming part of the Financial Statements (Contd.)28.5 Foreign Currency Exposure The Company uses plain forward contracts for hedging purpose. Foreign currency Loans / ECB which are covered by full

currency & interest rate swap. All the contracts are for hedging purpose only and not for any speculative purpose.

Details of hedged and unhedged exposure are as under:

Particulars Foreign Currency

Denomination

2016-17 2015-16Foreign

Currency (Amount in

Lacs)

Indian Rupees

(Equivalent in Lacs)

Foreign Currency

(Amount in Lacs)

Indian Rupees


a. HedgedDebtors USD 71.79 4526.29 72.93 4777.99 Acceptances USD 74.83 5026.32 62.82 4263.56

EUR 0.00 0.00 4.05 73.26 JPY 584.56 358.35 369.99 220.55

Loan Taken USD 10.60 733.46 85.19 4588.12 Interest payable USD 0.07 5.06 0.77 35.21

b. UnhedgedInterest Payable USD 0.00 0.00 0.10 6.67 Debtors EUR 0.00 0.00 0.68 48.87

USD 22.42 1453.88 0.00 0.00 Creditors JPY 16.67 9.67 0.00 0.00

USD 1.01 65.20 1.06 70.05 EUR 0.01 0.98 0.01 1.06

Acceptances USD 85.95 5574.16 0.00 0.00 JPY 298.15 172.94 56.18 33.14

Loan Taken USD 0.00 0.00 649.39 43025.55 Loan Given USD 0.00 0.00 4.60 304.77 Export Commission payable USD 0.37 24.22 1.09 71.97 Foreign Bank Balances USD 0.03 1.65 0.03 1.69 Investment in share capital in subsidiary co. USD 1.30 80.17 1.30 80.17 Unsecure loan given to subsidiary co. USD 22.73 1474.27 22.73 1506.21

94



(` in Lacs)2016-17 2015-16

Note 29 : Extraordinary ItemsAdvances Written off 984.22 0.00 TOTAL 984.22 0.00

Note 30 : Earnings per share (EPS)Earning Per Share (EPS) computed in accordance with Accounting Standard 20 “ Earning per Share” as notified under Section 133 of the Companies Act, 2013, read together with paragraph 7 of the Companies (Accounts) Rules, 2014

(` in Lacs)2016-17 2015-16

i) Net Profit/(Loss) after tax as per Statement of Profit and Loss attributable to Equity Shareholders (` in Lacs) (9485.75) (14060.67)

ii) Weighted Average number of equity share used as denominator for calculating EPS 42082525 42082525

iii) Basic and Diluted Earnings per share (`) (Refer Note 30.1) (22.54) (33.41)iv) Face Value per equity share (`) 10.00 10.00

30.1 Basic earnings per share is calculated by dividing the net profit / (loss) for the year attributable to equity shareholders (after deducting preference dividends and attributable taxes) by weighted average number of equity shares outstanding during the year.

For the purpose of calculating diluted earnings per share, the net profit / (loss) for the year attributable to equity shareholders and the weighted average numbers of shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares (i.e. Optionally convertible Cumulative Preference shares)

Since, resultant EPS due to dilution decreased net loss per share as compared to basic earning per share, both basic and diluted EPS are considered at basic earnings.

(` in Lacs)2016-17 2015-16

Note 31 : Earnings in Foreign ExchangeFOB Value of Exports 38801.96 31322.48

95



Note 32 : Disclosure required under the Micro, Small and Medium Enterprises Development Act, 2006 (the MSMED Act) are given as follows:

(` in Lacs)Description 2016-17 2015-16Principal amount outstanding as at the end of the year 61.59 64.41 Interest due thereon remaining unpaid as at the end of the year 0.00 0.00 Interest paid to the supplier 0.00 0.00 Payment made the supplier beyond the appointed day during the year 0.00 0.00 Interest due and payable for the period of delay 0.00 0.00 Interest accrued and remaining unpaid as at the end of the year 0.00 0.00 Amount of further interest remaining due and payable in succeeding years 0.00 0.00

Note 33 : Related Party Disclosures

As per Accounting Standard 18 (AS-18) ‘Related Party Disclosures’, as notified under Section 133 of the Companies Act, 2013, read together with paragraph 7 of the Companies (Accounts) Rules, 2014, the disclosures of transactions with the related parties as defined in As - 18 are given below:

(i) List of related parties with whom transactions have taken place and relationships:

Sr.No.

Nature of relationships Names of related parties

1 Subsidiary Companies GAIA International FZE2 Group Company Surat Textile Mills Limited3 Key Management Personnel Shri Praful A. Shah

Shri Sanjay S. ShahShri Alok P. ShahShri Suhail P. Shah

4 Relatives of Key management personnel and their enterprises where Smt. Shilpa P. Shahtransactions have taken place. Smt. Sujata V. Parsai

Shri V. K. ParsaiArmorax Business Centre Pvt. Ltd.Como Textile Pvt. Ltd.Sorrento Textile Pvt. Ltd.Amalfi Textile Pvt. Ltd.

96


Notes annexed to and forming part of the Financial Statements (Contd.)(ii) Transactions during the year with Related Parties:

(` in Lacs)Nature of Transactions Subsidiary Group

CompanyKey

Management Personnel

Others Total

Raw Material & Stores Sales 520.89 520.89 (0.00) (0.00)

Other Misc Sales 215.85 215.85 (286.57) (286.57)

Job Charges Income 0.00 0.00 (0.10) (0.10)

Electric Power and Fuel Charges 479.12 479.12 (432.22) (432.22)

Purchases 6358.80 6358.80 (4629.16) (4629.16)

Job Charges expenses 0.00 0.00 (264.84) (264.84)

Remuneration 589.10 25.08 614.18 (435.48) (25.08) (460.56)

Professional Consultancy Fee 1.55 1.55 (1.20) (1.20)

Payments under Current Account. 5739.57 5739.57 (14471.69) (14471.69)

Receipt under Current Account 1172.33 1172.33 (9316.79) (9316.79)

Security Deposit against interest to be paid 0.00 0.00 (304.77) (304.77)

Security Deposit Returned 304.77 304.77 (0.00) (0.00)

Investment in Shares 0.00 0.00 (49.90) (49.90)

Unsecured Loan given 0.00 0.00 (290.02) (290.02)

Payment received against Unsecured Loan 31.94 31.94 (148.12) (148.12)

Advance received against sales 2657.82 2657.82 (11778.92) (11778.92)

Advance received against sales Returned 45661.82 45661.82 (0.00) (0.00)

Interest Expenses 1205.45 1205.45 (1025.91) (1025.91)

97



(` in Lacs)Nature of Transactions Subsidiary Group

CompanyKey

Management Personnel

Others Total

Sales of Finished Goods 10647.88 10647.88 (12003.34) (12003.34)

Payment received against sales 9159.10 9159.10 (9288.77) (9288.77)

Advances for preliminary expenses 0.00 0.00 (0.40) (0.40)

Payment Received against preliminary expenses 0.00 0.00 (13.26) (13.26)

Commission expenses 11.76 11.76 (482.46) (482.46)

Commission payables no longer required 494.22 494.22 (0.00) (0.00)

Leave & Licence Fees 116.31 116.31 (115.42) (115.42)

Telephone, Electricity & Other Taxes 15.39 15.39 (16.84) (16.84)

Balance at the beginning of the yearPayables 504.02 19.98 1.38 525.38 Investment in Shares 80.16 80.16 Unsecured Loan given 1506.21 1506.21 Debtors for goods 2997.20 2997.20 Advance received against sales 43004.00 43004.00 Security Deposit against Interest to be Paid 304.77 304.77

Balance at the end of the yearPayables 0.00 36.33 1.47 37.80 Current Account: Credit Balance 575.70 575.70 Investment in Shares 80.16 80.16 Unsecured Loan given 1474.27 1474.27 Debtors for goods 4485.98 4485.98 Advance received against sales 0.00 0.00 Security Deposit against Interest to be Paid 0.00 0.00

Note : Figures in bracket represent Previous Year’s amount.

98


Notes annexed to and forming part of the Financial Statements (Contd.)Note 34 : Contingent Liabilities and Commitments

1 Contingent Liabilities

(i) Disputed liabilities for Excise Duty not acknowledged as debts ` 7217.84 Lacs (Previous Year ` 3470.23 Lacs)

(ii) Disputed liabilities for Income - Tax not acknowledged as debts ` Nil (Previous Year ` 133.13)

(iii) Disputed liabilities for Gujarat Sales Tax not acknowledged as debts ` 58.18 Lacs (Previous Year ` 70.51 Lacs)

(iv) Counter-guarantees to Banks against guarantees issued to third parties ` 0.50 Lacs (Previous year ` 0.50 Lacs)

(v) Foreign bills Discounted with Banks ` 3261.93 Lacs (Previous Year ` 74.82 Lacs)

(vi) Unpaid dividend on 0.001% Optionally Convertible Cumulative Preference shares(now converted into equity shares) not acknowledged as debts ` 0.01 Lacs (Previous year ` 0.01 Lacs)

(vii) Custom Duty on Raw materials Imported under advance license against which export obligation is to be fulfilled is ` 3.72 lacs (Previous year ` 143.69 Lacs)

Note 35 :The details of Specified Bank Notes (SBN) held and transacted during the period from 8th November, 2016 to 30th December, 2016 are provided in the table below:

(` in Lacs)SBNs* Other

Denomination Notes

Total

Closing cash in hand as on 8th November, 2016 53.46 68.84 122.30 (+) Permitted receipts 0.00 63.83 63.83 (-) Permitted payments 0.00 62.03 62.03 (-) deposited in Banks 53.46 0.00 53.46 Closing cash in hand as on 30th December, 2016 0.00 70.64 70.64

*Specified Bank Notes (SBNs) mean the bank notes of denominations of the existing series of the value of five hundred rupees and one thousand rupees as defined under the notification of the Government of India, in the Ministry of Finance, Department of Economic Affairs no. S.O.3407(E), dated the 8th November, 2016

Note 36 :The Company has only one reportable segment viz. ‘Textiles’ as per Accounting Standard (AS) 17 of The Institute of Chartered Accountants of India (ICAI).

