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Directors Report of VLS Finance Ltd.

Mar 31, 2023

The directors are pleased to present the 36th Annual Report of the Company together with the Audited Annual Accounts for the year ended 31st March, 2023.

1. Financial Results

(Rs. in Lakhs)

Particulars

For the year

For the year

ended

ended

31st March,

31st March,

2023

2022

Total Income

7,725.11

28,628.73

Less: Total Expenditure

1,933.94

1,814.68

Less: Finance Cost

7.20

2.22

Gross Profit/(loss)

5,783.97

26,811.83

Less: Depreciation

425.82

146.69

Profit/ (loss) before tax

5,358.15

26,665.14

Less: Current Tax Less/Add: Tax adjustment for

(568.00)

(2,937.00)

earlier year

60.09

--

Add: Deferred Tax

393.76

1,710.80

Net Profit/ (loss) after tax Paid up Equity Share Capital

5,244.00

25,438.94

(excluding calls in arrears) Reserves excluding

3,535.00

3,878.42

revaluation reserve

1,45,797.78

1,67,097.53

Earnings per share (Rs.)

13.57

65.80

* (Figures have been regrouped / recast to conform to current year''s figures)

2. Management Discussion and Analysis Industry Structure and Development

The registered office of the Company was changed to 1st Floor, 90, Okhla Industrial Estate, Phase-III, New Delhi-110020 w.e.f. 01/06/2022. The same was changed to Ground Floor, 90, Okhla Industrial Estate, Phase - III, New Delhi -110020 effective from 10/11/2022. The related compliances were done in time under prescribed procedure.

The trend in the Indian Stock Market had largely been upbeat during the year under review except towards end of 4th quarter. Much of the effect of the COVID-19 pandemic waned during the year resulting in near normal operations. Globally also the effect of COVID-19 has waned. However, the global economy continued to face challenges with fear of recession looming large in several countries. The continuing war between Ukraine and Russia with visible unrest in some parts of the world continues to be a cause of concern. The Central Banks had effected several rate hikes in the wake of continuing inflation.

Health Safety and Pandemic Risk The Company and its subsidiaries have been proactive enough to adopt the digital mode since the Covid-19 outbreak ensuring best health safety measures for employees and uninterrupted service to the stakeholders in the Post COVID-19 era. The Company''s focus on liquidity, near zero debt supported by a strong balance sheet and acceleration in cost optimization initiatives, would help in navigating any near-term challenge.

Outlook, Risks and Concerns

The underlying strength of Indian demand and consumption, continues to remain healthy. The performance of your Company is closely linked to those of the stock markets. The Company is exposed to normal industry risks such as credit, interest rate, economic, currency, political, market and operational risks. The Company views risk management

as integral to its business for creating and maintaining best practices in business operations and administration.

Opportunities and Threats

The continuing emphasis on ‘Make in India'', Production Linked Incentive in various sectors, emphasis on building up infrastructure by the government is expected to infuse further capital investment in the country and thus more opportunities for the financial sector. The Company is looking forward to grasp the available opportunities. The Company will also focus on permitted avenues as a member of the Stock Exchange. The uncertain state of the global economy however continues to remain a cause of concern. Adequacy of Internal Financial Control Systems The management in consultation with Internal Auditors monitor and evaluate the efficacy and adequacy of internal financial control systems in the Company, its compliance with operating systems, accounting procedures and policies at all levels of the Company and its subsidiaries. The audit observations and the corrective actions thereon are presented to the Audit Committee of the Board. The control framework is established and maintained by the Company. The observations by the internal and statutory auditors are perused by the Management, the Audit Committee as well as the Board for proper implementation. The Company''s internal financial controls have been found to be adequate and effective.

Financial Review

During the year under review, your Company generated total income of Rs. 7,725.11 lakhs as against Rs. 28,628.73 lakhs in the previous year. The other income included in the aforesaid total income was Rs. 153.77 lakhs for the year under review as against Rs. 73.35 lakhs in the previous year. The Company has earned a net profit before tax of Rs. 5,358.15 lakhs for the year under review as compared to the profit of Rs. 26,665.14 lakhs in previous year. The other comprehensive income for the period stood at (Rs.20108.07 lakhs) as compared to the corresponding other comprehensive income figure of Rs. 10,882.43 lakhs for the previous year.

Further, the Financial Statements of the Company have been prepared in accordance with the Indian Accounting Standards (‘IND AS'') as per the Companies (Indian Accounting Standards) Rules 2015 as amended and notified under Section 133 of the Companies Act, 2013 (“the Act”), read with relevant Rules issued thereunder and in conformity with the accounting principles generally accepted in India. Key Ratios

Please refer Note no. 50 of Standalone Financial Statements for Key ratios and related information thereon.

Segment wise Performance

Ind-AS 108 on Operating Segments has been complied with. Please refer Note no. 55 of Standalone Financial Statements. Hence separate disclosure has not been made.

Cautionary Statement

The statements in the above analysis, describing the Company''s estimates, expectations or predictions may be ‘forward looking statements'' within the meaning of applicable securities laws and regulations. The actual results may differ from those expressed or implied. Important factors that could make a difference to the Company''s operations

include changes in government regulations, tax regimes, economic developments within the country and abroad, and other related factors.

3. Dividend & Reserve

The Board has recommended a dividend of 15% i.e. Rs.1.50 per equity share of Rs. 10/- each for the year 2022-23 subject to approval of members. The dividend, if approved, will be paid to the registered members as on the cutoff date for the purpose of Annual General Meeting (‘AGM'') scheduled to be held on 29/09/2023. No amount was proposed to be transferred to the reserve during the year under review.

4. Buy-back

During the year under review, the Board of Directors of the Company at its meeting held on 5th January, 2023, approved the buyback of upto 35,00,000 (Thirty Five Lacs) fully paid-up equity shares of Rs. 10/- each, from the open market through the stock exchange route at a price of upto Rs. 200/-per Equity Share (“Maximum Buyback Price”) excluding brokerage costs, Securities and Exchange Board of India turnover charges, taxes, advisory fees, brokerage, relevant stamp duty, GST, public announcement, publication charges, SEBI & Stock exchanges fees etc. (collectively referred to as “Transaction Costs”) for an aggregate amount not exceeding Rs.70,00,00,000/- (Rupees Seventy Crores only) (maximum buyback size, excluding transaction costs). The buyback was offered to all eligible equity shareholders of the Company (other than the Promoters / Promoter Group of the Company). The buyback of equity shares through the stock exchange commenced on 16th January, 2023 and would be closed on 29th May, 2023 (closing date of buyback).

The Company had bought back 34,34,235 equity shares during the financial year ended 31/03/2023 at an average price of Rs. 180.51 per equity share which were extinguished as per the buyback regulations. Accordingly, the share capital of the Company has been reduced by Rs.3,43,42,350/- as detailed in the enclosed balance sheet in Note No. 20''s footnote.

Further, from the commencement of buy-back upto the date of this report the Company had bought back 38,66,025 (Thirty eight lakhs sixty six thousand and twenty five) Equity Shares at an average price of Rs 179.22 (Rupees One Hundred Seventy Nine Twenty Two Paisa Only) per equity share and had deployed Rs. 69,28,58,736.35 (Rupees Sixty Nine Crores Twenty Eight Lacs Fifty Eight Thousand Seven Hundred Thirty Six and Paise Thirty Five only) (excluding Transaction Costs), which represents 98.98% of the Maximum Buyback Size of Rs.70 Crores (i.e. the maximum total amount which could be utilized in the Buyback).

Since the equity shares were bought back at an average price of Rs. 179.22 which was below the maximum buyback price of Rs. 200/-, therefore, the actual number of equity shares bought back has exceeded the indicative maximum number of equity shares that could have been bought back which was subject to maximum buyback size of Rs. 70 crores but was less than 38,66,200 equity shares being 10% of equity share capital prior to commencement of buyback.

5. Directors/ Key Managerial Personnel (KMP)

During the year under review and till the date of this report there had been no changes in the composition of the Board of Directors/ Key Managerial Personnel of your Company except as stated below:

Directorate:

Shri Vikas Mehrotra (DIN: 06476150) was appointed as Managing Director - International Operation w.e.f.

12/01/2022 pursuant to the approval of the Board and the members in their meetings held on 13/11/2021 and 30/12/2021 respectively and the subsequent approval of the Central Government via order dated 31/05/2022 read with corrigendum dated 29/06/2022.

Dr. Rajeev Lochan Bishnoi-Independent Director

(DIN: 00130335) resigned w.e.f. the closing business hours of 01/03/2023 from the Board citing his expanding role and responsibilities on being appointed on the Audit Advisory Board of Comptroller and Auditor General of India and other commitments. Besides this, he has confirmed that there are no other reasons. The Board places on record its appreciation for the invaluable guidance and contribution made by Dr. Bishnoi during his tenure as Independent Director of the Company.

Shri Deepak Kumar Chatterjee-Independent Director

(DIN: 03379600) resigned w.e.f. 04/05/2023 from the Board due to personal reasons. Besides this, no other reason has been stated for resignation by him. The Board places on record its appreciation for the invaluable guidance and contribution made by Shri Chatterjee during his tenure as Independent Director of the Company.

Dr. (Mrs.) Neeraj Arora-Non Executive Director

(DIN: 07191167) resigned w.e.f. 10/05/2023 from the Board due to personal reasons including her health. Besides this, no other reason has been stated for resignation by her. The Board places on record its appreciation for the invaluable guidance and contribution made by Dr. Arora during her tenure as Non-Executive Director of the Company.

Further, Shri M. P Mehrotra (DIN: 00016768) Executive Vice-Chairman in the capacity of Whole Time Director, whose tenure would end on 31st July, 2023, was reappointed by the Board in its meeting held on 27/05/2023 for a further period of 3 years w.e.f. 01/08/2023 to 31/07/2026, concurring to the recommendation of Nomination and Remuneration Committee of the Company subject to approval of Members in the ensuing Annual General Meeting. Your Directors recommend his re-appointment as Executive Vice-Chairman for a period of three years as set out in the Notice convening the ensuing AGM.

Shri S. K. Agarwal- Managing Director (DIN: 00106763) was reappointed by the Board in its meeting held on 28/05/2022 for a further period of 3 years w.e.f. 21/08/2022 to 20/08/2025 which was approved by the members of the Company in the 35th Annual General Meeting held on 30/09/2022.

Shri K. K. Soni- Director- Finance & CFO (DIN: 00106037) was reappointed by the Board in its meeting held on 28/05/2022 for a further period of 3 years w.e.f. 01/08/2022 to 31/07/2025 which was approved by the members of the Company in the 35th Annual General Meeting held on 30/09/2022.

The opinion of the Board on expertise and other attributes of Directors including Independent Directors has been charted in the Report on Corporate Governance enclosed as Annexure-I to this report.

Directors retiring by rotation:

In accordance with the provisions of Article 89 of the Articles of Association of the Company, Shri Suresh Kumar Agarwal (DIN: 00106763) and Ms. Divya Mehrotra (DIN: 0006494) will be retiring by rotation at the ensuing AGM of your Company and being eligible, have offered themselves for re-appointment. Concurring to recommendation of Nomination and Remuneration Committee of the Company,

your directors recommend their re-appointment as set out in the Notice convening the ensuing AGM.

Key Managerial Personnel (KMP):

Pursuant to the provisions of sub-section (51) of Section 2 and Section 203 of the Act read with the Rules framed thereunder, the following persons were Key Managerial Personnel of the Company as on March 31,2023:

1. Shri M. P. Mehrotra- Executive Vice-Chairman

2. Shri S. K. Agarwal- Managing Director

3. Shri Vikas Mehrotra- Managing Director - International Operations

4. Shri K. K. Soni- Director- Finance & Chief Financial Officer

5. Shri H. Consul- Company Secretary

There is no change in the Key Managerial Personnel of the Company during the year under review.

6. Independent Directors

The Independent Directors of your Company have complied with the relevant provisions of the law relating to their appointment and they continue to comply with the provisions of the Companies Act, 2013 and the listing regulations.

In terms of the provisions of sub-section (6) of Section 149 of the Act and Regulation 16 of the Listing Regulations, the Company has received declarations from all the Independent Directors of the Company that they continue to meet with the criteria of independence as provided in the Act and the Listing Regulations. Further, all the Non-Executive Directors of the Company had no pecuniary relationship or transactions with the Company, other than sitting fees, and reimbursement of expenses, if any, incurred by them for the purpose of attending meetings of the Company.

During the year ended 31/03/2023, 1 (one) meeting of Independent Directors was held on 31/03/2023 as detailed hereunder:

S.

No.

Name of the Director

Whether Chairman / Member

No. of Meeting(s) attended during F.Y. 2022-2023 and date(s)

1

Shri D. K. Chatterjee

Chairman

1

31/03/2023

2

Shri Ajit Kumar

Member

1

31/03/2023

3

Shri D.K. Mehrotra

Member

1

31/03/2023

In the meeting of Independent Directors, held on 31/03/2023 pursuant to Schedule IV of the Act and the Listing Regulations, the Independent Directors reviewed the performance of the Chairman and Non-Independent Directors of the Company. The Directors also discussed the quality, quantity and timeliness of flow of information between the Company management and the Board, which is necessary for the Board to effectively and reasonably perform their duties. Their conclusion on all the issues discussed was satisfactory.

7. Number of Board and Committee Meetings

Relevant details have been provided in the Report on Corporate Governance enclosed as Annexure-I of this Annual Report.

8. Corporate Governance and Compliance Certificate

We have reported in Annexure -I to this report, the extent of compliance of Corporate Governance practices in accordance with Regulation 34(3) of the SEBI (Listing

Obligations & Disclosure Requirements) Regulations, 2015.

The requisite certificate from A. Aggarwal and Associates-Company Secretaries signed by Shri Ashutosh Aggarwal, Practicing Company Secretary (COP: 7467 and Peer Review Certificate No. 1097 / 2021) confirming that none of the directors on the Board of the Company have been debarred or disqualified from being appointed or continuing as Director of Company by the SEBI / Ministry of Corporate Affairs or any such statutory authority is appended at the end of aforesaid report.

9. Directors’ Responsibility Statement

Pursuant to the provisions of Section 134(3) of the Companies Act, 2013, the Directors hereby confirm:

a. that in the preparation of the annual accounts for the financial year ended 31 st March, 2023, the applicable accounting standards have been followed, along with proper explanation relating to material departures;

b. that they 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 at the end of the financial year and of the profit of the Company for that period;

c. that they 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. that they have prepared the Annual Accounts for the financial year ended 31st March, 2023 on a ‘going concern'' basis;

e. that they have laid down Internal Financial controls to be followed by the Company and that such Internal Financial Controls are adequate and effective and

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

10. Evaluation of Board/Committees/Individual Directors

The Board carried out the annual performance evaluation of its own performance and its Committees in its meeting held on 27/05/2023. The said exercise was led by the independent directors who are also constituents of Nomination and Remuneration Committee. The evaluation process focused on different aspects of the Board and Committees functioning such as composition of the Board and Committees, experience and competence, performance of specific duties and obligations, governance issues etc. The aim was to assess the effectiveness of the Board''s/Committees'' processes, and to identify any actions required to improve effectiveness. The review thus focused on the following associated areas viz. structure, leadership, strategy, risks, decision making and development.

The evaluation process inter-alia comprised the following:

• Review of Board, Committees and management information and other relevant documentation.

• Discussions with all directors on the Board, Committee members focusing on aspects of the Board''s and Committees'' composition; strategy, risk and controls; decision-making, roles and performance

of the Chairman, independent directors, executive directors and other non-executive directors.

Given the experience and qualifications of the Board members, it was not considered necessary to engage external persons to facilitate the evaluation process.

