DIRECTORS REPORT Dear Members, The Directors of your Company have pleasure in presenting their 51st Annual Report together with the Audited Accounts of the Company for the Financial Year ended 31st March, 2015 PUBLIC DEPOSITS: The Company has not accepted and does not intend to accept any deposits from the public. As at 31st March, 2015, there are no outstanding/unclaimed deposits from the public. DIVIDEND: The Board of Directors of your Company is pleased to recommend a dividend of Rs. 3 per share on the fully paid-up equity shares of the Company. DIRECTORS AND KEY MANAGERIAL PERSONNEL (KMP): In accordance with provisions of the Articles of Association of the Company, Mrs. Suchita Jain, Director of your Company, retires by rotation at the conclusion of the forthcoming Annual General Meeting and being eligible, offers herself for re-appointment. The Board of Directors recommended her appointment for consideration of the members at the forthcoming Annual General Meeting. Pursuant to provisions of Section 203 of the Companies Act, 2013, the below mentioned KMP's were appointed/ designated in the Board meeting held on 12th February 2015, as detailed below Familiarisation programmes for Board Members: The Board members are from time to time provided with necessary documents/policies/internal procedures to get them familiar with the practices of the Company. The business strategies, performance, global developments, legal & other updates, compliance reports and other relevant information/reports etc are being periodically provided to the Board of Directors. INDEPENDENT DIRECTORS: Pursuant to the provisions of the Companies Act, 2013, Mr. Surinder Singh Bagai, Mr. Jagdish Rai Singal, Mr. Sat Paul Kanwar, Mr. Om Parkash Sharma & Mrs. Apinder Sodhi were appointed as Independent Directors in the 50th Annual General Meeting, who are not liable to retire by rotation. Declaration under Section 149(6): The Independent Directors have submitted their disclosures to the Board that they fulfill 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 read with the relevant rules. 7. AUDITORS: a. Statutory Auditors: M/s. R. Dewan & Co., the Statutory Auditors of the Company, have been appointed by the Shareholders of the Company for five consecutive years i.e. from conclusion of 50th Annual General Meeting to the conclusion of 55th Annual General Meeting, whose first year will be completed in the ensuing Annual General Meeting. Pursuant to provisions of Section 139 (1) of the Companies Act, 2013, this appointment shall be ratified by the Shareholders at every Annual General Meeting during their tenure. Therefore, it is recommended to the shareholders to ratify the appointment of M/s. R. Dewan & Co., the Statutory Auditors, in their forthcoming Annual General Meeting. b. Secretarial Auditor: Khanna Ashwani & Associates, Practicing Company Secretaries, were appointed as Secretarial Auditor & their report on Secretarial Audit in Form No. MR 3 under Section 204 of the Companies Act, 2013 for the Financial Year 2014-15 is attached as Annexure 1 and shall form part of this Report. c. Internal Auditor: Pursuant to provisions of Section 138 of the Companies Act, 2013, the Company has appointed Mr. Varun Mahajan, to conduct internal audit of the functions and activities of the Company and maintain internal control systems of the Company. 8. AUDITORS' REPORT: The Statutory & Secretarial Auditors' Reports are self-explanatory and requires no comments. 9. AUDIT COMMITTEE & VIGIL MECHANISM: Composition of Audit Committee: The Audit committee of the Board of Directors was constituted in conformity of provisions of the Companies Act, 2013 & the Listing Agreement. The committee comprises of three directors i.e. Mr. Om Parkash Sharma, Mr. Sat Pal Kanwar and Mrs. Apinder Sodhi, Independent Directors. Mrs. Apinder Sodhi is the Chairperson of the said committee and Ms. Tanu Berry is secretary of the Committee. The Committee met Four (4) times during the year. Vigil Mechanism and Whistle Blower: Pursuant to 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 Listing Agreement for employees and directors of the Company, for expressing the genuine concerns of unethical behavior, frauds or violation of the codes of conduct by way of direct access to the Chairman/Chairman of the Audit Committee in exceptional cases. 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" may be accessed on the Company's website at <http://www.vardhman.com/user_files/5a743d3b9b143130ad8cc8> ffbb5845a504d81a531436265717.pdf. 10. BOARD MEETINGS: During the Financial Year 2014-15, the Board met Four (4) times i.e. on 17.05.2014, 09.08.2014, 11.11.2014 and 12.02.2015. 11. DIRECTOR'S RESPONSIBILITY STATEMENT: Pursuant to Section 134 (5) of the Companies Act, 2013, the Directors confirm that: i. In the preparation of the annual accounts, the applicable Accounting Standards have been followed; ii. 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 at the end of the financial year and of the profit or loss of the Company for that period; iii. 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 safe guarding the assets of the Company and for preventing and detecting fraud and other irregularities; iv. The annual accounts have been prepared on a going concern basis. v. Laid down internal financial controls to be followed by the Company and such internal financial controls are adequate and were operating effectively. vi. Devised proper systems to ensure compliance with the provisions of all applicable laws and those systems were adequate and operating effectively. 12. CORPORATE GOVERNANCE: The Company has in place a system of Corporate Governance. A separate report on Corporate Governance forming part of the Annual Report of the Company is annexed hereto. A certificate from the Auditors of the Company regarding compliance of conditions of Corporate Governance as stipulated under Corporate Governance Clause of the Listing Agreement is annexed to the report on Corporate Governance. 13. PERSONNEL & RELATED INFORMATION: None of the employees has received salary of Rs. 60.00 lac per annum or Rs. 5.00 lac per month or more during the Financial Year 2014-2015. Accordingly, no particulars of employees are to be given pursuant to the provisions of Section 197 of the Companies Act, 2013 read with respective rules. Since the Company has no any subsidiary or holding company, no particulars are required to be given pursuant to the provisions of Section 197 (14) of the Companies Act, 2013. The particulars required under Section 197 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, are attached in Annexure 2. 