Note 37 :Previous year’s figures have been regrouped / reclassified wherever necessary to correspond with the current year’s classification / disclosure.


99


INDEPENDENT AUDITORS’ REPORTTo the Members of Garden Silk Mills Limited,

Report on the Consolidated Financial Statements1. We have audited the accompanying consolidated financial statements of Garden Silk Mills Limited (hereinafter referred

to as “the Holding Company”) and its subsidiary (the Holding Company and its subsidiary collectively referred to as “the Group”), comprising of the Consolidated Balance Sheet as at 31stMarch, 2017, the Consolidated Statement of Profit and Loss, the Consolidated Cash Flow Statement for the year then ended, and a summary of the significant accounting policies and other explanatory information (hereinafter referred to as “the consolidated financial statements”).

Management’s Responsibility for the Consolidated Financial Statements2. The Holding Company’s Board of Directors is responsible for the preparation of these consolidated financial statements

in terms of the requirement of the Companies Act,2013(hereinafter referred to as in “the Act”) that give a true and fair view of the consolidated financial position, consolidated financial performance and consolidated cash flows of the Group in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014. The respective Board of Directors of the Companies included in the Group are responsible for maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Group and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error, which have been used for the purpose of preparation of consolidated financial statements by the directors of Holding Company, as aforesaid.

Auditor’s Responsibility3. Our responsibility is to express an opinion on these consolidated financial statements based on our audit.

4. While conducting the audit, we have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the Audit Report under the provisions of the Act and the Rules made thereunder.

5. We conducted our audit in accordance with the Standards on Auditing specified under Section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.

6. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Holding Company’s preparation of the consolidated financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on whether the Company has in place and adequate internal financial control system over financial reporting and the operating effectiveness of such controls. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by the Holding Company’s Board of Directors, as well as evaluating the overall presentation of the consolidated financial statements.

7. We believe that the audit evidence obtained by us and the audit evidence obtained by the other auditor in terms of their reports referred to in sub-paragraph (a) of the “Other Matters” paragraph below, is sufficient and appropriate to provide a basis for our audit opinion on the consolidated financial statements.

100


Opinion8. In our opinion and to the best of our information and according to the explanations given to us, and based on the

consideration of the report of other auditors, on the financial statements of the subsidiaries noted below, the aforesaid consolidated financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the consolidated state of affairs of the Group as at 31st March, 2017, and the consolidated loss and its consolidated cash flows for the year ended on that date.

Other Matters9. a) We did not audit the financial statements of one wholly owned subsidiary, whose financial statements reflect

total assets (net) of ` 54.25 Crore as at 31st March, 2017, total loss of ` 7.22 Crore for the year ended on that date, as considered in the consolidated financial statements. These financial statements has been audited by other auditor whose report has been furnished to us by the Management, and our opinion on the consolidated financial statements, in so far as it relates to the amounts and disclosures included in respect of the subsidiary, and our report in terms of sub-sections (3) and (11) of Section 143 of the Act, in so far as it relates to the aforesaid subsidiary, is based solely on the reports of the other auditor. In our opinion and according to the information and explanations given to us by the Management, these financial statements are not material to the Group. Our opinion is not qualified in respect of this matter.

b) Our opinion on the Consolidated financial statements, and our report on the other legal and regulatory requirements below is not modified in respect of the above matters with respect to our reliance on the work done and the reports of the other auditors and the financial statements certified by the Management.

Report on Other Legal and Regulatory Requirements10. As required by Section 143(3) of the Act, we report, to the extent applicable that:

(a) We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit of the aforesaid consolidated financial statements;

(b) In our opinion proper books of account as required by law relating to preparation of aforesaid consolidated financial statements have been kept so far as it appears from our examination of those books and the reports of the other auditors;

(c) The Consolidated Balance sheet, the Consolidated Statement of Profit and Loss and the Consolidated Cash Flow Statement dealt with by this Report are in agreement with the relevant books of accounts maintained for the purpose of preparation of consolidated financial statements;

(d) In our opinion, the aforesaid consolidated financial statements comply with the Accounting Standards specified 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 of the Holding Company as on 31st March, 2017, and taken on record by the Board of Directors of the Holding Company, none of the directors of the Holding Company is disqualified as on 31stMarch, 2017, from being appointed as a director in terms of Section 164 (2) of the Act;

(f) With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate report in “Annexure A”; and

(g) With respect to the other matters to be included in the Auditor’s Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us:

i. the Consolidated Financial statements disclose the impact of pending litigations on its consolidated financial position of the Group. Refer Note 34 to the financial statements;

101


ii. the Group did not have any material foreseeable losses on the long term contracts including derivative contracts;

iii. there has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Holding Company; and

iv. the Group has provided requisite disclosures in its consolidated financial statements as to holdings as well as dealings in Specified Bank Notes during the period from 8th November, 2016 to 30th December, 2016 and these are in accordance with the books of accounts maintained by the Holding Company. Refer Note 35 to the consolidated financial statements.




102


ANNEXURE- A TO THE INDEPENDENT AUDITOR’S REPORT ON THE CONSOLIDATED FINANCIAL STATEMENTS

Report on the Internal Financial Controls under Clause (i) of Sub section-3 of Section 143 of the Companies Act, 2013 (“the Act”) and as referred to in paragraph 1(f) under the heading “Report on other legal and other regulatory requirements” of our Report of even date to the members of Garden Silk Mills Limited on the financial statements for the year ended 31st March, 2017.

1. We have audited the internal financial controls over financial reporting of Garden Silk Mills Limited (“The Holding Company”)as on 31st March, 2017 in conjunction with our audit of the consolidated financial statements of the Company for the year ended on that date.

Management‘s Responsibility for Internal Financial Controls2. The Respective Board of Directors of the Holding Company and its subsidiary company are responsible for establishing

and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India (‘ICAI’). These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to company’s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Companies Act, 2013.

Auditors’ Responsibility3. Our responsibility is to express an opinion on the Company’s internal financial controls over financial reporting based

on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls over Financial Reporting (the “Guidance Note”) and the Standards on Auditing, issued by the ICAI and deemed to be prescribed under Section143 (10) of the Companies Act, 2013 to the extent applicable to an audit of internal financial controls, both issued by the ICAI. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects.

4. Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.

5. We have not examined the Internal Financial Controls over Financial Reporting of the subsidiary company for the year ended 31st March, 2017.

6. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Company’s internal financial controls system over financial reporting.

Meaning of Internal Financial Controls over Financial Reporting7. A company’s internal financial control over financial reporting is a process designed to provide reasonable assurance

regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal financial control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;(2) provide reasonable

103


assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorisations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls Over Financial ReportingBecause of the inherent limitations of internal financial controls over financial reporting, including the possibility of collusion or improper management override of 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 financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

OpinionIn our opinion, the Holding Company has, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at 31st March 2017, based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note issued by the ICAI.




104


Consolidated Balance Sheet as at 31st March, 2017


(` in Lacs)Particulars Note No. As at

31st March 2017As at

31st March 2016I EQUITY AND LIABILITIES

(1) Shareholders’ Fundsa) Share Capital 2 4208.25 4208.25 b) Reserves and Surplus 3 (16909.97) (6701.97)

(12701.72) (2493.72)(2) Non-Current Liabilities

a) Long-Term Borrowings 4 119339.84 90618.11 b) Deferred Tax Liabilities (Net) 5 0.00 0.00 c) Other Long-Term Liabilities 6 728.20 686.74 d) Long-Term Provisions 7 660.98 621.09

120729.02 91925.94 (3) Current Liabilities

a) Short-Term Borrowings 8 11051.99 5686.98 b) Trade Payables 9 30408.61 24726.20 c) Other Current Liabilities 10 32226.23 61795.16 d) Short-Term Provisions 11 1760.48 954.27

75447.31 93162.61 TOTAL 183474.61 182594.83

II ASSETS(1) Non-Current Assets

a) Fixed Assets :(i) Tangible Assets 12(A) 109352.85 114742.70 (ii) Intangible Assets 12(B) 17.51 32.20 (iii) Capital Work-in-Progress 12(C) 3084.04 3116.77

112454.40 117891.67 b) Non-Current Investments 13 1340.53 1340.53 c) Long-Term Loans and Advances 14 295.31 1421.67

114090.24 120653.87 (2) Current Assets

a) Inventories 15 39229.85 29346.16 b) Trade Receivables 16 12083.98 15671.12 c) Cash and Bank Balances 17 8467.77 4820.22 d) Short-Term Loans and Advances 18 8119.39 10945.26 e) Other Current Assets 19 1483.38 1158.20

