Vardhman Holdings Ltd Directors Report.

Dear Members,

The Directors of your Company have pleasure in presenting their 54th Annual Report of the business and operations of the Company along with the Audited Financial Statements for the year ended, 31st March, 2018.

1. FINANCIAL RESULTS:

The financial performance of your Company for the year ended 31st March, 2018 is as under:-

(Rs. in Lakhs)

Standalone Consolidated
PARTICULARS 2017-18 2016-17 2017-18 2016-17
Revenue from operations (Net) 6,317.94 18,693.87 4,172.47 6,796.16
Other Income 136.14 357.02 136.13 357.02
Income from Associates 15,539.45 24,054.43
Profit before Depreciation, Interest & Tax (PBDIT) 5,836.91 18,797.78 19,230.88 30,954.50
Interest and Financial expenses
Profit before Depreciation and Tax (PBDT) 5,836.91 18,797.78 19,230.88 30,954.50
Depreciation 1.44 3.95 1.44 3.95
Profit before Tax (PBT) 5,835.47 18,793.83 19,229.44 30,950.55
Provision for Tax - Current 756.56 4,079.00 756.66 4,079.00
- Deferred Tax (93.53) 51.08 (93.53) 51.08
- MAT Credit Entitlement (329.53) (3,500.69) (329.53) (3,500.69)
Profit after tax (PAT) 5,501.97 18,164.44 18,895.94 30,321.16
Balance brought forward 27,537.28 13,197.90 136,571.53 110,075.43
Profit available for appropriation 33,039.25 31,362.34 155,467.47 140,396.59
Appropriations:
Proposed Dividend on Equity shares 159.58 159.57 159.58 159.57
Corporate Dividend Tax 32.80 32.49 32.8 32.49
Transfer to General Reserve
Transfer to Statutory Reserve 1,121.53 3,633.00 1121.53 3,633.00
Closing Balance of surplus i.e. Balance in statement of Profit & Loss Earnings per share (Rs.) 31,725.34 27,537.28 154,153.57 136,571.53
- Basic 172.39 569.14 592.06 950.05
- Diluted 172.39 569.14 592.06 950.05
Dividend per share (Rs.) 5.00 5.00 5 5

2. MANAGEMENT DISCUSSION AND ANALYSIS REPORT:

A. FINANCIAL ANALYSIS:

(i) STANDALONE

During the year under review, your Company has registered Revenue from Operations of Rs. 6,317.94 Lakhs as compared to Rs. 18,693.87 Lakhs in the previous year. The Company earned other income of Rs. 136.14 Lakhs during the year as against Rs. 357.02 Lakhs during last year.

PROFITABILITY:

The Company earned profit before depreciation, interest and tax of Rs. 5,836.91 Lakhs as against Rs. 18,797.78 Lakhs in the previous year. After providing for depreciation of Rs. 1.44 Lakhs (Previous Year Rs. 3.95 Lakhs), provision for current tax Rs. 756.56 Lakhs (Previous Year Rs. 4,079 Lakhs), deferred tax Rs. (93.53) Lakhs [Previous Year Rs. 51.08 Lakhs], MAT Credit Entitlement Rs. (329.53) [previous year Rs. (3,500.69)], the net profit from operations worked out to Rs. 5,501.97 Lakhs as compared to Rs. 18,164.44 Lakhs in the previous year.

The balance available for appropriation after adding balance in surplus account is Rs. 33,039.25 Lakhs. Out of this, a sum of Rs. 159.58 Lakhs and Rs. 32.80 Lakhs have been appropriated towards proposed dividend and corporate dividend tax respectively thereon, Rs. 1,121.53 Lakhs is proposed to be transferred to Special reserve and the balance of Rs. 31,725.34 Lakhs is proposed to be carried as surplus to the balance sheet.

(ii) CONSOLIDATED

During the year under review, your Company has registered Revenue from Operations of Rs. 4,172.47 Lakhs as compared to Rs. 6796.16 Lakhs in the previous year. The Company earned other income of Rs. 136.13 Lakhs during the year as against Rs. 357.02 Lakhs during last year.

