Karnika Industries Ltd. के निदेशक की रिपोर्ट

Mar 31, 2025

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

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

1. Financial Highlights: (Rs. In Lakhs except in EPS)

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

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

2. Performance of the Company

One of the top kid’s garment manufacturers,
Karnika Industries Limited, is known for
being a financially stable and well-run
business. With a team of highly qualified
employees, we believe in creating a broad
variety of creative designs for all kinds of
children''s clothing, including shorts, joggers,
t-shirts, capri, rompers, pyjamas, winter wear,
infant wear, etc. The Company has also
started a Unit to manufacture jeans for adults.

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

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

3. Green Initiative

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

4. Website

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

5. Dividend

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

6. Capital Structure of the Company

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

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

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

7. Transfer to Reserves

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

8. Web Address of Annual Return

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

Investor Relations tab “Annual Return”.

9. Board of Directors and Key Managerial
Personnel

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

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

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

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

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

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

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

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

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

Obligations and Disclosure Requirements)
Regulations, 2015.

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

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

11. Board’s Independence

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

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

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

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

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

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

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

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

The company''s independent directors are as
follows:

Ms. Kirti Taparia

Mr. Shashikant Soni

Separate Meeting of Independent
Directors

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

a. the performance of the Chairman, Non¬
Independent Directors and the Board of
Directors as a whole

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

12. Familiarisation Programme for
Independent Directors

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

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

13. Code of Conduct

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

14. Board Evaluation

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

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

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

15. Insider Trading

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

https://www.karnikaindustries.com.

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

16. Board Meetings

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

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

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

Recording of Minutes of proceedings of
Board and Committee meetings

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

Selection of agenda items for Board
Meetings

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

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

Number of Meetings of the Board

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

02.04.2024, 08.04.2024, 22.05.2024,

27.05.2024, 31.05.2024, 06.06.2024,

21.06.2024, 15.07.2024, 16.08.2024,

30.08.2024, 05.09.2024, 28.10.2024,

24.12.2024, 26.12.2024, 10.02.2025,

17.02.2025, 07.03.2025, 13.03.2025,

22.03.2025,

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

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

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

17. Business Responsibility and
Sustainability Report

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

18. Directors’ Responsibility Statement

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

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

b. the directors have selected such
accounting policies and applied them
consistently and made judgments and
estimates that are reasonable and
prudent to give a true and fair view of
the state of affairs of the company at
the end of the financial year and of the
profit of the company for the year
under review;

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

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

e. the directors have laid down internal
financial controls to be followed by the

company and that such internal
financial controls are adequate and are
operating effectively.

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

19. Auditors and Auditors Report

a. Statutory Auditors

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

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

The Statutory Auditors have
confirmed that they are not
disqualified from continuing as

Auditors of the Company for the F.Y
2024-25.

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

The Auditors’ Report does not contain
any qualification, reservation or

disclaimer. The Notes to the financial
statements referred in the Auditors’
Report are self-explanatory and do not
call for any further comments.

b. Cost Auditors-

Maintenance of cost records and
requirement of cost audit as prescribed
under the provisions of Section 148(1)
of the Companies Act, 2013 are not

applicable to the business activities
carried out by the Company.

c. Secretarial Auditors

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

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

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

d. Internal Auditors

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

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

qualifications hence do not call for any
further explanation by the Company.

20. Reporting of Fraud

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

21. Particulars of Loans, Guarantees or
Investments

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

22. Particulars of Contracts or
Arrangements with Related Parties

During the year under review:

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

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

The Policy on Materiality of Related Party
Transactions and on dealing with Related
Party Transactions as approved by the
Board is available on the Company’s
website and can be accessed at
https://www.karnikaindustries.com.There
were no materially significant related party

transactions which could have potential
conflict with the interests of the Company
at large. Members may refer to Note 33 of
the Standalone Financial Statement which
sets out related party disclosures pursuant
to AS - 18.

23. Committees of Board
Audit Committee

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

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

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

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

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

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

• Reviewing the Statutory Auditor’s
independence and performance and
effectiveness of audit process

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

• Evaluating the Company’s internal
financial controls and risk management
systems.

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

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

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

• Reviewing the functioning of the Vigil
Mechanism

Composition of the Audit Committee and attendance of the members

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

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

Stakeholders Relationship Committee
(“SRC”)

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

The terms of reference, inter alia, include:

• Monitor and resolve the grievances of
security holders.

