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V-Guard Industries Ltd.

BSE: 532953 | NSE: VGUARD |

Represents Equity.Intra - day transactions are permissible and normal trading is done in this category
Series: EQ | ISIN: INE951I01027 | SECTOR: Electric Equipment

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Annual Report

For Year :
2019 2018 2017 2016 2015 2014 2013 2012 2011

Director’s Report

The Directors have great pleasure in presenting Twenty Third Annual Report on the business and operations of the Company, together with the Audited Financial Statements for the year ended March 31, 2019.

1. FINANCIAL SUMMARY

The summarized standalone and consolidated results of your Company and its subsidiary are given in the table below:

(Rs. in crores)

Financial Year ended

particulars

Standalone

consolidated

31.03.2019

31.03.2018

31.03.2019 31.03.2018

Revenue from operations (Gross)

2,566.44

2,321.27

2,594.01

2,335.26

Other Income

10.55

7.45

12.34

7.38

Finance Income

7.71

3.66

7.71

3.66

Total Income

2,584.69

2,332.38

2,614.06

2,346.30

Operating expenditure

2,347.01

2,134.34

2,369.70

2,144.90

Operating profit before Depreciation, Interest, Tax & Exceptional Item

237.68

198.04

244.36

201.40

Finance Cost

1.27

1.66

1.76

2.04

Depreciation and amortization expense

21.82

19.11

23.01

19.68

Profit Before Tax and Exceptional Item

214.59

177.27

219.59

179.68

Profit Before Tax Tax Expense:

214.59

177.27

219.59

179.68

a) Current Tax

49.78

45.23

51.37

45.55

b) Deferred Tax

(0.71)

(1.04)

0.17

(0.92)

Profit After Tax

165.52

133.08

168.05

135.06

Basic EPS (?)

3.88

3.13

3.92

3.16

Diluted EPS (?)

3.82

3.08

3.86

3.10

2. company performance

The Standalone Gross Revenue from operations for the financial year ended March 31, 2019 was Rs. 2,566.44 crores, as against Rs. 2,321.27 crores for the previous financial year, an increase of 12% (GST adjusted). Profit Before Tax for the year under review was Rs. 214.59 crores, a growth of 21% compared to Rs. 177.27 crores in the previous financial year. The Profit After Tax for the year grew by 24% to Rs. 165.62 crores from Rs. 133.08 crores in the previous financial year. The Company was able to achieve the growth in turnover and profit despite some challenges such as unfavourable weather conditions, floods in Kerala during Onam and volatility in commodity and currency. Growth was driven by Water Heaters, Fans and Wires categories. The segment wise performance of the Company is detailed under the Section Management Discussion and Analysis which forms part of this Annual Report.

The consolidated net revenue from operations for the Financial Year under review was Rs. 2,594.01 crores, with a growth of 11% over Rs. 2,335.26 crores for the previous financial year. Consolidated Profit Before Tax for the year was Rs. 219.59 crores over Rs. 179.68 crores for the previous financial year. On consolidated basis, the Company earned a Profit After Tax of Rs. 168.05 crores for the Financial Year 2018-19, against Rs. 135.06 crores for the previous financial year. These consolidated figures include the financial performance of GUTS Electro-mech Limited, subsidiary Company. The consolidated figures for Financial Year 2017-18 include seven months of the subsidiary’s results.

3. NAMES OF COMPANIES WHICH HAVE BECOME OR CEASED TO BE ITS SUBSIDIARIES, JOINT VENTURES OR ASSOCIATE COMPANIES DURING THE YEAR

The Company’s equity investment in Guts Electro-mech Ltd., which is engaged in the business of manufacture and supply of MCB & RCCB, continues at 74% as on March 31, 2019. During the year under review, the Company has not made any investment in any other entity. Presently, the Company does not have any material subsidiary.

The Policy for determining Material Subsidiaries adopted by your Board, in conformity with Regulation 16 of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“the Listing Regulations”), can be accessed on the Company’s website at www.vguard.in.

4. CHANGES TO THE SHARE CAPITAL

During the year under review, the Company has allotted 3,70,436, 4,84,253 and 4,03,774 number of equity shares of Rs. 1/-, Rs. 34.64 and Rs. 71.36 respectively under ESOS2013. The Paid-up Capital of the Company, as on March 31, 2019, has increased to Rs. 42,69,34,094/-, due to allotment of shares under ESOS2013.