PROFITABILITY:

The Company earned profit before depreciation, interest and tax of Rs. 19230.88 Lakhs as against Rs. 30,954.50 Lakhs in the previous year. After providing for depreciation of Rs. 1.44 Lakhs (Previous Year Rs. 3.95 Lakhs), provision for current tax Rs. 756.56 Lakhs (Previous Year Rs. 4,079 Lakhs), deferred tax Rs. (93.53) Lakhs [Previous Year Rs. 51.08 Lakhs], MAT Credit Entitlement Rs. (329.53) Lakhs [previous year Rs. (3,500.69) Lakhs] the net profit from operations worked out to Rs. 18,895.94 Lakhs as compared to Rs. 30,321.16 Lakhs in the previous year.

The balance available for appropriation after adding balance in surplus account is Rs. 155,467.47 Lakhs. Out of this, a sum of Rs. 159.58 Lakhs and Rs. 32.80 Lakhs have been appropriated towards proposed dividend and corporate dividend tax respectively thereon, Rs. 1,121.53 Lakhs is proposed to be transferred to Special reserve and the balance of Rs. 154,153.57 Lakhs is proposed to be carried as surplus to the balance sheet.

B. RESOURCES UTILISATION:

a) Fixed Assets:

The Net Block as at 31st March, 2018 was Rs. 303.40 Lakhs as compared to Rs. 82.14 Lakhs in the previous year.

b) Current Assets:

The current assets as on 31st March, 2018 were Rs. 24,558.43 Lakhs as against Rs. 37,652.62 Lakhs in the previous year.

C. FINANCIAL CONDITIONS & LIQUIDITY:

Management believes that the Companys liquidity and capital resources should be sufficient to meet its expected working capital needs and other anticipated cash requirements. The position of liquidity and capital resources of the Company is given below:-

(Rs. in lakhs)
PARTICULARS 2017-18 2016-17
Cash and Cash equivalents:
Beginning of the year 130.96 62.38
End of the year 168.03 130.96
Net cash provided (used) by:
Operating Activities 2367.81 (3,435.26)
Investing Activities (2,137.90) 3,617.38
Financial Activities (192.84) (113.54)

D. BUSINESS OUTLOOK:

Vardhman Holdings Limited primarily earns its income from investments. The Companys strategy is to adopt a systematic approach of investment into different asset classes namely debt, equity & real estate and to keep the portfolio dynamic as per the changing market conditions. Companys current portfolio consists of investments into debt, equity and real estate. The investment is made in accordance with the asset allocation model fixed by the Board.

E. MANAGEMENT PERCEPTION OF RISK AND CONCERNS:

The Company recognises that risk is an integral and unavoidable component of business and is committed to managing the risk in a proactive and effective manner. The Company is a NBFC registered with RBI and mainly engaged in investment activities. It follows a strategy of adopting a systematic approach to investment into different asset classes and keeping the portfolio dynamic as per the changing market conditions. The aim is a well diversified portfolio to mitigate the market risk.

The Company is prone to all the financial risks and capital market fluctuations.

3. PUBLIC DEPOSITS:

The Company has not accepted and does not intend to accept any deposits from the public. As at 31st March, 2018, there are no outstanding/unclaimed deposits from the public.

4. DIVIDEND:

The Board of Directors in its meeting held on 22nd May, 2018 has recommended dividend of Rs. 5/- per share on the fully paid up Equity Shares of the Company.

5. INVESTOR EDUCATION AND PROTECTION FUND (IEPF):

Pursuant to the provisions of Section 124 and 125 of the Companies Act, 2013, read with IEPF Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 (‘the Rules), all unpaid or unclaimed dividends are required to be transferred by the Company to the IEPF established by the Central Government after the completion of seven years from the date of transfer to the Unpaid Dividend Account of the Company. The shareholders whose dividends have been transferred to the IEPF Authority can claim their dividend from Authority. The unclaimed or unpaid dividend relating to the financial year 2010-11 is due for remittance by the end of September, 2018 to Investor Education and Protection Fund established by Central Government.