69384.37 61940.96 TOTAL 183474.61 182594.83 Summary of Significant Accounting Policies 1The accompanying notes are an integral part of the consolidated financial statements

105


Consolidated Statement of Profit and Loss for the year ended 31st March, 2017


(` in Lacs)

Particulars Note No. 2016-17 2015-16

I Gross Revenue from Operations 20 265642.69 257811.99

II Other Income 21 499.25 990.43

III TOTAL REVENUE (I+II) 266141.94 258802.42

IV EXPENSES

a) Cost of Materials Consumed 22 178692.58 166950.34

b) Purchases of Stock-in-Trade 23 1799.30 1438.20

c) Changes in Inventories of Finished Goods,

Work-in-Progress and Stock-in-Trade 24 (7867.64) 2737.39

d) Employee Benefits Expense 25 12433.84 11700.59

e) Finance Costs 26 18441.95 18823.74

f) Depreciation and Amortisation Expense 12 6447.66 6681.51

g) Excise Duty 27 20855.81 19182.96

h) Other Expenses 28 44562.22 45288.90

TOTAL EXPENSES 275365.72 272803.63

V Profit/(Loss) before extra ordinary items and tax (III-IV) (9223.78) (14001.21)

VI Extraordinary Items 29 984.22 0.00

VII Profit/(Loss) before tax (V+VI) (10208.00) (14001.21)

VIII Tax expense:Tax in respect of earlier years 0.00 (64.09)

IX Profit/(Loss) for the year (VII-VIII) (10208.00) (13937.12)

X Earnings per equity share of `10 each 30

(a) Basic (in `) (24.26) (33.12)

(b) Diluted (in `) (24.26) (33.12)

Summary of Significant Accounting Policies 1

The accompanying notes are an integral part of the consolidated financial statements

106



Consolidated Cash Flow Statement for the year ended 31st March, 2017 (` in Lacs)

Year ended31st March, 2017

Year ended31st March, 2016

A. Cash Flow from Operating Activities:Profit/(Loss) before tax (10208.00) (14001.21)Adjustments for:Depreciation and Amortisation Expense 6447.66 6681.51 Finance Costs 18441.95 18823.74 Interest Income (144.38) (217.80)Net gain on sale of current investments (217.59) (433.97)Provision for Diminution in value of Investment 0.00 16.54 Credit Balance no longer required (29.62) (71.76)Bad Debts written off 1217.03 453.35 Capital Advances written off (extra ordinary item) 984.22 0.00 Provision for Bad and Doubtful debts 0.00 389.12 Dividend Income (0.58) (75.94)(Profit) / Loss on disposal of fixed assets (net) (23.79) (3.71)

26674.90 25561.08 Operating Profit before Working Capital Changes. 16466.90 11559.87 (Increase) / decrease in Trade and Other Receivables 4093.95 3814.44 (Increase) / decrease in Inventories (9883.69) 1456.29 (Decrease) / Increase in Trade and Other Payable 7209.78 (6886.14)

1420.04 (1615.41)Cash Generated from Operations 17886.94 9944.46 Direct Taxes (Paid) / Refund. (34.87) 77.00 Net Cash Flow from Operating Activities (A) 17852.07 10021.46

B. Cash Flow from Investing Activities:Purchase of Fixed Assets (977.81) 488.28 Sale of Fixed Assets 148.01 57.13 Purchase of Investments (10000.00) (35000.00)Sale of Investments 10217.59 35433.97 Dividend Income 0.58 75.94 Other Loans and Advances 273.17 660.02 Net Cash Inflow from Investing Activities (B) (338.46) 1715.34

C. Cash Flow from Financing Activities:Proceeds from Long Term Borrowings 46687.70 15633.71 Proceeds from Short Term Borrowings 5365.00 6.50 Repayment of Long Term Borrowings (54722.38) (8311.79)Interest and Other Finance Charges Paid (11196.38) (19767.45)Net Cash Outflow from Financing Activities (C) (13866.06) (12439.03)Net Increase / (Decrease) in Cash and Cash Equivalents (A+B+C) 3647.55 (702.23)Cash and Cash Equivalents at the beginning of the year 4820.22 5522.45 Cash and Cash Equivalents at the end of the year 8467.77 4820.22

Note: (i) Bank balances include unclaimed dividend ` 27.02 Lacs (Previous Year: `37.77 Lacs) which is not available for use by the Company as they represent corresponding unpaid dividend liability.

(ii) Figures in the bracket () denominates outflow.

107


Notes annexed to and forming part of the Consolidated Financial StatementsNote 1 : Significant Accounting Policies:The Consolidated financial statements comprise the financial statements of Garden Silk Mills Limited ("the Company" or "the Holding Company") and its 100% owned Subsidiary (GAIA International FZE, Dubai ("the subsidiary") as on 31st March, 2017.

1.01 Basis of accounting and preparation of financial statements The financial statements are prepared and presented under the historical cost convention in accordance with the

Generally Accepted Accounting Principles (GAAP) and the provisions of the Companies Act, 2013. The Company follows the mercantile system of accounting and recognizes Income and Expenditure on accrual basis. Accounting policies not referred to otherwise are consistent with the GAAP.

Principal of Consolidation The consolidated financial statements relate to the Company and its Subsidiary. The consolidated financial statements

have been prepared on the following basis:

a) The financial statements of the Company and its subsidiary are combined on a line-by basis by adding together the book value of like terms of assets, liabilities, income and expenses, after fully eliminating intra-group balances and intra-group transactions resulting in unrealized profits or losses in accordance with Accounting Standard-21 - "Consolidated Financial Statements" issued by the Institute of Chartered Accountants of India.

b) As far as possible, the Consolidated Financial Statements are prepared using uniform accounting policies for like transactions and other events in similar circumstances and are presented in the same manner as the Company's Separate Financial Statements.

c) Investments made by the parent company in subsidiary subsequent to the holding - subsidiary relationship coming into existence are eliminated while preparing the consolidated financial statements.

d) Intra group balances of intra group transactions have been accounted for depending upon whether the transactions an upstream or a downstream transaction.

e) Transactions in Foreign currencies of subsidiary is converted into U.S.Dollars at the rate of exchange ruling on the date of the transaction.

1.02 Foreign subsidiary being considered Integral Foreign Operation a) Assets and liabilities expressed in U.S.Dollars are translated in to Indian ` at the rate of exchange ruling at the

balance sheet date.

b) Revenues and expenses expressed in U.S.Dollars are translated in to Indian ` at the average rate of exchange for the month during which the transaction took place.

c) Resulting gain or loss is taken to the Consolidated Statements of Profit & Loss.

1.03 Use of Estimates The preparation of financial statements in conformity with GAAP requires estimates and assumptions to be made that

affect the reported amounts of assets and liabilities on the date of the financial statements, the reported amounts of revenues and expenses during the reported period and the disclosures relating to contingent liabilities as of the date of the financial statements. Difference between actual results and estimates are recognised in the period in which the results are known or materialise.

1.04 Fixed Assets: Tangible Assets Fixed Assets are recorded at cost of acquisition or construction, net of CENVAT / VAT and include amounts added /

reduced on revaluation, less accumulated depreciation and impairment loss, if any. The cost of fixed assets includes interest on borrowings attributable to acquisition of fixed assets up to the date of commissioning of the assets and other incidental expenses incurred up to that date. Fixed Assets acquired and put to use for project purpose are capitalised Project under commissioning and other Capital Work-in-Progress are carried at cost, comprising direct cost, related incidental expenses and attributable interest.

108


Notes annexed to and forming part of the Consolidated Financial Statements Intangible Assets Intangible assets ate stated at cost of acquisition less accumulated amortisation.

1.05 Capital Work-in-Progress Projects under commissioning and other capital Work-in-Progress are carried at cost, comprising direct cost, related

incidental expenses and attributable interest.

1.06 Impairment of Assets The carrying amount of assets are reviewed at each balance sheet date in respect of Cash Generating Unit if there is any

indication of impairment based on internal/external factors. An impairment loss is recognized wherever the carrying amount exceeds its recoverable amount. The recoverable amount is the greater of the asset's selling price and value in use.

Reversal of an impairment loss for an asset is recognised as income in the statement of profit and loss, which was earlier shown as an expense.

1.07 Investments Investments are classified into Current and Long-term Investments. Current investments are stated at lower of cost and

fair value. Long-term investments are stated at cost. Provision for diminution in the value of Long-term investments is made only if such a decline is other than temporary.

1.08 Inventories Inventories are valued in accordance with the requirements of revised Accounting Standard (AS) 2 on "valuation of

inventories" issued by The Institute of Chartered Accountants of India (ICAI). Mode of working of cost is weighted average while any item of inventory is valued at Net Realisable Value if the same is less than cost. Inventories are specifically identified, wherever possible in respect of traded goods.

Inventory valuation is determined on the following basis :

(i) Raw Materials, Stock in Process, Finished goods, Stock in Trade and Stores Spares & Chemicals are valued at cost or Net realisable value whichever is lower.

(ii) Waste is valued at net realisable value.

(iii) By product is valued at net realisable value.

1.09 Foreign Currency Transactions Transactions denominated in foreign currencies are recorded at a rate prevalent on the date of transaction.