• Oversee the performance of the

Company’s Registrar and Transfer

Agents;

• Review the Company''s activities related

to Health, Safety, and Sustainability

initiatives.

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

04.02.2025.

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

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

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

Nomination and Remuneration
Committee (“NRC”)

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

The terms of reference, inter alia, include:

• Determination and recommendation of

criteria for the appointment of
Executive, Non-Executive, and

Independent Directors to the Board, as
well as recommending to the Board the
appointment or re-appointment of Key
Managerial Personnel.

• Review and approve the compensation

or remuneration payable to Senior
Management Personnel, Executive and
Non-Executive Directors, and

recommend the same to the Board, along

with recommending the Remuneration
Policy of Key Managerial Personnel and
other employees.

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

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

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

• Oversee familiarization programs for
Directors.

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

Composition of the NRC and attendance of members:

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

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

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

24. Share Transfer System/

Dematerialization of shares.

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

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

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

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

25. Deposits

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

26. Investor Education and Protection Fund
(IEPF)

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

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

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

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

A. Conservation of Energy

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

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

B. Technology Absorption

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

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

c. The expenditure incurred on Research and Development:

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

C. Foreign Exchange Earnings and Outgo:

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

28. Risk Management Policy

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

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

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

29. Corporate Social Responsibility

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

Based on the Company’s profitability and
turnover, it was obligated to undertake CSR
activities during the financial year 2024—
2025, as mandated under Section 135 of the
Companies Act, 2013. Accordingly, the
Company has undertaken various initiatives
under the banner of "Corporate Social
Responsibility (CSR)", the details of which

are provided in Annexure — II. These
activities are in full compliance with Schedule
VII of the Companies Act, 2013 and are
aligned with the objectives outlined in the
Company’s CSR Policy.

30. Vigil Mechanism/ Whistle Blower
Policy

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

The Vigil Mechanism ensures adequate
safeguards against victimization of
individuals who raise such concerns and
provides for direct access to the Chairperson
of the Audit Committee in appropriate or
exceptional circumstances. The Whistle
Blower Policy is available on the Company’s
website at

https://www.karnikaindustries.com.

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

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

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

32. Internal Financial control & its
adequacy

The Company’s internal financial control
systems are adequate and commensurate
with the size and nature of its operations.
These controls are designed to provide
reasonable assurance regarding the

safeguarding of assets from unauthorized
use or disposition, the proper authorization
and execution of transactions, and the
maintenance of accurate and reliable
financial and operational information.

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

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

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

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

34. Changes in Nature of Business

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

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

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

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

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

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

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

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

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

38. Maternity Benefits

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

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

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

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

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

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

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

42. Corporate Governance & Management
Discussion and Analysis Report

The Company is committed to upholding the
highest standards of corporate governance

and transparency. It continuously endeavours
to adopt and implement best practices in
governance, with the objective of enhancing
long-term shareholder value in a legal,
ethical, and sustainable manner.

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

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

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

43. Education, Training and Development

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

Our structured training and development
programs ensure that every team member
gains consistent experience and a strong

foundation of knowledge. These initiatives
are designed to align individual growth with
organizational objectives, enhancing both
competence and confidence.

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

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

44. Disclosure about Secretarial Standard

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

45. Business Responsibility & Sustainability
Report (BRSR)

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

46. Other Disclosures

The Company does not have any scheme or
provision for the purchase of its own shares

held by employees/ Directors or by trustees
for the benefit of employees/ Directors.

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

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

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

47. Appreciation

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

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

For and on behalf of Board of Directors of
Karnika Industries Limited

Sd/- Sd/-

Niranjan Mundhra Mahesh Kumar Mundhra

Managing Director Whole-Time Director

DIN: 05254448 DIN: 08577538

Place: Howrah
Date: 06.09.2025

---

Mar 31, 2024

We are delighted to present the 2^nd Annual Report on the business and operations of our company, accompanied by the Audited Financial Statements for the Financial Year ended on 31^st March 2024. This report holds special significance as it marks our first report following our successful Initial Public Offering (IPO) and subsequent listing on the Emerge Platform of the National Stock Exchange of India Limited. We extend a warm welcome to all our new shareholders and express our gratitude for your trust and support. We look forward to continuing our journey together, creating value and delivering growth for our shareholders.