Further, according to the Rules, the shares in respect of which dividend has not been paid or claimed by shareholders for seven consecutive years or more shall also be transferred to the IEPF Authority . The Company shall sent notice to all shareholders whose shares are due to be transferred to the IEPF Authority and publish requisite advertisement in the newspaper.

The details of these shares is also provided on the website of the Company at www.vardhman.com.

6. CONSOLIDATED FINANCIAL STATEMENT:

In accordance with Companies Act 2013 & Accounting Standard (AS) -21 on Consolidated Financial Statements read with AS-23 on Accounting for Investments in Associates, the Audited Consolidated Financial Statements is provided in the Annual Report.

7. SUBSIDIARIES, JOINT VENTURES AND ASSOCIATE COMPANIES:

During the year under review, no Company has become or ceased to be Companys subsidiaries, joint ventures or associate companies. Further, the Company does not have any material subsidiary. The Company has following associate companies, the details of their financials for the year 2017-18 are given below:-

Vardhman Textiles Limited (VTXL)

Vardhman Textiles Limited (VTXL) is an Associate Company of the Company. The Company holds 26.66% shares of VTXL as on 31st March, 2018. VTXL is engaged in manufacturing of world class textiles. During the year, the Revenue from Operations (Consolidated) of the VTXL was Rs. 6,248.27 crore as compared to Rs. 6,029.95 crore in the previous year. VTXL had a Net profit after comprehensive income (Consolidated) worked out to Rs. 594.04 crore as compared to Rs. 993.82 crore in previous year.

Vardhman Spinning & General Mills Limited (VSGM)

Vardhman Spinning & General Mills Limited (VSGM) is an Associate Company of the Company. The Company holds 50% shares of VSGM as on 31st March, 2018. It is a trading Company dealing in trading of Cotton and Fibre. During the year, the Company has not traded any goods, however, the other income is Rs. 65,964/- for the Financial Year 2017-18 as compared to Rs. 18,611/-. The Company earned a Net profit of Rs. 29,404 as against a net loss of Rs. 9,474/- in the Previous Year.

8. DIRECTORS:

Liable to retire by rotation: In accordance with the provisions of the Articles of Association of the Company, Mr. Chaman Lal Jain, Director of the Company, retires by rotation at the conclusion of the forthcoming Annual General Meeting and being eligible, offers himself for re-appointment. The Board recommended his appointment for the consideration of the members of the Company at the ensuing Annual General Meeting.

Additional Director (Independent): During the year, Mr. Sanjeev Jain was appointed as an Additional Director (Independent) w.e.f. November 13, 2017 and holds office upto the forthcoming AGM of the Company. Necessary resolution for appointment of Mr. Sanjeev Jain as Independent Director has been included in the Notice.

Cessation from Directorship: During the year, Mr. Surinder Singh Bagai ceased to be Director of the Company as his term of appointment has expired on September 22, 2017.

Continuation of Non-Executive Directors: Pursuant to the provisions of Regulation 17 of SEBI (Listing Obligation and Disclosure Requirements) Regulation, 2015, as amended vide SEBI (Listing Obligation and Disclosure Requirements) (Amendment) Regulations, 2018, Special Resolution has been proposed to be passed by the Members in the ensuing Annual General Meeting for continuation of directorships of those non-executive directors who have attaind the age of 75 years viz. Mr. Sat Pal Kanwar, Mr. Chaman Lal Jain and Mr. Om Parkash Sharma.

Declaration under Section 149(6) :

Mr. Sanjeev Jain, Mr. Rajeev Kumar Mittal, Mr. Jagdish Rai Singal, Mr. Sat Pal Kanwar, Mr. Om Parkash Sharma & Ms. Apinder Sodhi being Independent Directors have submitted their disclosures to the Board that they fulfill all the requirements as stipulated in Section 149 (6) of the Companies Act, 2013 so as to qualify themselves to be appointed as Independent Directors under the provisions of the Companies Act, 2013 and the relevant rules thereof.