As per the provisions of Section 178(2) of Companies Act, 2013, the Board of Directors also carried out annual evaluation of each Director''s performance in its meeting held on 27/05/2023 on the parameters including attendance, contribution and independent judgment by individual directors. Since all Directors have rich experience of corporate environment, so they are accustomed to having their performance regularly evaluated.

11. Proper systems to ensure that compliances were adequate and effective

The professional conduct sets expectations that all employees shall comply with all laws and regulations governing Company''s conduct. Information is reported upwards internally within the organization to senior management and if appropriate, also shared with the Board of Directors and/or the external auditors. Information is reported externally in public filings, if it meets the criteria for requiring public disclosure.

12. Corporate Social Responsibility (CSR)

The Company is covered under the threshold prescribed under the Act for CSR. During the year under review, the Company had allocated total amount of Rs. 2,90,98,638.00 for spending in the F. Y. 2022-2023 after adjusting excess amount of Rs.13,330/- spent in previous year. The utilization statement is appended below:

Financial

Year

Allocated

Amount

Amount spent

Recipient entity and project

Amount Unspent (cumulative) as on March 31, 2023

(in Rs.)

(in Rs.)

(in Rs.)

2022-23

2,91,11,967.18

Opening Balance (excess spent)

-13,330.00

Amount available for disbursal

2,90,98,637.18

6,85,380.00

IIMPACT, Gurgaon (Assistance for five learning centers located in the rural areas of Kanpur Dehat Dist.

(UP.).

2,84,13,257.18

11,00,000.00

Bharat Lok Shiksha Parishad NS-15/ H 5 (Between ED & FD Block), Pitampura, Delhi-110034 (Project Ekal Vidyalaya for 50 centres)

2,73,13,257.18

49,40,000.00

Sri Sathya Sai Health & Education Trust (for treatment of 38 children with congenital heart disease in Sai Sanjeevani Hospital at Palwal, Haryana and other centers).

2,23,73,257.18

32,50,000.00

Sri Sathya Sai Health & Education Trust (for treatment of 38 children with congenital heart disease in Sai Sanjeevani Hospital at Palwal, Haryana and other centers).

1,91,23,257.18

7,85,100.00

Pratibha Parishkar Sansthanam, Mathura (U.P.) (Purchasing of Ambulance).

1,83,38,157.18

-4,052.50

Refunded by Pratibha Parishkar Sansthanam, Mathura (U.P.)

1,83,42,209.68

11,00,000.00*

Sri Sankat Mochan Dham Trust, Kanpur (Construction work of Computer Centre and Science Lab in Smt. Kasturi Devi Parashar Inter College in village Salai, District Kasganj (U P). (approved as an Ongoing project)

1,72,42,209.68

52,79,730.00*

Pushp Niketan School Samiti, Dhampur, (U.P.). (for complete renovation of badminton court). (approved as an Ongoing project)

1,19,62,479.68

1,15,72,000.00*

Research project by National Institute of Computer Education Society, Meerut (U.P.) (approved as an Ongoing project)

3,90,479.68

3,90,480.00

Transfer to PM CARES FUND permissible under schedule VII of the Companies Act, 2013 on 31/03/2023. (including a sum of Rs. 4052/- which remained untilized by Pratibha Parishkar Sansthanam)

0.00

-13,123.00

Refunded by Pratibha Parishkar Sansthanam, Mathura (U.P.) received on 31/03/2023.

13,123.00

13,123.00 s

Transfer to PM CARES FUND permissible under schedule VII of the Companies Act, 2013 on 09/05/2023.

0

Balance

0

* Transferred to “VLS Finance Ltd. - Unspent Corporate Social Responsibility Account” in pursuance to Section 135(6) for the Companies Act, 2013 read with Rule 2(1) (i) the Companies (Corporate Social Responsibility Policy) Rules, 2014.

$ An amount of Rs.7,85,100.00 was allocated to the ‘Pratibha Parishkar Sansthanam'', Mathura (U.P.). However, Rs.17,175.00 was unutilized and therefore, returned to the Company in two tranches. The entire amount was deposited to the PM Cares Fund as per CSR rules in two tranches. First tranch of Rs. 4,052/- was deposited on 31/03/2023 and second tranch of Rs. 13,123/- was deposited on 09/05/2023.

The recent amendment in CSR Rules effective from 22/01/2021 issued by Ministry of Corporate Affairs, mandates under Rule 10 thereof that the amount which remains unspent till the 31st March of every financial year, must be transferred to designated fund by the Government (‘fund'') within 6 months from the end of financial year and the Company would no longer be able to use or disburse under the CSR activities or carry over to next year or spend in future the allocated amount for CSR which remained unspent on 31st March of every financial year. For the financial year 202223, from the entire amount available for CSR initiative by the Company, Rs. 1.07.43.305/- had been spent in various proposals and an amount of Rs. 1.79.51.730/- had been Transferred to “VLS Finance Ltd. - Unspent Corporate Social Responsibility Account” in pursuance to Section 135(6) for the Companies Act. 2013 read with Rule 2(1)(i) the Companies (Corporate Social Responsibility Policy) Rules. 2014. Further. an amount of Rs. 3.90.480/- was transferred to the PM Cares Fund. At the end of financial year, there was an unspent amount of Rs. 13,123/- left in CSR corpus for the year 2022-23 which was received on 31/03/2023 from ‘Pratibha Parishkar Sansthanam'' besides allocation for ongoing projects. Accordingly, the amount of Rs. 13,123/-was transferred to the PM cares fund compliance of second proviso to sub-section 5 of Section 135 of the Companies Act 2013 read with Rule 10 of Companies (Corporate Social Responsibility Policy) Rules, 2014.

The report of CSR Committee in terms of Section 135 of the Companies Act, 2013 is enclosed as Annexure -II to this report.

13. Annual Return Extract (MGT-9)

Pursuant to Section 92(3) read with Section 134(3)(a) of the Companies Act, 2013, the Annual Return of the Company as on March 31, 2023 is available on the website of the Company at www.vlsfinance.com.

14. Policies

Your Company has formulated the following policies to optimize its performance and functions.

A. Corporate Social Responsibility Policy

The CSR policy can be accessed at Company''s website viz. www.vlsfinance.com under the head ‘Investor Relations''.

B. Related Party Transaction

The detailed policy may be accessed at www.vlsfinance.com under the head ‘Investor Relations''.

The Board of Directors (the “Board”) of VLS Finance Limited (the “Company”) has adopted this Policy. The said Policy includes the materiality threshold and the manner of dealing with Related Party Transactions (“Policy”) in compliance with the requirements of

Section 188 of the Companies Act, 2013 and conforms to the requirements of Regulation 23 of the Listing Regulations.

This Policy applies to transactions between the Company and one or more of its Related Parties. It provides a framework for governance and reporting of Related Party Transactions including material transactions.

This Policy is intended to ensure due and timely identification, approval, disclosure and reporting of transactions between the Company and any of its Related Parties in compliance with the applicable laws and regulations as may be amended from time to time.

C. Board diversity

The detailed policy may be accessed at www.vlsfinance.com under the head ‘Investor Relations''.

VLS Finance Ltd. recognises and embraces the benefits of having a diverse Board and sees increasing diversity at Board level as an essential element in maintaining a competitive advantage. A truly diverse Board will include and make good use of differences in the skills, regional and industry knowledge and experience, background, race, gender and other distinctions between Directors. These differences will be considered in determining the optimum composition of the Board and when possible would be balanced appropriately. All Board appointments shall be made on merit, in the context of the skills, experience, independence and knowledge which the Board as a whole requires to be effective.

D. Risk Management

The detailed policy may be accessed at www.vlsfinance.com under the head ‘Investor Relations''.

The Company has formed Risk Management Policy to ensure appropriate risk management within its systems and culture. The Company operates in a competitive environment and is generally exposed to various risks at different times such as technological risks, business risks, operational risks, financial risks, etc. The Board of Directors and the Audit Committee of the Company shall periodically review the Risk Management Policy of the Company so that the Management controls the risk through properly defined network.

The Company has a system-based approach to business risk management backed by strong internal control systems. A strong independent Internal Audit Function at the corporate level carries out risk focused audits across all businesses, enabling identification of areas where risk managements processes may need to be improved. The Board reviews internal audit findings, and provided strategic guidance on internal controls, monitors the internal control environment within the Company and ensures that Internal Audit recommendations are effectively implemented.

The combination of policies and procedures adequately addresses the various risks associated with your Company''s businesses.

E. Anti-sexual harassment mechanism

The detailed mechanism may be accessed at www.vlsfinance.com under the head ‘Investor Relations''.

The Company has in place an Anti-Sexual Harassment Policy in line with the requirements of

The Sexual Harassment of Women at the Workplace (Prevention, Prohibition & Redressal) Act, 2013. All women employees inter-alia permanent, contractual, temporary, trainees are covered under this policy.

The Internal Complaints Committee is headed by the woman Director on the Board. There were no complaints received from any employee or otherwise during the year under review and no complaints were pending as on 31/03/2023.

F. Nomination and Remuneration Policy

The detailed policy may be accessed at www.vlsfinance.com under the head ‘Investor Relations''.

Pursuant to the provisions of Section 178(3) of the Companies Act, 2013 and Regulation 19 of the Listing Regulations, the Nomination and Remuneration Committee (‘NRC'') has formulated a policy relating to the remuneration for the Directors, Key Managerial Personnel (KMP), Senior Management and other employees including their annual evaluation. While formulating this policy, the NRC has considered the factors laid down in Section 178(4) of the Companies Act, 2013 and the Listing Regulations, as amended.

G. Vigil Mechanism /Whistle Blower

The Company is committed to adhere to the highest standards of ethical, moral and legal conduct of business operations. Vigil (whistleblower) mechanism provides a channel to the employees and directors to report to the management concerns about unethical behaviour, actual or suspected fraud or violation of the code of conduct or policy. The mechanism provides for adequate safeguards against victimization of directors and employees who avail of the mechanism and also provide for direct access to the Chairman of the Audit Committee in exceptional cases. It is hereby affirmed that no person was denied access to the Audit Committee.

The detailed mechanism may be accessed at www.vlsfinance.com under the head ‘Investor Relations''.

15. Contracts with Related Party

The disclosure in prescribed form AOC-2 is enclosed as Annexure - III.

16. Auditors Statutory Auditors

In terms of Section 139 read with Companies (Audit and Auditors) Rules, 2014 M/s. Agiwal & Associates, Chartered Accountants (FRN: 000181N) had been appointed for a period of 5 years i.e. from the conclusion of 35th Annual General Meeting till the conclusion of 40th Annual General Meeting of the Company subject to applicable regulations. The members in the 35th AGM of the Company had authorised the Board to fix the remuneration of the Auditors. The Statutory Auditors have consented to continue as Statutory Auditors and have given a confirmation that they are eligible to continue with their appointment and have not been disqualified in any manner for continuing as Statutory Auditors.

Cost Auditor

The provisions relating to cost records and audit are not applicable to your Company.

Secretarial Auditors

The Board in its meeting held on 27/05/2023 had reappointed M/s. A. Aggarwal & Associates-Company Secretaries (COP: 7467) as Secretarial Auditors for the financial year 2023-24 who was also the Secretarial Auditors of the Company for the financial year 2022-23 in compliance with Section 204 of the Companies Act, 2013 read with regulation 24A of the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015.

17. Auditors’ Report

The observations made by the Statutory Auditors, with reference to notes on accounts for the year under report, have been adequately dealt with in the relevant Notes forming part of Financial Statements and need no further comments from Directors. Further, the Auditors have not reported any fraud in terms of Section 143(12) of the Companies Act, 2013 to the Board for the year under review.

18. Secretarial Audit Report

The Secretarial Audit Report for the year 2022-23 submitted by Secretarial Auditor in terms of Section 204 of the Companies Act, 2013 read with Rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is enclosed as Annexure-IV. The said report does not contain any adverse remark or observation by the Secretarial Auditor.

19. Statutory Information.

• The Company has paid the annual listing fees for the year 2023-24 to BSE Ltd. and The National Stock Exchange of India Ltd. and the custodian fees to National Securities Depository Ltd. and Central Securities Depository Ltd.

• The Board in its meeting held on 25/10/2018 had approved the proposal for voluntary delisting from the Calcutta Stock Exchange Ltd. (‘CSE''). When the Company approached CSE, thereafter, for completing formalities of delisting, it was learnt that CSE had suspended the scrip of your Company alleging nonpayment of listing fee for the year 2014-15 and other non- compliances. Since the Company had paid the said listing fee in time and also made other compliances the same were promptly informed to CSE in response to their communications. However, the Exchange had been inordinately delaying the process and delisting approval has not yet been granted. Regarding listing fee for the year 2019-20 onwards, the stand taken by the Company is that the same is not payable since the Company had approached Exchange for delisting of scrip well in time and cannot be made liable for payment of the fee when the delay is on part of Exchange.

• The shares of the Company are presently listed at BSE Ltd., The National Stock Exchange of India Ltd., Mumbai and The Calcutta Stock Exchange Ltd., Kolkata (pending delisting).

• There had been no change in the nature of business and name of Company during the year under review. Further, no proceedings/ application under Insolvency and Bankruptcy Code, 2016 had been made/pending against the Company.

• During the year under review, the Company did not absorb any new technology or carry out any R&D related activity for this purpose. However, use of energy efficient devices, wherever possible, in conducting

business of Company is part of its administration policies. The detailed disclosure is enclosed as Annexure -V to this report.

• Your Company''s principal business is acquisition of securities; hence Section 186 of the Act is not applicable.

• Your Company has not issued equity shares with differential voting rights, sweat equity or ESOP in terms of Section 43 and Section 62 of the Companies Act, 2013, during the year under review.

• No revision of financial statements or Board''s Report has been made in terms of Section 131 of the Companies Act, 2013, during the year under review. Further, there was no one time settlement with Bank/ Financial Institutions during the year under review.

• Disclosure relating to ratio of the remuneration of each director to the median employee''s remuneration in terms of Section 197(12) of the Companies Act, 2013 is enclosed as Annexure -VI to this report.

• Executive Vice-Chairman, Managing Director and Director- Finance & CFO of your company are not in receipt of any remuneration or commission from any subsidiary company in terms of Section 197(14) of the Companies Act, 2013 and were appointed by passing special resolution for 3 years.

• There had been no significant and material orders passed by regulatory authorities/ court that would impact the going concern status of the Company and its future operations. Further, there were no material changes or commitments affecting financial position of the Company occurred between the year under review and date of this report.

• In the annual financial statements for the year under review, the disclosures of those items, where amount for the year under review and corresponding previous year was Nil, had been dispensed with, though required to be disclosed under applicable regulations.

20. Fixed Deposits

The Company has not accepted any fixed deposit during the year under review. The Company has no plans to accept any deposits from the public in the current year.

21. Human Resources

Employee relations continued to be cordial during the year. The number of employees stood at 34 (Thirty Four) at the end of the year under review. The Directors place on record their appreciation of the devoted service of the employees at all levels. In terms of the provisions of Section 197 of the Companies Act 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, there was no employee during the year drawing remuneration more than the stipulated amount in the said rules. Your Company has not approved any scheme relating to provision of money to be held in a trust for the benefit of the employees in terms of Section 67(3)(b) of the Companies Act, 2013 during the year under review.