(H In Lakhs except in EPS)

Particulars	F.Y. 2023-24	F.Y. 2022-23
Revenue from operation	12727.26	12459.24
Other Income	118.39	146.37
Total Income	12845.65	12605.62
Profit before interest, depreciation	1925.95	1664.41
Less: Interest	488.82	516.63
Less: Depreciation	77.79	39.03
Profit before tax	1359.34	1108.75
Less: Tax Expenses
- Current Tax	357.54	293.56
- Deferred Tax	-8.68	-3.02
Profit for the year	1010.49	818.21
Earnings Per Shares (EPS)
- Basic	8.15	8.99
- Diluted	8.15	8.99

2. State of Company''s Affair or Company''s Performance overview

In the current fiscal year, the Company saw a rise in revenue, totaling H12845.65 Lakhs, compared to H12605.61 Lakhs in the preceding year. Concurrently, expenditure decreased to H11486.31 Lakhs from H11496.87 Lakhs in the previous year.

The Company achieved a net profit of H1010.49 Lakhs in the current fiscal year, a substantial increase from H818.21 Lakhs in the previous year. This impressive growth translates to an Earning Per Share of H8.15.

3. Initial Public Offer of Equity Shares

The Directors are delighted to announce the successful completion of the Company''s Initial Public Offering (IPO) of 32,99,200 Equity Shares, each with a face value of H10/- (Rupees Ten only), at a premium of H66/-. The response from investors was overwhelming. The Issue opened on 29^th September 2023, and closed on 5^th October 2023. The issue was subscribed 3.07 times.

We are pleased to inform you that the allotment for the IPO was completed on 10^th October 2023, with the shares ranking pari-passu with the existing

shares. Following this, the Company''s shares were listed on the NSE Emerge, the SME Platform of the National Stock Exchange of India Limited (NSE), on 12^th October 2023.

The 2337.39 lakhs in IPO proceeds were used to cover the company''s working capital needs.In addition, the company incurred 170.00 lakhs in offer expenses.

Further, there was no deviation/variation in the utilization of the gross proceeds raised through IPO.

4. Dividend

Your Company does not recommend dividend for the year under review because it has chosen to maintain growth in accordance with its long-term growth objectives by keeping profit and using it for current opportunities.

5. Share Capital or Capital Structure

The Capital structure of the Company as on 31.03.2024 as are follows:

The Authorized Equity Share Capital of the Company is H2500.00 Lakhs (Rupees Twenty-Five Crores)

divided into 2,50,00,000 (Two Crores Fifty Lakhs) Equity Shares of H10/- each.

The Issued, Subscribed and Paid-up Share Capital of the Company is H1239.95 Lakhs (Rupees Twelve Crores Thirty-Nine Lakhs Ninety-Five Thousand) divided into 1,23,99,500 (One Crore Twenty-Three Lakhs Ninety-Nine Thousand Five Hundred) Equity Shares of H10/- each.

6. Transfer to Reserves

During the year under review, the Company has not made transfers to any Reserves.

7. Web Address of Annual Return

Annual Return shall be made available at https://www. karnikaindustries.com/ under Investor Relations tab "Annual Return" after the conclusion of the Annual General Meeting.

8. Board of Directors and Key Managerial Personnel

In accordance with the relevant provisions of the Companies Act, 2013 and the Securities and Exchange Board of India (Listing Obligation and Disclosure Requirements) Regulations, 2015 ("SEBI Listing Regulations"), the Company has an appropriate mix of Executive Directors, Non-Executive Directors, and Independent Directors.

Two (2) independent directors make up the total of six (6) members of the board of directors.

The Managing Director and Promoter serves as the Board Chairman. The Board members are extremely skilled and have a wide range of experience in the pertinent field of the Company''s business operations. They play important roles in the formulation of business policies and the decision-making process, and they advise the executive management on how to carry out their duties efficiently.

9. Boards Independence

According to Regulation 16(1)(b) of the SEBI Listing Regulations, when read in conjunction with Section 149(6) of the Act and the rules promulgated thereunder, Independent Directors are NonExecutive Directors. They have declared that they are not aware of any circumstance or event that may reasonably be expected to affect or impair their ability to carry out their obligations in line with Regulation 25(8) of the SEBI Listing Regulations. The Board believes the Independent Directors meet the requirements for independence as stated in Section 149(6) of the Act and Regulation 16(1)(b) of the SEBI Listing Regulations, and that they are independent of the management, based on the declarations received from them and after giving them due consideration.