Companys Policy relating to Directors appointment, payment of remuneration and discharge of their duties:

The Nomination & Remuneration Committee of the Company has formulated the Nomination & Remuneration Policy on Directors appointment and remuneration which includes the criteria for determining qualifications, positive attributes, independence of a director and other matters as provided under Section 178(3) of the Companies Act, 2013.

The Nomination & Remuneration Policy is annexed hereto and form part of this report as Annexure I.

Familiarization programmes for Board Members:

Your Company has formulated Familiarization Programme for all the Board members in accordance with Regulation 25 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and the Schedule IV of the Companies Act, 2013 which provides that the Company shall familiarize the Independent Directors with the Company, their roles, rights, responsibilities in the Company, nature of Industry in which the Company operates, business model of the Company, etc. through various programs. The Familiarization Programme for Board members may be accessed on the Companys website at the link: https:// www.vardhman.com/user_files/investor/VHL_Familisation %20program.pdf Annual Evaluation of the Board Performance:

The meeting of Independent Directors of the Company for the calendar year 2017 was held on 13th November, 2017 to evaluate the performance of Non-Independent Directors, Chairperson of the Company and the Board as a whole. The evaluation was done by way of discussions on the performance of the Non- Independent Directors, Chairman and Board as a whole.

A policy on the performance evaluation of Independent Directors, Board, Committees and other individual Directors which includes criteria for performance evaluation of non-executive directors and executive directors has been formulated by the Company.

9. KEY MANAGERIAL PERSONNEL (KMP) :

Pursuant to provisions of Section 203 of the Companies Act, 2013, following are the KMPs of the Company as on 31st March, 2018.

Key Managerial Personnel of the Company Designation
S.P. Oswal Chairman & Managing Director (CMD)
Poorva Bhatia Chief Financial Officer (CFO)
Amrender Kumar Yadav Company Secretary (CS)

* Mr. Amrender Kumar Yadav has resigned from post of Company Secretary w.e.f. July 21, 2018.

10. NUMBER OF BOARD MEETINGS:

During the year under review, the Board met Four (4) times and the intervening gap between any two meetings was within the period prescribed under Companies Act, 2013. The details of Board Meetings are set out in Corporate Governance Report which form part of this Annual Report.

11. AUDITORS AND AUDITORS REPORT:

Statutory Auditors:

M/s. R. Dewan & Co., Chartered Accountants (Firm Registration no. 017883N) were appointed as Statutory Auditors of the Company by the Members for a term of five consecutive years starting from the conclusion of 50th Annual General Meeting till the conclusion of 55th Annual General Meeting of the Company (subject to ratification of their appointment at every AGM).

However, pursuant to the Companies (Amendment) Act, 2017 which was notified on May 7, 2018, the provision related to ratification of appointment of auditors by Members at every AGM has been done away with.

The report of the Statutory Auditors along with the Notes to Schedules forms part of the Annual Report and contains an Unmodified Opinion without any qualification, reservation or adverse remark.

Secretarial Auditors:

M/s. Khanna Ashwani & Associates, Company Secretaries in Practice, were appointed as Secretarial Auditors of the Company by the Board of Directors of the Company in its meeting held on 16th May, 2017 for the financial year 2017-18.

The Secretarial Auditors of the Company have submitted their Report in Form No. MR-3 as required under Section 204 of the Companies Act, 2013 for the financial year ended 31st March, 2018. This Report is self-explanatory and requires no comments. The Report forms part of Directors report as Annexure II.

12. AUDIT COMMITTEE

Composition of Audit Committee:

The Audit Committee consists of three Directors i.e. Ms. Apinder Sodhi, Mr. Sat Pal Kanwar and Mr. Sanjeev Jain, Independent Directors, as on March 31, 2018.

