v mart retail ltd Directors report

Dear Members,

Your Companys Directors are pleased to present the 21st Annual Report of the Company, along with Audited Accounts, for the financial year ended March 31, 2023.

FINANCIAL RESULTS

The operating results of the Company for the year under review are as follows:

(f in lakhs)

Particulars	For the year ended March 31, 2023	For the year ended March 31, 2022
Total Income	2,47,981	1,68,013
Profits/(Loss) before Depreciation & Tax	16,697	14,109
Less: Depreciation	17,998	13,070
Loss/Profit before tax	(1,301)	1,040
Less: Tax Expense	(516)	(124)
Net Loss/Profit for the period	(785)	1,164
Less: Utilised for Dividend Issue	148	0
Other comprehensive income	65	(187)
Balance carried forward to Balance Sheet	(868)	977

PERFORMANCE REVIEW

The Net Sales of the Company increased by 48% to Rs. 2,46,484 lakhs in the financial year 2022-23 as against Rs. 1,66,618 lakhs in F.Y. 2021-22. The Company has posted Operating Profits (EBITDA) for FY 2022-23 of f 26,891 lakhs (FY 202122 of f 20,433 lakhs) and PAT/Loss for FY 2022-23 of f (785) lakhs (FY 2021-22 of f 1,164 lakhs).

A detailed analysis of the Companys operations in terms of performance in markets, business outlook, risks and concerns forms part of the Management Discussion and Analysis Report, a separate section forming part of the Annual Report.

OPERATIONS REVIEW

Focusing on expansion opportunities with a long-term view, the Company opened 59 new stores during the year, the total store count was increased to 423 and thereby growing the total retail area by 14% y-o-y to 37 lakhs sq. ft. During the year under review 16 stores were closed.

Throughout the year, the Company focused on expanding our presence nationwide, with a particular emphasis on the southern regions through our Unlimited brand. Out of the total 59 new stores opened, 12 stores were established in the southern region under the brand name of Unlimited. Simultaneously, we took the decision to close 16 underperforming stores, which include 3 Unlimited stores.

Notably, the Unlimited Fashion Stores of the company has undergone a remarkable turnaround, displaying positive growth and strong performance. This success can be attributed to the effective implementation of various strategies. The Company

has worked on enhancing its product assortment, optimizing store layouts, and improving supply chain management. Additionally, recognizing the opportunities brought about by digital transformation, the Company has expanded our online presence, which has played a significant role in revitalizing our business.

In a ground-breaking strategic move aimed at expanding the Companys market presence and market share, the Company successfully acquired LimeRoad, a highly popular e-commerce platform in India specializing in fashion and lifestyle products. The acquisition took place on October 17, 2022, by entering into a Business Transfer Agreement (BTA) with A.M. Marketplaces Private Limited (LimeRoad) and certain other parties, as a going concern, on a slump sale basis, for a lump sum consideration.

This acquisition represents the beginning of a new chapter for the Company, where the Company reiterates its commitment to fostering prosperity and enhancing the lives of fashion-conscious individuals. It also serves to strengthen and extend its presence in tier II, tier III, and tier IV cities.

Through this strategic integration, the Company is combining V-Marts expertise with LimeRoads digital strengths. The Companys shared vision is deeply rooted in the core principles of making affordable and fashionable apparel accessible to every corner of India.

A major portion of investment made by the Company in the financial year was allocated towards the establishment of a new warehouse, which has been recently inaugurated. In line with the Companys commitment to environmental responsibility, the Company has adopted a green building design for the warehouse.

It is noteworthy that the Companys state-of-the-art facility has aimed to adopt the standards of the IGBC Gold Certification, reflecting its dedication to energy efficiency, eco-friendliness, and waste reduction. The warehouse incorporates innovative features and initiatives aimed at minimizing its environmental impact. The warehouse shall be fully automated, utilizes natural light, and runs on a solar power plant. The Company also prioritized green construction and implemented environmentally friendly materials.

DIVIDEND

In view of accumulated losses in financial year 2022-23, your directors have not recommended payment of any dividend for the year under review.

RESERVES

During the year under review, the Company has transferred Rs. (64.25) Lakhs to reserves. Post transfer, the reserves stood at Rs. 82,922.60 Lakhs as on March 31, 2023.

CREDIT RATING

Investment Information and Credit Rating Agency of India Limited (ICRA) has maintained the long- term rating of [ICRA] AA- (pronounced ICRA double A minus) and also maintained the short-term rating of [ICRA] A1+ (pronounced ICRA A one plus) assigned to the overall Rs. 195 crores Line of Credit of your Company.

The credit rating of the Company as on March 31, 2023 is as under:

Facilities	Previous Rating	Existing Rating
Long term bank limits	[ICRA] AA- (ICRA double A minus) (with stable outlook)	[ICRA] AA- (ICRA double A minus) (with positive outlook)*
Short term bank limit	ICRA A1 + (ICRA A one plus)	ICRA A1 + (ICRA A one plus)

MANAGEMENT DISCUSSION AND ANALYSIS

The Management Discussion and Analysis for the period under review as required under Schedule V read with Regulation 34(2) (e) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 has been dealt with extensively in a separate section forming part of the Annual Report.

AWARDS AND ACCOLADES

During the FY 2022-23 your Company has been recognised and honoured with a number of prestigious awards and accolades, acknowledging our achievements across various segments in the retail industry and governance. These achievements stand as a testament to the unwavering dedication and relentless commitment we invest in our work consistently, year after year.

• Won the prestigious Golden Peacock Award for Excellence in Corporate Governance, 2022 by the Institute of Directors

• Won the Certificate of Appreciation at the 22nd Institute of Company Secretaries of India ("ICSI") National Awards for Excellence in Corporate Governance by ICSI

• Won the Commitment to Being a Great Place to Work by Great Place to Work

• Won the IMAGES Most Admired Retailer of the Year for New Market Penetration at IRA 2022

LISTING

The Equity Shares of your Company continue to be listed at BSE Ltd. (BSE) and the National Stock Exchange of India Ltd. (NSE). The listing fees for fiscal 2023 have been paid for all of the above stock exchanges where the equity shares of the Company are listed.

Exchange	Scrip Code	ISIN
NSE	VMART
BSE	534976	INE665J01013

WEBLINK OF ANNUAL RETURN

Pursuant to the provisions of Section 92(3) of the Companies Act, 2013 read with Rule 12 of the Companies (Management and Administration) Rules, 2014 the copy of the Annual Return in prescribed form MGT-7 to be placed on the Companys website at the link www.vmart.co.in upon filing the same with ROC.

CORPORATE GOVERNANCE

Pursuant to the provisions of the SEBI (Listing Obligations and Disclosures Requirements) Regulations, 2015, the detailed Report on Corporate Governance forms a part of this report.