Additionally, in compliance with Section 150 of the Act and Rule 6 of the Companies (Appointment & Qualification of Directors) Rules, 2014, the Independent Directors have confirmed that they have enrolled in the Indian Institute of Corporate Affairs'' Independent Directors'' Databank.

The corporation has sent official appointment letters to the Independent Directors. The terms and circumstances of the appointment of Independent Directors, along with their functions, responsibilities, and obligations, are disclosed on the Company''s website at as required by Regulation 46 of the SEBI Listing Regulations.

The company''s independent directors are as follows: Ms. Kirti Taparia Mr. Shashikant Soni

As per provisions of the Companies Act, 2013, Independent Directors shall not be liable to retire by rotation.

10. Retirement by Rotation

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

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

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

The annexure to the notice calling the upcoming Annual General Meeting contains a brief resume and other information about Kirti Mundhra (DIN-09549207), who is recommended for re-appointment. This information is required to be disclosed under Regulation 36(3) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

11. Familiarisation Programme for Directors (including Independent Directors)

In accordance with the provisions of the Companies Act of 2013 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations of 2015, the company has developed a program through which the Independent Directors becomes familiar with the company''s business model, industry in which it operates, and other aspects of their roles, rights, and responsibilities.

The details of programmes for familiarisation foi Independent Directors are available on the website of the Company www.karnikaindustries.com

12. During the year under review following changes occurred in Board of Directors and Key Managerial Personnel of the Company:

Mr. Parmeshwar Lal Sharma (DIN-09798016) resigned on 29^th January, 2024 from the position of Independent Director and Mr. Shashikant Soni (DIN-09798016) was appointed on 30^th March 2024 as an Additional Independent Director and subsequently, has been appointed as an Independent Director on 29^th June 2024 at an Extra Ordinary General Meeting.

13. Directors and KMPs as on March 31, 2024, are as under:

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

14. Code of Conduct

The Board of Directors has adopted a Code of Conduct for Directors and Senior Management of the Company. An annual affirmation of compliance with the Code of Conduct is taken from all the Directors and Senior Management members of the Company to whom the Code applies. The Code of Conduct has also been posted at the website of the Company https:// www.karnikaindustries.com. Managing Director''s affirmation that the Code of Conduct has been complied with by the Board of Directors and Senior Management is produced elsewhere in the report.

15. Declaration from Independent Directors

All of the Independent Directors appointed during the year, in the Board''s opinion, meet the requirements for independence as outlined in the Act and the SEBI Listing Regulations, are independent of the management, and have complied with the Code for Independent Directors as outlined in Schedule IV of the Companies Act, 2013, as well as having the integrity, expertise, knowledge, and experience necessary to be Independent Directors of the Company.

16. Board Evaluation

The Nomination and Remuneration Committee of the Board has formulated a Performance Evaluation Framework, under which the Committee has identified criteria upon which every Director, every Committee, and the Board as a whole shall be evaluated. During the year under review the evaluation of every Director, every Committee, and the Board has been carried out.

17. Insider Trading

In accordance with the SEBI (Prohibition of Insider Trading) Regulation, 2015, the Company has adopted a Code of Conduct for the Prevention of Insider Trading to govern securities trading by its directors and selected staff. The details of the insider trading policy have been disclosed on the Company''s website at the following link: www.karnikaindustries.com

The Code requires a Trading Plan and preclearance for dealing in the Company''s shares, and it prohibits the Directors and designated employees from purchasing or selling Company shares while in possession of unpublished price sensitive information about the Company or while the Trading Window is closed. However, no such cases occurred in the Company during 2023-24.

18. Board Meetings

Aside from other Board matters, the Board meets on a regular basis to deliberate and make decisions regarding the Company/Business policy and strategy.

All Directors are notified well in advance of the upcoming Board meeting.

The quorum and frequency of these meetings complied with Secretarial Standard 1 and the Companies Act, 2013 regulations.

Recording of Minutes of proceedings of Board and Committee meetings

The Company Secretary & Compliance Officer ensures that the minutes of each Board and Committee meeting are properly recorded in accordance with the relevant provisions of the Act and the applicable Secretarial Standards issued by the Institute of Company Secretaries of India.

Selection of agenda items for Board Meetings

The information, as required under Regulation 17(7) read with Schedule II, Part A of the SEBI Listing Regulations and applicable provisions of the Act, is made available to the Board as part of agenda.