5. DIVIDEND

The Board of Directors is pleased to recommend a final Dividend of Rs. 0.80 (80 paise) per equity share of Rs. 1/- per share (80% per equity share of Rs. 1/- each). The final Dividend, if declared as recommended, would involve an outflow of Rs. 41.17 crores including Dividend Distribution Tax, if approved by the Shareholders at the ensuing Annual General Meeting. Dividend would be payable to all the Shareholders/Beneficial Owners whose names appear in the Register of Members as on July 17, 2019.

The Register of Members will remain closed from July 18, 2019 to July 24, 2019 (both days inclusive).

6. INVESTOR EDUCATION AND PROTECTION FUND

Transfer of unpaid/ unclaimed Dividend & Share Application Money to Investor Education and protection Fund (IEpF)

Pursuant to the provisions of Section 124(5) of the Companies Act, 2013 (“the Act”) unclaimed/ unpaid dividend of Rs. 4,41,340/- which was lying in the Unpaid Dividend Account for the financial year 2010-11 was transferred, during the year under review, to IEPF.

Further, unpaid dividend of Rs. 6,075/- for the financial year 2008-09 lying in the Unpaid Dividend IPO Drop Account, which ought to have been transferred to IEPF in the year 2016-17, was transferred during the year under review, along with interest @ 12% per annum amounting to Rs. 1,887/- for the period of delay.

As per the provisions of Section 125 of the Act, the share application money lying as unclaimed for seven years need to be transferred to IEPF established by the Central Government. An amount of Rs. 2,78,600/was lying as unclaimed in the refund account for a period of seven years and the amount ought to have been transferred on March 04, 2015. During the year under review, the Company transferred the said amount along with interest @ 12% per annum amounting to Rs. 1,22,120/- for the period of delay to the IEPF.

Reminders were sent to the Shareholders who have not claimed the dividends for earlier years to claim the same from the Company failing which, the unclaimed dividend lying in the unpaid account for seven years will be transferred to IEPF after the due date for transfer.

Pursuant to the provisions of the IEPF (Uploading of information regarding unpaid and unclaimed amounts lying with Companies) Rules, 2012, the Company has filed the necessary form and uploaded the details of unclaimed amounts lying in unpaid dividend accounts, as on July 31, 2018, with the Ministry of Corporate Affairs.

Unclaimed dividend in respect of the Financial year 2011-12 will be due for transfer to IEPF on August 24, 2019.

Transfer of Equity Shares to Investor Education protection Fund Authority (IEpFA)

In terms of Section 124(6) of the Act read with Rule 6 of the IEPFA (Accounting, Audit, Transfer and Refund) Rules, 2016, (as amended from time to time), shares on which dividend has not been paid or claimed by a shareholder for a period of seven consecutive years or more shall be credited to the Demat Account of IEPFA within a period of thirty days of such shares becoming due for transfer. Upon transfer of such shares, all benefits (like dividend, bonus, split, consolidation etc.), if any, accruing on such shares shall also be credited to the Account of IEPF and the voting rights on such shares shall remain frozen till the rightful owner claims the shares. Shares which were transferred to the Demat Account of IEPFA can be claimed back by the shareholder by following the procedure prescribed under the aforesaid rules.

During the year under review, the Company has transferred 19,018 equity shares to IEPFA as dividend had not been encashed or claimed on the above shares during the seven consecutive years from the financial Year 2010-11 to 2017-18.

Details of Nodal Officer

The details of the nodal officer appointed by the Company under the provisions of IEPF are given below and the same is disseminated in the website of the Company viz., www.vguard.in.

Name of the Company Secretary as Nodal Officer

Jayasree K

Direct Phone No.

91 484 - 433 5000

Email ID

jayasree@vguard.in

Address

V-Guard Industries Ltd 42/962, Vennala High School Road, Vennala, Ernakulam - 682028

7. FIXED DEPOSIT

The Company has not accepted any deposit within the meaning of Chapter V of the Act and the Rules framed thereunder.

8. MATERIAL CHANGES AND COMMITMENTS IF ANY, AFFECTING THE FINANCIAL POSITION OF THE COMPANY WHICH HAVE OCCURRED BETWEEN THE END OF THE FINANCIAL YEAR OF THE COMPANY TO WHICH THE FINANCIAL STATEMENTS RELATE AND THE DATE OF THE REPORT

There are no material changes and commitments affecting the financial position of the Company which have occurred between the end of the financial year of the Company to which the financial statements relate and the date of the Report.

9. CHANGE IN THE NATURE OF BUSINESS, IF ANY

There was no change in the nature of business of the Company during the Financial Year 2018-19.

