Vijay Shanthi Builders Ltd Directors Report.

To the Members,

Your Directors take pleasure in presenting the 28th Annual Report on the business and operations of your Company for the year ended 31st March 2019.

1. FINANCIAL HIGHLIGHTS:

On Standalone basis:-

During the Financial Year 2018-19, revenue from operations was Rs.2655.36 Lakhs as compared to Rs. 8526.13 Lakhs during the previous year. The net loss after tax is at 1065.53 Lakhs as compared to a profit of 2.33 Lakhs recorded for the previous year

On Consolidated basis:-

During the Financial Year 2018-19, the subsidiary company M/S VahicInc , Canada which was incorporated in the year 2017-18 did not commence its commercial activity. Considering the same, the investment made by the company amounting to 100 common shares of 1 canadian dollar each totaling to 100 canadiandollars(Amounting to Rs.5200) in the subsidiary was written off and hence the consolidated financial statement has not been furnished.

2. DIVIDEND

Owning to inadequacy or absence of profits the Company has not declared dividend for the financial year 2018 19.

3. EVENTS SUBSEQUENT TO THE DATE OF FINANCIAL STATEMENTS:

There are no material changes and commitments affecting the financial position of the Company between 31s tMarch 2019 and the date of Board s Report 14th June 2019.

4. CHANGE IN THE NATURE OF BUSINESS, IF ANY:

There are no changes in the nature of business of the Company during the financial year under review.

5. MANAGEMENT DISCUSSION AND ANALYSIS REPORT:

i. Industry Structure And Development

A recovery in the real estate sector, where project stalling rates have spiked, may be as prolonged as the slowdown without a significant price correction. The global financial crash of 2008 led to a global credit freeze and real estate projects across the world were gutted as lenders did their best to avoid this setor. India was no exception to this trend though credit flow to the sector did not dry up as dramatically as in the West. As fund flows dried up, project stalling rates spiked. The shock of demonetization, followed by two new regulatory changes, the goods and services tax (GST) and the Real Estate (Regulation and Development) Act, only served to bring in more uncertainty and ensured that the slump in the sector continued. As bank credit to the sector slowed and bank deposits soared post demonetization, banks outsourced lending to non-banking financial companies (NBFCs), which in turn stepped in to fund real estate developers. However, the NBFC crisis last year squeezed that channel of finance as well. Unsurprisingly, the lack of funds continues to be one of the major reasons behind stalled projects even today. The two big reasons cited by investors for stalled projects is the delay in land acquisition and lack of funds. It s a challenging situation, Every stakeholder should be prepared to take a hit or make compromises. Banks and financial institutions have to take a haircut in the loans given, developers and owners have to forgo profit/ surplus cash flows, and even homebuyers should be prepared to pay more, if required, for the completion of projects. Ultimately, a lot rides on where house prices head. Despite the slump in the sector, most localities haven t seen much of a correction in house prices. A significant correction can pave the ground for a V-shaped recovery in the sector. In the absence of that, the recovery in real estate is likely to be as prolonged as the slowdown.

ii. Business Outlook

The real estate sector is one of the most globally recognized sectors. Real estate sector comprises four sub sectors - housing, retail, hospitality, and commercial. The growth of this sector is well complemented by the growth of the corporate environment and the demand for office space as well as urban and semi-urban accommodations. The construction industry ranks third among the 14 major sectors in terms of direct, indirect and induced effects in all sectors of the economy.

It is also expected that this sector will incur more non-resident Indian (NRI) investments in both the short term and the long term.

Real estate sector in India is expected to reach a market size of US$ 1 trillion by 2030 from US$ 120 billion in 2017 and contribute 13 per cent of the country s GDP by 2025. Retail, hospitality and commercial real estate are also growing significantly, providing the much-needed infrastructure for India s growing needs.

iii. Future Outlook

The Securities and Exchange Board of India (SEBI) has given its approval for the Real Estate Investment Trust (REIT) platform which will help in allowing all kinds of investors to invest in the Indian real estate market. It would create an opportunity worth Rs 1.25 trillion (US$ 19.65 billion) in the Indian market over the years. Responding to an increasingly well-informed consumer base and, bearing in mind the aspect of globalisation, Indian real estate developers have shifted gears and accepted fresh challenges. The most marked change has been the shift from family owned businesses to that of professionally managed ones. Real estate developers, in meeting the growing need for managing multiple projects across cities, are also investing in centralised processes to source material and organise manpower and hiring qualified professionals in areas like project management, architecture and engineering.

