Ganesha Ecosphere Ltd

Your Directors have pleasure in presenting the Thirty-fi_h Annual Report of the Company together with the Audited Financial Statements for the financial year ended March 31, 2024.

The summarized financial results of the Company for the year ended March 31, 2024 as compared to the preceding year are as under:

(_ in Crore)

The standalone and consolidated financial statements for the financial year ended March 31, 2024, forming part of this Annual Report, have been prepared in accordance with the Indian Accounting Standards (Ind AS) as notified by the Ministry of Corporate Affairs and as amended from time to time.

During FY 2024, India's textile and apparel industry faced a severe blow due to the global economic slowdown and declining global trade. Acute demand shortage coupled with cheap imports from neighbouring countries impacted the industry adversely.

Amidst the above scenario, your Company had also su_ered and faced significant drop in sales and profitability during the financial year. On standalone basis, the total income of the Company was _1001.10 crore during FY 2024 as against _1149.30 crore during

FY 2023. The Operating Profit (EBITDA) stood at _125.50 crore as against _140.28 crore of the last financial year. During the year under review, the Company has earned Net Profit of _62.48 crore as compared to _73.32 crore of the preceding financial year.

On consolidated basis, the Company recorded a total income of _1137.56 crore as against _1193.02 crore in the previous financial year. Our consolidated net profit for the year is _40.57 crore compared to _69.46 crore of the last financial year.

The Company has achieved debt free status with repayment of almost entire borrowings from the proceeds of QIP and preferential issue undertaken in the last quarter of the financial year 2023-24. The performance of the Company during the current FY 2024-25 continues to be encouraging and barring unforeseen circumstances, your Directors expect your Company to achieve better results during the year. A more detailed analysis and current outlook is available in the Management Discussion and Analysis section of this report.

During the financial year 2023-24, the following ratings have been re-a_irmed by ICRA and CARE:

i. A; Stable (Single A; Outlook Stable) for Long Term Bank Facilities (Term Loan and Fund Based) signifying adequate degree of safety regarding timely servicing of financial obligations. Such facilities carry low credit risk.

ii. A1 (A One) for Short Term Bank Facilities (Non-Fund based) signifying very strong degree of safety regarding timely payment of financial obligations. Such facilities carry lowest credit risk.

Your Directors are pleased to recommend a dividend of _3/- per share (i.e. @ 30%) on Equity Shares of _10/- each of the Company, involving cash outflow of _7.60 crore of the Company's standalone net profit for the financial year 2023-24. Dividend is subject to approval of members at the ensuing Annual General Meeting (AGM) and shall be subject to deduction of income tax at source.

During the year under review, unpaid dividend for the financial year 2015-16 amounting to _0.10 crore being unpaid/unclaimed for more than 7 years from the date it was lying in the unpaid dividend account, had been transferred by the Company to the Investor Education and Protection Fund (IEPF) of the Central Government, in terms of Section 124(5) of the Companies Act, 2013.

Pursuant to Regulation 43A of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, as amended ("SEBI Listing Regulations"), the Company has adopted a Dividend Distribution Policy which endeavors for fairness, consistency and sustainability while distributing profits to the shareholders and the same is available on the Company's website at https://www.ganeshaecosphere. com/corporate-governance-policies.

During the year under review:

a) On January 18, 2024, the Company had issued and allotted 14,49,000 Fully Convertible Equity Warrants at an issue price of H1,035/- (including a premium of H1,025/-) per Equity Share, aggregating to H149.97 crore, to an entity belonging to Promoter Group, on preferential basis under Chapter V of the SEBI (ICDR) Regulations, 2018. The said warrants are convertible into equal number of Equity Shares within a period of 18 months from the date of their allotment. The upfront amount of H37.50 crore, received on allotment of warrants, has been entirely utilized towards stated purpose of the issue.

b) On February 2, 2024, the Company had issued and allotted 35,17,587 Equity Shares of face value of H10/- each at an issue price of H995/- per Equity Share (including H985/- towards share premium) aggregating to approx. H350 crore, to eligible qualified institutional buyers by way of Qualified Institutions Placement (QIP) under Chapter VI of the SEBI (ICDR) Regulations, 2018. Consequent to said allotment, the total Paid-up Equity Share Capital of the Company stood increased from H21.83 crore to H25.35 crore. The funds raised through the issue are being utilized in accordance with the objects stated in the offer document.

