Vijay Shanthi Builders Ltd Directors Report.

To the Members,

Your Directors take pleasure in presenting the 26th Annual Report on the business and operations of your Company for the year ended 31st March 2017.

Amount (Rs.In Lakhs)

Financial results Year ended 31.03.2017 Year ended 31.03.2016
Income from sales / other operation
Sales 7844.37 5652.30
Other Income 28.12 53.71
Total Revenue 7872.49 5706.01
Total Expenditure 6048.05 5504.58
Gross Profit (Before Depn. & Tax) 1824.44 201.43
Financial Overheads 928.37 59.20
Depreciation 32.78 38.06
Profit Before Tax 863.29 104.17
Exceptional Items 0.00 0.00
Provision for Tax 385.55 27.80
Profit after Current Tax 477.74 76.37
Less: Deferred Tax 5.46 5.34
Net Profit 472.27 71.02
Add: Surplus From Previous Year 3374.09 3303.07
Profit available for appropriation 3846.36 3374.09
Less: General Reserve 0.00 0.00
Less: Transfer to Debenture Redemption Reserve 0.00 0.00
Less: Transfer of Written down value of Assets 0.00 0.00
Balance Carried Forward 3846.36 3374.09
Earnings Per Share (EPS) 1.80 0.27

2. DIVIDEND

W ith a view to conserve the resources for its ongoing projects and future launches the company has not declared dividend for the financial year 2016 - 17.

3. EVENTS SUBSEQUENT TO THE DATE OF FINANCIAL STATEMENTS:

Ther e are no material changes and commitments affecting the financial position of the company between 31st March 2017 and the date of Boards Report 02nd June 2017.

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

Ther e 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

The Indian real estate sector has witnessed high growth in recent times with the rise in demand for office as well as residential spaces. India has been ranked fourth in developing Asia for FDI inflows as per the World Investment Report 2016 by the United Nations Conference for Trade and Development. According to data released by Department of Industrial Policy and Promotion (DIPP), the construction development sector in India has received Foreign Direct Investment (FDI) equity inflows to the tune of US$ 24.29 billion in the period April 2000-March 2017. The government has taken several initiatives to encourage the development in the sector.

ii. Business Outlook

For the residential sector, 2016 was not one of the best years as prevailing caution affected investors as well as end-users in the real estate market, due to the predominant economic risks. Despite huge demand, transaction volumes remained low in 2016. Pressures of increasing unsold inventory and a liquidity crunch resulted in fewer project launches in most of the cities. There was an increase in the incentives being offered to sell the property, such as innovative payment plans, discounts, and gifts with bookings. However, such incentives have not proved to be much of a booster and ready to move in apartment remain the most preferred one among end-users.

iii. Future Outlook

The Indian construction and real estate sector continues to be a favored destination for global investors. The coming year is therefore expected to write a new growth story for real estate sector. These include reduction in interest rates, interest subsidy to home buyers, increased loan portfolios, increased and ease FDI in real estate & construction sector, implementation and introduction of real estate regulatory authority and GST bill etc. With sufficient boost from the government, the realty market is expected to see gleaming days in coming future.

iv Operational Overview .

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

Ongoing Projects
Project Name Location Saleable Area (Sq. Ft.)
Boulevard (partly completed) Vandalur Kelambakkam Road, Kandigai 4.1 Lakh
I Sky Villas Perungudi 0.43 Lakh
Fortune Square Rathinamangalam 2.36 Lakh
Solitaire T. Nagar 0.004 Lakhs
Future Projects
Ark Oragadam 3.85 Lakhs
Ela Thandalam 5.22 Lakhs
Lush Pammal 0.98 Lakhs
Cue Besant Nagar 0.37 Lakhs

v. Opportunities and Threats

The Real Estate (Regulation and Development) Act, 2016 was passed by both houses of the parliament on 10th March 2016 and received the assent of the President on the 25th March 2016. The real estate bill seeks to set up a Real Estate Regulatory Authority in states and federal territories to oversee real estate transactions. It will help regulate sector and bring in clarity in terms of who governs/monitors realty projects. It also seeks to protect the interest of the allottees/purchasers by promoting transparency, accountability and efficiency in the construction and execution of real estate projects by promoters. It also holds the promoters accountable for not registering their projects with the Real Estate Regulatory Authority (Regulatory Authority) or for providing insufficient information regarding their project. In addition to the promoter and allottees, the Bill also brings real estate brokers who facilitate the sale and purchase of units in a project within its ambit