22. Green initiative in Corporate Governance

As a continuing endeavor towards the Go Green Initiative, the Company has been sending documents like the notice calling the general meeting, audited financial statements, directors'' report, auditors'' report etc. in electronic form, to

the email addresses provided by the members directly or made available to us by the depositories, besides regular correspondence. The electronic mode is both economical and speedier compared to physical documents. Members who hold shares in physical form are, therefore, requested to register their e-mail addresses and intimate any change in e-mail id, with the Company or with the Registrar & Share Transfer Agents, RCMC Share Registry Pvt. Ltd. In respect of electronic holdings, members are requested to register their e-mail addresses with the depository through their concerned depository participants. You may kindly note that even after registration of e-mail ID, you are entitled to be furnished, free of cost, a printed copy of the annual report of the Company, upon receipt of a requisition from you, at any time. In case you desire to receive Company''s communication and documents in physical form, you are requested to intimate us through email at [email protected].

23. Subsidiary/Associate Companies

Statement pursuant to Section 129(3) of the Companies Act, 2013 for the financial year ended 31/03/2023 in respect of the subsidiary/associate companies, is enclosed with Annual Accounts of the Company. Please refer to Note no. 53 of Notes forming part of consolidated financial statement in the Annual Report for the year under review.

The consolidated financial results include the audited financial results for the year ended on 31/03/2023 of the subsidiaries VLS Securities Limited (100%), VLS Real Estate Limited (100%) and VLS Asset Management Limited (99.15%). The financial results of VLS Capital Ltd. for the same period have been consolidated under equity method of accounting as an associate of VLS Securities Ltd. a subsidiary of the Company, since it was not consolidated by said subsidiary in view of exemption available under Section 129 read with Rule 6 of the Companies (Accounts) Rules, 2014. The financial results of Sunair Hotels Ltd. (‘Sunair'') are not included in these consolidated financial statements as it does not fall under the definition of an associate as per Ind AS-28 due to absence of significant influence on account of ongoing disputes between the Company and Sunair, hence excluded from consolidation of financial results of the year under review.

24. Consolidated Financial Statements

In compliance of Section 129(3) of the Companies Act, 2013, the consolidated financial statements in accordance with the prescribed accounting standards are annexed to the audited annual accounts for the year under review.

25. Acknowledgements

The Directors thank the Company''s business associates, Bankers, the Securities & Exchange Board of India and Stock Exchanges, employees, vendors, investors and academic partners for their continuous support. The Directors also thank the Government of India and Governments of various states in India.


Mar 31, 2018

DIRECTORS’ REPORT

The Directors are pleased to present the 31st Annual Report of the Company together with the Audited Annual Accounts for the year ended 31st March, 2018.

1. Financial Results (Rs. in Lakhs)

For the year ended 31st March, 2018

For the year ended 31st March, 2017*

Gross Receipts

209316.72

269227.74

Profit before Interest, Finance Charges & Depreciation

2500.18

6269.13

Less: Interest & Finance Charges

1.07

12.52

Profit before Depreciation

2499.11

6256.61

Less: Depreciation

60.57

35.53

Profit before exceptional & extraordinary items & tax

2438.54

6221.08

Less: Provision for diminution of value of assets (net)

600.00

1150.00

Profit before Tax

1838.54

5071.08

Less: Provision for Taxation/(Credits)

353.71

1321.49

Profit after Tax

1484.83

3749.59

Surplus brought forward from previous year

8430.49

5146.23

Less: i) Proposed dividend on Equity Shares

386.62

386.62

ii) Dividend distribution tax

79.47

78.71

Available for Appropriation

9449.23

8430.49

Appropriations:

To General Reserve

0.00

0.00

Surplus c/f

9449.23

8430.49

* (Figures have been regrouped / recast to conform to current year’s figures)

2. Management Discussion and Analysis Financial Review

During the year under review, profit before tax was Rs.1838.54 lakhs as compared to Rs. 5071.08 lakhs for the previous year. The profit after tax stood at Rs. 1484.83 lakhs as compared to Rs. 3749.59 lakhs during the previous year.

Industry Structure and Development

The global economy growth according to Goldman Sachs economic survey estimation is now at 4 percent and growth of developing Asian economies is estimated to be 6 percent, by Asian Development Bank (ADB) report. The financial markets have been showing a confident run as compared to last financial year. ADB report pegs Indian economy to grow at 7.3 percent for the current financial year. However, increasing divergence in monetary policies and volatility of capital flows coupled with foreign economic decisions viz. Brexit, United States trade agreement re-negotiations etc. paints an uncertain time ahead for our economy.

The growth prospects of the Emerging Asian economies (Southeast Asia, China and India) are expected to remain robust over the medium term amid global economic uncertainty. The Asian region is expected to grow at 6 percent in 2018-2019.

Outlook, Risks and Concerns

The country''s equity markets remains promising for both global and domestic investors. The underlying strength of Indian consumption and demand, continues to remain healthy. The performance of your Company is closely linked to those of the stock markets. The growth tendencies for 2018-2019 are expected to be mostly reflective of the developments in these areas. Your Company has been making use of available opportunities in the capital markets for its operations, keeping in view its business objectives.

Our approach to risk management is based on our extensive experience and well placed risk management framework. The Company is exposed to normal industry risks such as credit, interest rate, economic, currency, political, market and operational risks. The Company views risk management as integral to its business for creating and maintaining best practices in business operations and administration. Opportunities and Threats

The continuing emphasis on ‘Make in India’ by government is expected to infuse further capital investment in the country and thus more opportunity for financial sector. The relaxation of foreign investment rules has received a positive response from the financial sector. The Company is looking forward to grasp the available opportunities. The Company will also focus on permitted avenues as a member of the Stock Exchange. The uncertain state of the global economy however remains a cause of concern.

Adequacy of Internal Financial Control Systems

The management in consultation with Internal Auditors monitor and evaluate the efficacy and adequacy of internal financial control systems in the Company, its compliance with operating systems, accounting procedures and policies at all levels of the Company and its subsidiaries. The audit observations and the corrective actions thereon are presented to the Audit Committee of the Board. The control framework is established and maintained by the Company. The observations by the internal and statutory auditors are perused by the Management, the Audit committee as well as the Board for proper implementation. The Company’s internal financial controls have been found to be adequate and effective. Segment wise Performance

Accounting Standard (AS-17) relating to “Segment Reporting” has been complied with. The gross operating income and profit from the other segment is below the norms prescribed in AS-17, hence separate disclosure has not been made.

Cautionary Statement

The statements in the above analysis, describing the Company’s estimates, expectations or predictions may be ‘forward looking statements’ within the meaning of applicable securities laws and regulations. The actual results may differ from those expressed or implied. Important factors that could make a difference to the Company’s operations include changes in government regulations, tax regimes, economic developments within the country and abroad, and other related factors.

3. Dividend & Reserve

The Board has recommended 10% dividend on equity shares i.e. Rs.1/- per equity share for the year 2017-18 subject to approval of members. The dividend, if approved, will be paid to the registered members as on the date of book closure for the purpose of Annual General Meeting scheduled to be held on 20/09/2018. No amount was proposed to be transferred to the reserve during the year under review.

4. Directors/ Key Managerial Personnel (KMP)

The following changes have occurred from 01/04/2017 till the date of this report in the composition of the Board of Directors/ Key Managerial Personnel of your Company:

Directors:

In accordance with the provisions of Article 89 of the Articles of Association of the Company, Shri K. K. Soni- Director Finance & CFO and Shri Vikas Mehrotra -Director will retire by rotation at the ensuing Annual General Meeting of your Company (‘AGM’) and being eligible, offer themselves for re-election. The Board recommends their appointment.

In order to comply with recent amendment in SEBI (Listing Obligation and Disclosure Requirements) Regulations, 2015, the Board also recommends for approval of Members by way of special resolution, the continuation of Non -Executive Directors, namely Shri Ajit Kumar (DIN:00106597) and Dr. S. Ramesh (DIN:00126120) - Independent Directors who have attained the age of 75 years, till their respective tenure of appointment, after 31/03/2019. Further details have been provided in the Notice for convening 31st Annual General Meeting of the Company.

Key Managerial Personnel (KMP):

Pursuant to the provisions of sub-section (51) of Section 2 and Section 203 of the Act read with the Rules framed thereunder, the following persons were Key Managerial Personnel of the Company as on March 31,2018:

1. Shri S. K. Agarwal, Managing Director

2. Shri K. K. Soni, Director Finance & Chief Financial Officer

3. Shri H. Consul, Company Secretary

There was no change in the key managerial personnel of your Company during the year under review.

5. Independent Directors

In terms of the provisions of sub-section (6) of Section 149 of the Act and Regulation 16 of the Listing Regulations, the Company has received declarations from all the Independent Directors of the Company that they meet with the criteria of independence as provided in the Act and the Listing Regulations. Further, the Non-Executive Directors of the Company had no pecuniary relationship or transactions with the Company, other than sitting fees, and reimbursement of expenses, if any, incurred by them for the purpose of attending meetings of the Company.

6. Annual Return extract (MGT-9)

The details forming part of the extract of the Annual Return for the year 2017-18 in Form MGT-9 is enclosed as Annexure A.

7. Contracts with Related Party

The disclosure in prescribed form AOC-2 is enclosed as Annexure B.

8. Directors’ Responsibility Statement

Pursuant to the provisions of Section 134(3) of the Companies Act, 2013, the Directors hereby confirm:

a. that in the preparation of the annual accounts for the financial year ended 31st March, 2018, the applicable accounting standards have been followed, along with proper explanation relating to material departures;

b. that they 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 at the end of the financial year and of the profit of the Company for that period;

c. that they 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. that they have prepared the Annual Accounts for the financial year ended 31st March, 2018 on a ‘going concern’ basis;

e. that they have laid down Internal Financial controls to be followed by the Company and that such Internal Financial Controls are adequate and effective and

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

9. Evaluation of Board/Committees/Individual Directors

The Board routinely carries out the annual performance evaluation of its own performance, its Committees and Directors. The said exercise is led by the independent directors and the Chairman. The evaluation process focused on different aspects of the Board and Committees functioning such as composition of the Board and Committees, experience and competence, performance of specific duties and obligations, governance issues etc. Separate exercise was carried out to evaluate the performance of individual directors on parameters such as attendance, contribution and independent judgment. The aim was to assess the effectiveness of the Board’s/Committees’ processes, and to identify any actions required to improve effectiveness. The review thus focused on the following associated areas viz. structure, leadership, strategy, risks, decision making and development.

The evaluation process comprised the following:

• Review of Board, Committees and management information and other relevant documentation

• Meetings with key individuals within the organization.

• Discussions with all directors on the Board, Committee members focusing on aspects of the Board’s and Committees’ composition; strategy, risk and controls; decision-making, roles and performance of the Chairman, independent directors, executive directors and other non-executive directors.

Given the experience and qualifications of the Board members, it was not considered necessary to engage external persons to facilitate the evaluation process. Further, a meeting of Independent Directors, chaired by Shri Ajit Kumar, Chairman & Independent Director, was held pursuant to Schedule IV of the Act and the Listing Regulations to review the performance of the Chairman, Non-Independent Directors of the

Company and the performance of the Board as a whole. The Directors also discussed the quality, quantity and timeliness of flow of information between the Company management and the Board, which is necessary for the Board to effectively and reasonably perform their duties. Most directors have rich experience of corporate environment and so they are accustomed to having their performance regularly evaluated. The Directors have expressed their satisfaction with the evaluation process. As per the provisions of section 178(2) of Companies Act, 2013, the Nomination and Remuneration Committee carried out annual evaluation of each Director’s performance in its meeting held on 19th July, 2018.

10. Independent Directors

Independent Directors of your Company have complied with the relevant provisions of the law relating to their appointment and they continue to comply with the provisions of the Companies Act, 2013 and the listing regulations. All Independent Directors are in their first five year term. During the year ended 31/03/2018, 1 (one) meeting of Independent Directors was held on 24/01/2018.

Details of meeting(s) attended by the Independent Directors in the relevant period are as below:

S.

No.

Name of Director

Whether Chairman/ Member

No. of meetings attended during F.Y. 2017-18 & Dates

1

Shri Ajit Kumar

Chairman

1

24/01/2018.

2

Dr. S. Ramesh

Member

1

24/01/2018.

3

Shri R. Bandyopadhyay

Member

1

24/01/2018.

4

Shri D.K. Mehrotra

Member

1

24/01/2018.

11. Proper systems to ensure that compliances were adequate and effective

The professional conduct sets expectations that all employees shall comply with all laws and regulations governing company’s conduct. Information is reported upwards internally within the organization to senior management and, as appropriate, also shared with the Board of Directors and/or the external auditors. Information is reported externally in public filings, if it meets the criteria for requiring public disclosure.

12. Corporate Social Responsibility (CSR)

The Company is covered under the threshold prescribed under the Act for CSR. The Company had spent a total of Rs. 25,50,000/- in the financial year 2017-2018 for its chosen CSR initiatives as per the CSR policy.

A contribution of Rs. 20 lakhs was made to Lal Bahadur Shastri National Memorial Trust (“LBST”), 1 Motilal Nehru Place, New Delhi-110011 for construction of Laboratory for Mechanical Engineering course at Lal Bahadur Shastri Polytechnic in Village Manda, Near Allahabad (U.P.). Additionally, a contribution of Rs. 5.50 lakhs was made to a Gurgaon based non-profit organisation namely, IIMPACT which promotes primary education of girls in rural areas of Kanpur Dehat, Uttar Pradesh. All the CSR proposals are vetted and recommended by the CSR Committee to the Board of Directors for their approval.

Statement of CSR allocation and expenditure

(in Rs.)

Financial

Allocated

Amount

Amount Unspent

Year

Amount

Spent

(cumulative)

2014-2015

6,47,440/-

0

6,47,440/-

2015-2016

8,46,347/-

14,93,787/-

6,48,000/-

8,45,787/-

2016-2017

7,98,376/-

16,44,163/-

1,00,000/-

6,56,250/-

5,50,000/-

3,37,913/-

2017-2018

44,19,495/-

47,57,408/-

Less : Excess

-7,66,667/-

-7,66,667/-#

allocation

39,90,741/-

20,00,000/-

5,50,000/-

14,40,741/-

2018-2019

42,12,952/-

56,53,693/-*

# In the financial year 2016-17 the figure of profit before tax of Rs. 62,21,07,779/- was inadvertently considered for CSR calculations instead of Rs. 50,71,07,779/-. Accordingly allocation figure of Rs.44,19,495/- was computed involving excess allocation of Rs.7,66,667/-. The anomaly has now been corrected.

* Amount available for CSR expenditure in 2018-2019. The report of CSR Committee in terms of Section 135 of the Companies Act, 2013 is enclosed as Annexure-C to this report.

13. Number of Board Meetings

Relevant details have been provided in the report on corporate governance enclosed as Annexure D of this annual report.

14. Policies

Your Company has formulated following policies to better perform its functions and deliver results.

A. Corporate Social Responsibility Policy

The CSR policy can be accessed at company’s website viz. www.vlsfinance.com under the head ‘Investor Relations’.

B. Related Party Transaction

The detailed policy may be accessed at www.vlsfinance.com The Board of Directors (the “Board”) of VLS Finance Limited (the “Company”) has adopted this Policy. The said Policy includes the materiality threshold and the manner of dealing with Related Party Transactions (“Policy”) in compliance with the requirements of Section 188 of the Companies Act, 2013 and conforms to the requirements of regulation 23 of the Listing Regulations.

This Policy applies to transactions between the Company and one or more of its Related Parties. It provides a framework for governance and reporting of Related Party Transactions including material transactions.

This Policy is intended to ensure due and timely identification, approval, disclosure and reporting of transactions between the Company and any of its Related Parties in compliance with the applicable laws and regulations as may be amended from time to time.

C. Board diversity

The detailed policy may be accessed at www.vlsfinance.com VLS Finance Ltd. recognises and embraces the benefits of having a diverse Board and sees increasing diversity at Board level as an essential element in maintaining a competitive advantage. A truly diverse Board will include and make good use of differences in the skills, regional and industry knowledge and experience, background, race, gender and other distinctions between Directors. These differences will be considered in determining the optimum composition of the Board and when possible would be balanced appropriately. All Board appointments shall be made on merit, in the context of the skills, experience, independence and knowledge which the Board as a whole requires to be effective.