10. POSTAL BALLOT

During the year under review, the Board of Directors had sought approval of the Shareholders of the Company through Postal Ballot process pursuant to the provisions of Sections 108 & 110 of the Act read with Rule 20 & 22 of the Companies (Management and Administration) Rules, 2014 (as amended) and Regulation 44 of the Listing Regulations, in respect of the Ordinary Resolution set out in the Postal Ballot Notice dated August 28, 2018. The voting results are given below;

Date of Postal Ballot Notice: August 28, 2018

Declaration of Results: Friday, September 28, 2018 at 5.00 p.m.

Voting Period: August 29, 2018 to September 27, 2018

Sl

particulars of

Type of

No. of votes

votes cast in favor

votes cast against

No.

Resolution

Resolution

polled

No. of votes

%

No. of votes

%

1

To appoint

Ms. Radha Unni, as an Independent Director

Ordinary

Resolution

364,134,814

364,133,267

99.99

1,547

0.01

11. SIGNIFICANT OR MATERIAL ORDERS PASSED BY REGULATORS / COURTS / TRIBUNALS

There were no significant material orders passed by the Regulators/Courts/Tribunals which would impact the going concern status of the Company and its future operations.

12. CREDIT RATING

The Company’s bank facilities are rated by Investment Information and Credit Rating Agency of India Limited (ICRA Ltd.). The Company continues to have long-term rating of [ICRA]AA (pronounced ICRA double A) and short-term rating of [ICRA]A1 (pronounced ICRA A one plus). The outlook on the long-term rating remains stable.

13. BUSINESS RESPONSIBILITY REPORT

The Ministry of Corporate Affairs, Government of India, in July 2011, came out with the ‘National Voluntary Guidelines on Social, Environmental and Economic Responsibilities of Business’. These guidelines contain certain principles which are to be adopted by companies as part of its business practices and disclosures regarding the steps taken to implement these principles through a structured reporting format, viz., Business Responsibility Report. Pursuant to Regulation 34(2)(f) of the Listing Regulations, the Company has prepared the Business Responsibility Report forming part of this Annual Report.

14. BOARD OF DIRECTORS AND ITS COMMITTEES

A. composition of the Board of Directors

As on March 31, 2019, the Board of Directors of the Company comprises of nine Directors, of which two are Executive and seven are Non-Executive Directors, which includes, five Independent Directors. The composition of the Board of Directors is in compliance with the provisions of Regulation 17 of the Listing Regulations and Section 149 of the Act.

B. Change in office of Directors and Key Managerial personnel of the company During the Year under Review and Details of Directors Seeking Re-appointment at the 23rd Annual General Meeting

The members of the Company in their 22nd Annual General Meeting held on July 31, 2018, re-appointed Mr. Ramachandran V, Whole-time Director, as a Director, liable to retire by rotation and Mr. Mithun K Chittilappilly as the Managing Director for a term of three years with effect from April 01, 2018. Pursuant to Regulation 17(1A) of the Listing Regulations, approval of the members was sought in the AGM, for continuation of directorship of Mr. A K Nair, Independent Director, who had attained 75 years of age, till the expiry of current term of office.

During the year under review, the members of the Company, appointed Ms. Radha Unni, as an Independent Director, for a period of three years effective from September 27, 2018, through Postal Ballot process. The Company has received declaration from her confirming that she meets the criteria of Independence laid down in Section 149(6) of the Act and Regulation 16 of the Listing Regulations.

In accordance with the provisions of Section 152 of the Act and the Company’s Articles of Association, Ms. Joshna Johnson Thomas, Director, retires by rotation at the ensuing Annual General Meeting and being eligible offers herself for re-appointment. The Board recommends the re-appointment for consideration of the Members of the Company at the ensuing Annual General Meeting.

The present term of office of Mr. Cherian N Punnose, Mr. C J George and Mr. Ullas K Kamath, Independent Directors, who were appointed for a consecutive period of five years effective from July 29, 2014, expires on July 28, 2019. Pursuant to the provisions of the Act and based on the recommendation of the Nomination and Remuneration Committee, the Board proposes re-appointment of retiring Directors, as Independent Directors, for second term of five consecutive years from July 29, 2019 upto July 28, 2024.

The Notice dated June 25, 2019, of the ensuing Annual General Meeting includes the proposal for re-appointment of Directors and their brief resume, specific information about the nature of expertise, the names of the Companies in which they hold directorship and membership/ chairmanship of the Board Committees as stipulated in the Listing Regulations.