Ms. Apinder Sodhi is the Chairperson of the Committee and Company Secretary of the Company is the Secretary of the Committee. All the recommendations made by the Audit Committee were accepted by the Board.

13. VIGIL MECHANISM & SEXUAL HARASMENT OF WOMEN AT WORKPLACE

Vigil Mechanism:

Pursuant to provisions of Section 177 (9) of the Companies Act, 2013 the Company has established a "Vigil Mechanism" incorporating Whistle Blower Policy in terms of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, for employees and Directors of the Company, for expressing the genuine concerns of unethical behavior, actual or suspected fraud or violation of the codes of conduct by way of direct access to the Chairman/ Chairman of the Audit Committee.

The Company has also provided adequate safeguards against victimization of employees and Directors who express their concerns.

The Policy on Vigil Mechanism and Whistle Blower Policy as approved by the Board may be accessed on the Companys website at the link: https://www.vardhman. com/user_files/investor/5a743d3b9b143130ad8cc8ffbb 5845a504d81a531436265717.pdf Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013

The Company has complied with the provisions relating to the constitution of Internal Complaints Committee under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

Your Directors further state that, during the year under review, there were no cases filed pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

14. CORPORATE GOVERNANCE:

The Company has in place a system of Corporate Governance. Corporate Governance is about maximizing shareholder value legally, ethically and sustainably. A separate report on Corporate Governance forming part of the Annual Report of the Company is annexed hereto. A certificate from the Auditors of the Company regarding compliance of conditions of Corporate Governance as stipulated under Corporate Governance Clauses of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 is annexed to the report on Corporate Governance.

15. CORPORATE SOCIAL RESPONSIBILITY (CSR) :

Vision & Core areas of CSR: Your Company is committed to and fully aware of its Corporate Social Responsibility (CSR), the guidelines in respect of which were more clearly laid down in the recently overhauled Companies Act. The Companys vision on CSR is that the Company being a responsible Corporate Citizen would continue to make a serious endeavor for a quality value addition and constructive contribution in building a healthy and better society through its CSR related initiatives and focus on education, environment, health care and other social causes.

CSR Policy: The Corporate Social Responsibility (CSR) Policy of the Company indicating the activities to be undertaken by the Company, as approved by the Board, may be accessed on the Companys website at the link: https://www. vardhman.com/user_files/investor/d2741c4bbc072fc 76df0539a029aeab5b86073411436265583.pdf

During the year, the Company has spent Rs. 50 lakhs on CSR activities.

The disclosures related to CSR activities pursuant to Section 134(3) of the Companies Act, 2013 read with Rule 9 of Companies (Accounts) Rules, 2014 and Companies (Corporate Social Responsibility) Rules, 2014 is annexed hereto and forms part of this report as Annexure III.

16. RISK MANAGEMENT:

The Risk Management Policy required to be formulated under the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 has been duly formulated and approved by the Board of Directors of the Company. The aim of Risk Management Policy is to maximize opportunities in all activities and to minimize adversity. The policy includes identifying types of risks and its assessment, risk handling, monitoring and reporting, which in the opinion of the Board may threaten the existence of the Company.

The Risk Management policy may be accessed on the Companys website at the link: https://www.vardhman. com/user_files/investor/ac90887bccb0c1ac34a16f592a 1ecbb9c50c4d2e1436265676.pdf

17. INTERNAL FINANCIAL CONTROLS:

The Company has in place adequate internal financial controls with reference to financial statements. During the year, such controls were tested and no reportable material weakness in the design or operation was observed.

A report on the Internal Financial Controls under clause (i) of sub-section 3 of section 143 of the Companies Act, 2013 as given by the Statutory Auditors of the Company forms part of Independent Auditors Report on Standalone Financial Statements as Annexure A and Independent Auditors Report on Consolidated Financial Statements as Annexure B.

