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Vardhman Textiles Ltd.

BSE: 502986 | NSE: VTL |

Represents Equity.Intra - day transactions are permissible and normal trading is done in this category
Series: EQ | ISIN: INE825A01012 | SECTOR: Textiles - Spinning - Cotton Blended

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Annual Report

For Year :
2018 2017 2016 2015 2014 2013 2012 2011 2010

Director’s Report

DIRECTORS’ REPORT

Dear Members,

The Directors of your Company have pleasure in presenting their 45th Annual Report of the business and operations of the Company along with the Audited Financial Statements for the year ended, 31st March, 2018.

1. Financial Results:

The financial performance of your Company for the year ended 31st March, 2018 is as under:-

(RS, in crore)

Particulars

STANDALONE

CONSOLIDATED

2017-18

2016-17

2017-18

2016-17

Revenue from operations (Net)

5,851.37

5,690.95

6,248.27

6,029.95

Other Income

185.06

628.36

197.35

553.86

Profit before Depreciation, Interest & Tax (PBDIT)

1,043.62

1,759.43

1,117.82

1,790.02

Interest and Financial expenses

114.32

125.13

118.19

128.68

Profit before Depreciation and Tax (PBDT)

929.30

1,634.3

999.63

1,661.34

Depreciation

228.55

329.49

240.00

343.40

Profit before Tax (PBT)

700.75

1,304.81

759.63

1,317.94

Provision for Tax - Current

147.58

281.57

165.01

302.64

- Deferred Tax (Net of Adjustment)

7.41

21.65

2.18

21.03

Profit after tax (PAT)

545.76

1,001.59

592.44

994.27

Other Comprehensive Income

1.70

(0.22)

1.60

(0.45)

Total Comprehensive Income for the period

547.46

1,001.37

594.04

993.82

Earnings per share (H)

- Basic

96.41

163.67

106.56

163.11

- Diluted

95.45

163.67

105.48

163.11

2. Financial Analysis and Review of Operations: Production & Sales Review:

During the year under review, your Company has registered Revenue from Operations of RS, 5,851.37 crore as compared to RS, 5,690.95 crore in the previous year. The export of the Company increased from RS, 2,206.90 crore to RS, 2,211.43 crore showing an increase of 0.21 % over the previous year. The product wise performance is as under:-

a) Yarn:

The production of Yarn increased marginally from 2,02,770 MT to 2,04,091 MT during the year 2017-18.

b) Fabric:

During the year, the production of grey fabric remained same as last year i.e. 175 million meter. The production of processed fabric increased from 116 million meter to 122 million meter.

Profitability:

The Company earned profit before depreciation, interest and tax of RS, 1,043.62 crore as against RS, 1,759.43 crore in the previous year. After providing for depreciation of RS, 228.55 crore (previous year RS, 329.49 crore), interest of RS, 114.32 crore (previous year RS, 125.13 crore), provision for current tax of RS, 147.58 crore (previous year RS, 281.57 crore), deferred tax (net of adjustments) of RS, 7.41 crore (previous year RS, 21.65 crore), the Net Profit after comprehensive income worked out to RS, 547.46 crore as compared to RS, 1,001.37 crore in the previous year.

The balance available for appropriation after adding balance in surplus account is RS, 3,095.17 crore. Out of this, a sum of RS, 86.09 crore and RS, 15.79 crore has been utilized towards dividend and corporate dividend tax thereon respectively and an amount RS, 17.81 crore has been transferred to Debenture Redemption Reserve. After adding a sum of

RS, 2.19 crore on account of dividend received on shares held through Trust and a sum of RS, 180.81 crore on account of profit on sale of shares held through Trust, a balance of RS, 3,158.48 crore is proposed to be carried as surplus to the balance sheet.