C. Criteria for Determining Qualifications, Positive Attributes and Independence of a Director

The Nomination and Remuneration Committee has formulated Nomination, Remuneration and Evaluation Policy, which details the criteria for determining qualifications, positive attributes and independence of Directors in terms of provisions of Section 178(3) of the Act and the Listing Regulations. The policy forms part of this report.

D. Declaration by Independent Directors

Mr. C J George, Mr. Cherian N Punnoose, Mr. Ullas K Kamath, Mr. A K Nair and Ms. Radha Unni, Independent Directors, have furnished a declaration that they meet the criteria of independence as envisaged in Regulation 16 of the Listing Regulations and Section 149(6) of the Act.

E. Certificate from Practicing Company Secretary

Pursuant to Regulation 34(3) and Schedule V Para C clause (10)(i) of the Listing Regulations, M/s. Keyul M Dedhia & Associates, Company Secretary in practice, Mumbai, has certified that none of the directors on the Board of the Company have been debarred or disqualified from being appointed or continuing as directors of companies by the Board/Ministry of Corporate Affairs or any such statutory authority and the certificate forms part of the Report of Corporate Governance forming part of this Annual Report.

F. Number of Meetings of the Board of Directors

The Board meets at regular intervals to adopt financial results and decide business policies and strategic proposals apart from other items of business. The Board and Committee meetings are pre-scheduled and a tentative annual calendar of meetings is circulated to the directors in advance to ensure participation of all Directors.

During the year under review, five Board meetings were held and meetings of Sub-Committees of the Board were also held. The intervening gap between the meetings was within the period prescribed under the Act and the Listing Regulations. The details of the Meetings are given in the Report on Corporate Governance which forms part of this Report.

Pursuant to the requirements of Schedule IV to the Act and the Listing Regulations, a separate Meeting of the Independent Directors of the Company was held on March 22, 2019, and the Directors reviewed and assessed the matters enumerated under Schedule IV(VII)(3) to the Act and Regulation 25(4) of the Listing Regulations. All the Independent Directors, except Mr. Ullas K Kamath, attended the meeting.

G. Statutory committees of the Board

Pursuant to the requirement under the Act and the Listing Regulations, the Board of Directors has constituted various Committees of Board such as Audit Committee, Nomination and Remuneration Committee, Stakeholders’ Relationship Committee and Corporate Social Responsibility (“CSR”) Committee.

The composition and terms of reference of Audit Committee, Nomination and Remuneration Committee and Stakeholders’ Relationship

Committee and number of meetings held during the year under review are given in the section, Report on Corporate Governance forming part of this Annual Report.

The CSR Committee of the Company comprises of three members, Mr. Kochouseph Chittilappilly, Mr. Cherian N Punnoose and Mr. Mithun K Chittilappilly. Mr. Kochouseph Chittilappilly, is the Chairman of the Committee and the members of the Committee met three times during the year under review, on May 30, 2018, October 25, 2018 and January 31, 2019. The Committee recommended the amount of CSR spent for the financial year and the various CSR programs/activities to be carried out by the Company to the Board, for its consideration and approval.

H. performance Evaluation

Pursuant to the provisions of the Act and the Listing Regulations, the Board has carried out the annual performance evaluation of its own performance, the Directors (excluding the Director being evaluated) as well as the Sub-Committees of the Board. The Nomination and Remuneration Committee of the Company has carried out evaluation of performance of each individual Director. Performance evaluation was made on the basis of structured questionnaire considering the indicative criteria prescribed in the Nomination, Remuneration and Evaluation Policy of the Company read with SEBI Guidance Note on Board Evaluation.

Evaluation of the Board was made based on the role played by the Board in decision making, evaluating strategic proposals, discussing annual budgets, assessing adequacy of internal controls, review of risk management procedures etc. The evaluation of individual Director was carried out based on various parameters such as participation in the Board and its Committee meetings, contribution towards strategic proposals, suggesting risk mitigation measures, supporting in putting place internal controls, governance, leadership and talent development and managing external stakeholders. Performance evaluation of various Sub-Committees of the Board was carried out based on the criteria such as constitution, effective functioning of the Sub-Committees as per the terms of reference, periodical suggestions and recommendations given by the Sub-Committees to the Board etc.

A separate meeting of Independent Directors of the Company was held during the year under review, in which the members evaluated the performance of the Chairman based on criteria such as giving guidance to the Board and ensuring the independence of the Board etc. The performance of the non-independent directors was also evaluated based on their contribution made to the growth of the Company, strategic initiatives and Board deliberations.

