Vardhman Holdings Ltd Directors Report.

Dear Members,

The Directors of your Company have pleasure in presenting their 56th Annual Report of the business and operations of the Company along with the Audited Financial Statements for the year ended 31st March, 2020.

1. FINANCIAL RESULTS:

The financial performance of your Company for the year ended 31st March, 2020 is as under:-

(Rs. In Lakhs)

Particulars Standalone Consolidated
2019-20 2018-19 2019-20 2018-19
Revenue from operations (Net) 3,923.67 3,201.75 1,243.63 904.57
Other Income 138.01 139.54 138.01 139.54
Income from Associates - - 15,321.74 19,455.28
Profit before Depreciation, Interest & Tax (PBDIT) 3,464.08 3,044.32 16,105.77 20,202.42
Interest and Financial expenses - - - -
Profit before Depreciation and Tax (PBDT) 3,464.08 3,044.32 16,105.77 20,202.42
Depreciation 0.88 0.88 0.88 0.88
Profit before Tax (PBT) 3,463.20 3,043.44 16,104.89 20,201.54
Provision for Tax - Current 109.32 218.49 109.32 218.48
- Deferred Tax 24.12 (199.79) 24.12 (199.79)
- MAT Credit Entitlement - - - -
Profit after tax (PAT) 3,329.76 3,024.74 15,971.45 20,182.85
Other Comprehensive Income (2,958.52) (2,436.71) (2,958.52) (2,436.71)
Total Comprehensive Income 371.24 588.03 13,012.94 17,746.14
Balance brought forward 40,168.15 40,377.45 1,79,754.50 1,62,805.69
Profit available for appropriation 371.24 588.03 13,012.94 17,746.14
Appropriations:
Proposed Dividend on Equity Shares 159.58 159.58 159.58 159.58
Corporate Dividend Tax 32.80 32.80 32.80 32.80
Transfer to General Reserve - -
Transfer to Statutory Reserve 665.95 604.95 665.95 604.95
Closing balance of surplus 39,681.06 40,168.15 1,91,909.11 1,79,754.50
i.e. Balance in Statement of Profit & Loss
Earnings per share (Rs.)
- Basic 104.33 94.77 500.43 632.39
- Diluted 104.33 94.77 500.43 632.39

2. MANAGEMENT DISCUSSION AND ANALYSIS REPORT:

A. FINANCIAL ANALYSIS:

(i) STANDALONE

During the year under review, your Company has registered Revenue from Operations of 3,923.67 Lakhs as compared to 3,201.75 Lakhs in the previous year. The Company earned other income of 138.01 Lakhs during the year as against 139.54 Lakhs during last year.

PROFITABILITY:

The Company earned profit before depreciation, interest and tax of 3,464.08 Lakhs as against 3,044.32 Lakhs in the previous year. After providing for depreciation of 0.88 Lakhs (Previous Year 0.88 Lakhs), provision for current tax 109.32 Lakhs (Previous Year 218.49 Lakhs), deferred tax 24.12 Lakhs [Previous Year (199.79) Lakhs], the net profit from operations worked out to 3,329.76 Lakhs as compared to 3,024.74 Lakhs in the previous year.

The balance available for appropriation after adding balance in surplus account is 40,539.39 Lakhs. Out of this, a sum of 159.58 Lakhs and 32.80 Lakhs have been appropriated towards proposed dividend and corporate dividend tax respectively thereon, 665.95 Lakhs is proposed to be transferred to Special reserve account and the balance of 39,681.06 Lakhs is proposed to be carried as surplus to the balance sheet.

Return on Net Worth for the financial year 2019-20 is increased from 5.03% to 5.59% on account of increase in net profits during the financial year 2019-20.

(ii) CONSOLIDATED

During the year under review, your Company has registered Revenue from Operations of 1,243.63 Lakhs as compared to 904.57 Lakhs in the previous year. The Company earned other income of 138.01 Lakhs during the year as against 139.54 Lakhs during last year.