As on March 31, 2024; the Company had 2 (two) Indian wholly owned subsidiaries (namely Ganesha Ecopet Private Limited and Ganesha Ecotech Private Limited) and 1 (one) overseas wholly owned subsidiary in Nepal (namely Ganesha Overseas Private Limited). The Company had no Associate and Joint Venture Companies during the year ended on March 31, 2024.

A statement containing salient features of the Financial Statements of the subsidiaries in the prescribed format in Form AOC-1 as required under first proviso to Section 129(3) of the Companies Act, 2013 read with Rule 5 of the Companies (Accounts) Rules, 2014 is included in this Report as "Annexure A" and forms an integral part of this Report. The said form also highlights performance of the subsidiaries and their contribution to the overall performance of the Company during the period under review.

In terms of the provisions of Section 136 of the Companies Act, 2013 read with the SEBI Listing Regulations, the Audited Financial Statements of the subsidiaries are placed on website of the Company and can be accessed at https://www.ganeshaecosphere. com/subsidiary. These financial statements are also available for inspection by any member at the Registered Office of the Company. Any member desirous of obtaining a copy of the same may write to the Company.

The Company's Policy for determining Material Subsidiaries is disclosed on the Company's website at https://www. ganeshaecosphere.com/corporate-governance-policies. As on March 31, 2024, the Company had no material subsidiary.

The Company had adopted and implemented Ganesha Ecosphere Employees' Stock Option Scheme 2021 ("ESOP Scheme") for granting Employee Stock Options ("options") to the eligible employees of the Company and its Subsidiaries. There is no material change in the ESOP Scheme during the year under review and the provisions of the Scheme are in compliance with the SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021. The ESOP Scheme has been implemented through Trust mechanism by way of secondary acquisition of equity shares by the Trust for allocating/transferring the same to the eligible employees on exercising and vesting of options.

During the year under review, the Nomination and Remuneration Committee of the Company at its meeting held on March 7, 2024, had granted 39,194 options convertible into equal number of Equity Shares of the Company of face value of _10/- each, to the eligible employees of the Company and its Subsidiaries, against 39,194 equity shares held by the Ganesha Employees' Welfare Trust ("Trust"), pursuant to the provisions of the ESOP Scheme. The Options so granted shall vest after one year from the Grant Date i.e. on March 7, 2025 and shall be exercisable at an exercise price of _543/- per Equity Share within a period of 3 years from the date of vesting.

The details of stock options granted pursuant to the ESOP Scheme and the disclosure in compliance with Regulation 14 of the SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021, is available on the Company's website at https://www. ganeshaecosphere.com/latest-information.

Management Discussion and Analysis Report for the year under review, as stipulated under Regulation 34(2) of the SEBI Listing Regulations is provided in a separate section forming part of the Annual Report.

During the year under review, Shri Surendra Kumar Kabra ceased to be the Non-Executive Independent Director of the Company due to his demise on June 1, 2023. The Board praised his valuable guidance and contribution to the Company during his association and expressed their deepest condolences and paid tribute to Late Surendra Kumar Kabra.

With a view to broad base the Board and to fill the vacancy created in the Board due to the demise of Late Surendra Kumar Kabra, the Board of Directors of the Company, on the recommendation of Nomination & Remuneration Committee, had appointed Shri Narayanan Subramaniam (DIN: 00166621) as an Additional (Non- Executive Independent) Director of the Company with effect from August 24, 2023, for a term of 5 (five) consecutive years and the same was approved by members of the Company at the 34th Annual General Meeting held on September 21, 2023.

Shri Sharad Sharma (DIN: 00383178) was re-appointed as the Managing Director of the Company for a further period of 5 (five) years w.e.f. 1st February, 2024 by the Members of the Company at the 34th Annual General Meeting held on September 21, 2023. The Board of Directors of the Company at its meeting held on August 10, 2024, on the recommendation of Nomination & Remuneration Committee, has proposed the re-appointment of Dr. Shobha Chaturvedi (DIN: 08553800) as a Non-Executive Independent Director of the Company for a second term of 5 (five) years, as her present term of 5 (five) years as Independent Director shall expire at the conclusion of the ensuing AGM of the Company. The resolution proposing her re-appointment as Independent Director for the second term pursuant to Section 149(6) of the Companies Act, 2013, forms part of the Notice of ensuing AGM for approval of members of the Company.

Pursuant to the provisions of Section 152 of the Companies Act, 2013 and the Articles of Association of the Company, Shri Rajesh Sharma (DIN: 02228607), Joint Managing Director of the Company, retires from the Board by rotation, at the ensuing AGM of the Company and being eligible he has offered himself for re-appointment. The Board recommends the proposal of his re-appointment for consideration of the Members at the ensuing AGM of the Company.

