VIP Clothing Ltd Directors Report.

To,

THE MEMBERS

VIP CLOTHING LIMITED

(Formerly known as Maxwell Industries Limited)

The Directors of your Company are pleased to present, the 29 Annual Report, on the working and the progress of the Company, alongwith audited financial statement of the Company for the financial year ended on March 31, 2019 and Report of the Auditors thereon.

1. FINANCIAL RESULTS

(Rs. in Lakhs)

Current Year Ended March 31, 2019 Previous Year Ended March 31, 2018
Revenue from Operations 20,746.35 22,237.76
Other Income 196.97 128.01
Profit before Interest & finance charge, Depreciation & Income Tax 560.64 1,178.09
Interest & Finance charges (880.70) (1,093.36)
Depreciation (331.01) (335.41)
Profit/(Loss) Before Tax (Before Exceptional Income) (651.07) (250.68)
Exceptional (Loss)/Income - (1.63)
Profit/(Loss) Before Tax after Exceptional (loss)/income (651.07) (252.31)
(Income Tax)
Provision for Income tax Expense for prior periods - 79.07
Deferred Tax (31.73) (32.89)
Profit/(Loss) from continuing operations (619.34) (298.49)
Profit/(Loss) from discontinued operations - (8.73)
Profits/(Loss) for the year (619.34) (307.22)
Other Comprehensive income (net of tax) (21.63) 4.21
Total Comprehensive Income attributable to owners of the Company (640.97) (303.01)
Profit Brought forward 5,456.61 5,759.62
Profit available for appropriation 4,815.64 5,456.61
Appropriation
Dividend and Tax on dividend - -
Closing balance in retain earnings 4,815.64 5,456.61

2. OPERATIONS

Revenue from operations for the financial year 2018-19 stood to Rs. 207.46 Crores as against Rs. 222.38 Crores in the previous financial year 2017-18. There was a decrease in revenue by 6.71% as compared to the previous year. This is mainly on account of drop in sales in the southern region due to intense competition and contraction of overall demand.

The Earnings before Interest, Depreciation, Tax and Amortisation (EBIDTA) during the year stood around 2.70% as against the 5.30% in the previous year.

The Net loss for the financial year 2018-19 is stood to Rs. 6.41 Crores as against the Net Loss of Rs. 3.03 Crores in the previous financial year.

3. DIVIDEND

Due to loss in the financial year 2018-19, the Board has not recommended any dividend on Equity Share Capital for the financial year ended on March 31, 2019.

4. TRANSFER TO RESERVE

Due to loss in the current and previous financial year, no amount has been transferred to General Reserve for current and previous financial year.

5. SHARE CAPITAL

During the year under review there is no change in share capital of the Company.

6. SUBSIDIARY

The Company does not have any subsidiary Company.

7. FIXED DEPOSIT

During the year, the Company has not accepted any fixed deposits under the Companies Act, 2013.

8. CORPORATE GOVERNANCE

As per Schedule V read with Regulation 34(3) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, a separate section on Corporate Governance practice followed by the Company, together with the certificate from Companys Auditors confirming the compliance on Corporate Governance forms an integral part of this report.

9. EXTRACT OF ANNUAL RETURN

The details forming part of the extract of the Annual Return in Form MGT-9 as on March 31, 2019, as required under Section 92 of the Companies Act, 2013, is included in this Report as Annexure - A.

10. NUMBER OF MEETING OF THE BOARD

The Board of Directors met 5 (Five) times during the financial year 2018-19. The maximum interval between any two meetings did not exceed 120 days. The details of the board meetings and the attendance of the Directors are provided in the Corporate Governance Report.

11. WHISTLE BLOWER POLICY

The Company has a Whistle Blower Policy to report genuine concerns or grievances. As per Regulation 46 of SEBIs (Listing Obligations and Disclosure Requirements) Regulations, 2015 the Whistle Blower Policy has been posted on the website of the Company (www.vipclothing.in). The Audit Committee shall oversee the Vigil Mechanism.