Resources Utilization:

a) Fixed Assets:

The Net Block as at 31st March, 2018 was RS, 2,506.77 crore as compared to RS, 2,458.15 crore in the previous year.

b) Current Assets:

The current assets as on 31st March, 2018 were RS, 4,201.33 crore as against RS, 3,411.26 crore in the previous year. Inventory level was at RS, 2,116.51 crore as compared to the previous year level of RS, 1,589.00 crore.

CONSOLIDATED:

Profitability:

The Company earned profit before depreciation, interest and tax of RS, 1,117.82 crore as against RS, 1,790.02 crore in the previous year. After providing for depreciation of RS, 240.00 crore (previous year RS, 343.40 crore), interest of RS, 118.19 crore (previous year RS, 128.68 crore), provision for current tax of RS, 165.01 crore (previous year RS, 302.64 crore), deferred tax (net of adjustments) of RS, 2.18 crore (previous year RS, 21.03 crore), the net profit from operations after comprehensive income worked out to RS, 594.04 crore as compared to RS, 993.82 crore in the previous year.

The balance available for appropriation after adding balance in surplus account is RS, 3,288.39 crore. Out of this, a sum of RS, 84.56 crore and RS, 18.24 crore has been utilized towards dividend and corporate dividend tax thereon respectively, an amount RS, 17.81 crore and 2.05 crore has been transferred to Debenture Redemption Reserve and Statutory Reserve respectively. After adding a sum of RS, 2.19 crore on account of dividend received on shares held through Trust and a sum of RS, 180.77 crore on account of profit on sale of shares held through Trust, a balance of RS, 3,348.69 crore is proposed to be carried as surplus to the balance sheet.

Resources Utilization:

a) Fixed Assets:

The Net Block as at 31st March, 2018 was RS, 2,618.40 crore as compared to RS, 2,578.05 crore in the previous year.

b) Current Assets:

The current assets as on 31st March, 2018 were RS, 4,545.60 crore as against RS, 3,838.40 crore in the previous year. Inventory level was at RS, 2,256.64 crore as compared to the previous year level of RS, 1,752.81 crore.

Financial Conditions & Liquidity:

The Company enjoys a rating of “AA /Stable from Credit Rating Information Services of India (CRISIL) for long term borrowings and “A1 for short term borrowings respectively. Management believes that the Company''s liquidity and capital resources should be sufficient to meet its expected working capital needs and other anticipated cash requirements. The position of liquidity and capital resources of the Company is given below:-

(RS, in crore)

Particulars

2017-18

2016-17

Cash and Cash equivalents:

Beginning of the year

38.22

213.69

End of the year

65.20

38.22

Net cash provided (used) by:

Operating Activities

89.19

1288.92

Investing Activities

(159.28)

(251.80)

Financial Activities

97.07

(1,212.59)

3. Management Discussion and Analysis Report:

Management Discussion and Analysis Report for the year under review as stipulated under Regulation 34(2) (e) of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations,

2015 is presented in a separate section forming part of this Annual Report.

4. Dividend:

The Board of Directors in its meeting held on 12th May, 2018 has recommended dividend of H 15/- per share on the fully paid up Equity Shares of the Company.

5. Investor Eduction and Protection Fund (IEPF):

Pursuant to the provisions of Section 124 and 125 of the Companies Act, 2013, read with IEPF Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 (‘the Rules''), all unpaid or unclaimed dividends are required to be transferred by the Company to the IEPF established by the Central Government after the completion of seven years from the date of transfer to the Unpaid Dividend Account of the Company. The shareholders whose dividends have been transferred to the IEPF Authority can claim their dividend from Authority. The unclaimed or unpaid dividend relating to the financial year 2010-11 is due for remittance by the end of September, 2018 to Investor Education and Protection Fund established by Central Government.

Further, according to the Rules, the shares in respect of which dividend has not been paid or claimed by shareholders for seven consecutive years or more shall also be transferred to the IEPF Authority. The Company shall sent notice to all shareholders whose shares are due to be transferred to the IEPF Authority and publish requisite advertisement in the newspaper.