I. Directors’ Responsibility Statement

Pursuant to the provisions under Section 134(5) of the Act, with respect to Directors’ Responsibility Statement, the Directors confirm:

I. That in the preparation of the annual accounts, the applicable accounting standards have been followed and no material departures have been made from the same;

II. That they had selected such accounting policies and applied them consistently, and made judgements 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 and loss of the Company for that period;

III. That they had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

IV. That they had prepared the annual accounts on a going concern basis;

V. That they had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and

VI. That they had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

15. AUDIT RELATED MATTERS

A. Statutory Auditors

M/s. S R Batliboi & Associates LLP, Chartered Accountants, Kochi, with Firm Registration Number - 101049W/E300004 were re-appointed as Statutory Auditors of the Company for a period of five consecutive years at the Annual General Meeting (AGM) of the Company held on July 31, 2017, to hold office from the conclusion of 21st AGM till the conclusion of 26th AGM to be held in the year 2022, on a remuneration fixed by the Board of Directors.

Re-appointment was made subject to ratification by the Members at every subsequent AGM held during the tenure of re-appointment. Pursuant to the amendment made to Section 139 of the Act by the Companies (Amendment) Act, 2017, effective from May 07, 2018, the requirement of seeking ratification of the members for the appointment / re-appointment of the Statutory Auditors has been withdrawn from the Statute. Hence, the resolution seeking ratification of the members for re-appointment at the ensuing AGM is not being sought.

The Auditors’ Report for the financial year 2018-19 does not contain any qualification, reservation or adverse remark. The Auditors’ Report is enclosed with the financial statements in the Annual Report.

B. cost Auditors

As per Section 148 of the Act read with Rules framed thereunder, M/s. RA & Co., Cost Accountants, Mumbai (Firm Reg. No. 000242) has been re-appointed as Cost Auditors for the financial year 2019-20 to conduct cost audit of the accounts maintained by the Company in respect of various products prescribed under the applicable Cost Audit Rules. The remuneration of Cost Auditors has been approved by the Board of Directors based on the recommendation of the Audit Committee. The requisite resolution for ratification of remuneration of Cost Auditors by members of the Company is set out in the Notice of ensuing AGM. The Cost Auditors have certified that their appointment is within the limits of Section 141(3)(g) of the Act and that they are not disqualified from appointment within the meaning of the said Act.

The Cost Audit Report for the financial year 2017-18, issued by M/s. RA & Co., Cost Auditors, in respect of the various products prescribed under Cost Audit Rules was filed with the Ministry of Corporate Affairs on August 21, 2018. The Cost Audit Report does not contain any qualifications, reservations or adverse remarks.

The Cost Audit Report for the financial year 2018-19 to be issued by M/s. RA & Co., Cost Auditors will be considered by the Board of Directors.

c. Secretarial Auditors

M/s. Keyul M Dedhia & Associates, Company Secretaries, Mumbai, were appointed as Secretarial Auditors of the Company for the financial year 2018-19 pursuant to Section 204 of the Act. The Secretarial Audit Report submitted by them in the prescribed form MR- 3 is attached as Annexure- I to this report.

The Secretarial Auditors have observed that there was a delay in transfer of share application money of Rs. 2,78,600/- pertaining to Initial Public Offer (IPO) and unclaimed dividend of Rs. 6,075/- on drop shares which was lying in escrow account for the Financial Year 2008-09 to Investor Education and Protection Fund. The amounts were transferred to IEPF after the due date for transfer. The Company had transferred the amount with interest to IEPF before March 31, 2019.

Board’s clarification for the observation:

There was an inadvertent omission to transfer the said amounts on the due date and the amounts were transferred to IEPF with interest @ 12% per annum for the period of delay from the due date of transfer till the date of transfer.

There are no other qualifications or adverse remarks or disclaimer of the Secretarial Auditors in the Report issued by them for the financial year 2018-19 which call for any explanation from the Board of Directors.

16. REPORTING OF FRAUDS

During the year under review, neither the Statutory Auditors nor the Secretarial Auditors or the Cost Auditors has reported to the Audit Committee, under Section 143(12) of the Act, any instances of fraud committed against the Company by its officers or employees.

17. POLICY MATTERS

A. Nomination, Remuneration and Evaluation policy

In terms of provisions of Section 178(3) of the Act, the Nomination and Remuneration Committee of the Company has formulated and recommended to the Board a policy, containing the criteria for determining qualifications, competencies, positive attributes and independence for appointment of a Director (Executive/ Non-Executive) and it highlights the remuneration for the Directors, Key Managerial Personnel and other employees, ensuring that it covers the matters mentioned in Section 178(4) of the Act. Nomination, Remuneration and Evaluation Policy approved by the Board is given in Annexure II to this Report.