12. NOMINATION AND REMUNERATION POLICY

The Board of Directors has framed a policy which lays down a framework in relation to remuneration of Directors, Key Managerial Personnel and Senior Management of the Company. This policy also lays down criteria for selection and appointment of Board Members. The policy is available on the website of the Company www.vipclothing.in.

13. RELATED PARTY TRANSACTIONS

In line with the requirements of the Companies Act, 2013 and Regulation 23 of SEBI (Listing Obligations and Disclosure Requirements), Regulations, 2015, your Company has formulated a Policy on Related Party Transactions. The Policy intends to ensure that proper reporting, approval and disclosure processes are in place for all transactions between the Company and Related Parties.

This Policy specifically deals with the review and approval of material Related Party Transactions keeping in mind the potential or actual conflicts of interest that may arise because of entering into these transactions. All Related Party Transactions are placed before the Audit Committee for review and approval and also the Company has developed Related Party Transactions framework through Standard Operating Procedures for the purpose of identification and monitoring of such transactions.

All transactions entered with Related Parties for the year under review were on arms length basis and in the ordinary course of business and that provisions of Section 188 of the Companies Act, 2013 are not attracted. The policy is available on the website of the Company www.vipclothing.in.

There were no materially significant transactions with related parties during the financial year, which were in conflict with the interest of the Company. Therefore, there is no requirement to report any transaction in Form AOC-2 in terms of Section 134 of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014.

14. CORPORATE SOCIAL RESPONSIBILITY

The details about the initiatives taken by the Company on Corporate Social Responsibility (CSR) activities during the year are as per the annexure attached to the Companies (Corporate Social Responsibility Policy) Rules, 2014 have been appended as Annexure -B to this Report. The policy is available on the website of the Company www.vipclothing.in.

15. RISK MANAGEMENT POLICY AND INTERNAL ADEQUACY

The Company has formed a Risk Management Committee in accordance with the requirements of Regulation 21 of SEBI (Listing Obligations and Disclosure Requirements), Regulations, 2015. The Committee is responsible for reviewing the risk management plan and ensuring its effectiveness.

The Companys internal control systems are commensurate with the nature of its business and the size and complexity of operations. These systems are routinely tested and certified by Statutory as well as Internal Auditors and cover all offices, factories and key business areas, significant audit observations and follow up actions thereon are reported to the Audit Committee. The Audit Committee reviews adequacy and effectiveness of the Companys internal control environment and monitors the implementation of audit recommendations, including those relating to strengthening of the Companys risk management systems.

16. DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013

The Company strongly believes in providing a safe and harassment free workplace for each and every individual working for the Company through various interventions and practices. It is the continuous endeavour of the Management of the Company to create and provide an environment to all its employees that is free from discrimination and harassment including sexual harassment.

The Company has constituted Internal Complaints Committee (ICC).

During the year under review, no complaint pertaining to sexual harassment was received by the Committee.

17. DIRECTORS RESPONSIBILITY STATEMENT

To the best of knowledge and belief and according to the information and explanation obtained by them, the Directors make the following statement in term of Section 134(3)(c) of the Companies Act, 2013 that:

(a) in the preparation of the annual accounts of the Company for the financial year ended on March 31, 2019, the applicable accounting standards have been followed along with proper explanation relating to material departures;

(b) the Directors have selected such accounting policies and applied them consistently and 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 March 31, 2019 and of the loss of the Company for the year ended on March 31, 2019;

(c) the Directors have 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;

(d) the Directors have prepared the annual accounts on a going concern basis;

(e) the Directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and operating effectively;

(f) the Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.

18. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS

No significant and material orders passed by the Regulators/Courts/Tribunals during the year which would impact the going concern status of the Company’s future operations.

19. AUDITORS

M/s. Sharp & Tannan, Chartered Accountants, Mumbai, [Firm Registration No. 109982W], the Statutory Auditors of the Company, were appointed by the Shareholders at their meeting held on September 27, 2016 for a period of 5 years i.e. upto conclusion of Thirty First Annual General Meeting.