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 Companys 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. Inter nal 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 clients 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 Directors Responsibility Statement, it is hereby stated -

i. that in the preparation of annual accounts for the financial year ended 31st March, 2017, 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 profit 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 accor dance 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 31 . st March, 2016 on a "going concer n basis";

v that the Directors had laid down internal financial controls to be followed by the Company and that such . inter nal 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 does not have any subsidiary company nor any associate company within the meaning of Section 2(6) of the Companies Act, 2013

8. DIRECTORS AND KEY MANAGERIAL PERSONNEL

i. Independent Directors

Mr. Siva Subramaniam (DIN: 00763122) and Mrs. Revathy Ramakrishna (DIN:05128878) were appointed as the Independent Directors 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 Septemember 2014. 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. Mrs. Revathy Ramakrishna (DIN:05128878) has resigned from the office of Independent Non-Executive Director of the company on 15th May 2017. The Board wishes to place on record services rendered by Mrs Revathy Ramakrishna, Director during her tenure in the Board.

The Board, on recommendation by Nomination and Remuneration Committee has proposed the reappointment of Mr. Siva Subramaniam for a second term up to September 28, 2022.

All Independent Directors have declared that they met all the criteria of independence as provided under Section 149(6) of the Companies Act 2013.

Separate Meeting of Independent Directors (IDs)

During the year under review, a separate meeting of IDs was held on 13th March 2017 and the IDs reviewed theperformance of the Non-IDs viz., Mr.Chandan Kumar Jain, Managing Director and Mr. DVB Prasad, Whole Time Director

They also assessed the quality, quantity and timeliness of flow of information between the Companys Management and the Board that are necessary for the Board to effectively and reasonably perform their duties.

All the IDs were present at the meeting.

ii. W omen Director

In terms of Section 149 of the Companies Act 2013 read with the Companies - Appointment and Qualification of Directors, Rules, 2014 and Regulation 17 of SEBI (LODR) Regulations 2015, the Company is required to have a woman director on its Board and during 2016-17, Mrs. Revathy Ramakrishna (DIN:05128878) was serving the Board as an Independent cum woman Director of the Company.

Retir ement 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 (DIN: 00262521), Director who is liable to retire by rotation, at the AGM, and being eligible, offers himself for re-appointment.

iii. 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 2016 and his term shall end with 31st December 2018.

Whole Time Director (WTD)

Mr . DVB Prasad (DIN:02001256) was re-appointed as the Whole Time Director of the Company for another period of three years commencing from 1st March 2015 and his term shall end with 28th February, 2018.

iv . 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

Ms. R.K.Swathi Lakshmi Rao was appointed as the Company Secretary of the Company with effect from 01st July 2016 in the Board meeting held on 27th June 2016.

Mr . Chandan Kumar -Managing Director, Mr. DVB Prasad -Whole Time Director, Mrs. Sarala Viswanathan, Chief Financial Officer and Ms. R.K.Swathi Lakshmi Rao Company Secretary (since resigned with effect from 22nd May 2017) are the Key Managerial Personnel of the Company during 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 the Companies 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.

v . 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 Boards 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.

vi. Number of Board Meeting held

The number of Board meetings held during the financial year 2016-17 was 08 (Eight) and more details 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. Vinodh Kothari & Co., Chartered Accountants, Chennai (Firm Registration No: 012717S) was appointed as the Statutory Auditors of the Company for the financial year 2016-17, who shall hold office upto the date of this AGM but, they have written to the company stating their inability for re appointment due to other pre occupation. In view of this, the Board has proposed appointment of M/S Sanjay Shah & Associates, Chartered Accountants, Chennai (Firm Registration No: 003572S ) as statutory auditor to hold office for a term of 5 years, subject to ratification by shareholders in each AGM. Accordingly, requisite resolution forms part of the notice convening the AGM.

