Vardhman Holdings Ltd Directors Report.

Dear Members,

The Directors of your Company have pleasure in presenting their 55th Annual Report of the business and operations of the Company along with the Audited Financial Statements for the year ended, 31st March, 2019.

1. FINANCIAL RESULTS:

The financial performance of your Company for the year ended 31st March, 2019 is as under:-

(R in lakhs)

PARTICULARS Standalone Consolidated
2018-19 2017-18 2018-19 2017-18
Revenue from operations (Net) 3,201.75 4,929.51 904.57 2,784.03
Other Income 139.54 136.14 139.54 136.14
Income from Associates - - 19,455.28 15,539.45
Profit before Depreciation, Interest & Tax (PBDIT) 3,044.32 4,715.03 22,202.42 18,109.00
Interest and Financial expenses - - - -
Profit before Depreciation and Tax (PBDT) 3,044.32 4,715.03 20,202.42 18,109.00
Depreciation 0.88 1.44 0.88 1.44
Profit before Tax (PBT) 3,043.44 4,713.59 20,201.54 18,107.56
Provision for Tax - Current 218.49 756.57 218.48 756.56
- Deferred Tax (199.79) (516.04) (199.79) (516.04)
-MAT Credit Entitlement - - - -
Profit after tax (PAT) 3,024.74 4,473.06 20,182.85 17,867.04
Other Comprehensive Income (2,436.71) 3015.00 (2,436.71) 3015.00
Total Comprehensive Income 588.03 7,488.06 17746.14 20,882.05
Balance brought forward 4,0377.45 34,202.98 1,62,805.69 1,43,237.24
Profit available for appropriation 588.03 7,488.06 17,746.14 20,882.05
Appropriations:
Proposed Dividend on Equity Shares 159.58 159.58 159.58 159.58
Corporate Dividend Tax 32.80 32.49 32.80 32.49
Transfer to General Reserve - - - -
Transfer to Statutory Reserve 604.95 1,121.53 604.95 1,121.53
Closing balance of surplus 4,0168.15 4,0377.45 1,79,754.50 1,62,805.69
i.e. balance in statement of Profit & Loss
Earnings per share (R)
- Basic 94.77 140.15 632.39 559.83
- Diluted 94.77 140.15 632.39 559.83
Dividend per share (R) 5.00 5.00 5.00 5.00

2. MANAGEMENT DISCUSSION AND ANALYSIS REPORT: A. FINANCIAL ANALYSIS: (i) STANDALONE

During the year under review, your Company has registered Revenue from Operations of R 3,201.75 lakhs as compared to R 4,929.51 lakhs in the previous year. The Company earned other income of R 139.54 lakhs during the year as against R 136.14 lakhs during last year.

PROFITABILITY:

The Company earned profit before depreciation, interest and tax of R 3,044.32 lakhs as against R 4,715.03 lakhs in the previous year. After providing for depreciation of R 0.88 lakhs (Previous Year R 1.44 lakhs), provision for current tax R 218.49 lakhs (Previous Year R 756.56 lakhs), deferred tax R (199.79) lakhs [Previous Year R (516.04) lakhs], the net profit from operations worked out to R 3,024.74 lakhs as compared to R 4,473.06 lakhs in the previous year.

The balance available for appropriation after adding balance in surplus account is R 40,965.48 lakhs. Out of this, a sum of R 159.58 lakhs and R 32.80 lakhs have been appropriated towards proposed dividend and corporate dividend tax respectively thereon, R 604.95 lakhs is proposed to be transferred to Special reserve account and the balance of R 40,168.15 lakhs is proposed to be carried as surplus to the balance sheet.

Return on Net Worth for the financial year 2018-19 is 5.03% as against 7.48% in the previous financial year. Return on Net Worth decreased primarily on account of reduction in profits during financial year 2018-19.

(ii) CONSOLIDATED

During the year under review, your Company has registered Revenue from Operations of R 904.57 lakhs as compared to R 2,784.03 lakhs in the previous year. The Company earned other income of R 139.54 lakhs during the year as against R 136.14 lakhs during last year.

PROFITABILITY:

The Company earned profit before depreciation, interest and tax of R 20,202.42 lakhs as against R 18,109.00 lakhs in the previous year. After providing for depreciation of R 0.88 lakhs (Previous Year R 1.44 lakhs), provision for current tax R 218.48 lakhs (Previous Year R 756.56 lakhs), deferred tax R (199.79) lakhs [Previous Year R (516.04) lakhs], the net profit from operations worked out to R 20182.85 lakhs as compared to R 17,867.04 lakhs in the previous year. The balance available for appropriation after adding balance in surplus account is R 1,80,551.83 lakhs. Out of this, a sum of R 159.58 lakhs and R 32.80 lakhs have been appropriated towards proposed dividend and corporate dividend tax respectively thereon, R 604.95 lakhs is proposed to be transferred to Special reserve account and the balance of R 1,79,754.50 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, 2019 was R 304.61 lakhs as compared to R 303.40 lakhs in the previous year. b) Current Assets: The current assets as on 31st March, 2019 were R 56,461.87 lakhs as against R 55,990.46 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:- R ( in lakhs)

PARTICULARS 2018-19 2017-18
Cash and Cash equivalents:
Beginning of the year 158.58 120.75
End of the year 222.25 158.58
Net cash provided (used) by:
Operating Activities 2,896.52 2,368.60
Investing Activities (2,642.38) (2,137.93)
Financial Activities (190.47) (192.84)

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 recognizes 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, 2019, there are no outstanding/unclaimed deposits from the public.