D. Risk Management

The detailed policy may be accessed at www.vlsfinance.com The Company has formed Risk Management Policy to ensure appropriate risk management within its systems and culture. The Company operates in a competitive environment and is generally exposed to various risks at different times such as technological risks, business risks, operational risks, financial risks, etc. The Board of Directors and the Audit Committee of the Company shall periodically review the Risk Management Policy of the Company so that the Management controls the risk through properly defined network.

The Company has a system based approach to business risk management backed by strong internal control systems. A strong independent Internal Audit Function at the corporate level carries out risk focused audits across all businesses, enabling identification of areas where risk managements processes may need to be improved. The Board reviews internal audit findings, and provided strategic guidance on internal controls, monitors the internal control environment within the Company and ensures that Internal Audit recommendations are effectively implemented.

The combination of policies and procedures adequately addresses the various risks associated with your Company’s businesses.

E. Anti-sexual harassment mechanism

The detailed mechanism may be accessed at www.vlsfinance.com The Company has in place an Anti-Sexual Harassment Policy in line with the requirements of The Sexual Harassment of Women at the Workplace (Prevention, Prohibition & Redressal) Act, 2013. All women employees interalia permanent, contractual, temporary, trainees are covered under this policy.

The Internal Complaints Committee is headed by the woman Director on the Board. There were no complaints received from any employee or otherwise during the year under review and no complaints were pending as on 31/03/2018.

F. Nomination and Remuneration Policy Title:

This Policy shall be called ‘VLSF Nomination and Remuneration Policy.’

Objective:

The provisions in the Companies Act, 2013 and corresponding provisions in the revamped Regulation 19 of the SEBl (Listing Obligations & Disclosure Requirements) Regulations, 2015 have ushered Indian corporate system in to a new era of Corporate Governance placing onerous governance responsibilities on the shoulders of the Board of Directors and Key Managerial Personnel of the Companies.

Section 178 of the Companies Act, 2013 and clause 49 of the Listing Agreement provide the necessary legal impetus for companies to have a policy and criteria for various matters like the remuneration of directors, key managerial persons and other employees, training of Independent Directors and performance evaluation of directors. Considering this it is necessary to ensure quality of persons on the Board of Directors of the Company as well as in the Key Managerial personnel, as these are the persons who are entrusted with the responsibility of policy formulation for, direction to and execution of the business and operations of the Company.

Definitions:

Board means the Board of Directors of VLS FINANCE LIMITED. Company means VLS Finance LIMITED.

Committee means Nomination and Remuneration Committee of Board of Directors.

Director means a person who has been appointed as such on the Board of the Company and includes Executive as well as NonExecutive Directors.

Executive Director means a Director who is in the whole time employment of the Company and includes a Managing Director as well as a Whole time Director and Manager, if member of the Board. Government includes Central Government as well as any of the State Governments, any statutory authority, tribunal, board or a governmental or semi-governmental authority or any authority or agency recognized by the Government.

HR Department means the Human Resource Department of the Company.

HR Policy means the Policy of the Company defining the criteria and process for the recruitment, training, appraisal etc. and dealing with other matters concerning the employees of the Company. Key Managerial Person means a person appointed as such by the Board under Section 203 of the Companies Act, 2013. Nomination & Remuneration Committee means the Committee of the Board constituted as such under the provisions of Section 178 of the Companies Act, 2013.

Non-Executive Director means a Director who is not in the whole time employment of the Company and includes an Independent Director, Promoter Director and Nominee Director.

Policy means this policy, as amended from time to time. Contents of the Policy:

This Policy contains following:

a) Process for the selection and appointment of Directors and Key Managerial Personnel;

b) Criteria for determining remuneration of the Directors, Key

Managerial Personnel and other employees of the Company; c) Training of Independent Directors.

(I) Selection of Directors and Key Managerial Personnel

In case of Executive Directors and Key Managerial Personnel, the selection can be made in either of the ways given below:

a) by way of recruitment from outside;

b) from within the Company hierarchy; or

c) Upon recommendation by the Chairman or other Director.

The appointment may be made either to fill up a vacancy caused by retirement, resignation, death or removal of an existing Executive Director or it may be a fresh appointment. In case of Non-Executive Directors the selection can be made in either of the ways given below:

a) by way of selection from the data bank of Independent Directors maintained by the Government.

b) Upon recommendation by Chairman or other Director. The appointment may be made either to fill up a vacancy caused by resignation, death or removal of an existing NonExecutive Director or it may be appointment as an additional director or an alternate director.

(II) Qualifications, Experience and Positive Attributes of Directors

a) While appointing a Director, it shall always be ensured that the candidate possesses appropriate skills, experience and knowledge in one or more fields of finance, law, management, sales, marketing, administration, research, corporate governance, technical operations or other disciplines related to the company’s business.

b) In case of appointment as an Executive Director, the candidate must have the relevant technical or professional qualifications and experience as are considered necessary based on the job description of the position. In case no specific qualification or experience is prescribed or thought necessary for the position then, while recommending the appointment, the HR Department shall provide the job description to the Committee and justify that the qualifications, experience and expertise of the recommended candidate are satisfactory for the relevant appointment. In such circumstances, the Committee may, if considered necessary, call for an expert opinion on the appropriateness of the qualifications and experience of the candidate for the position of the Executive Director.

c) In case of appointment as a Non-Executive Director, the candidate must be a graduate or possess diploma or a professional qualification in the field of his practice / profession / service and shall have not less than five years of working experience in such field as a professional in practice, advisor, consultant or as an employee, provided that the Board may waive the requirements of qualification and /or experience under this paragraph for a deserving candidate.

d) The Board, while making the appointment of a Director, shall also try to assess from the information available and from the interaction with the candidate that he is a fair achiever in his chosen field and that he is a person with integrity, diligence and open mind.

(III) Process for Appointment of Directors and Key Managerial Personnel

(A) Process for the appointment of Executive Directors and Key Managerial Personnel:

a) A proposal for the appointment of an Executive Director / Key Managerial Personnel with such details as may be prescribed shall be submitted for the consideration of the Committee. The proposal with recommendation of committee will be placed before the Board.

b) The Board shall, based on the information available in the proposal and recommendation of committee deliberate upon the necessity for appointment, expertise,

skill and knowledge of the candidate and reasonableness of the remuneration.

c) The Board may call and seek the help of any other Company Official including the recommender or a Key Managerial Personnel while finalizing the appointment. The recommender shall not take part in the discussion or voting on the appointment of a Key Managerial Personnel.

(B) Process for the appointment of Non- Executive Directors:

a) A proposal for the appointment of a Non-Executive Director with such details as may be prescribed shall be submitted for the consideration of the committee. The proposal with recommendation of committee will be placed before the Board.

b) The Board, based on the information available in the proposal, shall deliberate upon the necessity for appointment, integrity, qualifications, expertise, skill and knowledge of the candidate.

(IV) Remuneration of Directors, Key Managerial Personnel and other Employees

a) While determining the remuneration of Executive Directors and Key Managerial Personnel, the Board shall consider following factors:

i) Criteria / norms for determining the remuneration of such employees prescribed in applicable statutory provisions and Company’s internal criteria for remuneration.

ii) Existing remuneration drawn.

iii Industry standards, if the data in this regard is available.

iv) The job description.

v) Qualifications and experience levels of the candidate,

vi) Remuneration drawn by the outgoing employee, in case the appointment is to fill a vacancy on the death, resignation, removal etc. of an existing employee.

vii) The remuneration drawn by other employees in the grade with matching qualifications and seniority, if applicable.

b) The determination of remuneration for other employees shall be governed by the HR Policy.

c) The proposal for the appointment of an Executive Director / Key Managerial Personnel shall provide necessary information in this regard including recommendation of Committee to the Board in arriving at the conclusion as to whether or not the remuneration offered to the candidate is appropriate, reasonable and balanced as to the fixed and variable portions (including the commission).

d) The remuneration payable to the Executive Directors, including the Commission and value of the perquisites, shall not exceed the permissible limits as are mentioned within the provisions of the Companies Act, 2013.

e) The Executive Directors shall not be eligible to receive sitting fees for attending the meetings of the Board or committees thereof.

f) The Non-Executive Directors shall not be eligible to receive any remuneration / salary from the Company. However, the Non-Executive Directors shall be paid sitting fees for attending the meeting of the Board or committees thereof and commission, as may be decided by the Board / shareholders from time to time.

The Non-Executive Directors shall also be eligible to receive reimbursement of reasonable out-of-pocket expenses incurred by them for attending the meetings of the Board, committees or shareholders, including travelling and lodging & boarding expenses or such other expense incurred by them regarding the affairs of the

Company on an actual basis.

g) The amount of sitting fee and commission payable to Non-Executive Directors shall not exceed the limits prescribed therefor under the provisions of the Companies Act, 2013.

Explanation: For the purposes of this Policy, Remuneration shall mean the Cost to the Company and shall include the salary, allowances, perquisites, performance incentive and any other facility provided or payment made to the employee.

(V) Training of Independent Directors

The Company shall arrange to provide training to Independent Directors to familiarize them with the Company, their roles, rights and responsibilities in the Company, nature of the industry in which the Company operates, business model of the Company etc.

The training may be provided in any of the ways given below:

a) By providing reading material to the Independent Director(s) giving all relevant information about the Company, industry and the role of Independent Directors.

b) An induction program devised for the Independent Director(s) wherein structured training is provided to the Independent Director(s) either exclusively or with other officials of the Company who are due for such induction / training.

c) Such other manner as may be prescribed by applicable law or decided by the Board.

Interpretation:

a) Any words used in this policy but not defined herein shall have the same meaning ascribed to it in the Companies Act, 2013 or Rules made thereunder, SEBI Act or Rules and Regulations made thereunder, Listing Agreement, Accounting Standards or any other relevant legislation / law applicable to the Company.

b) The reference to the male gender in the Policy shall be deemed to include a reference to female gender.

c) In case of any dispute or difference upon the meaning / interpretation of any word or provision in this Policy, the same shall be referred to the Committee and the decision of the Committee in such a case shall be final. In interpreting such term / provision, the Committee may seek the help of any of the officers of the Company or an outside expert as it deems fit.

Amendments:

The Board of Directors shall have the power to amend any of the provisions of this Policy, substitute any of the provisions with a new provisions or replace this Policy entirely with a new Policy.

G. Vigil Mechanism /Whistle Blower

The Company is committed to adhere to the highest standards of ethical, moral and legal conduct of business operations. Vigil (whistleblower) mechanism provides a channel to the employees and directors to report to the management concerns about unethical behaviour, actual or suspected fraud or violation of the code of conduct or policy. The mechanism provides for adequate safeguards against victimization of directors and employees who avail of the mechanism and also provide for direct access to the Chairman of the Audit Committee in exceptional cases.

The detailed policy may be accessed at www.vlsfinance.com.

15. Corporate Governance and Compliance Certificate

We have reported in Annexure D to this report, the extent of compliance of Corporate Governance practices in accordance with Regulation 34(3) of the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015.

16. Auditors Statutory Auditors

In terms of Section 139 read with Companies (Audit and Auditors) Rules, 2014 M/s. M. L. Puri & Co. - Chartered Accountants, (FRN: 002312N)

had been appointed for a period of 5 years i.e. from the conclusion of 30th Annual General Meeting till the conclusion of 35th Annual General Meeting of the Company subject to ratification of their appointment by members every year and other compliances, if any as per applicable regulations.

However, with the enforcement of Section 40 of the Companies Amendment Act, 2017 w.e.f. 07/05/2018 the provision relating to ratification of appointment of Statutory Auditors in the intervening period as envisaged in Section 139 of the Companies Act, 2013 from Members had been omitted. The Government had also notified the amendment in relevant rules to this effect from the same date. The ratification of appointment of Statutory Auditors by the Members is, therefore, no longer required. The remuneration of Statutory Auditors for each financial year during their tenure would however continue to be fixed by the Members though they may authorise the Board to fix the remuneration every year. Such authorisation can be made for the remaining tenure of Auditors to obviate yearly authorisation. The Board recommends for your approval the proposal for authorising the Board to fix the remuneration of Statutory Auditors for remaining period of their tenure as set out in relevant item in the Notice for ensuing AGM.

Secretarial Auditor

The Board in its meeting held on 17/05/2018 has appointed Ms. Pooja Gandhi -Practicing Company Secretary (CoP:11351) as Secretarial Auditor for the year 2018-2019.

The provisions relating to cost records and audit are not applicable to your company.

17. Secretarial Audit Report

The Secretarial Audit Report submitted by Secretarial Auditor in terms of Section 204 of the Companies Act, 2013 read with Rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is enclosed as Annexure E. There are no adverse comments/observations by Secretarial Auditor requiring explanation by the Board.

18. Auditors’ Report

The observations made by the Statutory Auditors, with reference to notes on accounts for the year under report, have been adequately dealt with in the relevant Notes forming part of Financial Statements and need no further comments from Directors.

19. Statutory Information

- During the year under review, the Company did not absorb any new technology or carry out any R&D related activity for this purpose. However, use of energy efficient devices, wherever possible, in conducting business of Company is part of its administration policies. The detailed disclosure is enclosed as Annexure F to this report.

- The shares of the Company are presently listed at BSE Ltd., The National Stock Exchange of India Ltd., Mumbai and The Calcutta Stock Exchange Ltd., Kolkata. The proposal to delist the shares from the Calcutta Stock Exchange Ltd., where no trading of the Company’s shares had been done for past many years, is under consideration by the management.

- The Company has paid the annual listing fees for the year 20182019 to all the aforesaid Stock Exchanges.

- Your Company’s principle business is acquisition of securities; hence Section 186 of the Act is not applicable.

- Your Company has not issued equity shares with differential voting rights, sweat equity or ESOP in terms of Section 43 and Section 62 of the Companies Act, 2013, during the year under review.

- No revision of financial statements or Board’s Report has been made in terms of Section 131 of the Companies Act, 2013, during the year under review.

- For continuing the directorship of non-executive directors who have attained the age of seventy five years a special resolution would be required to be passed at the ensuing Annual General Meeting of the Company. This is pursuant to the SEBI Notification No. SEBI/ LAD-NR0/GN/2018/10 dated May 09, 2018 through which it has amended the SEBI (Listing Obligations and Disclosures Requirement) Regulations, 2015. This amendment is going to be effective from April 01, 2019. No independent director was reappointed through special resolution during the year under review.

- Disclosure relating to ratio of the remuneration of each director to the median employee’s remuneration in terms of Section 197(12) of the Companies Act, 2013 is enclosed as Annexure G to this report.

- Executive Vice-Chairman, Managing Director and Director- Finance & CFO of your company are not in receipt of any remuneration or commission from any of subsidiary company in terms of Section 197(14) of the Companies Act, 2013.

- There were no orders passed by the regulators against the Company.

- Senior management have made requisite disclosures to the Board relating to all material financial and commercial transactions.

20. Fixed Deposits

The Company has not accepted any fixed deposit during the year under review. The Company has no plans to accept any deposits from the public in the current year.

21. Human Resources

Employee relations continued to be cordial during the year. The number of employees stood at 30 (Thirty). The Directors place on record their appreciation of the devoted service of the employees at all levels. In terms of the provisions of Section 197 of the Companies Act 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, there was no employee during the year drawing remuneration more than the stipulated amount in the said rules. Your Company has not approved any scheme relating to provision of money to be held in a trust for the benefit of the employees in terms of Section 67(3)(b) of the Companies Act, 2013 during the year under review.