NUMBER OF MEETINGS OF THE BOARD

Six (6) Board Meetings were held during the year under review, the details of which are given in the Corporate Governance Report forming part of this report. The intervening gap between any two meetings was within the period prescribed by the Companies Act, 2013 & SEBI (Listing Obligations and Disclosures Requirements) Regulations, 2015.

BOARD EVALUATION

In order to ensure that the Board and Board Committees are functioning effectively and to comply with statutory requirements, the annual performance evaluation of the board, board committees and individual directors was conducted during the year. The evaluation was carried out based on the criteria and framework approved by the Nomination & Remuneration Committee in the manner prescribed in the provisions of the Companies Act, 2013 and as per the Corporate Governance requirements prescribed by the Securities and Exchange Board of India (Listing Obligations and Disclosures Requirements) Regulations, 2015 ("SEBI Listing Regulations"). The evaluation parameters and the process have been explained in the Corporate Governance Report.

DIRECTORS AND KEY MANAGERIAL PERSONNEL

The Board of Directors consists of six members, of which four are Independent Directors including one woman Independent Director.

In pursuance of section 203 of the Companies Act, 2013, the key managerial personnel of the Company are as follows:

Mr. Lalit Agarwal, Managing Director, Mr. Madan Gopal Agarwal, Whole-time Director, Mr. Anand Agarwal, Chief Financial Officer and Ms. Megha Tandon, Company Secretary.

The shareholders at the 20^th AGM held on August 30, 2022 reappointed Mr. Lalit Agarwal as the Managing Director and Mr. Madan Gopal Agarwal as the Whole-time Director for a period of 5 years w.e.f. from May 31, 2022.

In accordance with the provisions of Section 152 of the Companies Act, 2013, Mr. Lalit Agarwal (DIN: 00900900) is liable to retire by rotation at the ensuing Annual General Meeting and being eligible, has offered himself for re-appointment. The Board of Directors recommends his re-appointment and the matter is being placed for the approval of members at the ensuing Annual General Meeting of the Company.

DECLARATION BY INDEPENDENT DIRECTORS

The Company has received necessary disclosures from each of its four Independent Directors under Section 149(7) of the Companies Act, 2013 that they meet all the criteria laid down in Section 149(6) of the Companies Act, 2013 and Regulation 16 of the SEBI (Listing Obligation and Disclosures Requirement) Regulations, 2015 and there has been no change in the circumstances which may affect their status as Independent Director during the year. During the year, the Non-Executive Directors of the Company had no pecuniary relationship or transactions with the Company, other than payments towards the sitting fees and reimbursement of expenses incurred by them for the purpose of attending meetings of the Company.

POLICY ON DIRECTORS APPOINTMENT AND REMUNERATION

The Company has a Nomination & Remuneration Policy to ensure a competent Board. The Committee identifies competency gaps, evaluates candidates, and recommends suitable members. It also fills Board vacancies as needed. The selected candidates are invited to join the Board and approved by Shareholders.

The Company has also constituted a Nomination & Remuneration Committee which help determine the selection criteria for board members through the following roles and responsibilities among others:

(a) The Committee shall identify persons who are qualified to become directors and who may be appointed in senior management in accordance with the criteria laid down, recommend to the Board their appointment and removal.

(b) The Committee shall be responsible to determine whether to extend or continue the term of appointment of the independent director, on the basis of the report of performance evaluation of independent directors.

(c) Recommend to the Board a policy, relating to the remuneration for directors, key managerial personnel and other employees including ESOP, pension rights and any other compensation payment.

The policy of the Company on Directors appointment and remuneration including criteria for determining qualifications, positive attributes, independence of a Director and other matters provided under sub-section (3) of Section 178 is appended as Annexure-A to this report.

TRAINING OF INDEPENDENT DIRECTORS

According to the Regulation 25(7) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 the listed entity shall familiarise the independent directors through various programmes about the listed entity, including the following:

a. nature of the industry in which the listed entity operates;

b. business model of the listed entity;

c. roles, rights, responsibilities of independent directors; and

d. any other relevant information.

The details of the familiarisation programme have been provided under Corporate Governance Report forming part of this Report.

RETIREMENT BY ROTATION

In terms of the provisions of Section 152 of the Companies Act, 2013, Mr. Lalit Agarwal, Director is liable to retire by rotation at the forthcoming Annual General Meeting and being eligible, offers himself for re-appointment.

COMMITTEES OF THE BOARD

A detailed note on the Board and its Committees is provided under the Corporate Governance Report forming part of this Annual Report.

DISCLOSURE REQUIREMENTS

As per SEBI Listing Regulations, Corporate Governance Report with auditors certificate thereon and Management Discussion and Analysis are attached, which form part of this report. The Company has also complied with disclosing the required details on the website of the company on www.vmart.co.in

PRACTISING COMPANY SECRETARYS CERTIFICATE ON CORPORATE GOVERNANCE

As required under Schedule V, Clause E read with Regulation 34(3) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Practicing Company Secretarys certificate on Corporate Governance is enclosed as Annexure I to the Corporate Governance Report.

SHARE CAPITAL

a. Buy Back of Securities: The Company has not bought back any of its securities during the year under review.

b. Issue of Sweat Equity: The Company has not issued any sweat equity shares during the year under review.

c. Issue of Bonus Shares: The Company has not issued any bonus shares during the year under review.

d. Employees Stock Option / Restricted stock units: The Company has adopted the ESOP Scheme 2012 and the ESOP Scheme, 2020 as per the applicable SEBI Regulations and approved by the members at the Annual General Meeting of the Company. A certificate from the Secretarial

Auditors under share-based payment regulations has been obtained and shall be available for inspection at the Annual General Meeting of the Company.

The Company has implemented an Employee Stock Option Scheme, 2012, which was approved by the Board of Directors and the shareholders vide resolution dated 2^nd July, 2012 and 10^th July, 2012 respectively (‘the V-Mart ESOP Scheme 2012), consequent to which 300,000 equity shares of Rs. 10 each were to be granted upon exercise as stock options (ESOPs) to eligible employees. Subsequently, the shareholders in its meeting held on September 18, 2017 approved an amendment in the said ESOP scheme by increasing the total number of stock options from 300,000 to 600,000 options. The exercise price of these options will be determined by the Nomination & Remuneration Committee and the options will vest over a period of 12 months to 36 months of continued employment from the grant date.

Further, the Company has also implemented an Employee Stock Option Scheme 2020, which was approved by the Board of Directors and the shareholders vide resolution dated 10^th August, 2020 and 30^th September, 2020 respectively (‘the V-Mart ESOP Scheme 2020), consequent to which 200,000 equity shares of Rs. 10 each were to be granted upon exercise as stock options (ESOPs) to eligible employees. Subsequently, the shareholders in its meeting held on August 30, 2022 approved an amendment in the said ESOP scheme by increasing the total number of stock options from 200,000 to 500,000 options. The exercise price per option in performance based ESOP scheme, 2020 shall be based on the closing price of the day prior to the date of grant on the recognised stock exchange and shall be decided by the nomination and remuneration committee, subject to compliance with the provisions of the SEBI (Share based employee benefits and sweat equity regulations) 2021. The Nomination and Remuneration committee may provide a maximum discount of upto 50% on the above price.