The details of these shares is also provided on the website of the Company, at www.vardhman.com.

6. Consolidated Financial Statement:

In accordance with Companies Act 2013 & Indian Accounting Standards (Ind AS) 110 on ‘Consolidated Financial Statements'' read with Ind AS 111 on ‘Joint Arrangements'' and Ind AS 112 on ‘Disclosure of Interest in other entities'', the Audited Consolidated Financial Statements are provided in the Annual Report.

7. Subsidiaries, Joint Ventures and Associate Companies:

The Company does not have any material subsidiary. The details of the financials of the subsidiary and associate companies for the year 2017-18 are as follows:-

VMT Spinning Company Limited (VMT)

This subsidiary of the Company was a Joint Venture with Marubeni Corporation (MC), Japan and Marubeni Hong Kong and South China Limited (MHSCL), Hong Kong. During the year, your Company purchased the entire stake of its Joint Venture partners i.e. 6.66% of MC and 3.88% of MHSCL in VMT. As such VMT became a 100% subsidiary of the Company w.e.f. 6th September, 2017. The Revenue from Operations of VMT has increased to RS, 223.74 crore from RS, 191.13 crore in the last year. The Net Profit of the Company after comprehensive income worked out to RS, 1.78 crore as against RS, 8.26 crore in the previous year registering a decrease of 78.45%.

VTL Investments Limited (VTL)

This 100% subsidiary of your Company is engaged in the business of investment. The earnings of the Company mainly come from the dividend /interest earned on its investments and profits made on sale of investments. During the year, the Company has earned a Net Profit of RS, 10.24 crore as compared to RS, 9.75 crore during the previous year.

Vardhman Acrylics Limited (VAL)

This subsidiary of the Company is engaged in the business of manufacturing of Acrylic Fibre. Presently, the Company holds 70.74% shares in this subsidiary. During the Financial Year 2017-18, VAL recorded Revenue from Operations of RS, 326.97 crore against RS, 368.43 crore in the previous year. The Net Profit of the Company after comprehensive income worked out to RS, 38.47 crore as compared to RS, 40.99 crore in the previous year.

Vardhman Nisshinbo Garments Company Limited (VNGL)

This subsidiary of the Company is a Joint Venture partnership of 51:49 with Nisshinbo Textiles Inc., Japan for manufacturing men''s shirts. During the year, the Revenue from Operations of the Company was RS, 59.81 crore as compared to RS, 58.18 crore in the previous year. The Company posted a Net Profit of RS, 0.34 crore as against a net loss of RS, 0.54 crore in the previous year.

Vardhman Yarns and Threads Limited (VYTL)

Vardhman Yarns and Threads Limited, a Joint Venture with American & Efird Global, LLC (A&E), is an Associate of the Company. It is engaged in the business of threads manufacturing and distribution. Presently, the Company holds 11% stake in VYTL. A&E is the second largest player in threads manufacturing and distribution across the world. During the year under review, the Revenue from Operations were RS, 812.84 crore as against RS, 778.58 crore in the previous year registering an increase of 4.40%. The Net Profit for the year after comprehensive income worked out to RS, 84.43 crore as compared to RS, 99.09 crore during last year registering a decrease of 14.7%.

Vardhman Special Steels Limited

Vardhman Special Steels Limited (VSSL) is an Associate of the Company. The Company holds 27.20% shares of VSSL. During the year, the Revenue from Operations of the Company was RS, 877.89 crore as compared to RS, 753.13 crore in the previous year. The Net Profit for the year after comprehensive income worked out to RS, 24.73 crore as compared to RS, 18.91 crore in the previous year.

Vardhman Spinning & General Mills Limited

Vardhman Spinning & General Mills Limited (VSGM) is an Associate of the Company. The Company holds 50% shares of VSGM. It is a trading Company dealing in the business of Cotton and Fibre. During the year, the Company has not traded any goods. So, the Revenue from Operations is NIL for the Financial Year 2017-18. The Company posted a Net Profit of H 29,404 as against a net loss of H 6,851 in the previous year.