22. Green initiative in Corporate Governance

As a continuing endeavor towards the Go Green Initiative, the Company has been sending documents like the notice calling the general meeting, audited financial statements, directors'' report, auditors'' report etc. in electronic form, to the email addresses provided by the members directly or made available to us by the depositories, besides regular correspondence. The electronic mode is both economical and speedier compared to physical documents. Members who hold shares in physical form are, therefore, requested to register their e-mail addresses and intimate any change in e-mail id, with the Company or with the Registrar & Share Transfer Agents, RCMC Share Registry Pvt. Ltd. In respect of electronic holdings, members are requested to register their e-mail addresses with the depository through their concerned depository participants. You may kindly note that even after registration of e-mail ID, you are entitled to be furnished, free of cost, a printed copy of the annual report of the Company, upon receipt of a requisition from you, at

any time. In case you desire to receive Company’s communication and documents in physical form, you are requested to intimate us through email at [email protected].

23. Subsidiary/Associate Companies

Statement pursuant to Section 129(3) of the Companies Act, 2013 for the financial year ended 31/03/2018 in respect of the subsidiary/associate companies, is enclosed with Annual Accounts of the Company.

After coming into effect of the Companies Act, 2013, the definition of “Associate” covers a Company or Companies in which the Company holds not less than 20% of the total share Capital of that company or those companies irrespective of whether they are in the same group or not. Hence, though Sunair Hotels Ltd. and BMS IT Institute Pvt. Ltd are presently not in the same group still Accounting Standard 23 has been followed for the limited purpose of consolidation of annual accounts of these companies. However, as regards the notes on account and significant accounting policies related to these companies are concerned, the Company has not considered the same as the Company is in litigation with these companies. In the opinion of the Board, there is no adverse impact of such litigation on investments/advances made by the Company in these associates and the amount realizable from the said investments/ advances would not be less than the amount stated in the Company’s own financial statements.

Separate section on performance and financial position of subsidiary and associate companies have been provided as note no. 23 sub-note 16 & 17 of Notes forming part of consolidated financial statement in the Annual Report for the year under review.

24. Consolidated Financial Statements

In compliance of Section 129(3) of the Companies Act, 2013, the consolidated financial statements in accordance with the prescribed accounting standards are annexed to the audited annual accounts for the year under review.

25. Acknowledgements

Your Directors wish to place on record their sincere appreciation and gratitude to the Company’s business associates, customers, Bankers, the Securities & Exchange Board of India and Stock Exchanges for their continued support and assistance and also to the esteemed shareholders of the Company, for their valuable support and patronage.

For and on behalf of the Board of Directors

Place : New Delhi S.K. Agarwal K.K. Soni

Date : 19/07/2018 Managing Director Director-Finance & CFO

DIN:00106763 DIN:00106037


Mar 31, 2016

DIRECTORS’ REPORT TO THE MEMBERS

The Directors are pleased to present the 29th Annual Report of the Company together with the audited statement of accounts for the year ended 31st March, 2016.

1. Financial Results (Rs. in Lakhs)

For the year ended

31st March, 2016

For the year ended 31st March, 2015*

Gross Receipts

191701.79

462349.03

Profit before Interest & Depreciation

1036.82

799.38

Less: Interest & Finance Charges

195.80

23.04

Profit before Depreciation

841.02

776.33

Less: Depreciation

44.96

47.64

Profit before Tax

796.06

728.69

Less: Provision for Taxation/(Credits)

94.08

(80.68)

Profit after Tax

701.98

648.01

Surplus brought forward from

4444.25

2495.28

previous year

Less: Adjustment on account of

0.00

1.16

transitional Provision effect

for depreciation

Add: Transfer from Statutory Reserve

0.00

1302.13

(Under RBI Act, 1934)

Available for Appropriation

5146.23

4444.25

Appropriations:

To General Reserve

0.00

0.00

Surplus c/f

5143.23

4444.25

* (Figures have been regrouped/recast to conform to current year’s methodology)

2. Management Discussion and Analysis Financial Review

During the year under review, profit before tax was Rs.796.06 Lakhs as compared to Rs. 728.69 Lakhs for the previous year and profit after tax was also higher at Rs. 701.98 Lakhs as compared to Rs. 648.01 Lakhs during the previous year.

Industry Structure and Development

The world economy showed a weakening trend, with weak aggregate demand, falling commodity prices and increasing volatility in the financial markets. Most emerging economies have been showing slower economic growth. India has fortunately been able to buck this trend, thanks largely to the country’s domestic demand and comparatively limited reliance on the external sector for growth. The world economy’s revised growth rate was at 2.4% as compared to 3.6% in the previous year and is projected to grow by 2.9% in 2016.

The Asian region is expected to grow at a steady 5.4 percent in 2015-16 and will continue to remain the global growth leader. Asia’s growth should benefit from relatively strong labour markets and growth in disposable income along with the ongoing recovery in major developed economies. Low inflation, increased public investment, revival of private investment and increased consumption (both urban and rural) were the major factors influencing India’s GDP growth which was at 7.4%. The continuing tightening measures by the Reserve Bank of India to combat inflation, led to higher cost of funds which adversely affected India’s industrial growth. The value of the rupee stabilized vis-a-vis other international currencies during the later half of the fiscal year as a result of various measures taken by the Government and Reserve Bank of India.

Outlook, Risks and Concerns

Your Company has been making use of available opportunities in the capital and the commodities markets for its operations, keeping in view its business objectives. The Company received registration as stock broker in October, 2014. After complying with the requisite formalities of the stock exchange viz. BSE Ltd, the Company commenced operations as stock broker in December, 2015.

The underlying strength of Indian consumption and demand, continues to remain robust. The country’s equity markets remain a favourite of global investors. The performance of your Company is closely linked to those of the stock and commodities markets and more particularly to stock markets. The growth tendencies for 2016-17 are expected to be mostly reflective of the developments in these areas. Your Company is cautiously optimistic in the current scenario and will focus on a well-adjusted portfolio mix, resourceful cost management and risk containment measures in order to sustain profitability.

The Company is exposed to normal industry risks such as credit, interest rate, economic, currency, political, market and operational risks. Our approach to risk management is based on our extensive experience and well placed risk management framework. The Company views risk management as integral to its business for creating and maintaining best practices in business operations and administration.

Opportunities and Threats

Positive strides have been made since the new government has taken over. The Company is looking forward to grasp the available opportunities. The Company will also focus on permitted avenues as a member of the Stock Exchange including corporate advisory and other related services. The uncertain state of the global economy however remains a cause of concern.

Adequacy of Internal Financial Control Systems

The Internal Auditor monitors and evaluates the efficacy and adequacy of internal financial control systems in the Company, its compliance with operating systems, accounting procedures and policies at all levels of the Company and its subsidiaries. Significant audit observations and the corrective actions thereon are presented to the Audit Committee of the Board. The control framework is established and maintained by the Company. The observations by the internal and statutory auditors is perused by the Management, the Audit Committee as well as the Board for proper implementation. The Company’s internal financial controls have been found to be adequate and effective.

Segment wise Performance

Accounting Standard (AS-17) relating to “Segment Reporting” has been complied with. The gross operating income and profit from the other segment is below the norms prescribed in AS-17, hence separate disclosure has not been made.

Cautionary Statement

The statements in the above analysis, describing the Company’s projections, estimates, expectations or predictions may be ‘forward looking statements’ within the meaning of applicable securities laws and regulations. The actual results may differ from those expressed or implied. Important factors that could make a difference to the Company’s operations include changes in government regulations, tax regimes, economic developments within the country and abroad, and other related factors.

3. Dividend

As a measure to conserve resources, no dividend is recommended.

4. Reserve

No amount was proposed to be transferred to the reserve during the year under review.

5. Directors/ Key Managerial Personnel (KMP)

The following changes have occurred from 01/04/2015 till the date of this report in the composition of the Board of Directors/ Key Managerial Personnel of your Company:

Directors:

Due to untimely demise of Shri Somesh Mehrotra on 22/08/2015, he ceased to be the Director from that date and Shri M.P. Mehrotra was appointed as Non-Executive/Non-Independent Director on 12.09.2015 to fill the casual vacancy so caused. Shri. B.M. Oza ceased to be Director w.e.f. 30/06/2016 due to his demise.

Shri R. Bandyopadhyay and Shri D.K. Mehrotra have been appointed as Additional Directors in the category of Independent Director w.e.f. 28.05.2016 besides Shri Vikas Mehrotra who was also appointed an Additional Director on 28.05.2016 in the category of Non-Independent Director. Shri Vikas Mehrotra is son of Shri M.P. Mehrotra- Promoter and Director of the Company and is related to him as such.

In accordance with the provisions of Article 89 of the Articles of Association of the Company, Shri K. K. Soni- Director-Finance & CFO will retire by rotation at the ensuing Annual General Meeting of your Company and being eligible, offers himself for re-election.

The tenure of Shri S.K. Agarwal-Managing Director is ending on 20th August, 2016 and his reappointment, subject to members approval, has been made in the Board meeting held on 28/05/2016. His tenure as a Managing Director will be effective from 21/08/2016 for a period of 3 years.

As already reported, Dr. (Mrs.) Sushma Mehrotra ceased to be Director on 09/04/2015 due to her demise. Dr. (Mrs.) Neeraj Arora was appointed as Additional Director w.e.f. 30/05/15 and her appointment as Director liable to retire by rotation was approved by members in 28th Annual General Meeting held on 24/09/15.

Key Managerial Personnel (KMP):

Shri K. K. Soni- Director-Finance & CFO was reappointed as such in the extraordinary general meeting held on 19th December, 2015. There has been no other change in the Key Managerial Personnel of your Company during the year under review.

i. Independent Directors

The Independent Directors of your company have complied with the relevant provisions of the law relating to their declaration served to the Company and they continue to comply with the provisions of the applicable laws & listing regulations.

’. Annual Return extract (MGT-9)

The details forming part of the extract of the Annual Return in Form MGT-9 is annexed herewith as annexure A.

. Contracts with Related Party

The disclosure in prescribed form AOC-2 is enclosed as annexure B.

i. Directors’ Responsibility Statement

Pursuant to the provisions of Section 134(3) of the Companies Act, 2013, the Directors hereby confirm:

a. that in the preparation of the annual accounts for the financial year ended 31st March, 2016, the applicable accounting standards have been followed, along with proper explanation relating to material departures;

b. that they 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 at the end of the financial year and of the profit of the Company for that period;

c. that they 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; and

d. that they have prepared the Annual Accounts for the financial year ended 31st March, 2016 on a ‘going concern’ basis.

e. that they have laid down Internal Financial controls to be followed by the Company and that such Internal Financial Controls are adequate and effective.

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

10. Evaluation of Board/Committees/Individual Directors

The Board carried out the annual performance evaluation of its own performance, its Committees and Directors. The exercise was led by the independent directors and the Chairman. The evaluation process focused on various aspects of the Board and Committees functioning such as composition of the Board and Committees, experience and competencies, performance of specific duties and obligations, governance issues etc. Separate exercise was carried out to evaluate the performance of individual directors on parameters such as attendance, contribution and independent judgment. The Directors expressed their satisfaction with the evaluation process. The aim was to assess the effectiveness of the Board’s/Committees’ processes, and to identify any actions required to improve effectiveness. The review thus focused on the following associated areas; structure, leadership, strategy, risks, decision making and development.

The evaluation process comprised the following:

- Review of Board, Committees and management information and other relevant documentation

- Meetings with key individuals within the organization.

- Discussions with all directors on the Board, Committee members focusing on aspects of the Board’s and Committees’ composition; strategy, risk and controls; decision-making, roles and performance of the Chairman, independent directors, executive directors and other non-executive directors.

Given the experience and qualifications of the Board members, it was not considered necessary to engage external persons to facilitate the evaluation process. Most directors have rich experience of corporate environment and so they are accustomed to having their performance regularly evaluated.

11. Proper systems to ensure compliances were adequate and effective The professional conduct sets expectations that all employees shall comply with all laws and regulations governing company’s conduct. Information is reported upwards internally within the organization to senior management and as appropriate, also shared with the Board of Directors and/or the external auditors. Information is reported externally in public filings, if it meets the criteria for requiring public disclosure.

12. Number of meetings

During the financial year ended on 31st March, 2016, the Board met 5 times, on 28/05/2015, 11/08/2015, 12/09/2015, 06/11/2015 and 09/02/2016.

13. Corporate Social Responsibility (CSR)

With the enactment of the Companies Act, 2013 (‘Act’) the Company is covered under the threshold prescribed under the Act for CSR.

In the previous year it was reported that the Company had to expend a sum of Rs. 4,98,534/- being 2% of the average profits of the previous three years on its CSR initiatives. However, based on the clarification by the Ministry of Corporate Affairs on the computation of the profits under section 135 of the Companies Act, 2013, a recalculated figure of Rs. 6,47,440/- was derived to be spent on its CSR activities which is higher than the earlier reported figure for the year 2013-2014. The amount to be spent on CSR initiatives for the year 2014-2015 amounted Rs. 8,46,347/-. Out of the total amount of Rs. 14,93,787/- to be spent on CSR in the year 2015-2016, the Company had placed Rs. 6,48,000/- in the ‘Prime Minister’s National Relief Fund’ as recommended by the CSR committee in its meeting held on 21st March, 2016. The unspent amount for CSR as on 31/03/2016 was Rs. 8,45,787/-. Further, Rs. 100,000/- was approved by the CSR Committee by circulation on 06/06/2016 to be expended by way of contribution made by the Company to Jan Akanksha Pratishthan’s (a non-government organization) ‘Flying Feet’ initiative. The cumulative unspent brought forward amount for CSR activities thus stood at Rs.7,45,787/- . The allocation for the year 2015-16 towards CSR expenditure amounts to Rs. 7,98,376/-. Accordingly, the total unspent amount under CSR as on date of this report is Rs. 15,44,163/-. This amount will be spent as per the further recommendations of the CSR Committee. Given below is the summary of the amount expended on CSR:

Statement of CSR allocation and expenditure

(in Rs.)

Financial

Year

Allocated

Amount

Amount

Spent

Amount Unspent (cumulative)

2013-2014

6,47,440

Not applicable

6,47,440

2014-2015

8,46,347

0

14,93,787

2015-2016

7,98,376

6,48,000

16,44,163

2016-2017

*

1,00,000

15,44,163

*will be computed after closure of current financial year.

The report of CSR Committee in terms of section 135 of the Companies Act, 2013 is enclosed as Annexure -C to this report.

14. Policies

Your Company has formulated following polices to better perform its functions and deliver results.

A. Corporate Social Responsibility Policy

Primer

VLS Finance Limited (VLSF) is committed to undertake CSR activities in accordance with the provisions of Section 135 of the Companies Act, 2013 and related Rules, as amended.

VLSF believes that development has to be all-encompassing and every community has to be responsible for the development of an impartial and benevolent society. VLSF commits itself to add to the society in ways possible for the organization.

Intention & Purpose

- Strategy is to develop a long-term vision for VLSF CSR goals.

- Outline of activities to be embarked upon, in line with the CSR policy and Schedule VII of the Companies Act, 2013, as amended.

- VLSF shall promote projects that are sustainable and create a long term value for the society;

- Have specific and measurable goals in alliance with VLSF beliefs;

- To establish a mechanism for the implementation and monitoring of the CSR activities.

Committee Composition

The CSR Committee of the Board shall be composed of at least three (3) Directors. The CSR Committee shall include one (1) independent director effectively within the time period prescribed under law. Members of the CSR Committee may be replaced by any other member of the Board.

Committee Meetings

The CSR Committee shall meet as often as its members deem necessary to perform its duties responsibly.