The growing flow of FDI into Indian real estate is encouraging increased transparency. Developers, in order to attract funding, have revamped their accounting and management systems to meet due diligence standards.

iv. Operational Overview

The following are the details of the ongoing and future projects of the Company.

Ongoing Projects

Project Name Location Saleable Area(IN SQ FT)
I Sky Villas Perungudi 0.43 Lakhs
Crest Ratnamangalam 0.54 Lakhs
Fortune Square Ratnamangalam 1.82 Lakhs
The Art Nungambakkam 1.21 Lakhs

Future Projects

Project Name Location Saleable Area
Besta Oragadam 3.85 Lakhs
Ela Thandalam 5.22 Lakhs
Jade Pammal 0.98 Lakhs
Exotica Padur 0.76 Lakhs
Gaud Tiruvanmiyur, Rajaji Nagar 0.22 Lakhs
Fangle Perungudi 0.48 lakhs

v. Opportunities and Threats

The Government of India along with the governments of the respective states has taken several initiatives to encourage the development in the sector. The Government of India s Housing for all initiative is sure to bring in huge investment especially in the Real Estate Residential Sector.The Smart City Project, where there is a plan to build 100 smart cities, is a prime opportunity for the real estate companies.

Property prices have fallen slightly in most major Indian cities in past one year. Slack demand, huge inventories and stringent regulations have kept home prices low across major Indian cities. The number of Launches in were few and sales were tardy in the past one year in Chennai, but prices came down, leading to a big fall in the inventory. The drinking water crisis facing the city may bring down prices further.

vi. Segment wise Performance:

The Company has only one segment that is developing and promoting of residential apartments. Hence there is no requirement of segment wise reporting.

vii. Risks and Concerns

1. Market risk- Market risk is mainly caused by the demand uncertainty.

2. Completion risks- Completion risks refer to technical risks during and after the completion of a project.

3. Institutional risks- Institutional risks are related to the political uncertainties in a specific situation.

viii. Risk Management Policy

The Board has established a Risk Management Policy which formalizes the Company s approach to overview and manage business risks. The policy is implemented through identifying, assessing, monitoring and managing key risks across the Company.

The Audit Committee is entrusted with the task of monitoring and reviewing the risk management plan and procedures of the Company. The risk management function is complimentary to the internal control mechanism of the Company and supplements the audit function.

ix. Internal Financial Control

There are adequate internal financial controls in place with reference to the financial statements. During the year under review, these controls were evaluated and no significant weakness was identified either in the design or operation of the controls.

x. Discussion of Financial Performance

A detailed report about financial performance forms part of Directors Report to the shareholders.

xi. Human Resource Development

The Company considers its human resource as an asset of the Company. The Company prides in having well-oiled human resource machinery which has been one of the pillars for the growth of the Company over the years. We have also developed an appropriate blend of professionals, constantly thinking and executing innovative and cost effective solutions to every client s requirements. Thanks to its unique professionalism that embodies a code of ethics, a committed and farsighted management team Vijay Shanthi has registered consistent growth over the years, ever since its inception.

6. DIRECTORS RESPONSIBILITY STATEMENT

In accordance with the provisions of Section 134(5) of the Companies Act 2013, with respect to Director s Responsibility Statement, it is hereby stated

I. that in the preparation of annual accounts for the financial year ended 31stMarch, 2019, the applicable Accounting Standards had been followed and that there were no material departures;

II. that the Directors had selected such accounting policies and applied them consistently and made judgments and estimates that were 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 Loss of the Company for the year under review;

III. that the Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act 2013, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

IV. that the Directors had prepared the accounts for the financial year ended 31stMarch, 2019 on a going concern basis ;

V. that the Directors had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and

VI. the Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

7. FINANCIAL PERFORMANCE & POSITION OF SUBSIDIARY AND ASSOCIATE COMPANIES

The Company has made an investment of Rs.5198/- in Vahi INC a Company having its registered office at 31, Roker Crescent, Toronto, Ontario, Canada M1S 1P5 and is classified as 100% subsidiary under section 2(87)(ii) of Companies Act 2013.

The investment has been made during the Financial Year 2017 2018 and the company did not commence its commercial activity during the year 2018 19 and hence the said subsidiary was written off during the year and hence no consolidated financials were prepared.