PROFITABILITY:

The Company earned profit before depreciation, interest and tax of 16,105.77 Lakhs as against 20,202.42 Lakhs in the previous year. After providing for depreciation of 0.88 Lakhs (Previous Year 0.88 Lakhs), provision for current tax 109.32 Lakhs (Previous Year 218.49

Lakhs), deferred tax 24.12 Lakhs [Previous Year (199.79) Lakhs], the net profit from operations worked out to 15,971.45 Lakhs as compared to 20,182.85

Lakhs in the previous year.

The balance available for appropriation after adding balance in surplus account is 1,92,767.44 Lakhs. Out of this, a sum of 159.58 Lakhs and 32.80 Lakhs have been appropriated towards proposed dividend and corporate dividend tax respectively thereon, 665.95 Lakhs is proposed to be transferred to Special reserve account and the balance of 1,91,909.11 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, 2020 was 322.55 Lakhs as compared to 304.61 Lakhs in the previous year.

b) Current Assets:

The current assets as on 31st March, 2020 were 56,506.87 Lakhs as against 56,461.87 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 2019-20 2018-19
Cash and Cash equivalents:
Beginning of the year 222.25 158.58
End of the year 468.75 222.25
Net cash provided (used) by:
Operating Activities (6,777.21) 2,896.52
Investing Activities 7,215.35 (2,642.38)
Financial Activities (191.64) (190.47)

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.

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 Company is prone to all the financial risks and capital market fluctuations. Due to the impact of COVID19, the volatility in markets has reached unprecedented levels which may affect our investment portfolio though that impact may play out over the coming months.

3. DIVIDEND:

The Board of Directors of your Company has not recommended any dividend for the financial year 2019-20.

4. PUBLIC DEPOSITS:

The Company has not accepted and does not intend to accept any deposits from the public. As at 31st March, 2020, there are no outstanding/unclaimed deposits from the public.

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 the Authority. The unclaimed or unpaid dividend relating to the Financial Year 2012-13 is due for remittance in the month of October, 2020 to 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 also published requisite advertisement in the newspaper.

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

6. CONSOLIDATED FINANCIAL STATEMENT:

In accordance with Companies Act, 2013 & Indian

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 2019-20 are given below:-

Vardhman Textiles Limited (VTXL)

Vardhman Textiles Limited is an Associate Company of the Company. The Company holds 26.69% shares of VTXL as on 31st March, 2020. VTXL is engaged in manufacturing of world class textiles. During the year, the Revenue from Operations (Consolidated) was

6,735.00 crores as compared to 6,877.92 crores in the previous year. VTXL has a Net Profit after comprehensive income (Consolidated) worked out to 587.34 crores as compared to 739.99 crores in the previous year.

Vardhman Spinning and General Mills Limited (VSGM)

Vardhman Spinning and General Mills Limited is an Associate Company of the Company. The Company holds 50% shares of VSGM as on 31st March, 2020. 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 1.27 lakhs for the Financial Year 2019-20 as compared to 1.70 lakhs. The Company earned a Net Profit of 0.97 lakhs as compared to 1.39 lakhs 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. Vikas Kumar and Mrs. Shakun Oswal, Directors of the Company, retire by rotation at the conclusion of the forthcoming Annual General Meeting and being eligible, offers them self for re-appointment. The Board recommended their appointment for the consideration of the members of the Company at the ensuing Annual General Meeting.

Continuation of Non-Executive Directors: Pursuant to the provisions of Regulation 17 (1A) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, as amended vide SEBI (Listing Obligations 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 Mr. Jagdish Rai Singal and Mrs. Shakun Oswal, Non-executive directors who are going to attain the age of 75 years on 3rd January, 2021 & 18th August, 2021 respectively.

Independent Directors: Mr. Sanjeev Jain was appointed as an Independent Director of the Company by the Members in their 54th Annual General Meeting held on 27th September, 2018 for a term of consecutive three years starting from 13th November, 2017. Since his term will expire on 12th November, 2020, the Board of Directors in its meeting held on 29th June, 2020 recommended his re-appointment for the consideration of the Members of the Company at the ensuing Annual General Meeting for a term of 3 (three) consecutive years w.e.f. 13th November, 2020.

Declaration by Independent Directors:

The Independent Directors have submitted their disclosures to the Board that they fulfil 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.