The grant details under both the scheme(s) during the year are as follows:

Scheme	Grants	Vesting	Timeline
V-Mart ESOP Scheme 2012	During the financial year 2022-23 - No grant has been made	30% of the total grant	After 12 months from the date of grant
		30% of the total grant	After 24 months from the date of grant
		40% of the total grant	After 36 months from the date of grant
	During the financial year 2022-23 - 2 grants have been made comprising a total of 2,58,463 options	10% of the total grant	After 12 months from the date of grant
V-Mart ESOP Scheme 2020		20% of the total grant	After 24 months from the date of grant
		30% of the total grant	After 36 months from the date of grant
		40% of the total grant	After 48 months from the date of grant

Details of equity shares allotted during the year are as follows:

Sr. No.	Date of Allotment	No. of shares Allotted (ESOP Scheme 2012)	No. of shares Allotted (ESOP Scheme 2020)
1	May, 2022	6144	-
2	June, 2022	2000	8573
3	August, 2022	-	2220
4	November, 2022	4000	72
	Total	12144	10865

The information required to be disclosed under SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 as on March 31, 2023 are as follows:

Particulars	Details
Date of Shareholders Approval	ESOP Scheme 2012: July 10, 2012 and amended on September 18, 2017 ESOP Scheme 2020: September 30, 2020 and amended on August 30, 2022
Total number of options approved	ESOP Scheme 2012: 6,00,000 ESOP Scheme 2020: 5,00,000
Vesting Requirements	ESOP Scheme 2012: Tenure Based ESOP Scheme 2020: Performance Based
Maximum Terms of options granted	Options to be exercised within 8 years of vesting
Sources of Shares	Primary Issuance
Variation of terms of options	NIL
Number of options outstanding at the beginning of the year	ESOP Scheme 2012: 41,953 ESOP Scheme 2020: 1,80,085
Number of options granted during the year	ESOP Scheme 2012: Nil ESOP Scheme 2020: 2,58,463
Number of options forfeited / lapsed during the year	ESOP Scheme 2012: Nil ESOP Scheme 2020: 34,841
Number of options vested during the year	ESOP Scheme 2012: Nil ESOP Scheme 2020: Nil
Number of options exercised during the year	ESOP Scheme 2012: 12,144 ESOP Scheme 2020: 10,865
Number of shares arising as a result of exercise of Options	ESOP Scheme 2012: Nil ESOP Scheme 2020: Nil
Money realized by exercise of options (Rs.in Lakhs)	ESOP Scheme 2012: 215.74 ESOP Scheme 2020: 136.11
Number of options outstanding at the end of the year	ESOP Scheme 2012: 29,809 ESOP Scheme 2020: 3,92,808
Number of options exercisable at the end of the year	ESOP Scheme 2012: 18,988 ESOP Scheme 2020: 6,449
Pricing Formula	The Nomination & Remuneration Committee is authorized to determine the exercise price of ESOPs, with defined limitations,
Person-wise details of options granted during the Financial Year 2022-23:
Senior managerial personnel/key managerial personnel
A. ESOP Scheme 2012
B. ESOP Scheme 2020
A. Details of options granted (ESOP Scheme 2012)
Name of SMP/ KMP	Nil

 

Particulars						Details
Number of shares						Nil
Exercise Price Per share						Nil
B. Details of options granted (ESOP Scheme 2020)
Name of SMP/ KMP						Suchi Mukherjee
Number of shares						1,96,298
Exercise Price Per share						1,415
i) Any other employee who received a grant in any one year of options amounting to 5% or more options granted during the year						Nil
ii) Identified employees who are granted options during any one year equal to or exceeding 1% of the issued capital (excluding outstanding warrants and conversions) of the Company at the time of grant.						Nil
Fully-diluted EPS pursuant to issue of shares on exercise of options in accordance with relevant Accounting Standards						-3.97
Lock-in						NIL
Impact of the difference on the profits of the Company and on the EPS						Impact of the difference on Profits: Rs. 454.31 Impact of the difference on EPS: Nil
Difference, if any, between employee compensation cost (calculated according using the intrinsic value of stock options) and the employee compensation cost (calculated on the basis of fair value of stock options)						52.39 lakhs
Weighted average exercise price of options whose exercise price either equals or exceeds or is less than the market price of the stock						Exercise price exceeds market price: Not applicable
						Exercise price equals market price: Not applicable
						Exercise price is less than market price: As mentioned in Below table
Weighted average fair values of options whose exercise price either equals or exceeds or is less than the market price of the stock						Exercise price exceeds market price: Not applicable
						Exercise price equals market price: Not applicable
						Exercise price is less than market price: As mentioned in below table
Method and significant assumptions used to estimate the fair value of options granted during the year						The fair market value has been calculated on the basis of the ‘Black Scholes model.
how expected volatility was determined, including an explanation of the extent to which expected volatility was based on historical volatility						The volatility has been calculated based on one year average of standard deviation of the daily changing share price of V-Mart Retail Ltd. / Company.
whether and how any other features of the options granted were incorporated into the measurement of fair value, such as a market condition						The fair value is calculated using Black Scholes Option pricing model
Particulars	ESOPs Grant IV	ESOPs Grant V	ESOPs Grant VI	ESOPs Grant VII	ESOPs Grant VIII		ESOPs Grant IX	ESOPs Grant X	ESOPs Grant XI	ESOPs Grant XII	ESOPs Grant XIII	(i) ESOPs (ii) ESOPs Grant XIV Grant XIV		ESOPs Grant XV	ESOPs Grant XVI (	(i) ESOPs (ii) ESOPs GrantXVII Grant XVII
ESOP Scheme	Scheme	Scheme	Scheme	Scheme	Scheme		Scheme	Scheme	Scheme	Scheme	Scheme	Scheme	Scheme	Scheme	Scheme	Scheme	Scheme
	2012	2012	2012	2012	2012		2012	2012	2012	2012	2020	2020	2012	2012	2020	2020	2020
Price per option (In Rs.)	470	900	1260	2047	2044		2286	2347	1683	1769	1244	1400	2520	1842	1,487	1,415	1,415
Risk free return (ln%)	7.93	7.80	7.64	7.45	7.42		7.37	7.33	7.26	6.93	6.93	6.41	6.41	6.71	6.38	6.44	6.44
Expected Life (In years)	4	4	4	3	3		3	3	3	3	4	4	3	4	4	4	4
Expected Volatility	30.13%	42.48%	50.76%	40.30%	41.49%		22.23%	22.90%	23.61%	25.68%	24.32%	20.07%	20.07%	16.30%	18.07%	15.67%	15.67%
Dividend Yield	0.24%	0.18%	0.10%	0.10%	0.10%		0.10%	0.10%	0.10%	0.10%	0.10%	0.10%	0.10%	0.00%	0.10%	0.10%	0.10%
Closing market price of share as on date of option grant	522.35	1243.90	1412.60	2 274.05	2270.95		2540.25	2,594.85	1,871.00	1966.80	2487.55	2799.85	2799.85	3683.15	2974.35	2829.65	2829.65
	(NSE)	(NSE)	(NSE)	(NSE)	(NSE)		(NSE)	(NSE)	(NSE)	(NSE)	(NSE)	(NSE)	(NSE)	(NSE)	(NSE)	(NSE)	(NSE)
	(BSE)	(BSE)	(BSE)	(BSE)	(BSE)		(BSE)	(BSE)	(BSE)	(BSE)	(BSE)	(BSE)	(BSE)	(BSE)	(BSE)	(BSE)	(BSE)
	510	1220.45	1419.8	2327.20	2367.05		2781.05	2544.20	1911.40	1980.95	2501.75	2701.60	2701.60	3694.15	2979.85	2827.15	2827.15
Weighted average exercise price (In Rs.)	470	900	1,260	2,047	2,044		2,286	2,347	1,683	1,769	1,244	1400	2520	1842	1487	1415	1415
Weighted average fair value of stock option (In Rs.)	211	673	727	902	913		792	807	591	443	1,473	1726	771	2177	1738	1725	1725