At each Balance Sheet date, unrealized gains or losses on foreign currency transactions on revenue account as a result of increase or decrease in rupee liability as a result of exchange difference between the Balance Sheet date conversion rate and the transaction rate are recorded to the Profit & Loss account, and accordingly, assets or liabilities are adjusted.

Difference between forward rate and the exchange rate at the inception of a forward contract is recognized as income or expense over the life of a contract, and any unrealized gains or losses on account of fluctuations in the exchange rate pertaining to forward contracts at the Balance sheet date arising out of difference between the forward contract rate and year-end rate are recognised in Statement of Profit & Loss.

1.10 Depreciation and Amortisation Depreciation on the fixed assets is calculated on Straight Line Method, except on the Factory Buildings and Plant &

Machineries pertaining to Draw Winding & Draw Twisting section, specific Power Projects situated at Jolwa, Draw Warping & Gas Based Power Project situated at Vareli which is on Written Down Value method. Depreciation on revalued Assets is charged by dividing the unamortised depreciable amount over the residual useful life of the Assets. Depreciation on incremental cost arising on account of translation of foreign currency liabilities for acquisition of fixed assets is provided over the residual life of the assets. Intangible asset is amortised over the useful life of the underlying asset.

109


Notes annexed to and forming part of the Consolidated Financial Statements1.11 Revenue Recognisation Revenue from operations includes sale value of goods, net of sales returns, discounts, rate difference and Sales Tax /

Value Added Tax (VAT). Sales also include, sales of scrap, waste, rejection etc. and profits from property held as stock in trade.

1.12 Expenses All material known liabilities are provided for, on the basis of available information / estimates.

1.13 CENVAT: (i) The purchase cost of raw materials and other expenses are considered net of CENVAT available on inputs.

(ii) The CENVAT benefits attributable to acquisition / construction of fixed assets are netted off against the cost of fixed assets in accordance with the guidance note issued by the ICAI.

1.14 Excise Duty and VAT Excise Duty / Service tax has been accounted on the basis of both, payments made in respect of goods cleared as also

provision made for goods lying in bonded warehouses and the same has been treated as part of the cost of respective stock as per the revised Guidance Note on Accounting treatment for Excise Duty. However, this has no effect on the Profit for the year. Amount of Excise Duty shown as deduction from Sales is the total Excise Duty for the year except the duty related to difference between Closing Stock & Opening Stock. Excise duty related to the difference between Closing Stock & Opening Stock is recognised separately in Statement of Profit & Loss.

1.15 Employees Benefits Contributions are made to Provident Fund as per the Provident Fund Act. Contribution to Gratuity Fund are made

on the basis of actuarial valuation report as at the year end. Provision for Leave encashment benefit is provided in accordance with the Accounting Standard (AS)15 "Employee Benefits" issued by the ICAI.

(i) Short Term Employee Benefits All employee benefits falling due within twelve months of rendering of service are classified as short term

employee benefits. The benefits like salaries, wages, bonus, leave salary ex-gratia are recognised in the period in which employee renders the related services.

(ii) For Defined Contribution Plans (PF, FPF and ESI) Contributions to Defined Contribution Plans are recognized as expenses in the Profit and Loss Account as they

incur.

(iii) For Defined Benefit Plans As per requirement defined in Accounting Standard 15 - "Employee Benefits" issued by the ICAI, the entity relies

on the Actuarial valuation undertaken by a certified actuary for the present value of obligation.

1.16 Research and Development All revenue expenditure on research and development are charged to the Profit and Loss Account for the year in which

they are incurred.

1.17 Inter-divisional Transfers Internal transfers of goods between departments as captive consumption are shown as contra items in the Profit and

Loss Account to reflect the true economic value of the production. Any unrealised profit on unsold stock is ignored while valuing inventories.

1.18 Borrowing Cost Interest and other borrowing costs that are directly attributable to the acquisition or construction of qualifying assets

are capitalised as part of the cost of such assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for intended use. Other interest and borrowing costs are charged to revenue.

110


Notes annexed to and forming part of the Consolidated Financial Statements1.19 Provision for Current and Deferred Tax Provision for current tax is made on the basis of the assessable income at the tax rate which is applicable to the relevant

assessment year as per the Income Tax Act, 1961. The deferred tax asset and deferred tax liability is calculated by applying tax rate and tax laws that have been enacted or substantively enacted as on the Balance Sheet date.

Deferred tax assets arising mainly on account of brought forward losses and unabsorbed depreciation under tax laws, are recognised, only if there is a virtual certainty of their realisation, supported by convincing evidence. Deferred tax assets on account of other timing differences are recognised only to the extent there is a reasonable certainty of their realisation. Deferred tax asset is recognised and carried forward only to the extent that there is a virtual certainty that the asset will be realised in future. At each Balance Sheet date, the carrying amount of deferred tax assets are reviewed for reassessment.

1.20 Provisions, Contingent Liabilities and Contingent Assets Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation

as a result of past events and it is probable that there will be an outflow of resources.

Liabilities which are material, and whose future outcome cannot be ascertained with reasonable certainty, are treated as contingent, and disclosed by way of notes to the accounts.

Contingent Assets are neither recognized nor disclosed in the financial statement. Provisions, Contingent Liabilities and Contingent Assets are reviewed at each Balance Sheet date.

1.21 Earning Per Share Basic Earnings per share is calculated by dividing the net profit or loss for the period attributable to equity shareholders

by weighted average number of equity shares outstanding during the year.

Diluted Earning per share is calculated by considering potential equity shares that have been converted, from the beginning of the period.

111


Notes annexed to and forming part of the Consolidated Financial Statements

(` in Lacs)As at


31st March, 2016Note 2 : Share CapitalAuthorised5,00,00,000 (5,00,00,000) Equity Shares of `10/- each 5000.00 5000.00 1,00,00,000 (1,00,00,000) Preference Shares of `10/- each 1000.00 1000.00 Total 6000.00 6000.00

Issued, Subscribed and Paid up 4,20,82,525 (4,20,82,525) Equity Shares of `10/- each fully paid up 4208.25 4208.25 Total 4208.25 4208.25

2.1 Reconciliation of Equity Shares outstandingAs at 31st March, 2017 As at 31st March, 2016

No. of Shares ` In Lacs No. of Shares ` In LacsBalance at the beginning of the year 42082525 4208.25 42082525 4208.25 Shares issued during the year 0 0.00 0 0.00 Outstanding at the end of the year 42082525 4208.25 42082525 4208.25

2.2 Shareholders holding more than 5% of Paid-up Equity Share CapitalAs at 31st March, 2017 As at 31st March, 2016

No. of Shares % of holding No. of Shares % of holdingIntroscope Properties Pvt. Ltd. 7231996 17.19 7231996 17.19 Shri Praful A. Shah (Indl.) 2789190 6.63 2789190 6.63 Shri Praful A. Shah Partner of Isha Enterprises 3791965 9.01 3791965 9.01 IL & FS Trust Co. Ltd. 2462297 5.85 3263676 7.76 Rayben Investments 2492816 5.92 2492816 5.92 Palomar Textiles Ltd. 3930872 9.34 3930872 9.34

2.3 Rights, Preferences and Restrictions attached to Shares

Equity Shares:

The Company has one class of shares referred to as equity shares having a par value of `10 each. Each shareholder is entitled to one vote per share held. The dividend as and when proposed by the Board of Directors is subject to the approval of the shareholders at the Annual General Meeting. In the event of liquidation, Equity Shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding.

112



(` in Lacs)As at


31st March, 2016Note 3 : Reserves and SurplusSecurities Premium ReserveBalance at the beginning of the year 25219.06 25219.06 Balance at the end of the year 25219.06 25219.06

General ReserveBalance at the beginning of the year 3359.70 3359.70 Balance at the end of the year 3359.70 3359.70

Statutory ReserveTransfer from Statement of Profit and Loss 10.77 10.77

10.77 10.77 Surplus in Statement of Profit and LossBalance at the beginning of the year (35291.50) (21348.35)Less: Opening balance of subsidiary Company ceased to exist 0.00 4.74 Add/Less: Profit/(Loss) for the year (10208.00) (13937.12)Less: Transfer to Statutory Reserve 0.00 10.77 Balance at the end of the year (45499.50) (35291.50)TOTAL (16909.97) (6701.97)

(` in Lacs)As at 31st March, 2017 As at 31st March, 2016

Non-Current Current Non-Current CurrentNote 4 : Long-Term BorrowingsSecuredTerm Loans from banks Rupee Loans 117255.27 23144.64 88112.67 13231.29 Foreign Currency Loans 0.00 0.00 0.00 46426.98 Rupee Term Loans from financial institutions 1513.53 407.48 1746.38 232.85

118768.80 23552.12 89859.05 59891.12 UnsecuredBills discounted with foreign bank 0.00 0.00 0.00 417.41 Term Loans from foreign banks 571.04 162.42 759.06 162.42

571.04 162.42 759.06 579.83 TOTAL 119339.84 23714.54 90618.11 60470.95

113


Notes annexed to and forming part of the Consolidated Financial Statements4.1 Note on Secured Long-Term Borrowings:

a) Term Loans from Banks and Financial Institutions are secured by first mortgage on pari passu basis on all immovable properties (except those specifically excluded by lenders, of Rupee Term Loans as per Note (b) below), both present and future and first charge by way of hypothecation of all movables (except book debts) both present and future subject to prior charges created/to be created in favor of Bankers for working capital borrowings.

b) Of the Rupee Term Loans from banks:

i) Loans from Bank of India to the extent of `206.25 Lacs (Previous year `212.29 Lacs) are secured by hypothecation of specific machinery of Fully Drawn Yarn (FDY) Project at Jolwa.

ii) Loans from Bank of India to the extent of `982.86 Lacs (Previous year `1012.61 Lacs) are secured by hypothecation of specific Building and machinery of Texturising plant and Draw Twisting plant at Jolwa.

iii) Term loans from ICICI Bank, Kotak Mahindra Prime Limited and Axis Bank Ltd aggregating to `65.27 Lacs (Previous year `111.95 Lacs) under vehicle finance scheme are secured by an exclusive charge by way of hypothecation of specific vehicles purchased under the arrangements.

iv) Housing Loan of `366.51 Lacs (Previous year `472.97 Lacs) from ICICI Bank is secured by hypothecation of residential flat at Mumbai.

v) Loans from Corporation Bank to the extent of `3003.00 Lacs (Previous Year `3094.00 Lacs) are secured by hypothecation of movable fixed assets of Specific Continuous Polymerisation Project at Jolwa.

vi) Loan from Union Bank of India to the extent of `4330.15 Lacs (Previous Year `4461.40 Lacs) is secured by hypothecation of specific machinery of Coal Based Thermal Power Project at Jolwa.