The meetings of the Board are generally held at the Registered Office of the Company at 6 & 6/1, Gurgola Ghat Road, Bandhaghat, Howrah - 711106.

26 (Twenty-Six) Board Meetings were held during the year to consider and approve various matters including approvals required for the IPO process. The meetings were held on - 13.04.2023, 28.04.2023,

22.05.2023, 26.05.2023, 31.05.2023, 08.06.2023,

17.06.2023, 27.06.2023, 30.06.2023, 20.07.2023,

24.07.2023, 18.08.2023, 19.09.2023, 22.09.2023,

09.10.2023, 11.10.2023, 20.10.2023, 15.12.2023,

22.12.2023, 29.01.2024, 30.01.2024, 07.03.2024,

13.03.2024, 22.03.2024, 29.03.2024 and 30.03.2024. The gap between any 2 (two) Board meetings during the year did not exceed 120 (one hundred and twenty) days. The requisite quorum was present for all the meetings.

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

Name of the Director	No. of Board		Attendance at	No. of Shares
	Meetings		last AGM	held in the Company
	Held	Attended		as on March 31, 2024
Niranjan Mundhra	26	26	Yes	30,33,000
Shiv Shankar Mundhra	26	26	Yes	30,33,000
Mahesh Kumar Mundhra	26	26	Yes	30,33,000
Kirti Mundhra	26	26	Yes	260
Kirti Taparia	26	26	Yes	0
Parmeshwar Lal Sharma	26	20	Yes	0
Shashikant Soni	26	1	No	0

Separate Meeting of Independent Directors

Pursuant to Schedule IV of the Act read with Regulation 25 of SEBI Listing Regulations, the Independent Directors met on 08.12.2023 without the presence of Non-Independent Directors and members of the management and have inter-alia assessed the quality, quantity and timeliness of flow of information between the management and the Board that is necessary for the Board to effectively and reasonably perform their duties.

19. Management Discussion and Analysis

In terms of Regulation 34(2)(e) of SEBI Listing Regulations, a detailed report on Management Discussion and Analysis (MDA) Report is included in this Report as Annexure-I.

20. Business Responsibility and Sustainability Report

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

21. Directors'' Responsibility Statement

Pursuant to Section 134 (5) of the Companies Act, 2013, it is hereby confirmed that in the preparation of the annual financial statements for the year ended March 31, 2024, the applicable accounting standards read with requirements set out under Schedule III of the Act have been followed and there are no material departures from the same.

a. the directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit of the company for the year under review;

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

c. the directors have prepared the annual accounts on a going concern basis.

d. 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

e. 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.

22. Stakeholders Relationship Committee ("SRC")

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

The Stakeholders Relationship and Grievance Committee convened a meeting on 18.01.2024, to discuss share transfers, transmissions, demats, reported by the company''s RTA.

Name of Members	Designation	Position	No. of Meetings held during the period	No. of Meetings attended
Mr. Parmeshwarlal Sharma *	Independent Director	Ex-Chairman	1	1
Mr. Shashikant Soni**	Independent Director	Chairman	1	0
Mrs. Kirti Taparia	Independent Director	Member	1	1
Mrs. Kirti Mundhra	Non-Executive Women Director	Member	1	1
Mr. Shiv Shankar Mundhra	Whole-Time Director	Member	1	1

*Resigned on 29.01.2024 ** Appointed on 30.03.2024

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

23. Auditors and Auditors Report

a. Statutory Auditors

M/S AAAJ & Associates, Chartered Accountants (Firm Registration No. 0322455E) were appointed as Statutory Auditors of the Company for 5 (five) consecutive years, at the 1^st Annual General Meeting held on September 28, 2023, for five years till the conclusion of the Annual General Meeting to be held for the Financial Year 20272028. Accordingly, they have conducted Statutory Audit for the F.Y. 2023-24.

The Statutory Auditors have confirmed that they are not disqualified from continuing as Auditors of the Company and shall continue to be Statutory Auditors for the F.Y. 2023-24.

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

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

b. Cost Auditors-

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

c. Secretarial Auditors

The Board had appointed Mrs. Poonam Binani, Company Secretary, [ICSI Membership No. ACS-A33638 & Certificate of Practice No. 12552], to conduct Secretarial Audit of the Company. The Secretarial Audit Report for the financial year

ended March 31, 2024, is annexed and marked as Annexure-IV to this Report.