EMPLOYEE STOCK OPTION DETAILS:

Grant No.	Grant Date	ESOP Scheme	Exercise Price	Options Granted	Options vested and exercisable	Options Unvested	Options Exercised	Options Forfeited	Options out-standing
1	July 20, 2012	Scheme 2012	150	1,53,252	1,53,252	-	1,23,264	29,988	-
2	January 5, 2015	Scheme 2012	450	22,350	22,350	-	18,700	3,650	-
3	December 28, 2015	Scheme 2012	573	13,645	13,645	-	13,645	-	-
4	January 30, 2017	Scheme 2012	470	76,225	76,225	0	58,812	17,413	0
5	July 12, 2017	Scheme 2012	900	6,395	6,395	0	6,395	0	0
6	November 9, 2017	Scheme 2012	1,260	9,300	9,300	0	6,528	2,772	0
7	May 24, 2018	Scheme 2012	2,047	18,527	18,527	0	4,781	13,746	0
8	July 23, 2018	Scheme 2012	2,044	40,764	40,764	0	27,868	3,210	9,686
9	November 2, 2018	Scheme 2012	2,286	3,426	3,426	0	0	3,426	0
10	May 10, 2019	Scheme 2012	2,347	8,228	4,937	0	0	5,369	2,859
11	August 2, 2019	Scheme 2012	1,683	6,025	3,614	0	100	3,597	2,328
12	November 10, 2020	Scheme 2012	1,769	27,051	8,115	0	12,115	0	14,936
13	December 24, 2020	Scheme 2020	1,244	1,85,950	0	0	10,255	55,015	1,20,680
14	May 28, 2021	Scheme 2012	2,520	705	0	0	0	705	0
14	May 28, 2021	Scheme 2020	1,400	7,617	0	0	610	0	7,007
15	February 10, 2022	Scheme 2020	1,842	13,163	0	0	0	3,997	9,166
16	August 5, 2022	Scheme 2020	1,487	20,767	0	0	0	0	20,767
17	November 11, 2022	Scheme 2020	1,415	2,37,696	0	0	0	2,508	2,35,188

MOVEMENT OF STOCK OPTIONS DURING THE YEAR OF ESOP SCHEME 2012 AND ESOP SCHEME 2020:

Total for all Grants	No. of Options	Weighted Average Exercise Price (Rs)
Outstanding at the beginning of the year	222,004	1,032.60
Granted during the year	258,463	1,420.79
Forfeited/ Cancelled during the year	(34,841)	1,297.04
Expired during the year	0	0
Exercised during the year	(23,009)	1,529.17
Outstanding at the end of the year	422,617	1,413.43
Exercisable at the end of the year	25,437	1,820.20

 

	As at March 31, 2023
Weighted average remaining contractual life (in years)	7.35

AUTHORISED SHARE CAPITAL :

The Authorized Share Capital of your Company as on March 31, 2023 stood at Rs. 25,00,00,000 (Rupees Twenty-Five crores only) I divided into 2,50,00,000 (Two Crores and Fifty Lakhs only) equity shares of Rs. 10/- (Rupees Ten only) each.

RELATED PARTY TRANSACTIONS I

All related party transactions that were entered into during the financial year were on an arms length basis and were in the ordinary I course of the business. There were no materially significant related party transactions made by the Company with the Promoters, ™ Key Management Personnel or other designated persons and have no potential conflict with interest of the Company at large. The Company has formulated a policy on Related Party Transaction which is available on the website of the Company at the link: https:// vmart.co.in/wp-content/uploads/2023/07/Related-Partv-Transaction-Policv.pdf. The details of related party transactions entered l during the year are provided in the accompanying financial statements. The particulars of the contract or arrangement with related f parties referred in section 188(1) of the Companies Act, 2013 in the prescribed form AOC-2, is annexed as Annexure-Eto this report. 5

DEPOSITS l

During the FY 2022-23, your Company has not accepted any deposits from the public, and as such no amount of principal or interest = was outstanding as on the date of the Balance Sheet.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS UNDER SECTION 186 OF THE COMPANIES ACT, 2013.

Loans, Guarantees & Investments covered under the provisions of Section 186 of the Companies Act, 2013, if any, form part of the notes to the financial statement provided in this annual report.

MATERIAL CHANGES AND COMMITMENTS AFFECTING FINANCIAL POSITION OF THE COMPANY BETWEEN MARCH 31, 2023 AND THE DATE OF BOARDS REPORT

There have been no such material changes and commitments affecting the financial position of the Company which have occurred between the end of the financial year of the Company to which the financial statements relate and the date of the report.

SUBSIDIARY COMPANIES, JOINT VENTURES & ASSOCIATE COMPANIES

The Company does not have any Subsidiary, Joint Venture or Associate Company.

REGISTERED OFFICE

The Registered Office of the Company is situated at 610-611, Guru Ram Dass Nagar, Main Market, Opp. SBI Bank, Laxmi Nagar, New Delhi - 110092.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

Your Company has constituted a Corporate Social Responsibility Committee of the Board comprising of four members, namely

•Ms. Sonal Mattoo (Chairperson),

•Mr. Lalit Agarwal (Member)

•Mr. Madan Gopal Agarwal, (Member) and

•Mr. Aakash Moondhra, (Member).