4. DIVIDEND:

The Board of Directors in its meeting held on 24th May, 2019 has recommended dividend of R 5 per share on the fully paid up

Equity Shares of the Company.

5. INVESTOR EDUCTION 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 the Authority. The unclaimed or unpaid dividend relating to the financial year 2011-12 is due for remittance in the month of October, 2019 to the Investor Education and Protection Fund established by the 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 has sent notice to all shareholders whose shares are due to be transferred to the IEPF Authority and has published 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 IND-AS 110 on Consolidated Financial Statements read with IND-AS 28 on Accounting for Investments in Associates, the Audited Consolidated Financial Statements are 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 subsidiary, joint venture or associate company. Further, the Company does not have any material subsidiary. The Company has following associate companies, the details of their financials for the year 2018-19 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, 2019. VTXL is engaged in manufacturing of world class textiles. During the year, the Revenue from Operations (Consolidated) was R 6,877.92 crores as compared to R 6,248.27 crores in the previous year. VTXL has a Net Profit after comprehensive income (Consolidated) of R 739.99 crores as compared to R 594.04 crores in the previous year.

Vardhman Spinning and General Mills Limited (VSGM)

Vardhman Spinning and General Mills Limited (VSGM) is an Associate Company of the Company. The Company holds 50% shares of VSGM as on 31st March, 2019. 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 R 1,70,212 for the Financial Year 2018-19 as compared to R 65,964. The Company earned a Net Profit of R 1,38,983 as compared to R 29,404 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. Sachit Jain and Mrs. Suchita Jain, Directors of the Company, retire by rotation at the conclusion of the forthcoming Annual General Meeting and being eligible, offers themself for re-appointment. The Board recommended their appointment for the consideration of the members of the Company at the ensuing Annual General Meeting.

Declaration under Section 149(6):

Mr. Sanjeev Jain, Mr. Rajeev Kumar Mittal, Mr. Jagdish Rai Singal, Mr. Sat Pal Kanwar, Mr. Om Parkash Sharma & Mrs. 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 forms 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 2018 was held on 13th November, 2018 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 the provisions of Section 203 of the Companies Act, 2013, the following are the KMPs of the Company as on 31st March, 2019.

Name Designation
1. S.P. Oswal Chairman & Managing Director (CMD)
2. Poorva Bhatia Chief Financial Officer (CFO)
3. *Mr. Satin Katyal Company Secretary (CS)

* Mr. Amrender Kumar Yadav, Company Secretary resigned from the Company w.e.f. 21st July, 2018 and Mr. Satin Katyal was appointed as Company Secretary in his place w.e.f. 13th November, 2018.

* Mr. Satin Katyal, Company Secretary resigned from the Company w.e.f. 5th May, 2019 and Ms. Swati Mangla has been appointed as Company Secretary in his place w.e.f. 24th May, 2019.

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., the existing Statutory Auditors of the Company have submitted Auditors Report on the accounts of the Company for the financial year ended 31st March, 2019. The Auditors Report is self-explanatory and requires no comments. 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. Their tenure of five years is going to complete at the conclusion of the forthcoming Annual General Meeting. The Audit Committee of the Company has proposed and on 24th May, 2019, the Board of Directors of the Company has recommended the re-appointment of M/s R. Dewan & Co., Chartered Accountants the statutory auditors of the Company for a second term of three years starting from the conclusion of 55th Annual General Meeting till the conclusion of 58th Annual General Meeting. The said re-appointment is subject to the approval of the Members of the Company.

Secretarial Auditors:

M/s. Khanna Ashwani & Associates, Company Secretaries, were appointed as Secretarial Auditors of the Company by the Board of Directors of the Company in its meeting held on 22nd May, 2018 for the financial year 2018-19.

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, 2019. This Report is self-explanatory and requires no comments. The Report forms part of Directors report as Annexure II.

Cost Auditors:

Under the provisions of Section 148(1) of the Companies Act, 2013, maintenance of cost records is not applicable to the Company.

12. AUDIT COMMITTEE :

Composition of Audit Committee:

The Audit Committee consists of four Directors i.e. Mrs Apinder Sodhi, Mr. Sat Pal Kanwar, Mr. Om Parkash Sharma and Mr. Sanjeev Jain, Independent Directors, as on 31st March, 2019.

Mrs. 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 HARASSMENT OF WOMEN AT WORKPLACE:

Pursuant to the 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/5a743d3b9b143130ad8cc8ffbb5845a504d81a531436265717.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 complaints 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 Companies Act, 2013. 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:

During the year, the Company has spent R 0.97 crores 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/ac90887bccb0c1ac34a16f592a1ecbb9c50c4d2e1436265676.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 A.

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. 28 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:

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 6 and 7 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 are not applicable.

21. ANNUAL RETURN

Pursuant to the provisions of Section 134(3)(a) of the Companies Act, 2013, the web address of the extract of Annual Return of the Company is:

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 IV and forms part of this report. None of the employees has received salary of R 1.02 crores per annum or R 8.50 lakh per month or more during the Financial

Year 2018-19. 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, 2019 and of the profit of the Company for the year ended on 31st March, 2019; 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 a 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.

4. No fraud has been reported by the Auditors to the Audit Committee or the Board.

5. There is no Corporate Insolvency Resolution Process initiated under the Insolvency and Bankruptcy Code, 2016.

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 co-operation 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.

FOR AND ON BEHALF OF THE BOARD

Sd/-PLACE:

Ludhiana (S.P. Oswal)

DATE: 24th May, 2019 Chairman & Managing Director