V-Guard Industries Ltd.

Dear Shareholders, This has been a momentous year for V-Guard Industries, crossing a turnover of Rs. 1,500 crore for the first time in our history. Despite a tough operating environment, with consumer spends under pressure, the Company has delivered a growth of 12% year on year in both top line and bottom line while maintaining its margin profile at 8.4% for the full financial year. The revenue contribution from non-South has increased to 30% during the FY14. The Company''s growth moderated in FY14 mainly on account of a weak consumer sentiment and weather related issues. The advent of the monsoon was earlier than usual in 2013 and lasted for longer period, when compared to previous years, especially in Southern India. This had a bearing on demand for some of our products like Pumps and Motors. Growth of certain product category was lower than the previous years, as many parts of the country were free from power cuts starting from the second half of the year up to the general election period. Despite these challenges, V-Guard has remained committed towards building on its competitive strengths, expanding its network of channel partners and retailers across the country and enhancing our brand recall in the non-South markets through aggressive advertising spends and sales promotions. Your Company reinforced its presence in the kitchen appliance category during the year by launching mixer grinder to the product category. Both mixer grinder, and induction cook tops launched during FY13 has been well accepted in the market. The category will be strengthened further by adding more products to the folder. During the year under review, your Company has doubled the capacity for wires at the Kashipur plant in Uttarakhand from 3.3 million coils per annum to 6.6 million coils per annum in two phases at a total cost of Rs. 16.30 crores. The Company has also fully commercialized its state-of-art facility for manufacture of Solar Water Heater at Perundurai and also constructed a central warehouse at Perundurai to cater the requirements of the State of Tamil Nadu. The Management is continuously exploring the possibility of automation in various processes and steps are being implemented which will result in efficiency improvement and cost reduction. Your Company''s Research & Development Department has been approved by Department of Scientific and Industrial Research (DSIR) and subsequent to the approval, the state-of-art R & D Center has been set up by consolidating the R & D activities of various products of the Company. You are aware that, V-Guard since its inception is known for providing quality and prompt after sales service. As part of strengthening further the systems of after sale service, new service delivery model is being institutionalized with the support of robust IT solution pan India basis. With this new model of service delivery, the Company is confident of delivering a differentiated customer service and develop it as a competency, which will give competitive edge in the market and will position V-Guard as a most reliable and trusted service provider in the minds of our partners and customers. Your Company believes that employees are the pillars of growth and organizational success and has taken number of initiatives to increase their engagement in the operations of the Company. Regular trainings are provided to equip them to contribute to the future growth. Major locations of the Company are connected through well-equipped video conferencing facility. The focus is to make your Company a preferred employer in all the geographies where the Company is present. With a view to retain best talents of the Company and to create the feeling of ownership in their minds, the Company has implemented ESOS 2013 during the year under review and granted options to eligible employees. The Board of Directors has recommended dividend of Rs. 4.50 per share for FY14, up from Rs. 3.50 in the previous year. This amounts to a payout of 22% of profits. V-Guard is committed to creating shareholder value, and the increased dividend reflects our continued focus to deliver on that commitment. It also shows our confidence in successfully executing our strategic plan and enabling a balance between judiciously investing in the business and regular returns to our shareholders. The existing Board of the Company has been re-constituted by inducting two more Additional Directors - Mr. Ullas K Kamath and Mrs. Joshna Mithun, with effect from 2nd May, 2014. Mr. Ullas K Kamath, who is on the Board of Jyothy Laboratories Ltd., as Joint Managing Director, is a Chartered Accountant and management expert, having immense experience in Finance and Marketing. Mrs. Joshna Mithun, who is on the Board of V-Star Creations Pvt. Ltd., as Executive Director, is a Management professional with specialization in the areas of HR and Finance. We believe our growth trajectory has bottomed out in FY14 and expect accelerated growth going forward, given the strong outlook for the summer season and low base last year. We will continue making investments in advertising and marketing to enhance brand visibility in order to facilitate further pan- India expansion. Actions are also afoot to add more retailers under the distributors, thereby increasing revenue contribution per distributor and providing significant scope for expansion of returns on existing investments. I would like to express my sincere thanks and gratitude to all stakeholders including our esteemed shareholders, valued customers, vendors, Banks, Central and various State Governments for the faith reposed by them in the Company. With Best Wishes Sd/- Kochouseph Chittilappilly Chairman