Duties & Responsibilities of CSR Committee

i) Formulate and recommend to the Board the CSR activities/ programs to be undertaken by VLSF. The CSR Committee shall be guided by the list of activities specified in Schedule VII to the Companies Act, 2013.

ii) Recommend the CSR expenditure to be incurred on the CSR activities.

iii) Institute a transparent mechanism for implementation of the CSR projects and effective monitoring tools of such projects.

iv) Preparation of annualized reports of the CSR activities undertaken and submission of the same to the Board.

Responsibilities of the Board

i) Approve the CSR Policy and expenditure on CSR initiatives after taking into consideration the recommendations made by the CSR committee.

ii) Ensure the CSR spending in every financial year is in accordance with statutory provisions as applicable from time to time.

iii) Ensure that the CSR activities included in the policy are undertaken by the Company and are in conformity to the activities as outlined in Schedule VII of the Companies Act.

iv) Ensure disclosure of the contents of the CSR Policy and CSR Committee in its report to the members and put the policy on the Company’s website.

CSR Expenditure

i) CSR expenditure shall mean all expenditure incurred in respect of specific projects/programs relating to activities as approved by the Board on the recommendation of its CSR committee including contribution to corpus relating to CSR activities and it shall not include expenditure on an item not in conformity with the CSR policy and Schedule VII of the Companies Act, 2013.

ii) The surplus arising out of the CSR activities or projects shall not form part of the business profit of the Company.

CSR Activities - Projects

i) The Company may undertake one or more CSR activities in line with Schedule VII of the Companies Act, 2013.

ii) The Company shall give preference to the local area(s) around which it operates while considering the CSR activities to be undertaken. However, it may be guided by the requirements of the specific CSR activity in other locations within India.

Implementing CSR Activities

i) The Company shall undertake the CSR activities directly and also through various implementing agencies within the group or outside such as, non-profit organizations, etc. Such outside implementing agencies shall have an established track record as prescribed under the relevant law.

ii) The initiatives so undertaken may be communicated to the employees through specific awareness campaigns, so as to enable maximum participation.

iii) The Company may collaborate with other companies for undertaking CSR projects or programs provided separate reporting mechanisms are in place and are in accordance with Companies Act, 2013 and rules there under, as amended.

Assessment

The CSR committee shall be apprised on the implementation of the CSR activities and the progress shall be monitored on regular basis.

The Company shall through its internal controls, monitoring and evaluation systems, implement, assess, document and report the impact of its CSR activities.

General

Any term or aspect not specifically defined or set out in this policy shall be construed to mean what is laid down in respect thereof under the Act or CSR Rules.

Amendments

This Policy may be reviewed and amended from time to time.

B. Related Party Transaction

The detailed policy may be accessed at www.vlsfinance.com The Board of Directors (the “Board”) of VLS Finance Limited (the “Company”) has adopted this Policy. The said Policy includes the materiality threshold and the manner of dealing with Related Party Transactions (“Policy”) in compliance with the requirements of Section 188 of the Companies Act, 2013 and Clause 49 of the Listing Agreement.

This Policy applies to transactions between the Company and one or more of its Related Parties. It provides a framework for governance and reporting of Related Party Transactions including material transactions.

This Policy is intended to ensure due and timely identification, approval, disclosure and reporting of transactions between the Company and any of its Related Parties in compliance with the applicable laws and regulations as may be amended from time to time.

C. Board diversity

The detailed policy may be accessed at www.vlsfinance.com

VLS Finance Ltd. recognizes and embraces the benefits of having a diverse Board and sees increasing diversity at Board level as an essential element in maintaining a competitive advantage. A truly diverse Board will include and make good use of differences in the skills, regional and industry knowledge and experience, background, race, gender and other distinctions between Directors. These differences will be considered in determining the optimum composition of the Board and when possible would be balanced appropriately. All Board appointments shall be made on merit, in the context of the skills, experience, independence and knowledge which the Board as a whole requires to be effective.

D. Risk Management

The detailed policy may be accessed at www.vlsfinance.com

The Company has formed Risk Management Policy to ensure appropriate risk management within its systems and culture. The Company operates in a competitive environment and is generally exposed to various risks at different times such as technological risks, business risks, operational risks, financial risks, etc. The Board of Directors and the Audit Committee of the Company shall periodically review the Risk Management Policy of the Company so that the Management controls the risk through properly defined network.

The Company has a system based approach to business risk management backed by strong internal control systems. A strong independent Internal Audit Function at the corporate level carries out risk focused audits across all businesses, enabling identification of areas where risk managements processes may need to be improved. The Board reviews internal audit findings, and provided strategic guidance on internal controls, monitors the internal control environment within the Company and ensures that Internal Audit recommendations are effectively implemented.

The combination of policies and procedures adequately addresses the various risks associated with your Company’s businesses.

E. Anti-sexual harassment mechanism

The detailed mechanism may be accessed at www.vlsfinance.com

The Company has in place an Anti-Sexual Harassment Policy in line with the requirements of The Sexual Harassment of Women at the Workplace (Prevention, Prohibition & Redressal) Act, 2013. All women employees interalia (permanent, contractual, temporary, trainees) are covered under this policy.

The Internal Complaints Committee is headed by the woman Director on the Board. There were no complaints received from any employee or otherwise during the year under review and no complaints were pending as on 31/03/2016.

F. Nomination and Remuneration Policy Title:

This Policy shall be called ‘VLSF Nomination and Remuneration Policy.’

Objective:

The provisions in the Companies Act, 2013 and corresponding provisions in the revamped Regulation 27(2) of the SEBl (Listing Obligations & Disclosure Requirements) Regulations, 2015 have ushered Indian corporate system in to a new era of Corporate Governance placing onerous governance responsibilities on the shoulders of the Board of Directors and Key Managerial Personnel of the Companies.

Section 178 of the Companies Act, 2013 and clause 49 of the Listing Agreement provide the necessary legal impetus for companies to have a policy and criteria for various matters like the remuneration of directors, key managerial persons and other employees, training of Independent Directors and performance evaluation of directors.

Considering this it is necessary to ensure quality of persons on the Board of Directors of the Company as well as in the Key Managerial personnel, as these are the persons who are entrusted with the responsibility of policy formulation for, direction to and execution of the business and operations of the Company. Definitions:

Board means the Board of Directors of VLS FINANCE LIMITED. Company means VLS Finance LIMITED.

Committee means Nomination and Remuneration Committee of Board of Directors.

Director means a person who has been appointed as such on the Board of the Company and includes Executive as well as Non-Executive Directors.

Executive Director means a Director who is in the whole time employment of the Company and includes a Managing Director as well as a Whole time Director and Manager, if member of the Board.

Government includes Central Government as well as any of the State Governments, any statutory authority, tribunal, board or a governmental or semi-governmental authority or any authority or agency recognized by the Government.

HR Department means the Human Resource Department of the Company.

HR Policy means the Policy of the Company defining the criteria and process for the recruitment, training, appraisal etc. and dealing with other matters concerning the employees of the Company.

Key Managerial Person means a person appointed as such by the Board under Section 203 of the Companies Act, 2013.

Nomination & Remuneration Committee means the Committee of the Board constituted as such under the provisions of Section 178 of the Companies Act, 2013.

Non-Executive Director means a Director who is not in the whole time employment of the Company and includes an Independent Director, Promoter Director and Nominee Director.

Policy means this policy, as amended from time to time.

Contents of the Policy:

This Policy contains following:

a) Process for the selection and appointment of Directors and Key Managerial Personnel;

b) Criteria for determining remuneration of the Directors, Key Managerial Personnel and other employees of the Company;

c) Training of Independent Directors.

(I) Selection of Directors and Key Managerial Personnel

In case of Executive Directors and Key Managerial Personnel, the selection can be made in either of the ways given below:

a) by way of recruitment from outside;

b) from within the Company hierarchy; or

c) Upon recommendation by the Chairman or other Director.

The appointment may be made either to fill up a vacancy caused by retirement, resignation, death or removal of an existing Executive Director or it may be a fresh appointment. In case of Non-Executive Directors the selection can be made in either of the ways given below:

a) by way of selection from the data bank of Independent Directors maintained by the Government.

b) Upon recommendation by Chairman or other Director. The appointment may be made either to fill up a vacancy caused by resignation, death or removal of an existing Non-Executive Director or it may be appointment as an additional director or an alternate director.

(II) Qualifications, Experience and Positive Attributes of Directors

a) While appointing a Director, it shall always be ensured that the candidate possesses appropriate skills, experience and knowledge in one or more fields of finance, law, management, sales, marketing, administration, research, corporate governance, technical operations or other disciplines related to the company’s business.

b) In case of appointment as an Executive Director, the candidate must have the relevant technical or professional qualifications and experience as are considered necessary based on the job description of the position. In case no specific qualification or experience is prescribed or thought necessary for the position then, while recommending the appointment, the HR Department shall provide the job description to the Committee and justify that the qualifications, experience and expertise of the recommended candidate are satisfactory for the relevant appointment. In such circumstances, the Committee may, if considered necessary, call for an expert opinion on the appropriateness of the qualifications and experience of the candidate for the position of the Executive Director.

c) In case of appointment as a Non-Executive Director, the candidate must be a graduate or possess diploma or a professional qualification in the field of his practice / profession / service and shall have not less than five years of working experience in such field as a professional in practice, advisor, consultant or as an employee, provided that the Board may waive the requirements of qualification and /or experience under this paragraph for a deserving candidate.

d) The Board, while making the appointment of a Director, shall also try to assess from the information available and from the interaction with the candidate that he is a fair achiever in his chosen field and that he is a person with integrity, diligence and open mind.

(III) Process for Appointment of Directors and Key Managerial Personnel

(A) Process for the appointment of Executive Directors and Key Managerial Personnel:

a) A proposal for the appointment of an Executive Director / Key Managerial Personnel with such details as may be prescribed shall be submitted for the consideration of the Committee. The proposal with recommendation of committee will be placed before the Board.

b) The Board shall, based on the information available in the proposal and recommendation of committee deliberate upon the necessity for appointment, expertise, skill and knowledge of the candidate and reasonableness of the remuneration.

c) The Board may call and seek the help of any other Company Official including the recommender or a Key Managerial Personnel while finalizing the appointment. The recommender shall not take part in the discussion or voting on the appointment of a Key Managerial Personnel.

(B) Process for the appointment of Non- Executive

Directors:

a) A proposal for the appointment of a Non-Executive Director with such details as may be prescribed shall be submitted for the consideration of the committee. The proposal with recommendation of committee will be placed before the Board.

b) The Board, based on the information available in the proposal, shall deliberate upon the necessity for appointment, integrity, qualifications, expertise, skill and knowledge of the candidate.

(IV) Remuneration of Directors, Key Managerial Personnel and other Employees

a) While determining the remuneration of Executive Directors and Key Managerial Personnel, the Board shall consider following factors:

i) Criteria / norms for determining the remuneration of such employees prescribed in applicable statutory provisions and Company’s internal criteria for remuneration.

ii) Existing remuneration drawn.

iii Industry standards, if the data in this regard is available.

iv) The job description.

v) Qualifications and experience levels of the candidate,

vi) Remuneration drawn by the outgoing employee, in case the appointment is to fill a vacancy on the death, resignation, removal etc. of an existing employee.

vii) The remuneration drawn by other employees in the grade with matching qualifications and seniority, if applicable.

b) The determination of remuneration for other employees shall be governed by the HR Policy.

c) The proposal for the appointment of an Executive Director / Key Managerial Personnel shall provide necessary information in this regard including recommendation of Committee to the Board in arriving at the conclusion as to whether or not the remuneration offered to the candidate is appropriate, reasonable and balanced as to the fixed and variable portions (including the commission).

d) The remuneration payable to the Executive Directors, including the Commission and value of the perquisites, shall not exceed the permissible limits as are mentioned within the provisions of the Companies Act, 2013.

e) The Executive Directors shall not be eligible to receive sitting fees for attending the meetings of the Board or committees thereof.

f) The Non-Executive Directors shall not be eligible to receive any remuneration / salary from the Company. However, the Non-Executive Directors shall be paid sitting fees for attending the meeting of the Board or committees thereof and commission, as may be decided by the Board / shareholders from time to time.

The Non-Executive Directors shall also be eligible to receive reimbursement of reasonable out-of-pocket expenses incurred by them for attending the meetings of the Board, committees or shareholders, including travelling and lodging & boarding expenses or such other expense incurred by them regarding the affairs of the Company on an actual basis.

g) The amount of sitting fee and commission payable to Non-Executive Directors shall not exceed the limits prescribed therefore under the provisions of the Companies Act, 2013.

Explanation: For the purposes of this Policy, Remuneration shall mean the Cost to the Company and shall include the salary, allowances, perquisites, performance incentive and any other facility provided or payment made to the employee.

(V) Training of Independent Directors

The Company shall arrange to provide training to Independent Directors to familiarize them with the Company, their roles, rights and responsibilities in the Company, nature of the industry in which the Company operates, business model of the Company etc.

The training may be provided in any of the ways given below:

a) By providing reading material to the Independent Director(s) giving all relevant information about the Company, industry and the role of Independent Directors.

b) An induction program devised for the Independent Director(s) wherein structured training is provided to the Independent Director(s) either exclusively or with other officials of the Company who are due for such induction / training.

c) Such other manner as may be prescribed by applicable law or decided by the Board.

Interpretation:

a) Any words used in this policy but not defined herein shall have the same meaning ascribed to it in the Companies Act, 2013 or Rules made there under, SEBI Act or Rules and Regulations made there under, Listing Agreement, Accounting Standards or any other relevant legislation / law applicable to the Company.

b) The reference to the male gender in the Policy shall be deemed to include a reference to female gender.

c) In case of any dispute or difference upon the meaning / interpretation of any word or provision in this Policy, the same shall be referred to the Committee and the decision of the Committee in such a case shall be final. In interpreting such term / provision, the Committee may seek the help of any of the officers of the Company or an outside expert as it deems fit.

Amendments:

The Board of Directors shall have the power to amend any of the provisions of this Policy, substitute any of the provisions with a new provisions or replace this Policy entirely with a new Policy.

G. Vigil Mechanism /Whistle Blower

The Company is committed to adhere to the highest standards of ethical, moral and legal conduct of business operations. Vigil (whistleblower) mechanism provides a channel to the employees and directors to report to the management concerns about unethical behaviour, actual or suspected fraud or violation of the code of conduct or policy. The mechanism provides for adequate safeguards against victimization of directors and employees who avail of the mechanism and also provide for direct access to the Chairman of the Audit Committee in exceptional cases.

The detailed policy may be accessed at www.vlsfinance.com.

15. Corporate Governance and Compliance Certificate

We have reported in annexure D to this report, the extent of compliance of Corporate Governance practices in accordance with Regulation 27 of the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015.

16. Auditors

The Statutory Auditors, M/s. Agiwal & Associates, Chartered Accountants (FRN: 000181N), will retire at the forthcoming annual general meeting. The Company has received a certificate from the Auditors that they are qualified under Section 139 of the Companies Act, 2013 (‘Act’) to act as the Auditors of the Company, if appointed. Concurring to the recommendation of the Audit Committee, the Board of Directors recommends their appointment. The Board may also be authorized to fix their remuneration. In terms of Section 139(2) read with rule 6 of Companies (Audit and Auditors) Rules, 2014. The present auditor can be appointed for one more term i.e. for the financial year 2016-17 before being subjected to compulsory rotation of auditors as per the extant provisions of the Act. The Board in its meeting held on 28/05/2016 has appointed Ms. Pooja Gandhi -Practicing Company Secretary as secretarial auditor for the year 2016-17. The provisions relating to Cost Records and Audit are not applicable to your company.

17. Auditors’ Report

The observations made by the Auditors, with reference to notes on accounts for the year under report, have been adequately dealt with in the relevant Notes forming part of Financial Statements and need no further comments from Directors.

