V-Guard Industries

The directors have great pleasure in presenting the Twelfth Annual
 Report of the company on the business and operations together with the
 audited financial statements for the year ended 31st March 2008.
 
 1.  Financial Results
 
                                            Year ended     Year ended
                                      31st March, 2008 31st March 2007
                                          (Rs. Lakhs)     (Rs. Lakhs)
 
 Gross Sales                                  31064.67      24115.52
 Less : Trade Discounts                        2146.73       1193.48
 Net Sales                                    28917.94      22922.04
 Operating profit before Depreciation, 
 Interest and Tax                              3081.52       2708.58
 Less: Depreciation                             346.54        294.49
 Profit before Interest & Tax                  2734.98       2414.09
 Less : Financial charges                       462.28        364.19
 Profit before Tax and Exceptional item        2272.70       2049.90 
 Exceptional Item
 Profit on sale of land                        2970.74          -
 Profit on sale of long term non-trade 
 investment                                      -            600.00
 Profit Before Tax                             5243.44       2649.90
 
 Provision for tax:
 Current Tax                                   1475.32        778.30
 Deferred Tax                                    (5.00)        31.21
 Fringe Benefit Tax                              31.00         19.00
 For earlier years                               (0-19)        (2.54)
 Net Profit                                    3742.31        823.93
 Balance in P&L account brought forward         948.37       2082.25
 Profit available for appropriation            4690.68       3906.18
 
 Appropriations
 
 a) Capitalisation of accumulated 
    profits for issue of bonus shares             -         1,800.00
 b) Transfer to General Reserve                 380.00        200.00
 c) Dividend proposed: -
    Interim dividend                            873.90        840.00
 
    Tax on interim Dividend                     148.52        117.81
    Final dividend proposed                     746.19
    Tax on Final Dividend proposed              126.81
 
 d) Balance carried forward                    2415.26        948.37
                                               4690.68       3906.18
 
 2.  Business and Operations
 
 Your Companys business can be divided into the following segments:
 
 i) Electronic segment, consisting of Products like Electronic Voltage
 Stabilizers and UPS;
 
 ii) Electrical and Electromechanical, consisting of Insulated Cables,
 Electrical Fans, Electric Water Heaters and Pumps of all kinds and
 
 iii) Others, consisting of Solar Water Heaters and generation of power
 through Wind Mill.
 
 Indian Market Research Bureau, (IMRB) the premier market research firm
 in India, had conducted a research in August, 2007 and it was confirmed
 through the research that your Company is the largest manufacturer of
 Electronic Voltage stabilizers by volume as well as value.  Your
 Companys market position for stabilizers is thrice the size in value
 to the second largest stabilizer players and almost 15 times than the
 third largest.
 
 Your Company follows a unique manufacturing model, wherein products are
 strategically sourced from SSI units/small manufacturers across South
 India. Your Company has also started developing manufacturing units in
 various parts of North India for products like Stabilizers and UPS. The
 products, Electronic Voltage Stabilizers and UPS, coming under
 Electronic segment, and Electric Water Heaters, Electrical Fans and
 Pumps under Electrical and Electromechanical segment are manufactured
 by the Units, according to the Companys specifications and designs.
 Your Company owns two manufacturing units located at K G Chavadi,
 Coimbatore, one unit for manufacturing Solar Water Heaters and the
 other is for manufacturing insulated electric cables.  Both these are
 ISO 9001-2000 Certified units. Your Company also owns a factory in
 Peelamedu, Coimbatore, which manufactures Pumps and does the pilot
 production and R&D work related with Pumps.
 
 Your Companys total revenue from operations, during the year under
 review, increased to Rs.27811 lakhs, recording a growth of 25.12% over
 the financial year 2006-07. Profit after tax for the financial year
 2007-08 was Rs.3742.31 lakhs. The Company continued to perform well
 across all markets, both in the existing South Indian as well as new
 North Indian markets. During the year under review, the Insulated
 Cables, Electrical Water Heaters, Pumps and UPS have shown an excellent
 performance. Your Management was able to put in a new product to its
 folder in the financial year 2007-08, in the electrical division, i.e.
 L T Cable meant for underground power distribution and for industrial
 units. The performance of the electrical fans was also improved during
 the year under review. Your Company was able to grow further in the
 areas of solar water heaters meant for commercial purposes. Your
 Company succeeded in procuring orders for sale of its various products,
 from Retail giants and Institutions, including Real Estate Companies,
 Hospitals etc.
 
 The financial year 2007-08 can be called as year of business expansion
 for V-Guard. As part of the growth strategy and with a focus to
 penetrate North Indian markets and also to build up a strong base for
 the brand, branch offices were opened in Nagpur, Kolkata, Jaipur,
 Jamshedpur, Kanpur, Ludhiana, Kashipur, Raipur and one office in
 Chennai, to expand the business further in Tamil Nadu. The net work
 expansion has increased the share of North India to the total revenue
 of me Company, and Your Directors hope that Company will be able to
 excel further in North Indian region in the years to come.
 