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

d. Internal Auditors

Pursuant to Section 138 of the Companies Act,

2013 read with the Companies (Accounts) Rules,

2014 (as amended), the Board of Directors, on the recommendations of the Audit Committee, of the Company, has appointed M/s Ajay Mundhra & Associates, Chartered Accountants, [ICAI Firm Registration No.- 329704E], as the Internal Auditors of the Company for the financial year 2023-24.

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

24. Reporting of Fraud

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

25. Particulars of Loans, Guarantees or Investments

During the year, the Company has not given any loan or provided any guarantee or security in favour of other parties and has also not made any investment of its fund with any other party under Section 186 of Companies Act, 2013.

26. Particulars of Contracts or Arrangements with Related Parties

During the year under review:

a) all contracts / arrangements / transactions entered by the Company with related parties were in its ordinary course of business and on an arm''s length basis;

b) contracts / arrangements / transactions which were material, were entered into with related parties in accordance with the Policy of the Company on Materiality of Related Party Transactions and on dealing with Related Party Transactions. The Company had not entered into any contract / arrangement / transaction with related parties which is required to be reported in Form No. AOC-2 in terms of Section 134(3)(h) read with Section 188 of the Act and Rule 8(2) of the Companies (Accounts) Rules, 2014.

The Policy on Materiality of Related Party Transactions and on dealing with Related Party Transactions as approved by the Board is available

on the Company''s website and can be accessed at www.karnikaindustries.com. There were no materially significant related party transactions which could have potential conflict with the interests of the Company at large. Members may refer to Note 32 of the Standalone Financial Statement which sets out related party disclosures pursuant to AS - 18.

27. Audit Committee

The Audit Committee of the Board of Directors reviews Financial Statements and Reporting before submission to the Board. The Audit Committee makes recommendations on the appointment, remuneration, performance, and oversight of Internal and Statutory Auditors. The internal and statutory auditors'' reports are reviewed. Senior Management Personnel, including the Internal Auditor, are invited to Audit Committee meetings. During the fiscal year under review, the Audit Committee met four times to discuss a variety of issues. The meetings were held on 17.06.2023, 27.09.2023, 14.11.2023 and 19.01.2024.

Composition of the Audit Committee and attendance details of the members for the period as given below:

Name of Members	Designation	Position	No. of Meetings held during the period	No. of Meetings attended
Mr. Shashikant Soni1	Independent Director	Chairman	4	0
Mr. Parmeshwar Lal Sharma*	Independent Director	Ex-Chairman	4	4
Mrs. Kirti Taparia	Independent Director	Member	4	4
Mrs. Kirti Mundhra	Non-Executive Women Director	Member	4	4

28. Nomination and Remuneration Committee ("NRC")

The Company''s Nomination and Remuneration Committee was formed in accordance with Section 178 of the Companies Act, 2013. This Committee''s responsibilities include identifying qualified Directors and Senior Management, developing criteria for determining qualifications and independence, recommending appointments to the Board, evaluating Director performance, and developing a Remuneration Policy for Directors, Key Managerial Personnel, and Senior Managers.

Currently, the Nomination and Remuneration Committee consists of 1 Non-Executive Director and 2 Independent Director.

Selection of New Directors and Board Membership Criteria

The goal of the Nomination and Remuneration Committee (''NRC'') is to create a diverse board of directors with experience and backgrounds in business leadership, strategy, operations, technology, finance and accounting, governance, and government/regulatory affairs. The NRC formulates and recommends to the Board the appropriate qualifications, positive attributes, characteristics, skills, and experience required for the Board as a whole and its individual members. The meeting was held on 15.02.2024.

Name of Members	Designation	Position	No. of Meetings held during the period	No. of Meetings attended
Mr. Parmeshwar Lal Sharma*	Independent Director	Ex-Chairman	1	0
Mr. Shashikant Soni**	Independent Director	Chairman	1	0
Mrs. Kirti Taparia	Independent Director	Member	1	1
Mrs. Kirti Mundhra	Non-Executive Women Director	Member	1	1

* Resigned on 29.01.2024 ** Appointed on 30.03.2024

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

During the year, the NRC reviewed and recommended to the Board a Policy on Nomination, Remuneration, and Evaluation (including a Policy on the Appointment and Removal of Directors/Key Managerial Personnel ("KMPs"), a Familiarisation Programme for Independent Directors, a Succession Plan for Directors/KMPs, Board Diversity, and Board Evaluation) and a Code of Conduct for Board Members/KMPs. Remuneration Policy is published on the Company''s website at www.karnikaindustries.com.