8. Directors:

In accordance with the provisions of the Articles of Association of the Company, Mr. Sachit Jain, Director of the Company, retires by rotation at the conclusion of the forthcoming Annual General Meeting and being eligible, offers himself for re-appointment. The Board recommended his appointment for the consideration of members of the Company at ensuing Annual General Meeting.

Cessation from Directorship: During the year, Mr. Shravan Talwar ceased to be the Director of the Company as his term of appointment expired on 22nd September, 2017. Further, IDBI Bank Ltd. has withdrawn the nomination of Mr. Kumar Neel Lohit from the Board of Directors of your Company w.e.f. 11th December, 2017.

Additional Director: During the year, Dr. Parampal Singh was appointed as an Additional Director of the Company w.e.f. 27th November, 2017.

Declaration under Section 149(6):

The Independent Directors have submitted their disclosures to the Board that they fulfill all the requirements as stipulated in Section 149(6) of the Companies Act, 2013 so as to qualify themselves to be appointed as Independent Directors under the provisions of the Companies Act, 2013 and the relevant rules thereof.

Company’s Policy relating to Directors’ appointment, payment of remuneration and discharge of their duties:

The Nomination & Remuneration Committee of the Company has formulated the Nomination & Remuneration Policy on Directors'' appointment and remuneration including the criteria for determining qualifications, positive attributes, independence of a director and other matters as provided under Section 178(3) of the Companies Act, 2013.

The Nomination & Remuneration Policy is annexed hereto and form part of this report as Annexure I.

Continuation of Non-Executive Directors:

Pursuant to the provisions of Regulation 17 of SEBI (Listing Obligation and Disclosure Requirements) Regulation, 2015, as amended vide SEBI (Listing Obligations and Disclosure Requirements) (Amendment) Regulations, 2018, Special Resolution has been proposed to be passed by the Members in the ensuing Annual General Meeting for continuation of directorships of those non-executive directors who are above the age of 75 years viz Mr. Prafull Anubhai, Mr. A.K. Kundra, Mr. D.B. Jain, Dr. S.K. Bijlani.

Familiarization programmes for Board Members:

Your Company has formulated Familiarization Programme for all the Board members in accordance with Regulation 25 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and the Schedule IV of the Companies Act, 2013 which provides that the Company shall familiarize the Independent Directors with the Company, their roles, rights, responsibilities in the Company, nature of Industry in which the Company operates, business model of the Company, etc. through various programs.

The Familiarization Programme for Board members may be accessed on the Company''s website at the link: https:// www.vardhman.com/user_files/investor/familarisation.pdf

Annual Evaluation of the Board Performance:

The meeting of Independent Directors of the Company for the calendar year 2017 was held on 8th November, 2017 to evaluate the performance of Non-Independent Directors, Chairperson of the Company and the Board as a whole.

The evaluation was done by way of discussions on the performance of the Non- Independent Directors, Chairperson and Board as a whole.

A policy on the performance evaluation of Independent Directors, Board, Committees and other individual Directors which includes criteria for performance evaluation of non-executive directors and executive directors has been formulated by the Company.

9. Key Managerial Personnel (KMP):

In compliance with provisions of Section 203 of the Companies Act, 2013, following are the KMPs of the

Company as on 31st March, 2018:

Sl.

Name

Designation

No.

1.

S.P. Oswal

Chairman & Managing Director

2.

Rajeev Thapar

Chief Financial Officer

3.

Sanjay Gupta

Company Secretary

10. Number of Board Meetings:

During the year under review, the Board met Four (4) times and the intervening gap between any two meetings was within the period prescribed under Companies Act, 2013. The details of Board Meetings are set out in Corporate Governance Report which forms part of this Annual Report.