 3.  Interim and Final Dividend
 
 Your directors had declared an interim dividend @ 40% amounting to Rs
 873.90 lakhs during the financial year 2007-08. The interim dividend
 has been fully paid to the shareholders and the tax on Interim Dividend
 paid was Rs. 148.52 lakhs. Your Directors are pleased to recommend a
 final dividend of Rs.2.5/- per share (25% on par value of Rs.10/- per
 share) in view of the better profits. The final dividend if declared as
 above, would involve an outflow of Rs. 746.19 lakhs and Rs. 126.81
 lakhs towards dividend tax, resulting in a total outflow of Rs.873
 lakhs. If approved by the shareholders at the ensuing Annual General
 Meeting, the dividend will be paid as per the applicable regulations.
 
 The Register of Members and Share Transfer Books will remain closed
 from Tuesday, the 8th July, 2008 to Monday, the 14th July, 2008, both
 days inclusive.
 
 4.  Transfer to Reserves
 
 Your directors transfered an amount of Rs. 380 lakhs to the General
 Reserve account, out of the profits available for appropriation during
 the year, which is in accordance with the Companies (Transfer of
 Profits to Reserves) Rules 1975.
 
 5.  Initial Public Offer
 
 During the year under review, the Company successfully completed its
 Initial Public offer of 80,00,000 equity shares of Rs.10/- each at a
 premium of Rs.72/- per equity share aggregating to Rs.6560 lakhs. The
 initial public offer was oversubscribed to the extent of 2.70 times,
 including the shares reserved for employees of the Company. The shares
 of the Company were listed in The Bombay Stock Exchange Ltd and The
 National Stock Exchange of India Ltd.
 
 The objects of the issue are to construct domestic cable factory in
 Uttaranchal, L T Cable factory in Coimbatore, distribution cum service
 centers in Bangalore, Hubli and Vijayawada, Pilot Production Unit for
 Water Heater and Fan at Himchal Pradesh and for Pump at Coimbatore. Of
 this, the distribution cum service center in Bangalore will be ready by
 the second week of June, 2008 and the Pilot Production Unit for Pump at
 Coimbatore will be ready by the end of June, 2008. Construction work of
 domestic cable factory has been progressing and Your Company has
 already placed orders for most of the machineries required for its
 Cable factories and the operations are expected to commence by the end
 of December, 2008. The construction work of Pilot Production Unit for
 Water Heater and Fan has also been started and the same is progressing.
 Your Company hopes that all the projects mentioned in the offer
 document will be completed within the time schedule.
 
 6.  Fixed Deposit
 
 The Company has not accepted any fixed deposits during the year.
 
 7.  Directors
 
 During the year under review, the following changes had taken place in
 the Board of Directors of the Company.
 
 Mr. Kochouseph Chittilappilly was re-appointed as Managing Director and
 Mr. K. Vijayan and Mr. Mithun K Chittilappilly were re-appointed as
 Wholetime Directors of the Company, for a period of five years w.e.f.
 1st August, 2007. The appointments were made in accordance with the
 provisions of Companies Act, 1956 read with Schedule XIII to the Act.
 
 Mr. P G R Prasad and Mr. C J George, have been co-opted as Additional
 Directors with effect from 16th August, 2007 and Mrs. Sheela Kochouseph
 resigned from the Board as on that date.  Both Mr. P G R Prasad and Mr.
 C J George are Independent Directors. As per the provisions of Section
 260 of the Companies Act, 1956, these Directors hold office only up to
 the date of the forthcoming Annual General Meeting of the Company. The
 Company has received notices under Section 257 of the Act along with
 the requisite deposit, in respect of the above persons, proposing their
 candidature as Directors of the Company. Resolutions seeking approval
 of the Members for the appointment of Mr. P G R Prasad and Mr. C J
 George as Directors of the Company have been incorporated in the Notice
 of the ensuing Annual General Meeting.
 
 Mr. K. Vijayan, Wholetime Director of the Company, liable to retire by
 rotation, being eligible has offered himself for re-appointment. Brief
 details of the Directors seeking appointment/re- appointment are given
 in the Annual Report, in compliance with the provisions of Clause 49 of
 the listing agreement.
 
 8.  Remuneration payable to Managing and Wholetime Director
 
 Presently, Shri. Kochouseph Chittilappilly, Managing Director and Shri.
 Mithun K Chittilappilly, Executive Director are eligible to get a
 commission on the net profit of the Company @ 2% and 1% respectively.
 The Remuneration Committee of your Company in its meeting held on 19th
 May, 2008, has recommended a revision in the commission payable to the
 Managing Director @ not exceeding 1% of the net profits and to the
 Executive Director @ not exceeding 0.5% of the net profits of the
 Company.
 