18. PARTICULARS OF CONTRACTS OR ARRANGEMENTS MADE WITH RELATED PARTIES:

All contracts/arrangements/transactions entered by the Company during the financial year with related parties were in the ordinary course of business and on an arms length basis. The particulars of Contracts or Arrangements made with related parties as required under Section 134 (3) (h) of the Companies Act, 2013 in specified form AOC-2 are covered under Note No. 25 to the Financial Statements, which is set out for Related Party Transactions.

The Policy on dealing with related party transactions as approved by the Board may be accessed on the Companys website at the link: https://www.vardhman.com/user_files/ investor/0f9092fa713917ea04091bdf2fa3b2f2ee327272 1436265640.pdf

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

Particulars of loans given, investments made, guarantees given and securities provided along with the purpose for which the loan or guarantee or security is proposed to be utilized by the recipient are provided in the standalone financial statement (Please refer to Note 10, 11 and 12 to the standalone financial statement).

20. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO

Particulars with respect to conservation of energy and other areas as per Section 134 (3) (m) of the Companies Act, 2013 read with Rule 8 (3) of the Companies (Accounts) Rules, 2014: Not Applicable

21. ANNUAL RETURN

Pursuant to the provisions of Section 134(3)(a) of Companies Act, 2013 as substituted by Companies (Amendment) Act, 2017 w.e.f. July 31, 2018, the web address of the extract of Annual Return of Company is http://www.vardhman.com/ user_files/investor/VHL%20MGT-9.pdf.

22. HUMAN RESOURCES /INDUSTRIAL RELATIONS:

The Company is not carrying on any manufacturing activity and no workers were employed during the year.

23. PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES:

The disclosures in respect of managerial remuneration as required under section 197 (12) read with Rule 5 (1) of the Companies (Appointment & Remuneration of Managerial Personnel) Rules, 2014 is attached in Annexure V and forms part of this report.

None of the employees has received salary of Rs. 1.02 crores per annum or Rs. 8.50 lakh per month or more during the Financial Year 2017-18. However, the particulars of employees as per Rule 5(2) and 5(3) Companies (Appointment & Remuneration of Managerial Personnel) Rules, 2014 is annexed herewith.

Since the Company has no Holding or Subsidiary Company, no particulars are required to be given pursuant to the provisions of section 197 (14) of the Companies Act, 2013.

24. MATERIAL CHANGES AND COMMITMENT, IF ANY, AFFECTING THE FINANCIAL POSITION OF THE COMPANY BETWEEN THE END OF THE FINANCIAL YEAR TO WHICH THIS FINANCIAL STATEMENTS RELATE AND THE DATE OF THE REPORT:

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

25. DIRECTORS RESPONSIBILITY STATEMENT:

Pursuant to provisions of Section 134 (5) of the Companies Act, 2013 the Board hereby submits its responsibility Statement:-

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

b. Appropriate accounting policies have been selected and applied consistently, and have 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 as at 31st March, 2018 and of the profit of the Company for the year ended on 31st March, 2018;

c. Proper and sufficient care has been taken 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 annual accounts have been prepared on an going concern basis;

e. The Internal financial controls have been laid down to be followed by the Company and that such internal financial controls are adequate and are operating effectively; and

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

26. GENERAL DISCLOSURES:

Your Directors state that no disclosure or reporting is required in respect of the following items as there were no transactions on these items during the year under review:

1. Change in nature of Business of the Company.

2. Issue of equity shares with differential rights as to dividend, voting or otherwise.

3. Significant or material orders passed by the Regulators or Courts or Tribunals which impact the going concern status and Companys operations in future.

27. ACKNOWLEDGEMENT:

Your Directors are pleased to place on record their sincere gratitude to the Government, Bankers, Business Constituents and Shareholders for their continued and valuable cooperation and support to the Company and look forward to their continued support and co-operation in future too. They also take this opportunity to express their deep appreciation for the devoted and sincere services rendered by the employees of the Company during the year.

BY AND ON BEHALF OF THE BOARD
Sd/-
PLACE: Ludhiana (S.P. Oswal)
DATE: August 3, 2018 Chairman & Managing Director