4.2 Maturity profile of Secured and Unsecured Term Loan is set out as below :

(` in Lacs)Maturity Profile as at 31/03/2017

Rate of Interest ranged

between during 31/03/2017

1-2 years 2-3 years 3-4 years Beyond 4 years

Secured Term LoansRupee Loans 8% - 13.25% 21312.43 23443.56 25200.80 47298.49 Rupee Term Loans from financial institutions 8.25% - 11.00% 349.28 349.28 349.28 465.70

21661.71 23792.84 25550.08 47764.19 Unsecured Term LoansTerm Loans- from foreign banks 5.69% 162.42 162.42 246.20 0.00

162.42 162.42 246.20 0.00 TOTAL 21824.13 23955.26 25796.28 47764.19

114



(` in Lacs)As at


31st March, 2016Note 5 : Deferred Tax Liability (net)(a) Deferred Tax Liability on account of :

Difference between book value and tax written Down Value of Fixed Assets 18813.68 18106.68 TOTAL 18813.68 18106.68

(b) Deferred Tax Asset on account of :Disallowances under section 43B of the Income Tax Act, 1961 2661.57 140.45 Provision for Diminution in Value of Investments 0.00 9.16 Carried forward tax losses 30895.15 29325.49 Provision for Doubtful Debts 27.72 0.00 TOTAL 33584.44 29475.10

Deferred Tax Liability / (Asset) (Net) (Refer Note 5.1) (14770.76) (11368.42)Current year (Credit)/ Charge to the extent of liability 0.00 0.00 Current year (Credit)/ Recognised at balance amount 0.00 0.00

5.1 The Company has unabsorbed depreciation and carried forward losses under Tax laws. In absence of virtual certainty of sufficient future taxable income, net deferred tax assets have not been recognised considering prudence in accordance with Accounting Standard (AS) 22 "Accounting for Taxes on Income" issued by the Institute of Chartered Accountants of India.

(` in Lacs)As at


31st March, 2016Note 6 : Other Long-term LiabilitiesTrade Deposits 728.20 686.74 TOTAL 728.20 686.74

(` in Lacs)As at


31st March, 2016Note 7 : Long-term ProvisionsProvision for Employee Benefits (Refer Note 25.2) 660.98 621.09 TOTAL 660.98 621.09

(` in Lacs)As at


31st March, 2016Note 8 : Short-term Borrowings SecuredLoan repayable on demand- Cash Credit Facilities (Refer Note 8.1) 11051.99 4401.01 OthersBuyers Credit 0.00 1285.97 TOTAL 11051.99 5686.98

115



8.1 Cash Credit facilities are part of Working Capital facilities availed from Consortium of Banks and are secured with hypothecation by way of first pari passu charge on all company's current assets and by way of second pari passu charge on immovable and all movable properties (excluding current assets) of the Company. Rate of Interest on Cash Credit facilities ranged between 10.90% to 11.30%

(` in Lacs)As at


31st March, 2016Note 9 : Trade PayablesTrade payables:a) Payable to Micro and Small enterprises (Refer Note 32) 61.59 64.41 b) Payable to Others i) Acceptances 22160.48 18586.99 ii) Others including creditors for expenses 8186.54 6074.80

30408.61 24726.20

(` in Lacs)As at


31st March, 2016Note 10 : Other Current LiabilitiesCurrent Maturities of Long term debt (Refer Note 4) 23714.54 60470.95 Overdrawn Bank Balances 820.48 0.00 Interest Accrued and Due on Borrowings 7017.01 340.93 Interest Accrued but not Due on Borrowings 64.62 213.17 Unclaimed Dividends 27.02 37.77 Other Payables

- Creditors for Capital Expenditure 122.03 133.28 - Payable to related parties towards purchase of fixed assets 30.00 30.00 - Statutory Dues - TDS and VAT 423.73 568.69 - Other Advances 6.80 0.37

TOTAL 32226.23 61795.16

(` in Lacs)As at


31st March, 2016Note 11 : Short-term ProvisionsProvision for Employee Benefits (Refer Note 25.2) 149.23 198.21 Other Provisions (Refer Note 11.1) 1611.25 756.06 TOTAL 1760.48 954.27

11.1 The Company had recognised liability based on substantial degree of estimation for excise duty payable on clearance of goods lying in stock as on 31st March, 2016 of `756.06 Lacs as per the estimated pattern of dispatches. On the analogy, provision for such liability works out to be `1611.25 Lacs as on 31st March, 2017. Actual outflow is expected in next financial year.

116



Not

e 12

: Fi

xed

Asse

ts(`

in L

acs)

Parti

cula

rsGr

oss B

lock

Depr

ecia

tion/

Amor

tisati

onNe

t Blo

ckAs

at

01/0

4/20

16Ad

ditio

nsD

educ

tions

/ Ad

just

men

tsAs

at

31/0

3/20

17As

at

01/0

4/20

16Fo

r the

Ye

arD

educ

tions

/ Ad

just

men

tsUp

to

31/0

3/20

17As

at

31/0

3/20

17As

at

31/0

3/20

16

12

35

67

810

1112

13

(A) T

angi

ble

Asse

ts:

Free

hold

Lan

d60

00.5

1 0.

00

0.00

60

00.5

1 0.

00

0.00

0.

00

0.00

60

00.5

1 60

00.5

1

Build

ing

3463

1.11

17

.32

5.08

34

643.

35

1381

0.42

11

68.4

2 1.

42

1497

7.42

19

665.

93

2082

0.69

Plan

t and

Mac

hine

ry16

4595

.90

1040

.88

517.

83

1651

18.9

5 78

736.

39

4784

.37

402.

98

8311

7.78

82

001.

17

8585

9.51

Furn

iture

& F

ixtu

res

900.

97

14.4

5 (0

.20)

915.

62

547.

09

63.7

6 0.

00

610.

85

304.

77

353.

87

Mot

or V

ehic

les

1099

.16

48.0

8 62

.42

1084

.82

677.

31

96.6

8 56

.96

717.

03

367.

79

421.

86

Offi

ce E

quip

men

ts49

3.02

14

.86

5.08

50

2.80

39

7.84

28

.64

4.63

42

1.85

80

.95

95.1

8

Com

pute

r & D

ata

Proc

essi

ng U

nits

862.

55

18.1

5 0.

00

880.

70

787.

05

21.1

0 0.

00

808.

15

72.5

5 75

.52

Labo

rato

ry E

quip

men

ts21

3.23

11

.96

0.00

22

5.19

19

7.79

4.

77

0.00

20

2.56

22

.63

15.4

4

Elec

tric

al In

stal

latio

n &

Equ

ipm

ents

2733

.37

0.31

0.

00

2733

.68

1633

.23

263.

90

0.00

18

97.1

3 83

6.55

11

00.1

2

Tota

l Tan

gibl

e As

sets

2115

29.8

2 11

66.0

1 59

0.21

21

2105

.62

9678

7.12

64

31.6

4 46

5.99

10

2752

.77

1093

52.8

5 11

4742

.70

(B) I

ntan

gibl

e As

sets

:So

ftw

are

614.

92

1.33

0.

00

616.

25

582.

72

16.0

2 0.

00

598.

74

17.5

1 32

.20

Tota

l Int

angi

ble

Asse

ts61

4.92

1.

33

0.00

61

6.25

58

2.72

16

.02

0.00

59

8.74

17

.51

32.2

0

Tota

l21

2144

.74

1167

.34

590.

21

2127

21.8

7 97

369.

84

6447

.66

465.

99

1033

51.5

1 10

9370

.36

1147

74.9

0

Tota

l Pre

viou

s Yea

r21

0201

.15

2366

.18

422.

58

2121

44.7

5 91

057.

49

6681

.51

369.

15

9736

9.85

11

4774

.90

1191

43.6

6

(C) C

apita

l Wor

k-in

-Pro

gres

s30

84.0

4 31

16.7

7

Tota

l11

2454

.40

1178

91.6

7

Not

es:

12.1

Bui

ldin

gs in

clud

e `4

0.59

Lac

s (P

revi

ous

Year

`40

.59

Lacs

) bei

ng c

ost o

f sha

res

rela

ting

to o

wne

rshi

p fla

t in

a Co

-Ope

rativ

e So

ciet

y.