 9.  Human Resources
 
 The Human Resources Development Team closely associates with the top
 Management to provide timely support and service to the most valuable
 resources, on a continuous basis. We constantly endeavor to add value
 to our services and believe in continuous improvement in all areas of
 the organization environment. We ensure that the right people are
 recruited at the right place at the right time and they are groomed and
 taken care of.
 
 We adhere to our mission statement, which says: Adding value to the
 vision of the Organisation concentrating on our core area - Human
 resource development and enlightening our Customers by delivering on
 time Quality service. Through our communication channels, we constantly
 communicate the corporate vision and mission down the line and ensure
 that all our Employees share the common goal & vision of the
 Organisation.
 
 The 900+ Employees firmly believe that growth of the Company results in
 their growth and vice versa. They constantly endeavor to rise up to the
 expectations of the top Management and to the changing Market
 conditions and requirements. The Employees take pride in sharing the
 ownership of the Company, as many of them are shareholders. We
 constantly serve their aspirations and needs. We are paving the path
 for their career growth in V-Guard and we strive to live up to their
 expectations, on time.
 
 10.  Adequacy of Internal Control Systems:
 
 The Company has appointed M/s. Varma & Varma, Chartered Accountants to
 conduct the internal audit of the Company. The Company is also
 maintaining an in-house Internal Audit Department.  Internal audit is
 conducted on a quarterly basis and the report and findings of Internal
 Auditors are placed before the Audit Committee and are reviewed in
 detail. All significant observations and comments are placed before the
 Board of Directors.
 
 11.  Corporate Governance
 
 Your company has complied with corporate governance norms as stipulated
 under the provisions of the Listing Agreement entered into with the
 stock exchanges. A detailed report on corporate governance is attached
 to this report. A certificate of Statutory Auditors conforming
 compliance of the Corporate Governance requirements by the Company is
 attached to the Report on Corporate Governance.
 
 12.  Management Discussion and Analysis Report
 
 A detailed review of the industrial growth vis-a-vis the growth of the
 Company and the future outlook is explained under the head Management
 Discussion and Analysis Report, which forms part of this Report.
 
 13.  Auditors
 
 M/s. Deloitte Haskins & Sells, Chartered Accountants, who are the
 statutory auditors of the Company hold office, in accordance with the
 provisions of the Companies Act, 1956, upto the conclusion of the
 ensuing Annual General Meeting and are eligible for re-appointment.
 
 14.  Disclosure of Particulars
 
 The details of employees who are in receipt of salary in excess of the
 limits prescribed under Section 217(2A) of the Companies Act, 1956,
 read with the Companies (Particulars of Employees) Rules, 1975 as
 amended and Companies (Disclosure of Particulars in the Report of the
 Board of Directors) Rules 1988 are given in Annexure I, which forms
 part of this report.
 
 15.  Energy conservation, Technology absorption and Foreign exchange
 earnings and outgo The information required under Section 217(l)(e) of
 the Companies Act, 1956, read with the companies (Disclosure of
 Particulars in the Report of the Board of Directors) Rules 1988, with
 respect to conservation of energy, technology absorption and foreign
 exchange earnings and outgo is given in Annexure II which forms part of
 this report.
 
 16.  Directors Responsibility Statement
 
 In accordance with the provisions of section 217 (2AA) of the Companies
 Act 1956, your directors here by state that :-
 
 i) In the preparation of the annual accounts, the applicable accounting
 standards have been followed along with proper explanation relating to
 material departures;
 
 ii) Accounting policies selected were applied consistently. Reasonable
 and prudent judgements and estimates were made so as to give a true and
 fair view of the state of affairs of the Company at the end of the
 financial year as on 31st March, 2008 and of the profit of the Company
 for the year ended on that date;
 
 iii) Proper and sufficient care has been taken for the maintenance of
 adequate accounting records in accordance with the provisions of
 Companies Act, 1956 for safeguarding the assets of the Company and for
 preventing and detecting fraud and other irregularities.
 
 iv) The annual accounts of the company have been prepared on a going
 concern basis.
 
 17.  Acknowledgement
 
 We would like to place on record our sincere thanks to our Clients,
 Bankers, Vendors and Investors for the co-operation and support
 extended during the year. We also thank the employees of the Company
 for their valuable contribution in taking the Company to newer heights.
 We thank the Government of India and the State Governments, the
 Regulatory Authorities like SEBI, Registrar of Companies, Stock
 Exchanges, and Depositories etc. for their valuable support and also
 look forward for their continued support in the years to come.
 
                         For and on behalf of the Board of Directors
 
                                        Sd/-
                         P G R Prasad
                         Chairman
 Kochi
 04th June 2008