VTX Industries Ltd Directors Report

The Members,

Your directors are pleased to present the 60"¹ Annual Report and the Audited Accounts for the financial year ended March 31, 2014.

Financial Results:

		(Rs in lakhs)
Particulars	2013 - 14	2012- 13
Profit before Interest, Depreciation and Tax
(before extraordinary item)	(17,092.52)	6,067.11
Extraordinary item	-	-
Profit before Interest, Depreciation and Tax
(after extraordinary item)	(17,092.52)	6,067.11
Less: Interest	4,655.08	4,205.54
Depreciation	1,313.63	1,670.64
	5,968.71	5,876.18
	(23061.23)	190.93
Tax expense:
a) Current tax expense for current year
b) (Less): MAT credit (where applicable)
c) Current tax expense relating to prior years	-	-
d) Net current tax expense
e) Deferred tax	635.28 635.28	107.91 107.91
Profit / (Loss) for the year	(23,696.51)	83.02

Review of Operations

During the year under review, The turnover of the company has reduced to Rs 4,593 lakhs from Rs 17630 lakhs in the corresponding previous financial year and incurred a loss ofRs 236.96 lakhs as against profit of Rs 83.02 lakhs which is,- mainly due to working capital shortage and liquidity issue and also due to severe power shortage and suspension of activity in Tamilnadu. M/s. Indian Overseas Bank as lead bankers for Term Load lender has initialed SARFAESI proceedings against the Company for secured debt repayment.

The reason lor losses were mainly due to increase in finance costs since there were increased rate of tnteres! and other borrowing costs.

The deteriorating working capital situation, resultant delayed delivery at higher cost and consequential orders cancellation. The past few years, inventory accumulated because of exports that reduced critically. There was volatility in cotton price and due to general sluggishness of the economy in the Country as well as in the World over, there was no pick up in demand. Consequently, much progress could not take place in the performance of the company. However, the prospects for textile industry looks promising provided a favourable condition prevails in the Country due to Governments initiatives.

Status of manufacturing:

The units i.e. weaving /processing / madeups units are running on very low capacity mainly on job works and marginal exports which has been further aggravated due to frequent power cuts / load shedding, which forced the company to use alternative mode. The increase in the finance cost to Term Loan and Working Capital facilities availed from the Banks is also making hardship to the company.

Future

Your Company is confident that the persistent and committed efforts of the management to bring in fresh infusion of funds will be successful, provided that the Lenders show interest and commitment in reviving the operations of your Company instead of the current hostile and negative approach that is proving a major cause of concern to investors.

The Management is in close working with the bankers, to arrive at a beneficial one time settlement.

The management is confident of reviving the business thought prudently reworking the strategy of high value products to improve business of value addition and profitability. They have brought in advisors in business turnaround around the world.

The future of your Companys performance looks promising as it has taken effective measures in the production which would help to reduce cost of production and thereby increase profit margin.

The company could secure good international orders and it has adequate infrastructure to execute and a good brand in the international as well as domestic markets soon.

Your company is making all efforts to explore international markets to expand its customer base and it has progressively entered into hospitality segment comprising hotels and hospitals both in India and aboard.

Dividend

In view of operating losses incurred during the year, your Directors do not recommend payment of any dividend for the financial year 2013-14.

Internal Control System and their adequacy

The Company has an adequate system of internal controls commensurate with its size and nature of business to ensure adequate protection for the Companys resources, provision of accurate and speedy financial reports and compliance with the companys policies, procedures and legal obligations. The audit Committee meets periodically with the Management, Internal Auditors and Statutory Auditors to review the internal audit and internal control systems.

Subsidiaries

Your company has two subsidiaries viz. Vijayeswari UK Ltd and Vijayeswari USA LLC. The accounts of the subsidiaries are consolidated with the accounts of Company in accordance with Accounting Standard AS-21 on consolidated financial statements and Listing Agreement prescribed by Securities Exchange Board of India. The Consolidated accounts duly audited by the statutory auditors form part of the Annual Report.