B. vigil Mechanism / Whistle Blower policy

The Company has adopted a Whistle Blower Policy for Vigil Mechanism for Directors and Employees to report to the Management instances of unethical behaviour, fraud or violation of Company’s code of conduct. The mechanism provides for adequate safeguards against victimisation of employees and Directors who use such mechanism and makes provision for direct access to the Chairperson of the Audit Committee in exceptional cases. None of the person has been denied access to the Audit Committee. The policy has been circulated amongst the employees of the Company working at various locations, divisions/units. During the year under review, the Company has not received any instances of genuine concerns from Directors or employees.

The policy amended in line with the provisions of the Act and the Listing Regulations is available on the website of the Company www.vguard.in.

C. corporate Social Responsibility policy

In terms of the provisions of Section 135 of the Act read with the Companies (Corporate Social Responsibility Policy) Rules, 2014, the Board of Directors of your Company has constituted a CSR Committee and framed a CSR policy which details the programs / activities that can be carried out under various program heads. CSR policy of the Company is available on the Company’s website viz., www.vguard.in. The Company’s CSR activities are focused on Health Care and Education, Infrastructure Development, Sustainable Livelihood and Social Empowerment & Welfare and Sports, Arts and Culture.

During the year, Company carried out several initiatives under the CSR program, directly as well as through agencies. A report on CSR activities is attached as Annexure III forming part of this report.

D. Risk Management policy

The Company has developed and implemented risk management framework detailing risks associated with its business, process of identification of risks, monitoring and mitigation of these risks. Risk Management committee constituted by the Board identifies Corporate level risks at the beginning of the financial year which are cascaded down to product/functional risk groups for inclusion in their risk matrices. Corporate risks are strategic risks impacting the Company in the areas of new products, information security, digitization etc. Product risk groups also identifies and monitors product specific risks and key product risks are included in Corporate Risks. Quarterly updates on Corporate risks and its mitigation plans are presented to Risk Management Committee and Board.

E. Dividend policy

Pursuant to the Regulation 43A of the Listing Regulations, the Board of Directors of the Company has adopted a Dividend Policy for determining circumstances and parameters under which Dividend pay-out could be made on periodical basis. The policy highlighted the factors to be considered by the Board of Directors at the time of recommending/declaring of Dividend. The said policy is given in Annexure IV to this report and posted on the website of the Company www.vguard.in.

18. OTHER MATTERS

A. Internal Financial controls

The Company has Internal Control Systems commensurate with the nature of its business, size and complexities. Audit Committee reviews the adequacy and effectiveness of internal control system and monitors the implementation of audit recommendations. During the year under review, the Internal Audit division of the Company conducted detailed review of control processes in key areas and identified design gaps, process automation opportunities and management check points which will help in strengthening the processes and monitoring mechanisms. Key controls in operational, financial and IT processes were tested to provide assurance regarding compliance with the existing policies and significant operating procedures and no significant weaknesses/deviations were noted in operation of controls. Further, the Statutory Auditors of the Company also carried out audit of Internal Financial Controls over Financial Reporting of the Company as on March 31, 2019 and issued their report which forms part of the Independent Auditor’s report.

B. particulars of Loans, Guarantees and Investments

During the year under review, the Company has not given any loan, provided any guarantee or made any investment falling under the provisions of Section 186 of the Act.

C. Financial position and performance of Subsidiaries, Joint ventures and Associates

GUTS Electro-mech Ltd., Subsidiary Company reported Revenue from Operations of Rs. 60.23 crores for the FY 2019 (Previous Year: Rs. 47.11 crores). The financial summary of subsidiary company is as under:

(Amt in lakhs)

particulars

2018-19

2017-18

Revenue from

6,022.50

4,710.57

Operations

Profit Before Tax

593.01

70.74

Profit/(Loss) After Tax

311.14

(28.55)

Consolidated Financial Statements of the Company are prepared in accordance with Indian Accounting Standards (IND AS) notified under Companies (Indian Accounting Standards) Rules, 2015 (as amended from time to time) and presentation requirements of Division II of Schedule III to the Act, (Ind AS compliant Schedule III), as applicable to the consolidated financial statements and forms an integral part of this Report.

Pursuant to Section 129(3) of the Act read with Rule 5 of the Companies (Accounts) Rules, 2014, a statement containing salient features of the financial statements of Subsidiary, for the Financial Year 2018-19 is given in

Form AOC-1 which forms an integral part of this Annual Report.