11. Auditors and Auditors’ Report:

Statutory Auditors:

At the Annual General Meeting held on 22nd September,

2017, Deloitte Haskins & Sells, LLP, Chartered Accountants (Firm registration No. 117366W/W-100018) (‘Deloitte'') were appointed as Statutory Auditors of the Company to hold office till the conclusion of 49th Annual General Meeting of the Company. Their appointment was subject to ratification by Members of the Company in every Annual General Meeting. Now, pursuant to the provisions of section 40 of the Companies (Amendment) Act, 2017, section 139 of Companies Act, 2013 has been amended whereby the requirement of annual ratification of the appointment of Statutory Auditors by the Members of the Company is no longer required. Accordingly, the resolution regarding ratification of the appointment of ‘Deloitte'' as Statutory Auditors is not being proposed in the ensuing Annual General Meeting.

Further, the Statutory Auditors of the Company have submitted Auditors'' Report on the accounts of the Company for the accounting year ended 31st March,

2018. The Auditors'' Report is self-explanatory and requires no comments.

Secretarial Auditor:

M/s. B.K. Gupta & Associates, Company Secretaries in Practice, were appointed as Secretarial Auditors of the Company by the Board of Directors of the Company in its meeting held on 10th May, 2017 for the financial year2017-18.

The Secretarial Auditors of the Company have submitted their Report in Form MR-3 as required under Section 204, of the Companies Act, 2013 for the financial year ended 31st March, 2018. This Report is self-explanatory and requires no comments. The Report forms part of this report as Annexure II.

Cost Auditor:

The Company is maintaining the Cost Records, as specified by the Central Government under section 148(1) of Companies Act, 2013.

The Board of Directors has appointed M/s Ramanath Iyer & Company, Cost Accountants, New Delhi, as the Cost Auditors of the Company to conduct Cost Audit of the Accounts for the financial year ended 2018-19. However, as per provisions of Section 148 of the Companies Act, 2013, read with Companies (Cost Records and Audit) Rules, 2014, the remuneration to be paid to the Cost Auditors is subject to ratification by members at the Annual General Meeting. Accordingly, the remuneration to be paid to M/s Ramanath Iyer & Company, Cost Accountants, New Delhi, for financial year 2018-19 is placed for ratification by the members.

12. Audit Committee & Vigil Mechanism:

Composition of Audit Committee:

The Audit Committee consists of Mr. Prafull Anubhai, Dr. S.K. Bijlani, Mr. D.B. Jain, Mr. A.K. Kundra, Independent Directors and Mr. D.L. Sharma, Director. Mr. Prafull Anubhai is the Chairman of the Committee and Company Secretary of the Company is the Secretary of the Committee. All the recommendations made by the Audit Committee were accepted by the Board.

Vigil Mechanism:

Pursuant to provisions of Section 177(9) of the Companies Act, 2013 the Company has established a “Vigil Mechanism incorporating whistle blower policy in terms of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 for employees and Directors of the Company, for expressing the genuine concerns of unethical behavior, actual or suspected fraud or violation of the code of conduct by way of direct access to the Chairman/ Chairman of the Audit Committee.

The Company has also provided adequate safeguards against victimization of employees and Directors who express their concerns.

The Policy on Vigil Mechanism and whistle blower policy as approved by the Board may be accessed on the Company''s website at the link: http://www.vardhman.com/ userfiles/?0b9bcdbd?cc01fde3e8e7d39?d93573769 de1941436265078.pdf.

13. Corporate Governance:

The Company has in place a system of Corporate Governance. Corporate Governance is about maximizing shareholder value legally, ethically and sustainably. A separate report on Corporate Governance forming part of the Annual Report of the Company is annexed hereto. A certificate from the Auditors of the Company regarding compliance of conditions of Corporate Governance as stipulated under SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 is annexed to the report on Corporate Governance.