Reply to Qualification / Observations made in the Statutory Audit Report: i. As r egards 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 spend on this project towards completion is substantial. ii. In r espect 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. iii. As r egards gratuity, the Board is of the opinion that the amount provided for in the books of the company is adequate based on its past experience.

Secr etarial Auditors

As r equired 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.

Accor dingly, Mr. R Muthu Krishnan, Practising Company Secretary, Chennai, was appointed as Secretarial Auditors for carrying out the secretarial audit for the financial year 2016-17.

As r equired by Section 204 of the Companies Act, 2013, the Secretarial Audit Report for the year 2016-17, given by Mr. R Muthu Krishnan, Practising Company Secretary, Chennai, for auditing the secretarial and related records is attached to this report.

Reply to Qualification / Observations made in the Secretarial Audit Report: i. As r egards late filing / non filing of certain forms with ROC / stock exchanges during 2016-17, 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. ii. 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. iii. As regards to qualification regarding composition of Nomination and Remuneration Committee, due to resignation of an Independent Director during August 2015, the Company was unable to meet requirement regarding the composition for part of the year. However the Board has appointed Mr. V. Parthasarathy, as an additional Director in the Board Meeting held on 24.08.2016 and subsequently Mr. V. Parthasarathy has been appointed as the member of Nomination and Remuneration Committee. iv. As regards to qualification regarding appointment of Company Secretary, due to the resignation of Company Secretary during March 2016, the Company was unable to meet requirement from April 1, 2016 and June 30, 2016. However the Board has appointed Ms. RK Swathi Lakshmi Rao as a Company Secretary of the Company, w.e.f. 01st July 2016 in the Board Meeting held on 27.06.2016. v. As r egards to payment of penalty to National Stock Exchange of India Limited, the said delay was minor due to certain reason outside the control of the Company. vi. As r egards to delay in transfer of sums required to be transferred to the Investor Education and Protection Fund (IEPF), the Company shall ensure such delays shall not occur in future. The Board is of opinion that he reported delay is minor and not material.

10. 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.

11. 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 Companys website with the following link www.vijayshanthibuilders.com.

12. 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 2017.

13. 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 in Annexure 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.

Employees 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 Companys 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 arms 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 Companys 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 made any investments or 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 2016-17, no significant and material orders were passed by the Regulators or Courts or Tribunals impacting the going concern status and Companys operations in future.

14. CORPORATE SOCIAL RESPONSIBILTY POLICY

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 in accordance with the requirements of Section 135 of the Companies Act, 2013, the Company has constituted a Corporate Social Responsibility Committee ("CSR Committee"). The Corporate Social Responsibility Committee of the Board of Directors of the Company are as follows:

Mr . Revathy Ramakrishna – Independent Director (Chairperson)

Mr . Chandan Kumar – Managing Director (Member)

Mr . DVB Prasad – Whole Time Director (Member)

The Company shall ensure that the Company spends at least 2% of the average net profits of the Company made during the three immediate preceding financial years with stands at 4.44 lakhs, the average net profits being 222.03 lakhs, calculated in accordance with Section 198 of the Act, in pursuance of its CSR policy.

The Company was unable to spend the amount to be spent under Corporate social responsibility as required under Section 135 of the Companies Act, 2013 and rules made there under as the company was in the process of identifying the appropriate projects and agency to spend such amount as required. However, the Board shall make every effort to meet its CSR requirements in the current year. As the Company has not spent money towards CSR the necessary disclosures under Rule 8 of the Companies (Corporate Social Responsibility Policy) Rules, 2014 has not been furnished.

15. SEXUAL HARASSMENT OF WOMEN AT WORK PLACE (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, Prohibitionand Redressal) Act, 2013. No complaints has been received during the year under review from any woman employee of the Company. Hence, no complaint is outstanding in this regard.

16. ACKNOWLEDGEMENT

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

The Dir ectors 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
CHANDAN KUMAR Managing Director DIN: 00262521
DVB PRASAD Whole Time Director DIN: 02001256
Date: 02nd June 2017
Place: Chennai S SIVA SUBRAMANIAM Director DIN: 00763122