12.2

Pla

nt &

Mac

hine

ries i

nclu

de fo

reig

n cu

rren

cy fl

uctu

ation

cap

italis

ed d

urin

g th

e ye

ar a

ggre

gatin

g to

`58

.16

Lacs

(Pre

viou

s Yea

r `11

6.56

Lac

s) in

acc

orda

nce

with

Par

a 46

A of

Acc

ounti

ng S

tand

ards

11

rela

ting

to ‘T

he e

ffect

s of

cha

nges

in F

orei

gn E

xcha

nge

Rate

s’.

12.3

Dur

ing

the

prev

ious

yea

r, 72

337

Sq. M

trs L

and

at V

arel

i Sho

wn

as st

ock

in tr

ade

(Pro

pert

y un

der D

evel

opm

ent)

of `

478.

36 la

cs h

as b

een

conv

erte

d in

to F

ixed

Ass

ets.

117



(` in Lacs)As at


31st March, 2016Note 13 : Non-current InvestmentsLong Term Investments (At Cost)Other InvestmentsIn Equity Shares of Associate Company – (Quoted, Fully paid-up)14500000 (14500000) Equity Shares of Surat Textile Mills Ltd. of `1 each 1282.92 1282.92

In Equity Shares (Unquoted, Fully paid-up)108 (108) Equity Shares of New Piece Goods Bazaar Co. Ltd. of `100 each 1.57 1.57 50000 (50000) Equity Shares of Amitabh Bachchan Corporation Ltd. of `10 each 40.00 40.00 4943832 (4943832) Equity Share of Salora Shinsung Textile Co Ltd. of `10 each 549.17 549.17 100 (100) Equity Shares of Electrex India Ltd. of `10 each 0.02 0.02 206667 (206667) Equity Share of Icent Ltd. of `10 each 62.00 62.00 500 (450) Equity Shares of Majestic Land Developers Pvt. Ltd. of `100 each 32.41 32.41

In Government Securities-Unquoted6 Years National Savings Certificate (Deposited with Sales Tax Authorities) 0.15 0.15

1968.24 1968.24 Less : Provision for diminution in value of investments 627.71 627.71 TOTAL 1340.53 1340.53

Aggregate Value of Unquoted Investments 137.78 57.61 Aggregate Value of Quoted Investments 1282.92 1282.92 Aggregate Market Value of Quoted Investments 581.45 348.00

Notes:-The break up of provision for diminution in value of investments is as under:i) Equity Shares of Salora Shinsung Textile Co. Ltd. 549.17 549.17 ii) Equity Shares of Icent Ltd. 62.00 62.00 iii) Equity Shares of Majestic Land Developers Pvt. Ltd. 16.54 16.54 TOTAL 627.71 627.71

118


Notes annexed to and forming part of the Consolidated Financial Statements(` in Lacs)

As at 31st March, 2017

As at 31st March, 2016

Note 14 : Long-term Loans and Advances(Unsecured and Considered Good)Capital Advances 32.93 1173.96 Security Deposits 77.18 87.05 Advance Income Tax (Net of Provision for Tax) 174.15 139.28 Employee Advances 10.01 17.92 Other Loans and Advances 1.04 3.46 TOTAL 295.31 1421.67

(` in Lacs)As at


31st March, 2016Note 15 : InventoriesRaw Materials 10326.95 7575.28 Raw Materials in Transit 2211.67 4133.43 Stock-in-Process 387.37 327.44 Finished Goods 19129.46 10466.56 Stores, Spares and Chemicals 5897.37 5566.42 Stock-in-Trade (Art & Artifacts) 1277.03 1277.03 TOTAL 39229.85 29346.16

(` in Lacs)As at


31st March, 2016Note 16 : Trade Receivables(Unsecured and Considered Good)Outstanding for a period exceeding six months from the date they are due for payment

419.21 1824.55

Others 11748.61 14235.69 12167.82 16060.24

Less: Provision for Bad Debts 83.84 389.12 TOTAL 12083.98 15671.12

119



(` in Lacs)As at


31st March, 2016Note 17 : Cash and Bank BalancesCash and Cash Equivalents:Bank Balances in :- Current Accounts 4906.63 2409.50 - Deposit Accounts (with maturity less than 12 months) 242.54 419.01 Margin Money Account 3220.45 1615.77 Cash on hand 48.58 92.01

8418.20 4536.29 Other Bank Balances:Earmarked balances with Banks in Unpaid Dividend Account 27.02 37.77 Deposit Accounts (with maturity more than 12 months) 22.55 246.16

49.57 283.93 TOTAL 8467.77 4820.22

(` in Lacs)As at


31st March, 2016Note 18 : Short-term Loans and Advances(Unsecured and Considered Good)Loans to employees 10.81 13.62 Advance to Suppliers 2221.96 4922.84 Security Deposits 318.93 569.09 Advance Recoverable in cash or in kind or for value to be received 258.18 1736.53 Balance with Customs, Central Excise Authorities etc. 5309.51 3703.18 TOTAL 8119.39 10945.26

(` in Lacs)As at


31st March, 2016Note 19 : Other Current AssetsInterest Subsidy and interest receivable 255.98 300.03 Export Incentives receivable 3.42 47.66 Insurance Claim receivable 63.90 20.00 Benefits receivable against Advance Licence received 325.00 308.60 VAT receivable 174.91 174.91 Discount on Raw material receivable 660.17 307.00 TOTAL 1483.38 1158.20

120



(` in Lacs)2016-17 2015-16

Note 20 : Gross Revenue from OperationsSale of Products 265642.69 257811.99 TOTAL 265642.69 257811.99

Particulars of Sale of ProductsChips 92907.07 85585.87 Yarn (Includes POY & Processed yarn) 150536.82 151953.31 Fabrics 17640.11 18433.10 P.T.A. 15.07 10.46 M.E.G. 2647.30 72.83 Spin Finish Oil 55.89 0.00 Others 1840.43 1756.42

265642.69 257811.99

(` in Lacs)2016-17 2015-16

Note 21 : Other IncomeNet gain on sales of current Investment 217.59 433.97 Net surplus on disposal of Fixed Assets 23.79 3.71 Interest Income 144.38 217.80 Rent Income 10.15 1.70 Credit Balances Write back (net) 29.62 71.76 Bad Debts Recovery 8.00 0.00 Dividend Income 0.58 75.94 Miscellaneous Income 64.80 181.10 Currency Translation Gain 0.34 4.45 TOTAL 499.25 990.43

(` in Lacs)2016-17 2015-16

Note 22 : Cost of Materials ConsumedRaw Materials

Imported 29.58% 52851.05 31.24% 52161.29 Indigenous 70.42% 125841.53 68.76% 114789.05

100.00% 178692.58 100.00% 166950.34

121



(` in Lacs)2016-17 2015-16

22.1 Particulars of materials consumedP.T.A. 108200.86 103651.67 M.E.G. 48510.20 46902.14 Carbon Black Powder 100.72 244.23 Polyester Chips 16101.93 7284.92 Yarn 3149.94 6158.25 Cloth 2628.93 2709.13 TOTAL 178692.58 166950.34

(` in Lacs)2016-17 2015-16

Note 23 : Purchases of Stock-in-tradeYarn 108.60 29.05 Fabrics 1220.32 1392.90 MEG 453.70 0.00 Readymade 16.68 16.25 TOTAL 1799.30 1438.20

(` in Lacs)2016-17 2015-16

Note 24 : Changes in Inventories of Finished Goods, Work-in-Progressand Stock-in-TradeOpening Stock

Finished Goods and Stock-in-trade 11743.59 14796.77 Work-in-Progress 327.44 357.26

12071.03 15154.03 Closing Stock

Finished Goods and Stock-in-trade 20406.49 11743.59 Work-in-Progress 387.37 327.44

20793.86 12071.03 Add: Variation in Excise duty on opening and closing stock of finished goods 855.19 (345.61)TOTAL (7867.64) 2737.39

(` in Lacs)2016-17 2015-16

Note 25 : Employee Benefits ExpenseSalaries and Wages 11283.65 10483.52 Contribution to Provident and Other Funds 767.22 684.36 Gratuity 203.32 394.32 Staff Welfare Expenses 179.65 138.39 TOTAL 12433.84 11700.59

122


Notes annexed to and forming part of the Consolidated Financial Statements25.1 During the previous year, the Central Government vide its letter dated 28th April, 2015, granted its approval for

payment of total remuneration @ `1,43,71,000/- (Rupees One Crore Forty-three Lacs Seventy -one Thousand only) per annum to Shri Praful A. Shah for the period from 01/04/2014 to 31/08/2016.

25.2 Employee Benefits as per AS 15:

Brief description : The type of defined benefit plans is as follows

Gratuity :

The employee gratuity fund is managed by "Garden Silk Mills - Employees Gratuity Fund". The present value of obligation is determined based on actuarial valuation. The liability is fully funded.

Leave Encashment:

The present value of obligation for Leave encashment is determined based on actuarial valuation and is unfunded.