Dematerialization

Out of the 181,69,240 shares, 172,67,843 equity shares stands dematerialized as on 31^s March 2014. M/s. Link Intime India Private Limited, Mumbai, having its branch office at Coimbatore has been retained as the Registrar and Transfer Agents of the Company for all shares both in electronic and physical form.

Listing of Shares

The shares of your Company have been listed on BSE Limited, Mumbai and Madras Stock Exchange Limited, Chennai.

Directors

Sri. Shreenivasa Rao and Sri. Mohan Rao, Directors of the Company retire by rotation at the ensuing Annual General Meeting and being eligible, offer themselves for re-appointment.

The term of Smt. Jayanthi Ramachandra as Managing Director expired on September 11, 2013 and is eligible herself for re-appointment and it is proposed to re-appoint her for a further period of 3 years as the Board considers that her continued association would be of immense benefit to the company and it is desirable to continue to avail the services of Smt. Jayanthi Ramachandra as Managing Director. Necessary resolution for her re-appointment is included in the Agenda of the Annual General Meeting.

Independent Directors

In compliance of the provisions of the Companies Act, 2013 and the Listing Agreement entered into with the Stock Exchanges in which the Companies shares are listed, Independent Directors are required to be appointed for a term not exceeding 5 years at a time besides the other requirements. Accordingly the Board of Directors have proposed to appoint Sri. J. Balmurugan and Sri. Pattabhi Ramarao, Directors, who are retiring by rotation at the ensuing Annual General Meeting, as Independent Directors for a Term of 5 consecutive years, i.e. upto 31.03.2019. Your Directors recommend their appointment.

Details of the proposal for appointment of the above Directors are mentioned in the Explanatory Statement under Section 102 of the Companies Act, 2013 annexed to the Notice of the ensuing Annual General Meeting.

Fixed Deposits

In terms of the provisions of Sec.58A, the company has not accepted any deposits from the public during the financial year under review. There was no refund claim of the Fixed Deposits during the year and the unclaimed Fixed Deposits as on 31.03.2014 was Rs 11.27 lakhs.

Auditors

The term of Auditors M/s. Suri & Co., Chartered Accountants, Coimbatore, expires at the end of the ensuing Annual General Meeting and they are eligible for re-appointment. The Audit Committee has recommended their reappointment. The requisite certificate from Auditors, pursuant to Section 139(1) of the Companies Act, 2013 has been received by the Company.

Cost Auditors

The Board of Directors has appointed M/s. P. Mohan Kumar & Co., Cost Accountants, Coimbatore as Cost Auditors of the Company for the financial year 2013-14. The Cost Auditing for the said financial year is under process and the Cost Audit report along with Auditors observations and suggestions, and Annexure shall be filed to the Central Government before its due date i.e. within 180 days from the close of the Companys financial year to which the report relates.

Directors Responsibility Statement

Pursuant to section 217(2 A A) of the Companies Act, 1956, the Directors do hereby confirm that:

a. in the preparation of the Annual Accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

b. the Directors had selected suitable 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 at the end of the financial year and of the profit of the company for that period;

c. the Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities, and

d. the Directors had prepared the Annual Accounts on a going concern basis.

Conservation of Energy, Technology absorption, Foreign Exchange Earnings and Outgo:

The particulars required by Section 217 (l)(e) of the Companies Act, 1956 relating, to Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo, are provided as the annexure to this report.

Statement of Particulars of Employees:

In terms of Section 217 (2A) of the Companies Act, 1956 read with Rule 1A of Companies (Particulars of Employees) Amendment Rules, 2011, the Company has no employee drawing salary exceeding Rs 60 lakhs per annum or Rs 5 lakhs per month during the year under review.

Corporate Governance

Your company has complied with Corporate Governance norms as stipulated under clause 49 of Listing Agreement entered into with Stock Exchanges. A detailed report on Corporate Governance forms part of this report. A certificate from statutory Auditors confirming the compliance of governance is attached to corporate governance report.