Your Board confirms that in its opinion the Independent Directors possess the requisite integrity, experience, expertise, proficiency and qualifications. All the Independent Directors on the Board of the Company are registered with the Indian Institute of Corporate Affairs, Manesar, Gurgaon (IICA) as notified by the Central Government under Section 150(1) of the Companies Act, 2013 and shall undergo online proficiency self-assessment test, ,if applicable, within the time prescribed by the IICA.

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 2019 was held on 14th February, 2020 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):

In compliance with provisions of Section 203 of the Companies Act, 2013, following are the KMPs of the Company as on 31st March, 2020:

S.No. Name Designation
1. Shri Paul Oswal Chairman & Managing Director
2. Poorva Bhatia Chief Financial Officer
3. Swati Mangla Company Secretary

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 the Companies Act, 2013. The details of Board Meetings are set out in Corporate Governance Report which forms part of this Annual Report.

11. AUDITORS AND AUDITORS REPORT:

Statutory Auditors:

At the 55th Annual General Meeting held on 30th September, 2019, M/s. R. Dewan & Company, Chartered Accountants (Firm Registration No. 017883N) were reappointed as Statutory Auditors of the Company to hold office till the conclusion of 58th Annual General Meeting of the Company. Further, the Statutory Auditors of the Company have submitted Auditors Report on the accounts of the Company for the accounting year ended 31st March, 2020. This Auditors Report is self explanatory and requires no comments.

Secretarial Auditor:

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 24th May, 2019 for the financial year 2019-20.

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, 2020. This Report is self-explanatory and requires no comments. The Report forms part of this 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 March 31, 2020.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/5a743d3b9b143130ad 8cc8ffbb5845a504d81a531436265717.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. BUSINESS RESPONSIBILTY REPORT (BRR):

SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 mandate the inclusion of the BRR as part of the Annual Report for top 1000 listed entities based on market capitalization. In compliance with the Listing Regulations, we have integrated BRR disclosure into our Annual Report.

15. 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 Practising Company Secretary regarding compliance of conditions of Corporate Governance as stipulated under SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 is annexed to the report on Corporate Governance.

16. 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:https://www.vardhman.com/user_files/investor/ d2741c4bbc072fc76df0539a029aeab5b86073 411436265583.pdfDuring the year, the Company has spent 3.64 crore 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 form part of this report as Annexure III.

17. 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/ ac90887bcc b0c1ac34a16f592a1ecbb9c50c4d2e1436265676.pdf

18. 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.

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

All contracts/arrangements/transactions entered into by the Company during the financial year with related parties were in the ordinary course of business and on an arms length basis. During the year, the Company had not entered into any contract / arrangement/transaction with related parties which could be considered material in accordance with the provisions of Regulation 23 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. Accordingly, the disclosure of Related Party Transactions as required under Section 134(3)(h) of the Companies Act, 2013 in Form AOC-2 is not applicable. The 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/0f9092fa713917ea040 91bdf2fa3b2f2ee3272721436265640.pdf.

Your Directors draw attention of the Members to Note no. 26 to the standalone financial statement which sets out related party disclosures.

20. 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 no. 6 to the standalone financial statement).

21. 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.

22. 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: https://www.vardhman. com/user_files/investor/MGT-9_VHL_2019-2020_.pdf

23. HUMAN RESOURCES /INDUSTRIAL RELATIONS:

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

24. 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 form part of this report.

None of the employees has received salary of 1.02 crores per annum or 8.50 lakh per month or more during the Financial Year 2019-20. 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.

25. MATERIAL CHANGES AND COMMITMENT, IF ANY, AFFECTING THE FINANCIAL POSITION OF THE COMPANY BETWEEN THE END OF THE FINANCIAL YEAR TO WHICH THE 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 the financial statements relate and the date of the report.

26. DIRECTORS RESPONSIBILITY STATEMENT:

Pursuant to provisions of Section 134 (5) of the Companies Act, 2013 the Board hereby submit 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, 2020 and of the profit of the Company for the year ended on 31st March, 2020;

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.

27. 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.

28. 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
Place : Ludhiana (S.P. Oswal)
Date : 29th June, 2020 Chairman & Managing Director