8. DIRECTORS AND KEY MANAGERIAL PERSONNEL

i. Independent Directors

Mr.Siva Subramaniam (DIN: 00763122) who was appointed as the Independent Director of the Company for a period of 3 years upto 28th September 2017 in the 23rd Annual General meeting of the Company held on 29th September 2014 has now been reappointed for a second term for a period of 5 years upto 28th September 2022 in the Annual General Meeting of the Company held on 27th September 2017.

Mr. V. Parthasarathy was appointed as the Independent Director of the Company for a period of 5 years upto 30th September 2021 in the 25th Annual General Meeting of the Company held on 30th September 2016.Mr. V Parthasarathy(DIN:07594302) resigned from the Board with effect from 23rd August 2018 citing personal reasons and same has been accepted by the Board. The Board wishes to place on record the valuable services received by the company from the Director during her tenure in the Board.

Ms Shaily Ramesh Rathore was appointed as the Independent Women Director of the Company in the Board Meeting held on 28th February 2019. All Independent Directors have declared that they met all the criteria of independence as provided under Section 149(6) of the Companies Act 2013.

Retirement of Directors by Rotation

In terms of the provisions of sub-section (6) read with explanation to Section 152 of the Companies Act 2013 two-thirds of the total number of directors i.e., excluding IDs, are liable to retire by rotation and out of which, one-third are liable to retire by rotation at every annual general meeting.

Mr. Chandan Kumar Jain (DIN: 00262521), Managing Director who is liable to retire by rotation, at the AGM, and being eligible, offers himself for re-appointment.

ii. Executive Directors

Managing Director

Mr. Chandan Kumar (DIN: 00262521) was re-appointed as the Managing Director of the Company for another period of three years commencing from 1st January 2019and his term shall end with 31st December 2022 in the Board Meeting held on 14th February 2019. The reappointment has been approved by the Nomination and Remuneration Committee of the Board and the same is subject to approval by the Shareholders.

Hence a special resolution seeking members consent for the above said reappointment has been proposed and same forms part of the notice to this ensuing AGM

Whole Time Director (WTD)

Mr. DVB Prasad (DIN:02001256) was re-appointed as the Whole Time Director of the Companyin the Board Meeting held on 14th February 2018 for another period of three years commencing from 1stMarch 2018 and his term shall end with 28th February, 2021.

Key Managerial Personnel

As per Companies Act 2013 the persons holding the post of Managing Director, Whole Time Director, Chief Financial Officer and Company Secretary are the Key Managerial Personnel of the Company.

Mr Prem Prasad Babu who was appointed as the Company Secretary of the Company with effect from 14th September 2017 in the Board Meeting held on 14th September 2017resigned from the position of Company Secretary with effect from 31st August 2018 and the same was taken on record in the Board meeting held on3rd October 2018.

Mr .Chandan Kumar -Managing Director, Mr. DVB Prasad -Whole Time Director, Mrs. Sarala Viswanathan, Chief Financial Officer are the Key Managerial Personnel of the Company at the end of the year under review.

Nomination and Remuneration Policy

The Nomination and Remuneration Committee of Directors (NRC) reviews the composition of the Board, to ensure that there is an appropriate mix of abilities, experience and diversity to serve the interests of all shareholders and the Company.

In accordance with the requirements under Section 178 of theCompanies Act 2013 and Regulation 19 of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements), Regulations 2015, the NRC has formulated a Nomination and Remuneration Policy to govern the terms of nomination / appointment and remuneration of (i) Directors, (ii) Key Managerial Personnel (KMPs) of the Company.

The NRC will review the profile of persons and the most suitable person is either recommended for appointment by the Board or is recommended to shareholders for their election.

NRC will ensure that any person(s) who is / are appointed or continues in the employment of the Company as its Executive Chairman, Managing Director, Whole-Time Director shall comply with the conditions as laid out under Part I of Schedule V to the Companies Act 2013. NRC will ensure that any appointment of a person as an independent Director of the Company will be made in accordance with the provisions of Section 149 read with Schedule IV of the Companies Act 2013 along with any other applicable provisions and Regulation 25 of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements), Regulations 2015.

Criteria for performance evaluation, disclosures on the remuneration to executive directors have been disclosed as part of Corporate Governance Report attached herewith.

iii. Evaluation of the Board, Committee and Directors

During the year, as recommended by the Nomination and Remuneration Committee, an evaluation framework was adopted by the Board. Pursuant to the provisions of the Companies Act, 2013 and Regulation 25 of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements), Regulations 2015, the Board carried out an annual performance evaluation of its own performance, the Directors individually as well as the working of its various Committees. Structured questionnaires were prepared, after taking into consideration the feedback of the Directors. The overall Board evaluation covered various aspects of the Board s functioning in terms of structure, governance, and dynamics of functioning besides the financial reporting process, internal controls and risk management.