The Committee is responsible for formulating and monitoring the CSR policy of the Company. Details about the CSR policy of the Company and initiatives taken by the Company on CSR during the year are available on the companys website.

As per the Companies Act, 2013, every company having a net worth of rupees five hundred crores or more, or a turnover of rupees one thousand crores or more or a net profit of rupees five crores or more during the immediately preceding financial year shall spend in every financial year, at least two percent of the average net profits of the company made during the three immediately preceding financial year, or where the company has not completed the period of three financial years since its incorporation, during such immediately preceding financial years in pursuance of its Corporate Social Responsibility Policy. Accordingly, the Company was required to spend Rs. 46.44 lakhs on CSR activities during the year.

During the year under review, your Company has spent an amount Rs. 61.14 lakhs towards the Corporate Social Responsibility projects. The company has spent all its statutorily mandated CSR obligations during the period under review. The annual report on CSR Activities is appended as Annexure-B to this Board Report.

CONSERVATION OF ENERGY

The operational activity of the Company does not involve large energy consumption. In any case, the conservation of energy is considered to be a priority and therefore ensuring minimum consumption by way of better energy conservation programs, training/ awareness of the employees, layout of machines and prompt upkeep is a continuous exercise. The Company has continued its efforts and taken many energy saving initiatives such as:

• Multiple energy conservation practices have been put in place like employees switching off all power points during lunch breaks, adding reminder messages near switches and doors to promote electricity conservation, all Air Conditioners (ACs) at its office have temperature sensors to ensure periodic compressor cuts, and installation of motion sensor-enabled lighting systems enabled at the warehouse of the Company.

• Recycling metal and wood scrap to create tables and racks for operational purposes

• Prioritizing the use of recycled materials, reusing carbon boxes, minimizing plastic and paper consumption, and implementing efficient scrap management practices.

• The water filtration systems produce 3,000 litres of waste water on weekdays, reducing reliance on water supply resources.

• The use of automated sensors in water tanks and coolers to prevent water wastage from overflow.

• Groundwater recharging through rainwater capture

• The waste water from the RO system is utilized for cleaning and gardening purposes and regular maintenance of the RO system is conducted to minimize effluent generation.

• Installed motion sensors to control lights in the storage area, racks and washroom to save energy on a daily basis.

• Replacing the old machinery and devices with highly energy efficient 5 star rated devices.

• Replacing higher wattage lights with lower wattage LED lights while maintaining LUX level of 350 in the warehouse of the Company, thereby saving 2 KW of energy daily.

• The Company also implemented a cable tray design to minimize unnecessary consumption in electrical devices and utilized a digital control panel to oversee energy meters and mitigate any potential energy losses.

• Further, obtained fresh electrical equipment (alternating current/diesel generator) in accordance with the most recent environmentally-friendly regulations, such as the "CBCB4" standard.

TECHNOLOGY ABSORPTION

With its sights firmly focused on accelerating long-term growth and sustained value creation for all stakeholders, your Company is steadily making its organisational structure, processes and capabilities more robust and future-ready.

Your Company is enriching its already existing organisation wide data analytics architecture, to feed decision-enabling insights directly to store managers, regional heads and zonal heads. Technology adoption and up gradation across its planning, supply chain and logistics infrastructure.

During the year under review, several technological changes have been implemented at the companys Head-office, warehouse, as well as at the stores which includes:

Supply Chain:

• Improving Vendor data interface by the up gradation of Vendor Portal and Vendor Data Management System with the new features such as further improved quality check; Advanced Shipment Notice (ASN) and Logistics Support

• Implementation of a Transporter Management system for outbound process;

• Building a centralized state of the art warehouse for meeting the future omni channel scale.

• Upgraded Warehouse Control System (WCS) for segregation for stores returns (with logic SKU, Article, option and Multi season wise);

• The Rule Engine has been enhanced and implemented to facilitate Inventory Replenishment in stores.

Cyber Security:

The initial phase of Cyber Security implementation has been introduced, incorporating the following features:

• System, user and application authentications for security purposes;

• Single sign-on (SSO) is an authentication mechanism that allows users to securely authenticate across multiple applications and websites using a single set of credentials.

Omni Channel:

• We have expanded our presence by partnering with marketplaces like Amazon, Myntra, and vmartretail.com. Additionally we have introduced our products this year on LimeRoad.com.

• Our custom Customer Data Platform (CDP) enhances interaction with loyal customers, allowing us to send personalized messages and exclusive promotions, resulting in increased sales.

• Weve introduced a new feature - customers can now interact with us through our official Whatsapp handle. They can easily find personalized coupons, eliminating previous challenges. This innovation aims to streamline the process, reduce queues, and provide a smoother shopping experience.

• VMarts data science and engineering team collaborated with external consultants to automate and implement merchandise planning processes, particularly in the area of demand forecasting. Through our joint efforts, we have achieved a remarkable milestone in more accurately predicting monthly demand for every season, achieving an impressive accuracy rate of ~71% across over 250 departments.

• To ensure that our stores offer the most suitable merchandise selection, we have implemented a recalibration process during the year. By considering regional preferences, competition analysis, and customer surveys, we aim to curate products that align with the specific needs and preferences of each location.Through this, we have successfully delivered recommended merchandise mixes based on these factors. During the early pilot phases, we recorded growth in our monthly rate of sale across various divisions, with improvements reaching up to 3%.

• We have witnessed a remarkable increase in our daily listings; it has increased from ~50 options per day to 500 options per day. This substantial increase in listings has allowed us to expand our product offerings and cater to a broader range of customer preferences.

• To ensure a strong omnichannel culture and adherence to service level agreements (SLAs) across our expansive network of over 400+ stores throughout India, we have taken deliberate measures to align and communicate

the pace of growth and incentives to our stores.Through carefully crafting sales incentives and multiple rounds of culture building store staff trainings,we have successfully fostered the growth of our endless aisle orders. In just 9 months since implementation,we have witnessed a remarkable increase from 200 orders per month to over 12,000 orders per month.

• Accurate inventory management and intelligent order routing allow us to efficiently fulfil online orders from our stores. We prioritize inventory analysis, automation, and leverage our Order Management Systems (OMS) to ensure timely delivery and maximize customer satisfaction.

Financial, Operations and Analytics:

• Efficiency has been enhanced through the implementation of workflow-based systems in various areas such as store selection, project management, and compliance management.

• The Tableau dashboard for tracking key business performance indicators (KPIs) has been upgraded.

• Further leveraging of analytic based personalized customer discount through coupon engine

• Launching of a Campaign Manager Tool to automate and schedule rule-based personalized communication marketing campaigns to target customers across event- specific segments, and cohorts.