In accordance with Section 136(1) of the Act, the Annual Report of your Company containing inter alia, financial statements including consolidated financial statements, has been placed on the Company’s website, www.vguard.in. Further, the financial statements of the subsidiary have also been placed on the Company’s website.

The audited financial statements including the consolidated financial statements of the Company, audited financial statements in respect of the subsidiary company shall also be kept open for inspection at the Registered Office of the Company from 11.00 A.M. to 1.00 P.M. for a period of 21 days upto the date of the ensuing AGM. The aforesaid documents relating to subsidiary Company can be made available to any member interested in obtaining the same upon a request made to the Company.

D. Any Revision Made in Financial Statements/ Board’s Report

The Company has not revised the Financial Statements or Board’s Report in respect of any of the three preceding financial years.

E. Employee Stock Option Scheme 2013

During the Financial Year 2015-16, the Company had granted 9,06,280 options to the eligible employees to be vested over a period of three years in accordance with the Employee Stock Option Scheme (ESOS) 2013. Vesting of options for the first & second year had been completed and during the year under review, considering the parameters for vesting of options, 86,567 no. of options of Rs. 1/- each and 2,67,014 no. of options of Rs. 71.36 each were vested to eligible employees, being the vesting for the third year of the grant. During the year under review, 1,05,797 no. of options were cancelled due to non-achievement of parameters for performance vesting.

Further, 63,000 no. of options of Rs. 1/- each and 5.67.000 no. of options of Rs. 68.75 each, being the options for time based vesting for the Second year, were vested for the grant made on May 04, 2016. Options to the extent of 48,654 of Rs. 1/- each were vested on time basis, for the Second year in respect of grant made on June 16, 2016. In respect of grant made on August 08, 2016, options to the extent of 2,42,578 of Rs. 1/- each were vested on time basis for the second year of vesting.

Further, 42,000 no. of options of Rs. 1/- each and 1,68,000 no. of options of Rs. 121.80 each were also vested during the year under review, on time basis, towards the Second year, in respect of the grant made on August 08, 2016. In respect of grant made on October 21, 2016, options to the extent of 28,994 of Rs. 1/- each were vested on time basis towards the second year.

Further, options to the extent of 37,707 and 23,580 of Rs. 1/- each were vested on time basis towards the first year in respect of grants made in May 2017 and July 2017 respectively. In respect of grant made on January 2017, options to the extent of 15,462 of Rs. 1/- each were vested on time basis for the second year.

Options to the extent of 47,007 of Rs. 1/- each were vested on time basis for the first year in respect of grant made on January 22, 2018.

The Nomination and Remuneration Committee made several grants under ESOS2013, during the year under review to various eligible employees and the options granted will be vested over a period of four years from the date of grant. 46,354 nos. of options were granted on May 30, 2018 at face value of Rs. 1/- each. Further, 99,452 nos. of options were granted on July 31, 2018 and 76,190 nos. of options were granted on January 31, 2019 at a face value of Rs. 1/- each respectively.

The disclosure pursuant to the provisions of Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014 and Section 62(1) (b) of the Act, read with Rule 12(9) of the Companies (Share Capital and Debentures) Rules, 2014, is given as Annexure V to this Report.

F. code of conduct

In compliance with Regulation 26(3) of the Listing Regulations and the Act, the Company has framed and adopted Code of Conduct (“the Code”) for Directors and Senior Management. The Code provides guidance on ethical conduct of business and compliance of law. The Code is available on the Company’s website www.vguard.in.

All Members of the Board and Senior Management personnel have affirmed the compliance with the Code as on March 31, 2019. A declaration to this effect, signed by the Managing Director in terms of the Listing Regulations is given in the Report of Corporate Governance forming part of this Annual Report.

G. Extract of Annual Return

The details forming part of the extract of the Annual Return in form MGT-9 is enclosed as Annexure VI.

H. Management Discussion and Analysis

As per the terms of Regulations 34(2)(e) of the Listing Regulations, the Management Discussion and Analysis forms part of this Annual Report.

I. Related party Transactions

All related party transactions which were entered during the financial year were in the ordinary course of business and on an arm’s length basis. There were no materially significant related party transactions entered by the Company with the promoters, directors, key managerial personnel or other persons which may have a potential conflict with the interests of the Company.

A statement of all related party transactions is presented before the Audit Committee on quarterly basis, specifying the nature, value and terms and conditions of transactions. Since all the Related Party Transactions that were entered into during the financial year were on an arm’s length basis and were in the ordinary course of business, no details are required to be provided in Form AOC-2 prescribed under clause (h) of sub-section (3) of section 134 of the Act and Rule 8(2) of the Companies (Accounts) Rules, 2014.