The performance evaluation of the Independent Directors was carried out by the entire Board. The performance evaluation of the Non-Independent Directors was carried out by the Independent Directors at their separate meeting.

iv. Number of Board Meeting held

The number of Board meetings held during the financial year 2017-18was 06 (Six) and more details including attendance particulars of directors are provided as part of Corporate Governance Report prepared in terms of Regulation 17 of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements), Regulations 2015.

9. AUDITORS

Statutory Auditors

M/s. Sanjay Shah & Associates, Chartered Accountants, Chennai (Firm Registration No: 003572S) were appointed as the statutory auditors of the Company for a period five years from the conclusion of the 26th Annual General Meeting till the conclusion of 31st Annual General Meeting to be held in the year 2022.

Reply to Qualification / Observations made in the Statutory Audit Report:

i. As regards the statement regarding deviation in the guidelines issued by ICAI regarding revenue recognition of accounting for real estate transaction in respect of certain project, the Audit Committee and the Board is of the considered opinion, that the Company has not violated the guidelines issued by ICAI. The said project being High End Apartments is not fully complete, as the completion is based on delivery of individual customized requirements of each of the prospective buyer. Hence the Board is of the opinion that sales can be accounted for only after completion of such pending works which may vary depending on prospective customer needs and cannot be generalized. Further the amount to be spent on this project towards completion is substantial.

ii. In respect of the said bank accounts the Company had approached banks for confirmations and same is awaited. However these are mainly inoperative accounts and the balances held in the accounts are not material.

Secretarial Auditors:

As required under Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014, the Company is required to appoint a Secretarial Auditor for auditing secretarial and related records of the Company.

Accordingly, Mr. R Muthukrishnan, Practising Company Secretary, Chennai, was appointed as Secretarial Auditors for carrying out the secretarial audit for the financial year 2018-19.

As required by Section 204 of the Companies Act, 2013, the Secretarial Audit Report for the year 2018-19, given by Mr. R Muthukrishnan, Practising Company Secretary, Chennai, for auditing the secretarial and related records is attached to this report.

Reply to Point 1 List of Observations

1. As regards late filing / non filing of certain forms with ROC / stock exchanges during 2018-19, there was certain dislocation in the administrative work due to changes in employees. However, the Company shall ensure that such delays are avoided in future.

Reply to Point 2 List of Observations

2. As far as loans in the nature of project advances to certain entities covered in Section 189 to the Companies Act, 2013, the said amounts are purely in the nature of project advances extended for the purpose of execution of certain joint venture projects entered by the company with such entities, on an arms lengths basis and as per agreements entered in to by the company, with such entities. Hence, given this background, the Board is of the opinion that the said project advances are, as per standard market practice of construction companies, is a commercial advance and hence such amounts are not in nature of any pure loans.

Reply to Point 3,4,5 List of Observations

3. As regards to qualification regarding composition of Audit Committee and Nomination and Remuneration Committee, due to resignation of an Independent Director during August 2018, the Company is in the process of identifying a suitable person to bring them on Board to meet with the requirements of the SEBI LODR Regulations. The Board has filled in necessary vacancy arising due to resignation of independent director as well as woman director by appointing an Independent Women Director on 28th February 2019.

Reply to Point 6 List of Observations

4. As regards to qualification regarding appointment of Company Secretary, the Company is in the process of identifying a suitable candidate to appoint as the Company Secretary of the Company.

Reply to Point 7, 8, 9 List of Observations

5. As regard to qualification with Regard to the delay in the submission of publication of financial results and submission of Annual Reports, Submission of Investor Complaints Report, the Company shall ensure to comply with the stipulations as laid down under SEBI LODR Regulations and shall avoid such delays in the future.

Reply to Point 10 List of Observations

6. The Company shall ensure to transfer the funds to Investor Education and Protection Fund. The Company shall also ensure that such delay does not arise in the future.

Reply to Point 11 List of Observations

7. The Company is taking steps to make the necessary payments to the Stock Exchanges and would be complying with the requirement at the earliest.