FOREIGN EXCHANGE EARNINGS AND OUTGO

Sr. No	Particulars	Foreign Exchange Earning (Amount in Rs.)	Foreign Exchange Outgo (Amount in Rs.)
	Nil	Nil	Nil

CODE OF CONDUCT

The Board of Directors have approved a Code of Conduct which is applicable to the Members of the Board and all employees in the course of day-to-day business operations of the Company. The Company believes in "Zero Tolerance" against bribery, corruption, and unethical dealings/behaviours of any form and the Board has laid down directives to counter such acts. The Code has also been posted on the Companys website www. vmart.co.in (http://vmart.co.in/corporate-governance/)

VIGIL MECHANISM/WHISTLE BLOWER POLICY

The Company believes in the conduct of the affairs of its various constituents fairly and transparently by committing the highest standards of professionalism, honesty, integrity and ethical behaviour. In line with this commitment, This Vigil Mechanism/ Whistle Blower Policy ("the Policy") has been formulated to provide a mechanism for all stakeholders, including Directors, Employees, Customers, Vendors, Associates and Suppliers of the Company to raise concerns about suspected frauds, any violations of legal/regulatory requirements or code of conduct/ policy of the Company, incorrect or misrepresentation of any financial statements and reports, etc.

This Policy is to encourage V-Marts stakeholders who have concerns about suspected misconduct to come forward and report any actual or potential unethical practices in violation of the code of conduct or the applicable laws, without fear of retaliation, punishment or unfair treatment.

The policy provides a mechanism whereby whistle-blowers may send protected disclosures directly to the Chairperson of the Audit Committee or Vigilance Officer. The Policy is available on the website of the Company i.e. www.vmart.co.in (https://vmart. co.in/corporate-governance/)

CODE ON PROHIBITION OF INSIDER TRADING

The Securities and Exchange Board of India (SEBI) has in exercise of powers conferred under the Securities and Exchange Board of India, Act, 1992 has made the Securities and Exchange Board of India (Prohibition of Insider Trading) (Amendment) Regulations, 2018 to amend the Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015.

In view of the above the code of conduct to regulate, monitor & report trading by Insiders, has been approved by the Board of Directors at their duly convened meeting.

The Code requires pre-clearance for dealing in the Companys shares and prohibits the purchase or sale of Company shares by the Directors and the designated persons while in possession of unpublished price-sensitive information in relation to the Company and during the period when the Trading Window is closed. The Board is responsible for the implementation of the Code.

The Code, inter alia, lays down the procedures to be followed by DPs while trading/ dealing in Company securities and while sharing Unpublished Price Sensitive Information (UPSI). The Code includes the obligations and responsibilities of DPs, and the obligation to maintain a structured digital database, a mechanism for the prohibition of insider trading and handling of UPSI.

All Directors and the designated person have confirmed compliance with the code.

Structured Digital Database (SDD) Module - Tracking of UPSI

The Structured Digital Database (SDD) Module has been implemented by the Company to track the transfer of Unpublished Price Sensitive Information (UPSI), in accordance with SEBI Regulations. All designated persons are required to update the data related to the UPSI that they are sharing.

If any person contravenes the same, he/she shall be penalized by SEBI as per the Regulations and shall also be subject to disciplinary action by the Company, which may include wage freeze, suspension, etc.

The details in this respect are available in the Ethics Framework available on the website of the Company: www.vmart.co.in.

RISK MANAGEMENT

Enterprise Risk Management (ERM) is a key area of operation for every responsible organisation. In recent years, volatile external

factors have increased the significance of ERM for organisation. Your Company is working in an open environment and hence faces various types of risk. Your Company has constituted a Risk Management Committee of the Board comprising of three members, namely:

• Mr. Murli Ramachandran (Chairperson),

• Mr. Aakash Moondhra (Member),

• Mr. Govind Shridhar Shrikhande (Member).

The Committee is responsible for monitoring and reviewing the risk management plan & policy and ensuring its effectiveness.

The details in respect of risk management are included in the Management Discussion and Analysis, which forms part of this report.

HUMAN RESOURCE MANAGEMENT

During the FY 2022-23 the Company continued to invest in the growth, progression, welfare and well-being of the employees. The Company endeavours to achieve a harmonious equilibrium between personal advancement and professional enrichment and progression by furnishing a secure, facilitative, and prolific work milieu.

The Company has prioritized workforce planning and analytics to identify skills gaps, predict talent needs, and implement strategies for attracting and retaining high-performing employees. Employee well-being, both physical and mental, has been prioritized through resources and support for stress management, work-life balance, and mental health.

In terms of training and development, various programs have been implemented to support employees at all levels. Retail excellence training focuses on customer service and sales techniques, management development programs target middle- level managers for skills development, and leadership training programs provide support to senior leaders through coaching and education. Technical training programs are also offered to enhance expertise in specific areas such as merchandising and supply chain management.

The statement containing the names and other particulars of employees in accordance with section 197 (12) of the Companies Act, 2013, read with rules 5(1) & 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is appended as Annexure-C to the Board Report.

The details of the employees of the Company employed throughout the financial year was in receipt of a remuneration of Rs 1.02 crores or more, or employed for the part of the year and in receipt of Rs 8.5 lakhs or more a month under Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are mentioned in Annexure C to this report.

INTEGRATED REPORT

Your Company has voluntarily provided an Integrated Report, which encompasses both financial and non-financial information

to enable the Members to take well informed decisions and have a better understanding of the Companys long term perspective.

The Report also touches upon aspects such as organisations strategy, governance framework, performance and prospects of value creation based on the six forms of capital viz. financial capital, manufactured capital, intellectual capital, human capital, social, relationship capital and natural capital.

STATUTORY AUDITORS & REPORT

Pursuant to the provisions of Section 139 of the Companies Act, 2013, S.R. Batliboi & Co. LLP, Chartered Accountants, (Firm Registration No. 301003E/E300005) were appointed as Statutory Auditors of the Company for a term of five consecutive years, to hold office from the conclusion of the 16^th Annual General Meeting held on June 29, 2018 until the conclusion of 21st Annual General Meeting of the Company to be held in the calendar year 2023, subject to annual ratification by members at every Annual General Meeting, on such remuneration as may be decided. However, vide notification dated May 7, 2018 issued by the Ministry of Corporate Affairs, the requirement of annual ratification has been omitted.

The Audit Committee and the Board at their meeting held on May 16, 2023 approved the re-appointment of M/s. S.R. Batliboi & Co. LLP, Chartered Accountants, (Firm Registration No. 301003E/E300005) as the statutory auditors for a second term of five (5) years i.e. from the conclusion of the 21st AGM held for the financial year 2022-23 till the conclusion of 26th AGM held for the financial year 2027-28. The necessary resolution(s) seeking the approval of the shareholders for their appointment as statutory auditors is included in the notice of the 21st AGM along with other necessary disclosures required under the Act and the Regulations.