18. Secretarial Audit Report

According to the provision of Section 204 of the Companies Act, 2013 read with rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Secretarial Audit Report submitted by Company Secretary in Practice is enclosed as a part of this report as annexure E.

19. Statutory Information

During the year under review, the Company did not absorb any new technology or carry out any R&D related activity for this purpose. However, use of energy efficient devices, wherever possible, in conducting business of Company is part of its administration policies. The detailed disclosure is enclosed as annexure F to this report.

- The shares of the Company are presently listed at BSE Ltd., The National Stock Exchange of India Ltd., Mumbai and The Calcutta Stock Exchange Ltd., Kolkata.

- The Company has paid the annual listing fees for the year 20162017 to all the aforesaid Stock Exchanges.

- Upon closure of Madras Stock Exchange (MSE) vide SEBI order dated 14/05/2015 the listing of shares of Company stood terminated from said exchange.

- Your company’s principle business is acquisition of securities; hence Section 186 of the Act is not applicable.

- Your Company has not issued equity shares with differential voting rights, sweat equity or ESOP in terms of section 43 and section 62 of the Companies Act, 2013, during the year under review.

- No revision of financial statements or boards report has been made in terms of Section 131 of the Companies Act, 2013, during the year under review.

- No Independent Director was reappointed through special resolution during the year under review.

- Disclosure relating to ratio of the remuneration of each director to the median employee’s remuneration in terms of Section 197(12) of the Companies Act, 2013 is enclosed as annexure G to this report.

- The managing director and whole time director (Director-Finance & CFO) of your company are not in receipt of any remuneration or commission from any of subsidiary company in terms of Section 197(14) of the Companies Act, 2013.

- There were no orders passed by the regulators against the Company.

- Senior Management have made all the disclosures to the Board relating to all material financial and commercial transactions, if any.

20. Fixed Deposits

The Company has not accepted any fixed deposit during the year under review. The Company has no plans to accept any deposits from the public in the current year.

21. Human Resources

Employee relations continued to be cordial during the year. The number of employees stood at 30. The Directors place on record their appreciation of the devoted service of the employees at all levels. In terms of the provisions of Section 197 of the Companies Act 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, there was no employee during the year drawing remuneration more than the stipulated amount in the said rules. Your company has not approved any scheme relating to provision of money to be held in a trust for the benefit of the employees in terms of section 67(3)(b) of the Companies Act, 2013 during the year under review.

22. Green initiative in Corporate Governance

As a continuing endeavor towards the Go Green initiative, the Company proposes to send future correspondence and documents like the notice calling the general meeting, audited financial statements, directors’ report, and auditors’ reports etc. in the electronic form, to the email addresses provided by the Members and made available to us by the Depositories. Members who hold shares in the physical form are requested to register their e-mail addresses and intimate any changes in their e-mail id, with the Company or with the Registrar & Share Transfer Agents, RCMC Share Registry Pvt. Ltd. In respect of electronic holdings, members are requested to register their e-mail addresses with the Depository through their concerned Depository Participants. However, in case you desire to receive Company’s communication and documents in physical form, you are requested to intimate us through email at [email protected]. You may kindly note that as a member of the Company, you will be entitled to be furnished, free of cost, a printed copy of the Annual Report of the Company, upon receipt of a requisition from you, at any time.

23. Subsidiary Companies

Statement pursuant to Section 129(3) of the Companies Act, 2013 for the financial year ended 31/3/2016 in respect of the Subsidiary Companies, is enclosed with Annual Accounts of the Company.

After coming into effect of the Companies Act, 2013, the definition of “associate” covers a Company or Companies in which the Company holds not less than 20% of the Total Share Capital of that company or those companies irrespective of whether they are in the same group or not except when held in fiduciary capacity. Hence, Sunair Hotels Ltd. and BMS IT Institute Private Ltd which are presently not in the same group, have been considered as associates. Even though the Company is in litigation with these companies, in the opinion of the Company, there is no adverse impact of such litigation on investments/advances made by it in these associates.

Separate section on performance and financial position of subsidiary and associate companies have been provided as note no. 23 sub-note 17(a) and 17(b) of Notes forming part of consolidated financial statement in the Annual Report for the year under review.

24. Consolidated Financial Statements

In compliance of section 129(3) of the Companies Act, 2013, the consolidated financial statements in accordance with the prescribed accounting standards are annexed to the audited annual accounts for the year under review.

25. Acknowledgements

Your Directors wish to place on record their sincere appreciation and gratitude to the Company’s business associates, customers, Bankers, the Securities & Exchange Board of India, Stock Exchanges and in particular BSE Ltd. for their continued support and assistance and also to the esteemed shareholders of the Company, for their valuable support and patronage.

For and on behalf of the Board of Directors

Place : New Delhi S.K. Agarwal K.K. Soni

Date : 29/07/2016 Managing Director Director-Finance & CFO

DIN: 00106763 DIN: 00106037


Mar 31, 2014

THE MEMBERS

The Directors are pleased to present the Twenty Seventh Annual Report of the Company together with the audited statement of accounts for the year ended 31st March, 2014.

1. Financial Results (Rs. in Lakhs)

For the year ended For the year ended 31st March, 2014 31st March,2013*

Gross Receipts 381636.53 232213.50

Profit before Interest & Depreciation 459.53 435.47

Less: Interest & Finance Charges 1.97 15.55

Profit before Depreciation 457.56 420.32

Less: Depreciation 41.98 48.73

Profit before Tax 415.58 371.59

Less: Provision for Taxation/ (Credits) 67.37 187.00

Profit after Tax 348.21 184.59

Surplus brought forward from previous year 2260.37 2127.45

Previous year adjustments/other adjustment@ (113.30) (14.75)

Available for Appropriation 2495.28 2297.29

Appropriations:

To General Reserve 0.00 0.00

To Statutory Reserve (under RBI Act, 1934) 0.00 36.92

Total Appropriations 0.00 36.92

Surplus c/f 2495.28 2260.37

* (Figures have been regrouped/recast to conform to current year''s methodology)

@Tranferred to Capital Redemption Reserve A/c.

3. Dividend

With a view to conserve resources, no dividend is recommended.

4. Directors

In accordance with the provisions of Article 89 of the Articles of Association of the Company, Shri Somesh Mehrotra- Director will retire by rotation at the ensuing Annual General Meeting of your Company and being eligible, offers himself for re-election. To enable the Company to obtain his continued valuable direction, guidance and assistance in conduct of the affairs of your Company, it is recommended that his reappointment be approved. The Board had re-appointed Shri S. K. Agarwal as Managing Director of the Company for 3 years w.e.f. 21/08/2013 and members'' approval was obtained in Annual General Meeting held on 25/09/2013. Further, the Board in its meeting dated 14/11/2013 had revised the remuneration of Shri S. K. Agarwal - Managing Director w.e.f. 01/04/2013 and appointed Shri K. K. Soni, CFO of the Company as Director of the Company also by redesignating him as Director- Finance & CFO and revised his remuneration w.e.f. 01/04/2013, the approvals of which from members were obtained in Extra-ordinary General Meeting held on 21/12/2013.

Your Board at its meeting held on 11th August, 2014 has recommended the appointment of Shri Ajit Kumar, Shri B. M. Oza, Shri M.G. Diwan, Dr. S. Ramesh, Shri A. K. Puri, Shri B. B. Tandon and Shri Gian Vijeshwar as Independent Directors in terms of Sections 149, 152 read with Schedule IV & other applicable provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement, with effect from the date of the ensuing Annual General Meeting of your Company.

Your Board at the said meeting, on the recommendation of the Nomination and Remuneration Committee, also recommended, for the approval of the Members for the change of terms of appointment of Shri S. K. Agarwal-Managing Director and Shri K. K. Soni - Director- Finance & CFO of the Company by making them liable to retire by rotation, with effect from the date of the ensuing Annual General Meeting of your Company. The remuneration of the Managing Director and the Director-Finance & CFO is also sought to be revised from the dates

indicated in respective resolutions therefor in the notice convening the ensuing Annual General Meeting. The re-appointment of Independent Directors and change in category of Executive Directors has been made in order to comply with provisions of the Companies Act, 2013 which are required to be approved by the members.

Appropriate resolutions seeking your approval to the aforesaid appointments are appearing in the Notice convening the 27th Annual General Meeting of the Company. Shri Ajit Kumar, Shri B. M. Oza, Shri M.G. Diwan, Dr. S. Ramesh, Shri A. K. Puri, Shri B. B. Tandon and Shri Gian Vijeshwar by virtue of being Independent Directors of your Company in terms of the provisions of the Companies Act, 2013, will not be liable to retire by rotation for the residual period of their respective terms of appointment approved by the Members of the Company.

5. Directors'' Responsibility Statement

Pursuant to the provisions of Section 217(2AA) of the Companies Act, 1956, the Directors hereby confirm:

a. that in the preparation of the Annual Accounts for the financial year ended 31st March, 2014, the applicable accounting standards have been followed, along with proper explanation relating to material departures;

b. that they 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 at the end of the financial year and of the profit of the Company for that period;

c. that they have 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. that they have prepared the Annual Accounts for the financial year ended 31st March, 2014 on a ''going concern'' basis.

6. Corporate Governance and Compliance Certificate

We have reported in Annexure-1 to this report, the extent of compliance of Corporate Governance practices in accordance with Clause 49 of Listing Agreement.

7. Auditors

The Auditors, M/s. Agiwal & Associates, Chartered Accountants, will retire at the forthcoming Annual General Meeting. The Company has received a certificate from the Auditors that they are qualified under section 139 of the Companies Act, 2013 to act as the Auditors of the Company, if appointed. Concurring to the recommendation of the Audit Committee, the Board of Directors recommends their appointment. The Board may also be authorised to fix their remuneration. In terms of section 139 (2) read with Rule 6 of Companies (Audit and Auditors) Rules, 2014, the present auditors can be appointed for three consecutive terms of one year each starting from present proposal before being subjected to compulsory rotation of Auditors.

8. Auditors'' Report

The observations made by the Auditors with reference to notes on accounts for the year under report have been adequately dealt with, in the relevant Notes forming part of Financial Statements and need no further comments from Directors.

9. Statutory Information

Not being a manufacturing Company, your Company is advised that Form A prescribed under the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, relating to Conservation of Energy and Technology Absorption, is not applicable to it. It is informed that during the year under review, the Company did not absorb any new technology or carried out any R&D related activity for this purpose. However, use of energy efficient devices, wherever possible, in conducting business of Company is part of administration policies. During the year under review the Company had decided to buyback its own shares under authority of Board''s power to buyback the same and the entire process was completed on 11/02/2014. The Company had bought back 11,32,983 equity shares in terms of the offer to buyback made by it. Accordingly, the capital of the Company had been reduced by Rs.1,13,29,830/- as detailed in the enclosed balance sheet in Notes No. 2 i.e. Share Capital of the Company.

Details of foreign exchange earnings and outgo are given below:

Foreign Exchange earnings : Nil

Foreign Exchange outgo : Rs. 1,75,216/-

The shares of the Company are presently listed at BSE Ltd. (formerly, The Bombay Stock Exchange, Mumbai), The National Stock Exchange of India Ltd., Mumbai, The Calcutta Stock Exchange Ltd., Kolkata and The Madras Stock Exchange Ltd., Chennai.

The Company has paid the Annual Listing fees for the year 2014-2015 to all the aforesaid Stock Exchanges.

10. Fixed Deposits

The Company has not accepted any fixed deposit during the year under review. The Company has no plans to accept any deposits from the public in the current year.

11. Human Resource

Employee relations continued to be cordial during the year. The number of employees stood at 22. The Directors place on record their appreciation of the devoted service of the employees at all levels. In terms of the provisions of Section 217 (2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 as amended, there was no employee during the year drawing remuneration more than the stipulated amount in the said rules.

12. Green Initiative in Corporate Governance

As a continuing endeavor towards the Go Green initiative, the Company proposes to send future correspondences and documents like the notice calling the general meeting, audited financial statements, directors'' report, auditors'' reports etc. in the electronic form, to the email addresses provided by the Members and made available to us by the Depositories. Members who hold shares in the physical form are requested to register their e-mail addresses and intimate any changes in their e-mail id, with the Company or with the Registrar & Share Transfer Agents, RCMC Share Registry Pvt. Ltd. In respect of electronic holdings, members are requested to register their e-mail addresses with the Depository through their concerned Depository Participants. However, in case you desire to receive Company''s communication and documents in physical form, you are requested to intimate us through email at [email protected]. You may kindly note that as a Member of the Company, you will be entitled to be furnished, free of cost, a printed copy of the Annual Report of the Company, upon receipt of a requisition from you, at any time.

Members are advised to convert their shares from Physical form to Dematerialized form. Dematerialization of shares provides several benefits to the shareholders. The transaction of shares can be carried out quickly and in an easy way. Holding securities in Demat form helps the investors to get immediate transfer of securities. No stamp duty is payable on transfer of shares held in Demat form and the brokerage involved is also generally lower. The incidence of non-delivery or bad delivery and the risks associated such as forged transfers that occurs for the shares when held in physical format is totally avoided.

Further, the sale and purchase of Company''s shares is possible if the shares are held in dematerialized form only. Hence members holding in physical form can not sell the shares through stock exchange unless the physical shares are converted in dematerialized form.

13. Subsidiary Companies

Statement pursuant to Section 212(1) (e) read with sub-section (3) of the said section of the Companies Act, 1956 for the financial year ended 31/3/2014 in respect of the Subsidiary Companies, is enclosed with Annual Accounts of the Company.

14. Consolidated Financial Statements

In compliance of Clause 41 of the Listing agreement, the Consolidated Financial Statements in accordance with the prescribed Accounting Standards are annexed to the Audited Annual Accounts for the year under review.

15. Acknowledgements

Your Directors wish to place on record their sincere appreciation and gratitude to the Company''s business associates, customers, Bankers, and the Reserve Bank of India for their continued support and assistance and also to the esteemed shareholders of the Company, for their valuable support and patronage.

For and on behalf of the Board

Place : New Delhi

Date : 11/8/ 2014 K. K. Soni S. K. Agarwal

Director-Finance & CFO Managing Director


Mar 31, 2013

TO THE MEMBERS

The Directors are pleased to present the Twenty Sixth Annual Report of the Company together with the audited statement of accounts for the year ended 31st March, 2013.

1. Financial Results

(Rs. in Lakhs)

For the year ended For the year ended 31s March. 2013 31st March, 2012*

Gross Receipts 232213.50 213661.45

Profit before Interest & Depreciation 435.47 422.21

Less: Interest & Finance Charges 15.55 66.53

Profit before depreciation 420.32 355.68

Less: Depreciation 48.73 171.69

Profit before Tax 371.59 183.99

Less: Provision for Taxation/(credits) 187.00 (31.01)

Profit after Tax 184.59 215.00

Surplus brought forward from previous year 2127.45 1953.25

Previous year adjustments/other adjustment (14.75) 2.20

Available for Appropriation 2297.29 2170.45

Appropriations:

To General Reserve 0.00 0.00

To Statutory Reserve (under RBI Act, 1934) 36.92 43.00

Total Appropriations 36.92 43.00

Surplus c/f 2260.37 2127.45

* (Figures have been regrouped/recast to conform to current year''s methodology)

2. Dividend

With a view to conserve resources, no dividend is recommended.

4. Directors

Shri Ajit Kumar, Shri B. M. Oza and Dr. S. Ramesh - Directors would retire by rotation at the forthcoming Annual General Meeting and all, being eligible, offer themselves for reappointment. To enable the Company to obtain their continued valuable direction, guidance and assistance in conduct of the affairs of your Company, it is recommended that their reappointment be approved. The Board has re-appointed Shri S. K Agarwal as Managing Director of the Company for next 3 years w.e.f. 21/08/2013 subject to members'' approval.