29. Share Transfer System/ Dematerialization of shares.

The Depositories, NSDL and CDSL, have both admitted the Company''s Equity Shares into the Dematerialization system. On March 31, 2024, the 1,23,99,500 equity shares that were dematerialized through the depositories, Central Depositories Services (India) Limited and National Securities Depositories Limited, accounted for 100% of the company''s total issued, subscribed, and paid-up share capital. Your company has been assigned the ISIN INE0MGA01012. Following is the status of the securities as of March 31, 2024:

	CDSL	NSDL	TOTAL
Shares in Demat	25,60,000	98,39,500	1,23,99,500
Physical Shares	Nil	Nil	Nil

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

30. Deposits

According to Section 73 of the Companies Act 2013 and the regulations enacted thereunder, your Company has not taken or renewed any deposits during the year under review.

31. Investor Education and Protection Fund (IEPF)

During the year under review, the provision of section 125(2) of the Companies Act, 2013 does not apply as the company was not required to transfer any amount to the Investor Education Protection Fund (IEPF) established by the Central Government of India.

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

Pursuant to Section 134(3)(m) of the Act read with Rule 8(3) of the Companies (Accounts) Rules, 2014, relevant details are given hereunder.

A. Conservation of Energy

The company has persisted in making deeper and more vigorous attempts to increase energy efficiency.

To keep all of the machinery and equipment in good working order, they undergo regular servicing, updates, and overhauls. As a consequence, less energy was used.

B. Technology Absorption

a. The Company continues to adopt and use the latest technologies to improve the productivity and quality of its products.

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

c. The expenditure incurred on Research and Development:

	F.Y. 2023-24	F.Y. 2022-23
Capital Expenditure	NIL	NIL
Revenue Expenditure	NIL	NIL

C. Foreign Exchange Earnings and Outgo:

	| F.Y. 2023-24	F.Y. 2022-23
Earnings	958.36	2,065.42
Outgo	169.32	4.14

33. Nomination and Remuneration Policy

The NRC''s purpose is to oversee the nomination process, including succession planning for the Company''s Senior Management Personnel and Board, and to assist the Board in identifying, screening, and reviewing individuals qualified to serve as Executive Directors, Non-Executive Directors, Independent Directors, Key Management Personnel, and Senior Management Personnel in accordance with the criteria established by the Board in its Policy. The NRC and the Board examines the Company''s succession planning process on a regular basis and are confident that there is an acceptable procedure in place for the orderly succession of Board members, Key Management Personnel, and Senior Management Personnel.

34. Risk Management Policy

The Company prioritizes an effective, consistent, and sustainable risk management system as part of its work culture. There is a clear risk management approach in place, including risk mapping, trend analysis, exposure, potential impact, and mitigation. The process aims to reduce the impact of recognized risks and take proactive steps to mitigate them. The mechanism is based on the probability of occurrence and the potential impact when triggered. A comprehensive risk assessment is underway to identify, evaluate, monitor, and manage both business and non-business-related risks.

35. Corporate Social Responsibility

In compliance with Section 135 of the Companies Act, 2013 and the regulations outlined therein, a CSR Policy has been implemented to guarantee social responsibilities.

The CSR Policy is available for download at the company''s website www.karnikaindustries.com.

Due to the company''s profitability and turnover, your company was mandated by section 135 of the Companies Act, 2013 and its implementing regulations to carry out CSR expenditure in 20232024. The Company has carried out a number of expenditures under the banner of "Corporate Social Responsibility which has been provided in Annexure-II that are compliant with both Schedule VII of the Companies Act of 2013 and the Company''s CSR Policy.

36. Vigil Mechanism/ Whistle Blower Policy

The Company has established a Vigil Mechanism/ Whistle Blower Policy for Directors, Employees, Vendors, Customers, and Other Stakeholders of the Company to raise, and report concerns regarding any unethical conduct, irregularity, misconduct, actual or suspected fraud, or any other violation of the Policy within the Company. This is in accordance with the provisions of Section 177 of the Act and Regulation 22 of SEBI Listing Regulations. The vigil system offers sufficient protections against victimization of those who utilize it, as well as direct access to the Audit Committee chairperson in suitable or extraordinary circumstances. The Company''s website www. karnikaindustries.com has the Whistle Blower Policy.