Further, the Auditors Report "with an unmodified opinion", given by the Statutory Auditors on the financial statements of the Company for financial year 2022-23, forms part of this Annual Report. There was no observation or qualification in the Auditors Report. The Notes on Financial Statements referred to in the Auditors report are self-explanatory and therefore do not require any further comments.

SECRETARIAL AUDITOR & REPORT

M/s. VKC & Associates, Company Secretaries, a partnership firm was appointed as Secretarial Auditors to conduct the Secretarial Audit of the Company for the FY 2022-23, pursuant to the provisions of Section 204 of the Companies Act, 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014. The Secretarial Audit report in form MR-3 is enclosed herewith as Annexure-D to the Boards Report.

The observation made by the Secretarial Auditor is selfexplanatory in nature and requires no further clarification.

INTERNAL FINANCIAL CONTROL

The Board has adopted adequate policies and procedures for ensuring orderly and efficient conduct of its business, including adherence to the Companys policies, safeguarding of its assets, prevention and detection of frauds and errors, the

accuracy and completeness of the accounting records, and the timely preparation of reliable financial disclosures. The details regarding internal financial control and its adequacy are included in the Management Discussion and Analysis, which forms part of this report.

SIGNIFICANT AND MATERIAL ORDERS

There was no such order passed by the regulators or courts or tribunals impacting the going concern status and Companys operations in the future during the year under review.

DISCLOSURE UNDER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION, AND REDRESSAL) ACT, 2013

Your Company laid down an Anti-Sexual Harassment Policy in compliance with the requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. The Internal Complaints Committee (ICC) has been set up to redress complaints regarding sexual harassment, if any.

The disclosures for the period under review as per the AntiSexual Harassment Policy of the Company and applicable Act thereof are as follows:

a) Number of complaints of sexual harassment received during the year: 5 (five)

b) Number of complaints disposed-off during the year: 5 (five)

c) Number of cases pending for more than ninety days: NIL

d) Number of workshops on awareness program against sexual harassment carried out: 1 (one)

POSH Course is a default, mandatory course that every new employee has to undertake in the organization. We have also assigned the POSH training course to all employees in December 2022, covering 8,000+ V-Mart employees. This type of training focuses on educating employees on proper workplace behaviour, how to handle uncomfortable situations, and what to do if they experience or witness sexual harassment in the workplace.

e) Nature of action taken by the employer or district officer: A detailed investigation was carried out by the Company and the appropriate action was taken to resolve the matter.

INCIDENT OF FRAUD

No material fraud by the Company or on the Company by its officers or employees has been noticed or reported during the period covered by our audit.

INVESTORS EDUCATION & PROTECTION FUND (IEPF)

Pursuant to the applicable provisions of the Companies Act, 2013 read with IEPF Authority (Accounting, Audit, Transfer & Refund) Rules 2016 all unpaid or unclaimed dividends are required to be transferred by the Company to the IEPF established by Central

Government after completion of seven years.

Further, all shares in respect of which dividend has not been paid or claimed for seven consecutive years or more are required to be transferred by the company in the name of Investor Education and Protection Fund.

Further details of unpaid or unclaimed dividends and shares are provided on our website at www.vmart.co.in.

BUSINESS RESPONSIBILITY & SUSTAINABILITY REPORT

As stipulated in terms of the provisions of Regulation 34 of SEBI (Listing Obligation & Disclosure Requirements) Regulations, 2015 the Business Responsibility & Sustainability Report describing the initiatives undertaken by the Company from environmental, social and governance perspective is presented in a separate section forming part of this Annual Report.

COST RECORDS AND COST AUDIT

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 activity carried out by the Company.

DIVIDEND DISTRIBUTION POLICY

Pursuant to Regulation 43A of the SEBI (Listing Obligations and Disclosures Requirements) Regulations 2015 ("the listing regulations"), the top 1000 listed companies shall formulate a dividend distribution policy. Accordingly, the policy was adopted to set out the parameters that will be taken into consideration by the Board of the Company in determining the distribution of dividends to its shareholders and/or retaining profits earned by the Company. The policy is available on the Companys website at the link: https://vmart.co.in/wp-content/uploads/2023/07/ Dividend-Distribtion-Policv-1.pdf.

SECRETARIAL STANDARDS

During the year under review, your Company has complied with all applicable secretarial standards issued by the Institute of Company Secretaries of India and approved by the Central Government pursuant to Section 118(10) of the Companies Act, 2013.

DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to Section 134(3) (c) of the Companies Act, 2013, the Directors hereby state and confirm that:

a) In the preparation of the annual accounts, the applicable accounting standards have been followed.

b) The Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit or loss of the company for that period.

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

d) The Directors have prepared the annual accounts on a going concern basis.

e) The Directors have laid down Internal Financial Controls to be followed by the Company and that such internal financial controls are adequate and 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.

ACKNOWLEDGEMENT

Your Directors take this opportunity to express their sincere appreciation for the excellent support and coordination extended by the employees, shareholders, customers, suppliers, bankers, and all other business associates.

Your Directors gratefully acknowledge the ongoing cooperation and support provided by Central Government, State Governments, and all regulatory authorities.

Your Directors also appreciate and value the contribution made by every member of the V-Mart family.

By the Order of the Board and On behalf of the Board

service contracts, policy for and scope of pension arrangements, etc. for Executives and reviewing it on a periodic basis;

4.2.2 Formulate the criteria for determining qualifications, positive attributes and independence of a director and recommend to the Board a policy relating to the remuneration for the Director.

4.2.3 Identifying persons who are qualified to become directors and who may be appointed as Executives in accordance with the criteria laid down in this policy, recommend to the Board their appointment and removal and carry out their evaluation.

4.2.4 Formulating terms for cessation of employment and ensure that any payments made are fair to the individual and the company, that failure is not rewarded and that the duty to mitigate loss is fully recognized;

4.3 The Committee shall:

4.3.1 review the ongoing appropriateness and relevance of the remuneration policy;

4.3.2 ensure that all provisions regarding disclosure of remuneration, including pensions; are fulfilled;

4.3.3 obtain reliable, up-to-date information about remuneration in other companies;

4.3.4 ensure that no director or Executive is involved in any decisions as to their own remuneration.

4.4 Without prejudice to the generality of the terms of reference to the Nomination and Remuneration Committee set out above, the Committee shall:

4.4.1 Operate the Companys share option schemes (if

any) or other incentives schemes (if any) as they apply to. It shall recommend to the Board the total aggregate amount of any grants to employees (with the specific grants to individuals to be at the discretion of the Board) and make amendments to the terms of such schemes (subject to the provisions of the schemes relating to amendment);

4.4.2 liaise with the trustee / custodian of any employee share scheme which is created by the Company for the benefit of employees or Directors and Director should possess the highest personal and professional ethics, integrity;

4.4.3 review the terms of executive Directors service contracts from time to time; and

4.4.4 perform such other acts, things and take such other decisions as provided and authorized by the Board of Directors of the Company to the Committee in terms of the provisions of Companies Act, 2013 and other applicable laws.