14. COMPANY POLICIES & STATUS OF DEVELOPMENT: a. CORPORATE SOCIAL RESPONSIBILITY (CSR) INITIATIVES: 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 recently overhauled Companies Act. The Company's vision is to pursue a corporate strategy that enables shareholder value enhancement in a mutually reinforcing and synergistic manner. The CSR Policy approved by the Board may be assessed on the website of the Company at <http://www.vardhman.com> user_files/ d2741c4bbc072fc76df0539a029aeab5b86073411436265583.pdf. The Company has identified following thrust areas for CSR: • PROMOTION OF EDUCATION: To continue our endeavour for promoting education by setting up schools, colleges to deliver high quality education to students of all strata of society. • ENVIROMENT PROTECTION AND ENERGY CONSERVATION: To protect environment and to sustain and continuously improve standards of Environment, Health and Safety through the collective endeavour of Company and its employees at all levels towards attaining world class standards. • DEVELOPMENT OF HUMAN CAPITAL: To encourage the development of human capital through skills development, vocational training programmes. • RURAL DEVELOPMENT: To contribute to development in rural areas near by unit of the Company and knowledge sharing and other social practices such as soil and moisture conservation and watershed management etc. • OTHER INITIATIVES: S To contribute to empowering women economically, supplementing primary and secondary education and participating in rural capacity building programmes and such other schemes. ¦ To respond to emergency situations & disasters by providing timely help to affected victims and their families. ¦ Any other project/programme pertaining to activities listed in Schedule VII of the Companies (Corporate Social Responsibility) Rules, 2014 and amendments thereto. The disclosurs under Section 134(3) of the Companies Act, 2013 read with Rule 9 of Companies (Accounts) Rules 2014 i.e. Annual Report on CSR activities for Financial Year 2014-15 is attached herewith in Annexure 3. b. NOMINATION AND REMUNERATION POLICY: The Nomination & Remuneration Committee was constituted by the Board on 09.08.2014, consisting of three directors viz Mr. Sachit Jain, Mr. Sat Pal Kanwar and Mrs. Apinder Sodhi. Mrs. Apinder Sodhi is the Chairperson of said Committee. The Committee met two times during the year under review. The Company's approved Policy relating to appointment of Directors, payment of Managerial remuneration, Directors' qualifications, positive attributes, Independence of Directors and other related matters as provided under Section 178(3) & (4) of the Companies Act, 2013 is attached herewith in Annexure 4. c. RISK MANAGEMENT POLICY: The risk management includes identifying types of risks and its assessment, risk handling and monitoring and reporting, which in the opinion of the Board may threaten the existence of the Company. The Risk Management Committee was re-constituted by the Board on 11.11.2014, comprising of Mr. Sachit Jain, Mr. Sat Pal Kanwar and Mrs. Apinder Sodhi. The Committee has formulated the Risk Management Policy which was subsequently approved by the Board of Directors. The Risk Management Policy may be assessed on the website of the Company at <http://www.vardhman.com/> user_files/ac90887bccb0c1ac34a16f592a1ecbb9c50c4 d2e1436265676.pdf. 15. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS MADE UNDER SECTION 186 OF THE COMPANIES ACT, 2013: The particulars of Loans, guarantees or investments made under Section 186 are forming part of the notes to financial statements (please refer Note No. 10 to 12 to the financial statement). 16. PARTICULARS OF CONTRACTS OR ARRANGEMENTS MADE WITH RELATED PARTIES: All the contracts/arrangements/transactions entered by the Company during the Financial Year with related parties were in the ordinary course of business and on an arm's length basis. The particulars of Contracts or Arrangements made with related parties as specified in form AOC 2 are covered under Note No. 24 to the financial statements, which is set out for related party transactions. The Related Party Transaction Policy may be accessed on the website of the Company at <http://www.vardhman.com/> user_files/0f9092fa713917ea04091bdf2fa3b2f2ee3272721436265640.pdf. 17. EXTRACT OF ANNUAL RETURN: The extracts of Annual Return pursuant to the provisions of Section 134 (3) (a) of the Companies Act 2013, is furnished in Annexure 5 (Form MGT 9) and is attached to this Report. 18. ANNUAL PERFORMACE EVALUATION: During the year under review, a policy on perfomarance evaluation of Independent Directors, Board and its Committees, other individual directors of the Company including detailed process & parameters has been formulated by the Company. The meeting of Independent Directors of the Company to evaluate the performance of Non-Independent Directors, Chairman & the Board as a whole for FY 2014-15 was held on 30th March 2015. The evaluation based on various parameters was discussed by the Independent Directors. 19. ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS & 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 NIL. 20. GENERAL DISCLOSURE: 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. Details of subsidiary, joint venture or associate company. 2. Issue of equity shares with differential rights to dividend, voting or otherwise. 3. No material changes and commitments affecting the financial position of the Company occurred between the end of the Financial Year to which this financial statements relate and the date of this report. 4. No significant/material orders have been passed by any Regulator/Court /Tribunal which could impact the going concern status & future operations of the Company. 5. No change in nature of Business of the Company. 21. ACKNOWLEDGEMENT: Your Directors are pleased to place on record their sincere gratitude to the Government Authorities, Financial Institutions & Bankers for their continued and valuable cooperation and support to the Company. Your Directors express their deep appreciation for the devoted and sincere efforts put in by the members of the team at all levels of operations in the Company during the year. The Company feels confident of continued cooperation and efforts from them in future also. For And on Behalf of the Board Sd/- (S.P. Oswal) Chairman Date: May 23, 2015 Place: Ludhiana |