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

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

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

38. Internal Financial control & its adequacy

The Company''s internal financial control systems are appropriate for its size and kind of business. These are intended to offer a reasonable level of assurance concerning the following: preserving assets from unauthorised use, carrying out transactions with the appropriate authorization, recording and supplying trustworthy financial and operational information, adhering to applicable accounting standards and pertinent statutes, and guaranteeing compliance with company policies. The Company has clearly defined authority delegation and restrictions for approving capital and revenue expenditures.

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

The Disclosures with respect to the Remuneration of Directors and Employees as required under Section 197 of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 along with, a statement containing particulars of Employees as required under Section 197 of Companies Act, 2013 read with Rule 5(2) and (3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is annexed herewith and marked as Annexure - III and form part of this report.

40. Changes in Nature of Business

The Company is engaged in the Business of Manufacturing and Trading in Children wear. During

the year under review, there were no changes in the nature of business of the Company.

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

There were no material changes during the period affecting the Financial Position of the Company.

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

During the year under review there has been no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and company''s operations in future.

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

The Company has zero tolerance for workplace sexual harassment and has implemented a policy to prevent, prohibit, and redress workplace sexual harassment in accordance with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition, and Redressal) Act, 2013 and its Rules. The Internal Complaints Committee (ICC) has been formed to investigate and resolve all sexual harassment accusations. The Company is committed to providing equal opportunity for all employees, regardless of race, caste, gender, religion, colour, nationality, disability, or other factors. This policy applies to all female associates (permanent, temporary, contractual, and trainees), visitors to the company''s office, and service suppliers. We treat all employees with dignity and aim to prevent sexual harassment, whether physical, verbal, or psychological.

During fiscal year 2023-24, the company received no accusations of sexual harassment.

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

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

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

During the year under review there was no case of one-time settlement with financial institution so the details of difference between amount of the valuation

done at the time of one-time settlement and the valuation done while taking loan from the Banks or Financial Institutions are not applicable to the company.

46. Corporate Governance & Management Discussion and Analysis Report

The company is committed to maintaining the highest levels of corporate governance and transparency. We make every effort to innovate and adhere to corporate governance principles and best practices in order to increase long-term shareholder value in a legal, ethical, and sustainable manner. We believe it to be an inherent responsibility to provide timely and accurate information about our operations and performance. We also strive to enhance shareholder value while respecting minority rights in all of our business choices.

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

47. Education, Training and Development

Training and development are crucial in today''s fast-paced corporate world. The Management views training as a valuable opportunity to broaden employees'' expertise. A planned training and development program ensures staff have consistent experience and background knowledge. Your organization promotes a culture of continuous learning for employees through training and development opportunities. The Karnika team prioritizes achieving targeted and tangible results for the business, treating it as a capital investment and driving results. Our training and development activities have shown significant improvements in productivity, efficiency, and effectiveness.

48. Disclosure about Secretarial Standard

The Directors have devised proper systems to ensure compliance with the provisions of all applicable Secretarial Standards and that such systems are adequate and operating effectively.

49. Business Responsibility & Sustainability Report (BRSR)

The Business Responsibility & Sustainability Reporting as required by regulation 34(2) (f) of the SEBI (listing obligations and disclosure requirement)

regulations, 2015 is not applicable to the company for the financial year ending, March 31, 2024.

50. Other Disclosures

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

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

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

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

51. Appreciation

Your directors wish to thank the Shareholders, Clients, Bankers and others associated with the Company for their continued support during the year. Your directors also wish to place on record their appreciation for the dedication and commitment of the Employees at all levels.

We think our leadership team has the necessary background and abilities to guide us into the next decade of expansion. We keep improving our abilities and bringing in the necessary resources, which enables the business to produce reliable outcomes in the years to come. The Board of Directors truly values the high calibre of professionalism, devotion, and hard work exhibited by staff members at every level.

For and on behalf of Board of Directors of

Niranjan Mundhra Shiv Shankar Mundhra

Managing Director Whole-Time director

DIN:05254448 DIN:02926873

Place: Howrah

Date: 05.09.2024

1

Appointed on 30.03.2024

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

During the fiscal year under review, the Company reviewed and recommended to the Board the Financial Statements and Auditors Report for filing with the NSE in the draft offer document for the IPO. The Audit Committee''s recommendation was accepted by the board.