5. PROCEDURE FOR SELECTION AND APPOINTMENT

OF THE BOARD MEMBERS

5.1 Board membership criteria

The Committee, along with the Board, reviews on an annual basis, appropriate skills, characteristics and experience required of the Board as a whole and its individual members. The objective is to have a Board with diverse background and experience in business, government, academics, technology and in areas that are relevant for the Companys global operations.

In evaluating the suitability of individual Board members, the Committee takes into account many factors, including general understanding of the Companys business dynamics, global business and social perspective, educational and professional background and personal achievements.

In addition, Directors must be willing to devote sufficient time and energy in carrying out their duties and responsibilities effectively. They must have the aptitude to critically evaluate managements working as part of a team in an environment of collegiality and trust.

The Committee evaluates each individual with the objective of having a group that best enables the success of the Companys business.

5.2 Selection of Board Members/ extending invitation to a potential director to join the Board

One of the roles of the Committee is to periodically identify competency gaps in the Board, evaluate potential candidates as per the criteria laid above, ascertain their availability and make suitable recommendations to the Board. The objective is to ensure that the Companys Board is appropriate at all points of time to be able to take decisions commensurate with the size and scale of operations of the Company. The Committee also identifies suitable candidates in the event of a vacancy being created on the Board on account of retirement, resignation or demise of an existing Board member. Based on the recommendations of the Committee, the Board evaluates the candidate(s) and decides on the selection of the appropriate member.

The Board then makes an invitation (verbal / written) to the new member to join the Board as a Director. On acceptance of the same, the new Director is appointed by the Board.

6. BOARD DIVERSITY

6.1 The Company acknowledges the importance of diversity in its broadest sense in the Boardroom

as a driver of Board effectiveness. Diversity encompasses diversity of perspective, experience, education, background, ethnicity and personal attributes. The Company recognizes that gender diversity is a significant aspect of diversity and acknowledges the role that directors with the right skills and experience can play in contributing to diversity of perspective in the Boardroom.

6.2 The Committee shall review and evaluate Board composition to ensure that the Board and its Committees have the appropriate mix of skills, experience, independence and knowledge to ensure their continued effectiveness. In doing so, it will take into account diversity, including diversity of gender, amongst other relevant factors.

6.3 The Committee shall monitor and periodically review the Board Diversity and recommend to the Board so as to improve one or more aspects of its diversity and measure progress accordingly.

7. PROCEDURE FOR SELECTION AND APPOINTMENT

OF EXECUTIVES OTHER THAN BOARD MEMBERS

7.1 The Committee shall actively liaise with the relevant departments of the Company to study the requirement for management personnel, and produce a written document thereon;

7.2 The Committee may conduct a wide-ranging search for candidates for the positions of Employees within the Company, within enterprises controlled by the Company or within enterprises in which the Company holds equity, if any, and on the human resources market;

7.3 The professional, academic qualifications,

professional titles, detailed work experience and all concurrently held positions of the initial candidates shall be compiled as a written document;

7.4 A meeting of the Committee shall be convened, and the qualifications of the initial candidates shall be examined on the basis of the conditions for appointment of the Employees;

7.5 Before the selection of Employee, the recommendations and relevant information on the relevant candidate(s) shall be submitted to the Board of Directors;

7.6 The Committee shall carry out other follow-up tasks based on the decisions of and feedback from the Board of Directors.

8. COMPENSATION STRUCTURE

(a) Remuneration to Non-Executive Directors:

The Non-executive Directors of the company are paid

remuneration by way of sitting fees only for attending the meetings of the Board and its Committee Meetings. The sitting fees paid to the Non-executive Directors for attending meetings of Board of Directors is Rs. 1,00,000/- and Rs. 75,000/- for meeting of Audit and Nomination and Remuneration Committee per meeting per member. Beside the sitting fees they are also entitled to reimbursement of expenses. The Nonexecutive Directors of the Company may also be paid other remuneration or commission, subject to requirements of applicable laws and payment matrix as approved by the Board/Nomination and Remuneration Committee of the Company.

The sitting fees of the Non-executive Directors for attending meetings of Board of Directors and the Committees of Board of Directors may be modified or implemented from time to time only with the approval of the Board in due compliance of the provisions of Companies Act, 2013.

(b) Remuneration to Executive Directors, Key Managerial Personnel(s) (KMPs) & Senior Management Personnel (s) (SMPs):

The Company has a credible and transparent framework in determining and accounting for the remuneration of the Managing Director / Whole Time Directors (MD/WTDs), Key Managerial Personnel(s) (KMPs) and Senior Management Personnel(s) (SMPs). Their remuneration shall be governed by the external competitive environment, track record, potential, individual performance and performance of the company as well as industry standards. The remuneration determined for MD/WTDs, KMPs and SMPs are subjected to the approval of the Board of Directors in due compliance of the provisions of Companies Act, 2013. The remuneration for the KMP and the SMP at the time of the appointment has to be approved by the Board but any subsequent increments shall be approved by the Managing Director of the Company as per the HR policy of the Company.

The Executive Directors of the Company are also entitled for commission on the profits of the Company as approved by the Board of Directors and Shareholders of the Company in Annual General Meeting.

9. ROLE OF INDEPENDENT DIRECTORS

9.1 The Committee shall, in consultation with the Independent Directors of the Company, prepare and submit this policy to the Board for its approval.

9.2 The Independent Directors shall have power and authority to determine appropriate levels of remuneration of executive directors and

Employees and have a prime role in appointing and where necessary recommends removal of executive directors and Employees.

9.3 The Independent Directors shall submit its recommendations/ proposals/decisions to the Committee which the Committee shall consult and take to the Board of Directors.

10. APPROVAL AND PUBLICATION

10.1 This remuneration policy as framed by the Committee shall be recommended to the Board of Directors for its approval.

10.2 This policy shall be hosted on the Companys website.

10.3 The policy shall form part of the Directors report to be issued by the Board of Directors in terms of Companies Act, 2013.

11. SUPPLEMENTARY PROVISIONS

11.1 This Policy shall formally be implemented from the date on which they are adopted pursuant to a resolution of the Board of Directors.

11.2 Any matters not provided for in this Policy shall be handled in accordance with relevant State laws and regulations and the Companys Articles of Association. If this Policy conflict with any laws or regulations subsequently promulgated by the state or with the Companys Articles of Association as amended pursuant to lawful procedure, the relevant state laws and regulations and the Companys Articles of Association shall prevail, and this Policy shall be amended in a timely manner and submitted to the Board of Directors for review and adoption.

11.3 The right to interpret this Policy vests in the Board of Directors of the Company.