(Unfunded)2016-17 2015-16 2016-17 2015-16

A. Amounts recognised in Balance Sheet:i. Present Value of Defined Benefit Obligation

- Wholly Funded 3253.59 2920.82 0.00 0.00 - Wholly Unfunded 0.00 0.00 706.89 649.99 Less: Fair Value of Plan Assets 3150.27 2751.50 0.00 0.00 Amount recognised in Balance Sheet as Liability or (Asset) 103.32 169.32 706.89 649.99

ii. Amount Reflected in Balance Sheet - Liability 103.32 169.32 706.89 649.99

B. Expenses recognised in statement of Profit and Loss:Current Service Cost 224.26 210.32 219.14 203.39 Interest Cost 213.51 189.29 48.96 50.10 Expected return on Plan assets (209.08) (222.87) 0.00 0.00 Actuarial (Gain)/Loss (25.37) 217.58 244.16 268.39 Net Cost 203.32 394.32 512.26 521.88

123



C. Changes in present value of defined benefit obligation representing Reconciliation of opening and closing balances of fair value of Plan Assets.


(Unfunded)2016-17 2015-16 2016-17 2015-16

Opening value of present value of defined benefit obligation 2920.82 2559.40 649.99 659.18 Add :Current Service Cost 224.26 210.32 219.14 203.39 Add: Interest Cost 213.51 189.29 48.96 50.10 Add : Actuarial Losses / (Gains) 80.01 149.26 244.15 268.39

3438.60 3108.27 1162.24 1181.06 Less : Benefits paid 185.01 187.45 455.35 531.07 Closing value of present value of defined benefit obligation 3253.59 2920.82 706.89 649.99

D. Principal Actuarial Assumptions at the Balance Sheet Date (expressed as Weighted Averages)(` in Lacs)

Gratuity (Funded) Leave Encashment (Unfunded)

2016-17 2015-16 2016-17 2015-16Discount Rate (p.a.) 7.20% 7.70% 7.20% 7.70%Expected Rate of Return on Assets (p.a.) 7.20% 7.70% – –Rate of escalation in salary (p.a.) 7.00% 8.00% 7.00% 8.00%

(` in Lacs)2016-17 2015-16

Note 26 : Finance CostsInterest Expenses 16592.62 14784.26 Other Financial Charges 1577.79 1821.42

Foreign Exchange Loss/(Gain) 611.89 2560.98 18782.30 19166.66

Less : Interest and other financial income 340.35 342.92 TOTAL 18441.95 18823.74

(` in Lacs)2016-17 2015-16

Note 27 : Excise DutyExcise Duty Expense 20855.81 19182.96 TOTAL 20855.81 19182.96

124



(` in Lacs)2016-17 2015-16

Note 28 : Other ExpensesManufacturing expenses

Consumption of Stores, Spares and Chemicals 9128.83 8646.02 Power and Fuel 17757.09 18516.72 Packing Charges 5301.70 5443.52 Conversion and Processing Charges 450.28 352.91 Repairs to Machinery 1632.84 1530.99 Repairs to Buildings 173.69 106.41 Repairs-others 124.67 168.88

Selling and Distribution ExpensesCommission and Discount 2037.82 2913.81 Freight, Octroi, Carting, Loading Unloading etc. 2013.57 2189.64 Advertisement 393.95 415.17 Other Selling and Distribution Expenses 477.78 443.31

Establishment ExpensesGeneral Charges 3255.72 3133.04 Insurance 193.41 180.68 Rent 301.52 284.37 Rates and Taxes 58.40 70.14 Auditors' Remuneration 39.96 25.06 Debit Balances Written off 1217.03 453.35 Provision for Bad and Doubtful debts 0.00 389.12 Provision for Diminution in value of Investment 0.00 16.54 Loss due to Fire 3.96 4.08 Loss on Investment in Subsidiary 0.00 5.14

TOTAL 44562.22 45288.90

28.1 Value of Stores, Chemicals and Component Consumed2016-17 2015-16

% ` in Lacs % ` in LacsImported 43.58 3978.50 47.66 4120.58 Indigenous 56.42 5150.33 52.34 4525.44

100.00 9128.83 100.00 8646.02

125



(` in Lacs)2016-17 2015-16

28.2 Value of Imports on CIF basis in respect ofRaw Materials 46681.79 55232.91 Stores, Spare parts, Components and Chemicals 9966.02 6979.86

(` in Lacs)2016-17 2015-16

28.3 Payment to Auditors as :(a) Auditor:

Statutory Audit Fees 22.92 20.24 Tax Audit Fees 3.32 3.31

(b) Cost Audit Fees 1.58 1.51 (c) Other services 12.14 0.00

TOTAL 39.96 25.06

(` in Lacs)2016-17 2015-16

28.4 Expenditure in Foreign CurrencyInterest & Other Financial Charges 2180.10 2389.01 Brokerage on Exports 330.78 531.03 Travelling Expenses 31.71 47.20 Others 359.49 356.23

126


28.5 Foreign Currency Exposure

The Company uses plain forward contracts for hedging purpose. Foreign currency Loans / ECB which are covered by full currency & interest rate swap. All the contracts are for hedging purpose only and not for any speculative purpose.

Details of hedged and unhedged exposure are as under:Particulars Foreign

CurrencyDenomination

2016-17 2015-16Foreign

Currency (Amount in

Lacs)

IndianRupees


ForeignCurrency

(Amount inLacs)

IndianRupees


a. HedgedDebtors USD 3.17 76.55 0.00 0.00 Acceptances USD 74.83 5026.32 62.82 4263.56

EUR 0.00 0.00 4.05 73.26 JPY 584.56 358.35 369.99 220.55

Loan Taken USD 10.60 733.46 85.19 4588.12 Interest payable USD 0.07 5.06 0.77 35.21

b. UnhedgedInterest Payable USD 0.00 0.00 0.10 6.67 Debtors EUR 0.00 0.00 0.68 48.87

USD 31.62 2050.43 0.00 0.00 Creditors JPY 16.67 9.67 0.00 0.00

USD 1.01 65.20 1.06 70.05 EUR 0.01 0.98 0.01 1.06

Acceptances USD 85.95 5574.16 0.00 0.00 JPY 298.15 172.94 56.18 33.14

Export Commission payable USD 0.37 24.22 1.09 71.97 Foreign Bank Balances USD 52.06 3375.58 33.04 2188.56 Advances Received USD 0.10 6.33 0.00 0.00

(` in Lacs)2016-17 2015-16

Note 29 : Extraordinary ItemsAdvances Written off 984.22 0.00 TOTAL 984.22 0.00


127



Note 30 : Earnings per share (EPS)Earning Per Share (EPS) computed in accordance with Accounting Standard 20 " Earning per Share" as notified under Section 133 of the Companies Act, 2013, read together with paragraph 7 of the Companies (Accounts) Rules, 2014

(` in Lacs)2016-17 2015-16

i) Net Profit/(Loss) after tax as per Statement of Profit and Loss attributable to Equity Shareholders (` in Lacs) (10208.00) (13937.12)

ii) Weighted Average number of equity share used as denominator for calculating EPS 42082525 42082525

iii) Basic and Diluted Earnings per share (`) (Refer Note 30.1) (24.26) (33.12)iv) Face Value per equity share (`) 10.00 10.00

30.1 Basic earnings per share is calculated by dividing the net profit / (loss) for the year attributable to equity shareholders (after deducting preference dividends and attributable taxes) by weighted average number of equity shares outstanding during the year.

For the purpose of calculating diluted earnings per share, the net profit / (loss) for the year attributable to equity shareholders and the weighted average numbers of shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares (i.e. Optionally convertible Cumulative Preference shares)

Since, resultant EPS due to dilution decreased net loss per share as compared to basic earning per share, both basic and diluted EPS are considered at basic earnings.

30.2 Additional information as required by paragraph 2 of the General Instructions for preparation of Consolidated Financial Statements to Schedule III to the Companies Act, 2013.

Name of Subsidiary Country of Incorporation Extent of Holding1. GAIA International FZE UAE 1

Name of the entity in the Parent Company

Net Assets i.e. total assets minus total liabilities

Share in Profit or Loss

As % of consolidated

net assets

Amount(` in Lacs)

As % of consolidated profit or loss

Amount(` in Lacs)

ParentGarden Silk Mills Limited (95.13) (12082.93) (92.92) (9485.75)SubsidiariesA) Indian Nil Nil Nil NilB) Foreign 1. GAIA International FZE (4.87) (618.79) (7.08) (722.25)

(` in Lacs)2016-17 2015-16

Note 31 : Earnings in Foreign ExchangeFOB Value of Exports 31322.48 38801.96

128



Note 32 : Disclosure required under the Micro, Small and Medium Enterprises Development Act, 2006 (the MSMED Act) are given as follows:

(` in Lacs)Description 2016-17 2015-16Principal amount outstanding as at the end of the year 61.59 64.41 Interest due thereon remaining unpaid as at the end of the year 0.00 0.00 Interest paid to the supplier 0.00 0.00 Payment made the supplier beyond the appointed day during the year 0.00 0.00 Interest due and payable for the period of delay 0.00 0.00 Interest accrued and remaining unpaid as at the end of the year 0.00 0.00 Amount of further interest remaining due and payable in succeeding years 0.00 0.00

Note 33 : Related Party DisclosuresAs per Accounting Standard 18 (AS-18) 'Related Party Disclosures', as notified under Section 133 of the Companies Act, 2013, read together with paragraph 7 of the Companies (Accounts) Rules, 2014, the disclosures of transactions with the related parties as defined in AS - 18 are given below:(i) List of related parties with whom transactions have taken place and relationships:

Sr. No.