Brief profile(s) of Dr. Shobha Chaturvedi and Shri Rajesh Sharma are provided in the Notice of ensuing AGM.

The Company had received the declarations u/s 149(7) of the Companies Act, 2013 from all Independent Directors 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 Regulations and they have also confirmed that they are not aware of any circumstance or situation, which exist or may be reasonably anticipated, that could impair or impact their ability to discharge their duties with an objective independent judgement and without any external influence.

In terms of Section 150 of the Companies Act, 2013 read with Rule 6 of the Companies (Appointment and Qualification of Directors) Rules, 2014, Independent Directors of the Company have confirmed that they have registered themselves with the databank maintained by the Indian Institute of Corporate Affairs.

In the opinion of the Board, all the Independent Directors on the Board of the Company have requisite qualifications & proficiency and possess attributes of integrity, expertise and experience.

The Audit Committee of the Company consisted of 4 (four) Directors, out of which 3 (three) Directors are independent. The composition and other details are provided in the Corporate Governance Report of the Company. During the year, all the recommendations made by the Audit Committee were accepted by the Board.

In terms of Section 134(5) of the Companies Act, 2013, the Board of Directors, to the best of their knowledge and ability, in respect of the financial year ended March 31, 2024, confirm that: -

a) in preparation of the Annual Accounts, the applicable Accounting Standards have been followed along with proper explanation relating to material departures, if any;

b) they have selected such accounting policies and applied them consistently and made judgements 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 profit of the Company for that year;

c) they 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) they have prepared Annual Accounts on a ‘Going Concern' basis.

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

The Company has in place adequate internal financial controls commensurate with the size of the Company and the nature of its business, with reference to financial statements. Internal Auditors of the Company periodically audit the adequacy and effectiveness of the internal controls laid down by the management. The Audit Committee of the Board of Directors also regularly reviews the adequacy and effectiveness of the internal control systems and suggests improvements to strengthen the same.

During the financial year 2023-24, the Board of Directors of the Company had met 6 (six) times. The details of the Board meetings held during the year are given under the Corporate Governance Report.

During the year under review, the Company has duly complied with the applicable provisions of the Secretarial Standards on Meetings of the Board of Directors (SS-1) and General Meetings (SS-2), issued by the Institute of Company Secretaries of India.

The copy of Annual Return as required under Section 92(3) and Section 134(3)(a) of the Companies Act, 2013, is placed on the Company's website and can be accessed at https:// ganeshaecosphere.com/admin/UploadedFiles/ContentImages/ AnnualReturn/ANNUALRETURN2022-2023.pdf

The Equity Shares of the Company are presently listed at BSE Limited and National Stock Exchange of India Limited and the listing fee, for the financial year 2024-25, for both the Stock Exchanges is paid.

Pursuant to the provisions of Section 139 of the Companies Act, 2013 and Rules made thereunder, M/s. Narendra Singhania & Co., Chartered Accountants, New Delhi (ICAI Firm Registration No. 009781N) were re-appointed as Statutory Auditors of the Company for a second term of 5 (five) consecutive years at 33rd AGM of the Company held on September 30, 2022, to hold office till the conclusion of 38th AGM of the Company. The Auditors have confirmed that they are not disqualified from continuing as Statutory Auditors of the Company.

The Statutory Auditors' Report for the financial year 2023-24 does not contain any qualification, reservation or adverse remark or disclaimer.

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and rules made thereunder, the Board has appointed M/s. S.K. Gupta & Co., Company Secretaries, as Secretarial Auditors of the Company, to undertake Secretarial Audit for the financial year 2023-24. The Secretarial Audit Report for the financial year ended March 31, 2024 is annexed herewith as "Annexure B".

The Secretarial Audit Report for the Financial Year 2023-24 does not contain any qualification, reservation or adverse remark or disclaimer.

Pursuant to the Rules made by the Central Government of India, the Company is required to maintain cost records as specified under Section 148 (1) of the Companies Act, 2013 in respect of its products and accordingly such accounts and records are made and maintained.

M/s. R. M. Bansal & Co., Cost Accountants (Firm Regn. No.:000022) and M/s. Rakesh Misra & Co., Cost Accountants (Firm Regn. No.: 000249), have been appointed as Cost Auditors of the Company to conduct the audit of the Cost Accounts of the Company in respect of its products ‘Yarn' and ‘Recycled Polyester Staple Fibre' respectively, for the financial year 2024-25.