5. Directors'' Responsibility Statement

Pursuant to the provisions of Section 217(2AA) of the Companies Act, 1956, the Directors hereby confirm:

a. that in the preparation of the Annual Accounts for the financial year ended 31st March, 2013, the applicable accounting standards have been followed, along with proper explanation relating to material departures;

b. that they 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 at the end of the financial year and of the profit of the Company for that period;

c. that they have 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. that they have prepared the Annual Accounts for the financial year ended 31st March, 2013 on a ''going concern'' basis.

6. Corporate Governance and Compliance Certificate

We have reported in Annexure-1 to this report, the extent of compliance of Corporate Governance practices in accordance with Clause 49 of Listing Agreement.

7. Auditors

The Auditors, M/s. Agiwal & Associates, Chartered Accountants, will retire at the forthcoming Annual General Meeting. The Company has received a certificate from the Auditors that they are qualified under section 224 (1B) of the Companies Act, 1956 to act as the Auditors of the Company, if appointed. Concurring to the recommendation of the Audit Committee, the Board of Directors recommends their appointment. The Board may also be authorised to fix their remuneration.

8. Auditors'' Report

The observations made by the Auditors with reference to notes on accounts for the year under report have been adequately dealt with, in the relevant Notes forming part of Financial Statements and need no further comments from Directors.

9. Statutory Information

Not being a manufacturing Company, your Company is advised that Form A prescribed under the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, relating to Conservation of Energy and Technology Absorption, is not applicable to it. It is informed that during the year under review, the Company did not absorb any new technology or carried out any R&D related activity for this purpose. However, use of energy efficient devices, wherever possible, in conducting business of Company is part of administration policies. There was no proposal during the year under review for buy back of shares by the Company. Details of foreign exchange earnings and outgo are given below:

Foreign Exchange earnings : Nil

Foreign Exchange outgo : Rs. 41,588/-

The shares of the Company are presently listed at BSE Ltd. (formerly, The Bombay Stock Exchange, Mumbai), The National Stock Exchange of India Ltd. Mumbai, The Calcutta Stock Exchange Ltd., Kolkata and The Madras Stock Exchange Ltd., Chennai.

The Company has paid the Annual Listing fees for the year 2013-2014 to all the aforesaid Stock Exchanges.

10. Fixed Deposits

The Company has not accepted any fixed deposit during the year under review. The Company has no plans to accept any deposits from the public in the current year.

11. Human Resource

Employee relations continued to be cordial during the year. The number of employees stood at 19. The Directors place on record their appreciation of the devoted service of the employees at all levels. In terms of the provisions of Section 217 (2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 as amended, there was no employee during the year drawing remuneration more than the stipulated amount in the said rules.

12. Subsidiary Companies

Statement pursuant to Section 212(1) (e) read with sub-section (3) of the said section of the Companies Act, 1956 for the financial year ended 31/3/2013 in respect of the Subsidiary Companies, is enclosed with Annual Accounts of the Company.

13.Consolidated Financial Statements

In compliance of Clause 41 of the Listing agreement, the Consolidated Financial Statements in accordance with the prescribed Accounting Standards are annexed to the Audited Annual Accounts for the year under review.

14. Acknowledgements

Your Directors wish to place on record their sincere appreciation and gratitude to the Company''s business associates, customers, Bankers, and the Reserve Bank of India for their continued support and assistance and also to the esteemed shareholders of the Company, for their valuable support and patronage.

For and on behalf of the Board

Place : New Delhi M. P. Mehrotra S. K. Agarwal

Date : 22/7/2013 Director Managing Director


Mar 31, 2012

The Directors are pleased to present the Twenty Fifth Annual Report of the Company together with the audited statement of accounts for the year ended 31st March, 2012.

1. Financial Results (Rs. in Lakhs)

For the year For the year ended ended 31st March, 31st March, 2012 2011*

Gross Receipts 2136614 60100.22

Profit before Interest & Depreciation 422.21 830.90

Less: Interest & Finance Charges 66.53 59.00

Profit before depreciation 355.68 771.90

Less: Depreciation 171.69 45.91

Profit before Tax 183.99 725.99

Less: Provision for Taxation/(credits) (31.01) 222.73

Profit after Tax 215.00 503.26

Surplus brought forward from previous year 1953.25 1547.50

Previous year adjustments/ other adjustment 2.20 3.14

Available for Appropriation 2170.45 2053.90

Appropriations:

To General Reserve 0.00 0.00

To Statutory Reserve (under RBI Act, 1934) 43.00 100.65

Total Appropriations 43.00 100.65

Surplus c/f 2127.45 1953.25

* (Figures have been regrouped/recast to conform to current year's methodology)

3. Dividend

With a view to conserve resources, no dividend is recommended.

4. Directors

Shri M. P. Mehrotra, Shri A.K. Puri and Shri M.G. Diwan - Directors would retire by rotation at the forthcoming Annual General Meeting and all, being eligible, offer themselves for reappointment. To enable the Company to obtain their continued valuable direction, guidance and assistance in conduct of the affairs of your Company, it is recommended that their reappointment be approved.

5. Directors' Responsibility Statement

Pursuant to the provisions of Section 217(2AA) of the Companies Act, 1956, the Directors hereby confirm:

a. that in the preparation of the annual accounts for the financial year ended 31st March, 2012, the applicable accounting standards have been followed, along with proper explanation relating to material departures;

b. that they 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 at the end of the financial year and of the profit of the Company for that period;

c. that they have 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. that they have prepared the annual accounts for the financial year ended 31st March, 2012 on a ‘going concern' basis.

6. Corporate Governance and Compliance Certificate

We have reported in Annexure-1 to this report, the extent of compliance of Corporate Governance practices in accordance with clause 49 of listing agreement.

7. Auditors

The Auditors, M/s. Agiwal & Associates, Chartered Accountants, will retire at the forthcoming Annual General Meeting. The Company has received a certificate from the Auditors that they are qualified under section 224 (1B) of the Companies Act, 1956 to act as the Auditors of the Company, if appointed. Concurring to the recommendation of the Audit Committee, the Board of Directors recommends their appointment. The Board may also be authorised to fix their remuneration.

8. Auditors' Report

The observations made by the Auditors with reference to notes on accounts for the year under report have been adequately dealt with, in the relevant Notes forming part of financial statements and need no further comments from Directors.

9. Statutory Information

Not being a manufacturing Company, your Company is advised that Form A prescribed under the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, relating to Conservation of Energy and Technology Absorption, is not applicable to it. It is informed that during the year under review, the Company did not absorb any new technology or carried out any R&D related activity for this purpose. However, use of energy efficient devices, wherever possible, in conducting business of Company is part of administration policies. Details of foreign exchange earnings and outgo are given below:

Foreign Exchange earnings : Nil

Foreign Exchange outgo : Rs. 5,57,986/-

The shares of the Company are presently listed at BSE Ltd. (formerly, The Stock Exchange, Mumbai), The National Stock Exchange of India Ltd., Mumbai, The Calcutta Stock Exchange Ltd., Kolkata and The Madras Stock Exchange Ltd., Chennai.

The Company has paid the Annual Listing fees for the year 2012-2013 to all the aforesaid Stock Exchanges.

10. Fixed Deposits

The Company has not accepted any fixed deposit during the year under review. The Company has no plans to accept any deposits from the public in the current year.

11.Human Resource

Employee relations continued to be cordial during the year. The number of employees stood at 20. The Directors place on record their appreciation for the devoted service of the employees at all levels. In terms of the provisions of Section 217 (2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 as amended, there was no employee during the year drawing remuneration more than the stipulated amount in the said rules.

12. Subsidiary Companies

Statement pursuant to Section 212(1) (e) read with sub-section (3) of the said section of the Companies Act, 1956 for the financial year ended 31/3/2012 in respect of the subsidiary companies, is enclosed with Annual Accounts of the Company.

13.Consolidated Financial Statements

In compliance of Clause 41 of the Listing agreement, the Consolidated Financial statements in accordance with the prescribed accounting standards, are annexed to the Audited Annual Accounts for the year under review.

14. Group

The SEBI (Substantial Acquisition of Shares & Takeovers) Regulations, 2011 had been promulgated w.e.f. 23/9/2011 repealing SEBI (Substantial Acquisition of Shares & Takeovers) Regulations, 1997. The new regulations do not prescribe disclosure requirement of ‘group' in Annual Report of target Company as stipulated in earlier regulations, hence dispensed with in this report.

15. Acknowledgements

Your Directors wish to place on record their sincere appreciation and gratitude to the Company's business associates, customers, Bankers, and the Reserve Bank of India for their continued support and assistance and also to the esteemed shareholders of the Company, for their valuable support and patronage.

For and on behalf of the Board



Place : New Delhi M. P. MEHROTRA S. K. AGARWAL

Date : 6/8/2012 Director Managing Director


Mar 31, 2010

The Directors are pleased to present the Twenty Third Annual Report of the Company together with the audited statement of accounts for the year ended 31st March, 2010.

1. Financial Results (Rs. in Lakhs)

For the year ended For the year ended

31st March 2010 31st March 2009

Gross Receipts 104937.78 63977.88

Profit before Interest &

Depreciation 727.81 1010.61

Less: Interest & Finance Charges 4.92 0.07

Profit before depreciation 723.89 1010.54

Less: Depreciation 48.91 50.54

Profit before Tax 674.98 960.00

Less: Provision for Taxation 194.56 -14.74

Profit after Tax 480.32 974.74

Surplus b/fd. From previous year 1131.33 351.46

Previous year adjustments/other

adjustment 31.91 0.08

Available for Appropriation 1643.56 1326.28

Appropriations:

To General Reserve 0.00 0.00

To Statutory Reserve

(under RBI Act, 1934) 96.06 194.95

Total Appropriations 96.06 194.95 Surplus c/f 1547.50 1131.33

3. Dividend

With a view to conserve resources, no dividend is recommended.

4. Directors

Shri Ajit Kumar, Shri B. M. Oza and Dr. S. Ramesh - Directors would retire by rotation at the forthcoming Annual General Meeting and all, being eligible, offer themselves for reappointment. The Board has re-appointed Shri S. K Agarwal as Managing Director of the Company for next 3 years w.e.f. 21/08/2010 subject to members’ approval. To enable the Company to obtain their continued valuable direction, guidance and assistance in conduct of the affairs of your Company, it is recommended that their reappointment be approved.

5. Directors Responsibility Statement

Pursuant to the provisions of Section 217(2AA) of the Companies Act, 1956, the Directors hereby confirm:

a. that in the preparation of the annual accounts for the financial year ended 31st March, 2010, the applicable accounting standards have been followed, along with proper explanation relating to material departures;

b. that they 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 at the end of the financial year and of the profit of the Company for that period;

c. that they have taken proper and sufficient care for the maintenance of proper 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. that they have prepared the annual accounts for the financial year ended 31st March, 2010 on a ‘going concern basis.

6. Corporate Governance and Compliance Certificate

The Corporate Governance philosophy of your Company is to comply with not only the statutory requirements, but also voluntarily formulate and adhere to a set of strong Corporate Governance practices. We at VLS, believe that sound Corporate Governance is critical to enhance and retain investors’ trust. The responsibility for this lies with the Board of Directors and the Management of the Company. The driving forces of Corporate Governance at VLS are its core values, which are : belief in people, entrepreneurship, innovation and pursuit of excellence. The Companys goal is to find creative and productive ways of keeping its stakeholders, such as investors, customers and associates informed, while fulfilling the role of a responsible corporate, committed to best practices. The Board and the Company Management strive hard to serve the interests of all stakeholders including shareholders, Government and the society at large in the best possible manner.

7. Auditors

The Auditors, M/s. Agiwal & Associates, Chartered Accountants, will retire at the forthcoming Annual General Meeting. The Company has received a certificate from the Auditors that they are qualified under section 224 (1B) of the Companies Act, 1956 to act as the Auditors of the Company, if appointed. Concurring to the recommendation of the Audit Committee, the Board of Directors recommends their appointment. The Board may also be authorised to fix their remuneration.

8. Auditors Report

The observations made by the Auditors with reference to notes on accounts for the year under report have been adequately dealt with, in the relevant Notes on Accounts and need no further comments from Directors.

9. Statutory Information

Not being a manufacturing Company, your Company is advised that Form A prescribed under the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, relating to Conservation of Energy and Technology Absorption, is not applicable to it. It is informed that during the year under review, the Company did not absorb any new technology or carried out any R&D related activity. Details of foreign exchange earnings and outgo are given below:

Foreign Exchange earnings : Nil

Foreign Exchange outgo : Rs.6,17,574/-

The shares of the Company are presently listed at The Bombay Stock Exchange Ltd. Mumbai., The National Stock Exchange of India Ltd. Mumbai, The Calcutta Stock Exchange Association Ltd., Kolkata and The Madras Stock Exchange Ltd., Chennai.

The Company has paid the Annual Listing fees for the year 2010-2011 to all the aforesaid Stock Exchanges. The delisting confirmation is yet to be received from The Calcutta Stock Exchange Association Ltd. and The Madras Stock Exchange Limited.

10. Fixed Deposits

The Company has not accepted any fixed deposit during the year under review. The Company has no plans to accept any deposits from the public in the current year.

11. Human Resource

The Company has a team of able and experienced professionals. The management recognizes the intellectual capital as its most valuable asset and constantly strives to strategically align personal goals and organizational growth. It encourages open channels of communication, blending the individuals vision with that of the organization and building a shared understanding of how each team member can contribute to the Companys success. It aims to build a strong corporate culture on core values such as safety, integrity, innovation and teamwork, thus creating a vision-guided, values-driven organization that focuses on employee fulfillment and leadership development. Employee relations continued to be cordial during the year. The number of employees stood at 20. The Directors place on record their appreciation of the devoted service of the employees at all levels. In terms of the provisions of Section 217 (2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 as amended, there was no employee during the year drawing remuneration more than the stipulated amount in the said rules.

12. Subsidiary Companies

Statements pursuant to Section 212(1) (e) & (f), read with sub-section (3) and sub section (5) of the said section of the Companies Act, 1956 for the relevant financial year, in respect of the subsidiary companies, are enclosed with Annual Accounts of the Company.

13. Consolidated Financial Statements

In compliance of Clause 41 of the Listing agreement, the Consolidated Financial statements in accordance with the prescribed accounting standards, are annexed to the Audited Annual Accounts for the year under review.

14. Group

Group for inter se transfer of shares under Clause 3 (e) of Securities & Exchange Board of India ( Substantial Acquisition of Shares & Takeovers) Regulations, 1997:

a. Shri M. P. Mehrotra

b. M. P. Mehrotra (HUF)

c. Dr. (Mrs.) Sushma Mehrotra

d. Shri Somesh Mehrotra

e. Ms. Divya Mehrotra

f . Mrs. Sadhana Mehrotra

g. Ms. Daya Mehrotra

h. Shri Ramji Mehrotra

i. Mrs. Sushma Mehrotra

j. VLS Capital Ltd.

k. Gaurav Overseas Exports Pvt. Ltd.

l. Needle Eye Plastic Industries Pvt. Ltd.

m. Pragati Moulders Ltd.

n. South Asian Enterprises Ltd.

15. Acknowledgements

Your Directors wish to place on record their sincere appreciation and gratitude to the Company’s business associates, customers, Bankers, and the Reserve Bank of India for their continued support and assistance and also to the esteemed shareholders of the Company, for their valuable support and patronage.

For and on behalf of the Board

Place : New Delhi S. K. AGARWAL M. P. MEHROTRA

Date : 27/07/ 2010 Managing Director Director

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