Nature of relationships Names of related parties

1 Group Company Surat Textile Mills Limited2 Key Management Personnel Shri Praful A. Shah

Shri Sanjay S. ShahShri Alok P. ShahShri Suhail P. Shah

3 Relatives of Key management personnel and their Smt. Shilpa P. Shahenterprises where transactions have taken place. Smt. Sujata V. Parsai

Shri V. K. ParsaiArmorax Business Centre Pvt. Ltd.Como Textile Pvt. Ltd.Sorrento Textile Pvt. Ltd.Amalfi Textile Pvt. Ltd.

129



(ii) Transactions during the year with Related Parties:(` in Lacs)

Nature of Transactions Group Company

Key Management

Personnel

Others Total

Raw Material & Stores Sales 520.89 520.89 (0.00) (0.00)

Other Misc Sales 215.85 215.85 (286.57) (286.57)

Job Charges Income 0.00 0.00 (0.10) (0.10)

Electric Power and Fuel Charges 479.12 479.12 (432.22) (432.22)

Purchases 6358.80 6358.80 (4629.16) (4629.16)

Job Charges expenses 0.00 0.00 (264.84) (264.84)

Remuneration 589.10 25.08 614.18 (435.48) (25.08) (460.56)

Professional Consultancy Fee 1.55 1.55 (1.20) (1.20)

Payments under Current Account. 5739.57 5739.57 (14471.69) (14471.69)

Receipt under Current Account 1172.33 1172.33 (9316.79) (9316.79)

Leave & Licence Fees 116.31 116.31 (115.42) (115.42)

Telephone, Electricity & Other Taxes 15.39 15.39 (16.84) (16.84)

Balance at the beginning of the year Payables 19.98 1.38 21.36

Balance at the end of the year Payables 36.33 1.47 37.80 Current Account: Credit Balance 575.70 575.70 Note : Figures in bracket represent Previous Year's amount.

130



Note 34 : Contingent Liabilities and Commitments1 Contingent Liabilities

(i) Disputed liabilities for Excise Duty not acknowledged as debts `7217.84 Lacs (Previous Year `3470.23 Lacs)(ii) Disputed liabilities for Income - Tax not acknowledged as debts `Nil (Previous Year `133.13)(iii) Disputed liabilities for Gujarat Sales Tax not acknowledged as debts `58.18 Lacs (Previous Year `70.51 Lacs)(iv) Counter-guarantees to Banks against guarantees issued to third parties `0.50 Lacs (Previous year `0.50 Lacs)(v) Foreign bills Discounted with Banks `3261.93 Lacs (Previous Year `74.82 Lacs)(vi) Unpaid dividend on 0.001% Optionally Convertible Cumulative Preference shares(now converted into equity

shares) not acknowledged as debts ` 0.01 Lacs (Previous year ` 0.01 Lacs) (vii) Custom Duty on Raw materials Imported under advance license against which export obligation is to be fulfilled

is ` 3.72 lacs (Previous year 143.69 Lacs)

Note 35 :

The details of Specified Bank Notes (SBN) held and transacted during the period from 8th November, 2016 to 30th December, 2016 are provided in the table below:

(` in Lacs)SBNs* Other

DenominationNotes

Total

Closing cash in hand as on 8th November, 2016 53.46 68.84 122.30 (+) Permitted receipts 0.00 63.83 63.83 (-) Permitted payments 0.00 62.03 62.03 (-) deposited in Banks 53.46 0.00 53.46 Closing cash in hand as on 30th December, 2016 0.00 70.64 70.64

* Specified Bank Notes (SBNs) mean the bank notes of denominations of the existing series of the value of five hundred rupees and one thousand rupees as defined under the notification of the Government of India, in the Ministry of Finance, Department of Economic Affairs no. S.O.3407(E), dated the 8th November, 2016.

Note 36 :

The Company has only one reportable segment viz. ‘Textiles’ as per Accounting Standard (AS) 17 of The Institute of Chartered Accountants of India (ICAI).

Note 37 :

Previous year’s figures have been regrouped / reclassified wherever necessary to correspond with the current year’s classification / disclosure.


Garden Silk Mills LimitedRegd. Office: Tulsi Krupa Arcade, 1st Floor, Puna-Kumbharia Road, Dumbhal, Surat 395010

CIN: L17111GJ1979PLC003463; Website: www.gardenvareli.comPhone: (0261) 2311197, 2311615 Fax: (0261) 2311029

ATTENDANCE SLIP(Only shareholders or the Proxies will be allowed to attend the meeting)

DP ID * L.F. No.

Client ID * No. of Shares held

* Applicable for the Member(s) holding shares in Electronic Form.

I being a Member / Proxy for the Member of the Company hereby record my presence at the 38th Annual General Meeting of Garden Silk Mills Limited at Tulsi Krupa Arcade, Puna-Kumbharia Road, Dumbhal, Surat 395010 on Wednesday, 20th September, 2017 at 11.00 a.m.

Name of the Shareholder : 1 …………………………………………. 2 ………………………………………….

Signature of the Shareholder : 1 …………………………………………. 2 ………………………………………….

Signature of the Proxyholder : ………………………………………....…

Notes

1. Shareholders attending the meeting in person or by Proxy are requested to complete the attendance slip and hand it over at the entrance of the meeting venue. For route map of meeting venue, please see overleaf.

2. As per Section 118(10) of the Companies Act, 2013 read with the Secretarial Standards for General Meetings issued by Institute of Company Secretaries of India “No gifts, gift coupons or cash in lieu of gifts shall be distributed to members at or in connection with the meeting”.

ROUTE MAP FOR ANNUAL GENERAL MEETING VENUETulsi Krupa Arcade, Puna-Kumbharia Road, Dumbhal, Surat 395010ROUTE MAP FOR ANNUAL GENERAL MEETING VENUE

Garden Silk Mills LimitedRegd. Office: Tulsi Krupa Arcade, 1st Floor, Puna-Kumbharia Road, Dumbhal, Surat 395010

CIN: L17111GJ1979PLC003463; Website: www.gardenvareli.comPhone: (0261) 2311197, 2311615 Fax: (0261) 2311029

PROXY FORM[Pursuant to section 105(6) of the Companies Act, 2013 and rule 19(3) of the Companies

(Management and Administration) Rules, 2014]

Name of the member(s)Registered Address

DP Id / Client Id* Folio No.

*Applicable for members holding shares in Electronic form.

I/We, being the member(s) holding …………..…...............................…… shares of the Garden Silk Mills Limited, hereby appoint

1. Name ............................................................................... Address: .................................................................................

.......................................................................................... Signature: .......................................................... , or failing him

2. Name ............................................................................... Address: .................................................................................


3. Name ............................................................................... Address: .................................................................................


as my/our proxy to attend and vote (on a poll) for me/us and on my/our behalf at the 38th Annual General Meeting of the Company, to be held on Wednesday, 20th September, 2017 at 11.00 a.m. at Tulsi Krupa Arcade, Puna-Kumbharia Road, Dumbhal, Surat 395010 and at any adjournment thereof in respect of such resolutions as are indicated below:

Sr. No.

Resolution Optional *For Against

Ordinary business1 Adoption of Audited Financial Statement, Reports of the Board of Directors and Auditors2 Re-appointment of Shri Sanjay S. Shah, who retires by rotation.3 Appointment of Sharp & Tannan Associates, Chartered Accountants as Statutory Auditors of the Company.Special business4 Special Resolution: Re-appointment of Shri Sanjay S. Shah Wholetime Director of the Company5 Ordinary Resolution: Ratification of remuneration to Cost Auditor6 Ordinary Resolution: Appointment of Shri Ketan A. Jariwala, as an Independent Director of the Company.

Signed this …… day of August, 2017,

Signature of Proxy holder(s):____________________ Signature of shareholder:________________________ Affix Re 1/-

Revenue Stamp

Notes:

1. This Instrument of proxy, in order to be effective, should be duly completed and signed and deposited at the Registered Office of the Company, not less than 48 hours before the commencement of the Meeting.

2. This form of Proxy shall be signed by the member or his duly authorised attorney, or if the member is a body corporate, it shall be duly sealed and signed by an officer or an attorney. The Proxy Form which is unstamped or inadequately stamped or where the stamp has not been cancelled or is undated or which does not state the name of the Proxy shall not be considered valid.

3. Proxy need not be a member of the Company. Pursuant to the provisions of Section 105 of the Companies Act, 2013, a person can act as proxy on behalf of not more than fifty (50) members and holding in aggregate not more than ten percent of the total share capital of the Company. Members holding more than ten percent of the total share capital of the company may appoint a single person as proxy, who shall not act as proxy for any other member.

4. The submission by a member of this form of proxy will not preclude such member from attending in person and voting at the meeting. If both member and proxy attend the meeting, the proxy shall stand automatically revoked.

5. It is optional to put a 'X' in the appropriate column against the Resolutions indicated in the Box. If you leave the ‘For' or 'Against' column blank against any or all Resolutions, your proxy will be entitled to vote in the manner as he/she thinks appropriate.

www.gardenvareli.com

annual - bombay stock exchange...sharp & tannan associates, chartered accountants, will hold...

Documents