As required under the Companies Act, 2013, the resolutions seeking Members' ratification for the remuneration payable to Cost Auditors form part of the Notice convening the AGM.

Pursuant to the provisions of Section 138 read with Rule 13 of the Companies (Accounts) Rules, 2014, your Company engaged the services of M/s. Ashok & Ajai, Chartered Accountants, Kanpur, to conduct the Internal Audit of the functions and activities of the Company for the Financial Year 2023-24. Quarterly Internal Audit Reports are placed before the Audit Committee of the Company for its review.

There was no instance of fraud during the year under review, which required the Statutory Auditors to report to the Audit Committee and / or the Board under Section 143(12) of Companies Act, 2013 and Rules framed thereunder.

During the year under review, all transactions entered into with Related Parties were approved/ ratified by the Audit Committee and wherever required, were also approved by the Board of Directors of the Company. Omnibus approval from the Audit Committee was obtained for transactions of repetitive nature. During the financial year 2023-24, the Company had not entered into any contract/ arrangement / transaction with related parties which could be considered material in accordance with the Company's Related Party Transactions Policy. Further, all related party transactions undertaken during the year were at arms' length basis. Accordingly, the disclosure of Related Party Transactions as required under Section 134(3)(h) of the Companies Act, 2013, in Form AOC-2 is not applicable.

The related party transactions entered into by the Company during the year under review, are disclosed under Note No. 34 of the Notes to the Standalone Financial Statements for the year ended March 31, 2024.

The Company's Policy on Related Party Transactions is disclosed on the website of the Company at https://www.ganeshaecosphere. com/corporate-governance-policies.

Pursuant to Section 186 of the Companies Act, 2013 and Schedule V of the SEBI Listing Regulations, disclosure on particulars of loans given, investments made, guarantees and/ or securities provided along with the purpose for which the loan or guarantee or security were proposed to be utilized by the recipient are provided in the notes to the Standalone Financial Statements.

Pursuant to Section 177 of the Companies Act, 2013 and the SEBI Listing Regulations, the Company has adopted Whistle Blower Policy for vigil mechanism for Directors and employees to report to the management about the unethical behaviour, fraud or violation of Company's code of conduct. The details of the policy are explained in the Corporate Governance Report.

The Policy has been posted on the website of the Company and may be accessed at https://www.ganeshaecosphere.com/ corporate-governance-policies.

The Board of Directors of the Company have approved and adopted Nomination, Remuneration and Board Diversity policy in compliance with Section 178 of the Companies Act, 2013 and SEBI Listing Regulations.

Our current Nomination and Remuneration Policy is to have an appropriate mix of Executive and Non-Executive Directors including the independent directors to maintain the diversity and independence of the Board.

The broad parameters covered under the Policy are –Attributes, Qualifications and Remuneration of Executive Directors, Non-Executive Directors including Independent Directors, KMP and Senior Management Personnel. It also covers performance evaluation criteria of the Board, its Committees and individual directors.

The Nomination, Remuneration and Board Diversity Policy of the Company is available on the website of the Company at https:// www.ganeshaecosphere.com/corporate-governance-policies. We a_irm that the remuneration paid to the Directors is as per the terms laid out in the Policy.

The Board of Directors at its meeting held on February 14, 2024, has carried out an annual evaluation of its own performance, board committees and individual directors pursuant to the provisions of the Act & SEBI Listing Regulations. Performance Evaluation of Independent Directors was done by the entire board, excluding the director being evaluated. The Evaluation Process was conducted through a structured questionnaire prepared after taking into consideration the various aspects laid down under the "Nomination, Remuneration and Board Diversity Policy" of the Company. The Board of Directors expressed satisfaction with the evaluation process.

In a separate meeting of Independent Directors held on March 30, 2024, the Independent Directors of the Company had evaluated the performance of non-independent directors and Board as whole and performance of Chairman of the Company after taking into account the views of Executive Directors and other Non-Executive Directors of the Company. Independent Directors have also assessed the quality, quantity and timeliness of flow of information between the Company's Management and the Board and recorded their satisfaction with the flow of information.

Risk management is an ongoing process and embedded in the operating framework of the Company. Risk Management & Strategic Planning Committee of the Board has been entrusted for timely identification, evaluation and mitigation of all types of internal and external risks including financial, operational, sectoral, sustainability (particularly, ESG related risks), information, cyber security risks etc. The Committee is responsible for formulating and reviewing the risk management plan/ policy and ensuring its effectiveness across the organization. The Audit Committee of the Board has an additional oversight in the risk management systems prevailing in the Company.