8. CORPORATE GOVERNANCE

A separate section on Corporate Governance and a certificate from the statutory auditors of the Company regarding compliance of conditions of Corporate Governance as stipulated under Regulation 27 of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements), Regulations 2015 with the Stock Exchange(s) form part of this Annual Report.

9. WHISTLE BLOWER POLICY

The Board at its meeting held on 16th October 2014, adopted a Whistle Blower Policy in accordance with the provisions of the Companies Act 2013 and as per Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements), Regulations 2015.

The Policy is disclosed on the Company s website with the following link www.vijayshanthibuilders.com.

10. PUBLIC DEPOSITS

The Company has not accepted any deposit from the public within the meaning of Chapter V of the Companies Act 2013, for the year ended 31st March 2019.

11.DISCLOSURES

Information on conservation of energy, technology absorption, foreign exchange, etc

Information on conservation of energy, technology absorption and foreign exchange earnings and outgo are given inAnnexure I to this report, in terms of the requirements of Section 134(3)(m) of the Companies Act 2013 read with the Companies (Accounts) Rules 2014;

Annual Return

Extract of Annual Return in the prescribed form is given as Annexure II to this report, in terms of the requirement of Section 134(3)(a) of Companies Act 2013 read with the Companies (Accounts) Rules, 2014.

Employee s Remuneration

The Company does not have any employees receiving the remuneration in excess of the limits prescribed under Section 197 of the Companies Act 2013 read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.

Comparative analysis of remuneration paid

A comparative analysis of remuneration paid to Directors and employees with the Company s performance is given as Annexure III to this report.

Details of related party transactions

All arrangements / transactions entered by the Company with its related parties during the year were in ordinary course of business and on an arm s length basis. During the year, the Company had not entered into any arrangement / transaction with related parties which could be considered material in accordance with the Company s Policy on Related Party Transactions and accordingly, the disclosure of Related Party Transactions in Form AOC 2 is not applicable. However, names of Related Parties and details of transactions with them have been included in Note no. 28.4 to the financial statements provided in the Annual Report.

Details of loans / guarantees / investments made

The Company has not extended any loans / guarantee/ or provided any security in connection with a loan to any other body corporate or person during the year under review, except certain advances in the nature of project advances, already detailed elsewhere in this annual report.

Significant & Material Orders Passed by the Regulators:

During the year 2018 - 19, no significant and material orders were passed by the Courts or Tribunals. However BSE Limited and National Stock Exchange of India Limited had suspended the trading in securities of the Company in both the platforms with effect from 9th April 2019 for the default in the Compliance of Regulation 17 and Regulation 18 of the SEBI Listing Regulations.

12. CORPORATE SOCIAL RESPONSIBILTY POLICY: (CSR)

As per Regulation 3(2) of Companies (Corporate Social Responsibility)Rules, 2014, the company is not meeting criteria as specified in Section 135(1) of the Companies Act, 2013 for a period of three consecutive financial years and hence the CSR requirements do not apply to your company.

However the Company continues to believe in operating and growing its business in a socially responsible way. This belief forms the core of the CSR policy of the Company that drives it to focus on holistic development of its host community and immediate social and environmental surroundings qualitatively. Hence although the provisions of Section 135 of the Companies Act, 2013, do not apply to the company, the Company has constituted a Corporate Social Responsibility Committee (CSR Committee) Voluntarily. The Corporate Social Responsibility Committee of the Board of Directors of the Company are as follows:

Mr.Sivasubramaniam- Director(Chairman)

Mr.Chandan Kumar Managing Director (Member)

Mr. DVB Prasad Whole Time Director (Member) (Resigned 28th February 2019)

As the Company is not covered under CSR requirements as aforesaid, the necessary disclosures under Rule 8 of the Companies (Corporate Social Responsibility Policy) Rules, 2014 has not been furnished.

13. SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013

The Company has necessary system in place to attend the grievances of women employee as required under Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. No complaints have been received during the year under review from any woman employee of the Company. Hence, no complaint is outstanding in this regard.

14. ACKNOWLEDGEMENT

The Directors thank the bankers, investing institutions, customers, dealers, vendors and sub-contractors for their valuable support and assistance.

The Directors wish to place on record their appreciation of the very good work done by all the employees of the Company during the year under review. The Directors also thank the investors for their continued faith in the Company.

For and on behalf of the Board of Directors
Date: 14.06.2019 CHANDAN KUMAR Managing Director DIN : 00262521
Place: Chennai S SIVA SUBRAMANIAM Director DIN : 00763122
DVB PRASAD Whole Time Director DIN : 02001256