In accordance with the requirements of the Listing Regulations, the Company has also adopted the Policy on Materiality and dealing with Related Party Transactions and the same has been placed on the website of the Company at www.vguard.in. The Company does not have a material unlisted subsidiary as defined under Regulation 16(1)(c) of the Listing Regulations.

J. corporate Governance

The Company is committed to maintain the highest standards of Corporate Governance and adhere to the Corporate Governance requirements. The Report on Corporate Governance as required under Regulation 34(3) read with Schedule V of the Listing Regulations forms part of this Annual Report. The Auditors’ Certificate on compliance with Corporate Governance norms is also attached to this Report. Further as required under Regulation 17(8) of the Listing Regulations, a certificate from the Managing Director and CFO is being annexed with this Report.

K. conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo

The information pertaining to conservation of energy, technology absorption and foreign exchange earnings and outgo stipulated under Section 134(3)(m) of the Act read with Rule 8 of The Companies (Accounts) Rules, 2014, is furnished in Annexure VII and forms part of this Report.

L. particulars of Remuneration details of Directors, Key Managerial personnel and Employees

The remuneration details of Directors and Key Managerial Personnel and ratio of remuneration of each director to the median of employees’ remuneration as per Section 197(12) of the Act, read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is enclosed as Annexure VIII. In accordance with the provisions of Section 197(12) of the Act and Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the names and particulars of remuneration of employees are available with the Company. In terms of provisions of Section 136(1) of the Act, this report is being sent to the members without this annexure and the details are open for inspection at the Registered Office of the Company from 11.00 A.M. to 1.00 P.M. for a period of 21 days upto the date of ensuing AGM. Any member interested in obtaining such particulars may write to the Company Secretary at the Registered Office of the Company.

M. Disclosure under The Sexual Harassment of Women at Workplace (prevention, prohibition and Redressal) Act, 2013

The Company has in place a robust policy on prevention of sexual harassment at workplace. The policy aims at prevention of harassment of employees and lays down the guidelines for identification, reporting and prevention of sexual harassment. There is an Internal Complaints Committee (ICC) which is responsible for redressal of complaints related to sexual harassment as per the guidelines provided in the policy. All women employees (permanent, temporary, contractual and trainees) are covered under this policy. The policy has been circulated amongst the employees of the Company and the same is exhibited in the notice Board of all the business locations/divisions of the Company. During the year under review, no complaint was received.

19. COMPLIANCE WITH SECRETARIAL STANDARDS

The Company has complied with the various Secretarial Standards issued by the Institute of Company Secretaries of India.

20. LISTING OF SHARES

The equity shares of the Company are listed on the National Stock Exchange of India Limited (NSE) and BSE Ltd. (BSE). The listing fee for the Financial Year 2019-20 has been paid to the credit of both the Stock Exchanges.

21. CODE OF PRACTICES AND PROCEDURES FOR FAIR DISCLOSURE OF UNPUBLISHED PRICE SENSITIVE INFORMATION

The Board has formulated code of Practices and Procedures for Fair Disclosure of Unpublished Price Sensitive Information (“Fair Disclosure Code”) for fair disclosure of events and occurrences that could impact price discovery in the market for the Company’s securities and to maintain the uniformity, transparency and fairness in dealings with all stakeholders and ensure adherence to applicable laws and regulations. The copy of the same is available on the website of the Company at www.vguard.in.

22. PREVENTION OF INSIDER TRADING

The Board has formulated code of conduct for regulating, monitoring and reporting of trading of shares by Insiders. This code lays down guidelines, procedures to be followed and disclosures to be made by the insiders while dealing with shares of the Company and cautioning them on consequences of non-compliances. The copy of the same is available on the website of the Company at www.vguard.in.

23. ACKNOWLEDGEMENT

Your Directors place on record their sincere appreciation for the steadfast commitment and highly motivated performance by employees at all levels which was instrumental in sustained performance of the Company. Your Directors also sincerely thank all the stakeholders, business partners, government & other statutory bodies, banks, financial institutions, analysts and shareholders for their continued assistance, cooperation and support.

For and on behalf of the Board of Directors

S/d S/d

Kochouseph chittilappilly Mithun K chittilappilly

Date: May 29, 2019 Chairman Managing Director

Place: Ernakulam (DIN: 00020512) (DIN: 00027610)

Director’s Report