There are no risks which in the opinion of the Board are of the nature that can threaten the existence of the Company. However, the risks inter-se those are generally dealt in regular course of business and have to be taken care of, are fluctuations in foreign exchange rates and prices of raw material as well as finished products.

The Risk Management Policy has been uploaded on the Company's website and may be accessed at the link https://www. ganeshaecosphere.com/corporate-governance-policies.

Your Company is committed to focus on inclusive growth and improving lives by contributing towards communities around which it operates. In compliance with Section 135 of the Companies Act, 2013, the Company has undertaken CSR activities, projects and programs as provided in the CSR policy of the Company and as identified under Schedule VII to the Companies Act, 2013.

The Composition of CSR Committee along with details of CSR activities undertaken by the Company have been disclosed in the ‘Report on CSR activities', set out as "Annexure C" and forming an integral part of this Report.

The CSR policy of the Company may be accessed at https://www. ganeshaecosphere.com/corporate-governance-policies.

In terms of Regulation 34(2) of SEBI Listing Regulations, a Business Responsibility and Sustainability Report describing the initiatives taken by the Company from an environmental, social and governance perspective is provided in a separate section forming part of the Annual Report.

During the year under review, the Company has neither accepted nor renewed any deposit from public in terms of the provisions of Sections 73 and 76 of the Companies Act, 2013, read with the Companies (Acceptance of Deposits) Rules, 2014.

In terms of Rule 2(1)(c)(viii) of the Companies (Acceptance of Deposits) Rules, 2014, the Company, during the year, had accepted an amount of _2.06 crore as unsecured loans from the Directors and the same were repaid during the year under review. No amount of unsecured loan from Directors was outstanding as on March 31, 2024.

No material changes and commitments affecting the financial position of the Company occurred between the end of the financial year 2023-24 and the date of this Report.

During the year under review, there were no significant and material orders passed by the regulators or courts or tribunals, which would impact the going concern status of the Company and its future operations.

The information pertaining to conservation of energy, technology absorption, foreign exchange earnings and outgo as required under Section 134(3)(m) of the Act read with Rule 8(3) of the Companies (Accounts) Rules, 2014, is annexed herewith as "Annexure D".

The Disclosure required under Section 197(12) of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is annexed as "Annexure E" and forms an integral part of this Report. The information showing names and other particulars of employees as per Rule 5(2) and 5(3) of the aforesaid Rules forms part of this report. However, as per first proviso to Section 136(1) of the Act, the Annual Report excluding the aforesaid information is being sent to the members of the Company and others entitled thereto. The said information is available for inspection by members at the registered office of the Company during business hours on all working days upto the date of ensuing AGM. Any member interested in obtaining a copy thereof, may also write to the Company Secretary.

As required under Schedule V to the SEBI Listing Regulations, a separate section on Corporate Governance together with a Certificate from M/s. S. K. Gupta & Co., Practicing Company Secretaries, confirming compliance of the conditions of Corporate Governance, forms an integral part of this Report.

Prevention and control of sexual harassment at workplace constitutes an important part of corporate culture while aligning with best practices and improving management processes. The Company has zero tolerance for sexual harassment at workplace and has adopted a policy on prevention, prohibition and redressal of sexual harassment at workplace with a mechanism of lodging complaints and has constituted an Internal Complaints Committee in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the rules framed there under. No complaints were reported to the Board for sexual harassment of women at work place during the financial year 2023-24.

During the year under review:-

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

* The Company has not issued any shares (including sweat equity shares) to employees of the Company or its subsidiaries under any scheme except for the grant of ESOP as disclosed above.

* There was no revision in the financial statements.

* Neither the Managing Director nor the Whole-time Directors of the Company had received any remuneration or commission from any of the Company's subsidiaries.

* There has been no change in the nature of business of the Company.

* There is no proceeding initiated/ pending against the Company under the Insolvency and Bankruptcy Code, 2016.

* There was no instance of one-time settlement with any Bank or Financial Institution.

Your Directors take this opportunity to place on record appreciation for the co-operation and support extended by various departments of the Central and the State Government(s), Bankers and Business associates.

Your Directors also wish to express their deepest appreciation to the employees at all levels, whose dedicated efforts, co-operation and unending support helped the Company in delivering results despite the challenges. We are also grateful to all the shareholders, customers, dealers, agents, suppliers and bankers of the Company for reposing continued trust, support and confidence in the management of the Company.