Management Discussion and Analysis Report

A review of Textile industry, its opportunities and threats, future, outlook of the company etc. are covered under the Management Discussion and Analysis Report, which is attached to this report.

Human Resource Management / Industrial Relations

Your company had always been committed to maintain healthy, cordial and harmonious industrial relations at all levels. The work environment of the company is constantly being upgraded. The labor relations continued to be cordial throughout the year and industrial relations were excellent and harmonious.

General exemption U/s. 212(8) of the Companies Act, 1956

In pursuance of the General Circular vide No.2/ 2011 dated 08.02.2011, issued by the Ministry of Corporate Affairs, New Delhi, read with Section 212(8) of the Companies Act, 1956, the company is exempted from attaching the Balance Sheet and Profit & Loss Account of the Subsidiaries viz. Vijayeswari UK Ltd and Vijayeswari USA LLC along with the report of

Board of Directors and report of Auditors thereon, with the companys accounts for the year ended 31^st March, 2014. Accordingly, the audited accounts and report of Directors and Auditors of the said subsidiary companies are not attached to the Balance Sheet of the Company. However, the accounts of the subsidiaries are consolidated with the accounts of Company in accordance with Accounting Standard AS-21 prescribed by the Institute of Chartered Accountants of India and Listing Agreement prescribed by Securities Exchange Board of India. The Consolidated accounts duly audited by the statutory auditors forms part of the annual report.

The annual accounts of the subsidiary companies and the related detailed information shall be made available to the shareholders of the holding and subsidiary companies seeking such information at any point of time. The annual accounts of the subsidiary companies will be available at the registered office of the Company and at the respective subsidiary companies and any shareholders can inspect the same during the business hours of any working day.

Industrial Relation

The relationship with employees continued to remain cordial throughout the year under review.

Acknowledgement

Your Directors place on record their appreciation for co-operation and support extended by shareholders, customers, bankers and all governmental and statutory agencies. Your Directors also thank the employees for their valuable contribution during the year and look forward to their continued support in the years to come.

	By the Order of the Board
	For VTX Industries Limited
Date : 28.06.2014	A.L. Ramachandra
Place : Coimbatore	Chairman & Managing Director

FORM A

[As per Rule 2 of the Companies (Disclosure of particulars in the Report of the Board of Directors) Rules, 1988]

A. Power and Fuel Consumption

	2013-14	2012-13
1. ELECTRICITY
a) Purchased
Units	189,036	65,79,296
Total Amount (in Rs )	1,814,787	5,09,85,249
Rate per unit (in Rs )	9.60	7.75
b) Own Generation
i) Through Diesel Generator
Units	5,53,860	19,03,679
Units per Litre of Diesel Oil	7.20	3.35
Cost per Unit (in Rs )	9.62	19.16
ii) Through Steam Turbine/Generator/Wind Mill
Units (Windmill energy produced)	-	33,52,265
Units per litre of Fuel Oil/Gas	-	-
Cost per unit
2. COAL
Quantity (Tonnes)	-	-
Total Cost	-	-
Average rate	-	-
3. FURNACE OIL
Quantity (K. Litres)	-	L
Total Amount (in Rs )	-	-
Average rate (in Rs )	-	-
4. OTHERS/INTERNAL GENERATION
Quantity	-	-
Total Cost	-	-
Rate per unit	-	-
B. Consumption per unit of production
Units consumed/product (with details)
Electricity/Furnace oil/Coal/others	-	7.40
1. Electricity
2. Furnace oil

C. Research & Development Expenditure :

Our Company is a member of South India Textile Research Association & SIMA Cotton Development and Research Association. Apart from this, Company has not taken up separate research and development work.

D. Foreign Exchange Earnings

The details of Foreign Exchange Earnings are furnished in Note No. 31 forming part of the Financial Statements.

	By the Order of the Board
	For VTX Industries Limited
Date : 28.06.2014	A.L. Ramachandra
Place : Coimbatore	Chairman & Managing Director