In terms of the provisions relating to statutory auditors forming part of the Companies Amendment Act, 2017, notified on May 07, 2018, ratification of appointment of Statutory Auditors at every Annual General Meeting is no more a legal requirement. Accordingly, the Notice convening the ensuing Annual General Meeting does not carry any resolution on ratification of appointment of Statutory Auditors. However, M/s. Sharp & Tannan, Chartered Accountants, have confirmed that they are eligible to continue as Statutory Auditors of the Company to audit the books of accounts of the Company for the financial year ending March 31, 2020 and accordingly M/s. Sharp & Tannan will continue to be the Statutory Auditors of the Company for the financial year ending March 31, 2020.

The Auditors Report does not contain any qualifications, reservations or adverse remarks and has not reported any fraud under Section 143(12) of the Companies Act, 2013.

20. COST RECORD AND COST AUDIT

There has been no notification till date, covering our industry for the purpose of maintenance of Cost Accounting Records and Cost Audit for the financial year 2018-19.

21. SECRETARIAL AUDIT

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and Rules made thereunder, the Company has appointed Mr. Rakesh Sanghani, Practicing Company Secretary (FCS No. 7647) (C.P No.6302) to undertake the Secretarial Audit of the Company.

The Secretarial Audit Report is included as Annexure - C and forms an integral part of this Report.

There is no qualifications, reservations or adverse remarks in the report.

22. BOARD OF DIRECTORS AND KEY MANAGERIAL PERSONNEL

There has been no change in the composition of Board of Directors of the Company during the year under review.

Retirement by rotation

Pursuant to Section 152(6) of the Companies Act, 2013, Mr. Sunil J. Pathare would retire by rotation at the forthcoming AGM and being eligible, offers himself for re-appointment.

Re-appointment of Independent Director

The terms of office of Mrs. Meher Castelino - Independent Director of the Company, will expire on March 23, 2020. The Board of Directors of the Company, on recommendation of the Nomination and Remuneration Committee to re-appoint her as an Independent Director of the Company for a second term of 5 (five) consecutive years on the expiry of her current term of office.

Key Managerial Personnel

Pursuant to the provision of Section 203 of the Companies Act, 2013, the Board of Directors of the Company has the following Key Managerial Personnel:

1. Mr. Sunil J. Pathare - Chairman and Managing Director

2. Mr. Kapil J. Pathare - Whole time Director

3. Mr. Ashish Mandaliya - Chief Financial Officer and Company Secretary

4. Mr. Devendra Vyas - Chief Finance Controller

During the financial year 2018-19, Mr. Yogesh Tiwari - Chief Executive Officer (CEO) of the Company has resigned from position of CEO with effective from February 28, 2019. Mr. Sunil J. Pathare Chairman and Managing Director had taken over the function, role and responsibility of Mr. Yogesh Tiwari.

23. BOARD INDEPENDENCE

The Board of the Company as on March 31, 2019 consisted of 6 (Six) Directors out of which 4 (Four) are Independent Directors and 2 (Two) are Executive Directors.

All the Independent Directors have given declarations that they meet the criteria of Independence mentinoed under Regulation 16(b) of Chapter IV of SEBIs (Listing Obligations and Disclosure Requirements) Regulations, 2015 and Section 149(6) of the Companies Act, 2013.

24. PERFORMANCE EVALUATION OF BOARD

Pursuant to the provisions of the Companies Act, 2013 and SEBIs (Listing Obligations and Disclosure Requirements) Regulations, 2015 and SEBI circular no. SEBI/HO/CFD/CMD/CIR/P/2017/004 dated January 5, 2017, the Board carried out an annual evaluation of performance of its own and its Committees and the Directors individually. At the meeting of the Independent Directors held on March 18, 2019 and as per the criteria specified by SEBI all the relevant factors for evaluating the performance of the Committees and of the Board was discussed.

25. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

The Company has not given any Loans, Guarantees and also not made any Investments under Section 186 of the Companies Act, 2013.

26. FAMILIARISATION PROGRAMMES FOR DIRECTORS

Pursuant to Section 149 read with Schedule IV, Part III of the Companies Act, 2013 and Regulation 25 of the SEBIs (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company familiarizes its Independent Directors on their roles, rights, responsibilities, nature of the industry in which the Company operates, business model of the Company, its products, and also update on various ongoing events and developments relating to company.

The familiarisation programme for Independent Directors is disclosed on the Companys website at www.vipclothing.in.

27. STATUTORY INFORMATION

The information on conservation of energy, technology absorption and foreign exchange earnings and outgo pursuant to Section134(3)(m) of the Companies Act, 2013 read with Rule 8(3) of the Companies (Account) Rules, 2014 is given in Annexure D to this report.

The information required under Section 197(12) of the Companies Act, 2013 read with Sub Rule 2 and 3 of Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rule, 2014 and forming part of the Directors Report for the year ended March 31, 2019 is given in a separate Annexure - E to this Report.

None of the Employees of the Company are in receipt of Rupees One Crore and Two Lakhs per annum or Rupees Eight Lakhs and Fifty Thousand per month during the year under review.

None of the employees listed in the said Annexure is a relative of any Director of the Company. None of the employees hold (by himself or along with his spouse and dependent children) more than two per cent of the Equity Shares of the Company.

The Business Responsibility Reporting as required by Regulation 34(2)(F) of Chapter IV of SEBIs (Listing Obligations and Disclosure Requirements) Regulations, 2015, is not applicable to your Company for the financial year ending March 31, 2019.

28. EMPLOYEE STOCK OPTION

The Companys Employees Stock Option Scheme (ESOS 2017) is in place from F.Y. 2017-18. The Company had granted total 9,09,000 Stock Options to eligible employees of the Company, under the "VIP Employee Stock Options Scheme 2017". Now, due to resignation, superannuation and surrender of Stock Options by the eligible employees of the Company, the Nomination and Remuneration Committee of the Board of Directors at its meeting held on March 18, 2019 had approved the cancellation of all 9,09,000 ESOP.

During the financial year under review, no fresh Stock Option was granted to any employee of the Company.

29. NON-RENEWAL OF LICENCE AGREEMENT WITH EMINENCE GROUP

The Licence agreement with Eminence group, for manufacturing and marketing of innerwear under brand name "Eminence" expired on December 31, 2018. The Company has not renewed the said Licence agreement with Eminence due to subdued revenue contribution from the Eminence brand over the last ten years and focus on promoting VIP brand.

30. DISPUTED INCOM E TAX LIABILITY

During the financial year 2018-19, the Company has received an order from High Court, Bombay, dismissing the appeal preferred by Income Tax department. The amount pending disposition of the appeal was disclosed as Contingent Liability and was also reported by Auditors under disputed tax liabilities till financial year 2017-18.

31. LISTING

Equity shares of the Company are listed on the BSE Limited and National Stock Exchange of India Limited (NSE) and listing fees have been paid.

32. ACKNOWLEDGEMENT

The Directors of your Company acknowledge with deep sense of appreciation the encouragement, support and co-operation received by the Company from its Bankers viz. State Bank of India, IDBI Bank Limited, HDFC Bank Limited; BSE Limited, National Stock Exchange of India Limited, Members; Suppliers and Esteemed Customers of the Company.

33. CAUTIONARY STATEMENT

Statement made in the Annual Report including those stated under the caption "Management Discussion and Analysis" describing the Companys plan, projections and expectations may constitute "forward looking statement" within the meaning of applicable laws and regulations. Actual results may differ materially from those either expressed or implied.

For and on behalf of the Board
Place: Mumbai Sunil J. Pathare
Date: May 20, 2019 Chairman and Managing Director
(DIN 00192182)