14. Corporate Social Responsibility (CSR):

Vision & Core areas of CSR: Your Company is committed to and fully aware of its Corporate Social Responsibility (CSR), the guidelines in respect of which were more clearly laid down in the Companies Act, 2013. The Company''s vision on CSR is that the Company being a responsible Corporate Citizen would continue to make a serious endeavor for a quality value addition and constructive contribution in building a healthy and better society through its CSR related initiatives and focus on education, environment, health care and other social causes.

CSR Policy: The Corporate Social Responsibility (CSR) Policy of the Company indicating the activities to be undertaken by the Company, as approved by the Board, may be accessed on the Company''s website at the link: https://www.vardhman.com/user files/investor/CSR%20 Policy%20final.pdf

During the year, the Company has spent RS,14.93 crore on CSR activities.

The disclosures related to CSR activities pursuant to Section 134(3) of the Companies Act, 2013 read with Rule 9 of Companies (Accounts) Rules, 2014 and Companies (Corporate Social Responsibility) Rules, 2014 is annexed hereto and form part of this report as Annexure III.

15. Business Responsibility Report (BRR):

SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 mandate the inclusion of the BRR as part of the Annual Report for top 500 listed entities based on market capitalization. In compliance with the Listing Regulations, we have integrated BRR disclosure into our Annual Report.

16. Dividend Distribution Policy (DDP):

As per Regulation 43A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the top 500 listed companies are required to formulate a DDP. Accordingly, a DDP was adopted to set out the parameters and circumstances that will be taken into account by the Board in determining the distribution of dividend to its shareholders and/or retaining profits earned by the Company. The policy is enclosed as Annexure IV to the Board''s report and is also available on the Company''s website at the link: https://www.vardhman.com/user_ files/investor/dividend%20policy.pdf

17. Risk Management:

The Risk Management Policy required to be formulated under the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 has been duly formulated and approved by the Board of Directors of the Company. The aim of risk management policy is to maximize opportunities in all activities and to minimize adversity. The policy includes identifying types of risks and its assessment, risk handling, monitoring and reporting, which in the opinion of the Board may threaten the existence of the Company.

The Risk Management policy may be accessed on the Company''s website at the link: http://www.vardhman. com/user files/a4c0a8b00e407cd507553e a7db7f06e89de1272a1436265025.pdf.

18. Internal Financial Controls:

The Company has in place adequate internal financial controls with reference to financial statements. During the year, such controls were tested and no reportable material weakness in the design or operation was observed.

A report on the Internal Financial Controls under clause (i) of sub-section 3 of section 143 of the Companies Act, 2013 as given by the Statutory Auditors of the Company forms part of Independent Auditor''s Report on Standalone Financial Statements as Annexure B and to the Independent Auditor''s Report on Consolidated Financial Statements as Annexure A.

19. Particulars of Contracts or Arrangements made with Related Parties:

All contracts/arrangements/transactions entered into by the Company during the financial year with related parties were in the ordinary course of business and on an arm''s length basis. During the year, the Company had not entered into any contract/arrangement/transaction with related parties which could be considered material in accordance with the provisions of Regulation 23 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. Accordingly, the disclosure of Related Party Transactions as required under Section 134(3)(h) of the Companies Act, 2013 in Form AOC-2 is not applicable.

The Policy on dealing with related party transactions as approved by the Board may be accessed on the Company''s website at the link: http://www. vardhman.com/user files/96c45534e3ab096d9b c682f8eebade0344f915151436264609.pdf.

Your Directors draw attention of the members to Note 46 of the standalone financial statement which sets out related party disclosures.

20. Particulars of Loans, Guarantees or Investments made under section 186 of the Companies Act, 2013:

Particulars of loans given, investments made, guarantees given and securities provided along with the purpose for which the loan or guarantee or security is proposed to be utilized by the recipient are provided in the standalone financial statement (Please refer to Note 4, 5, 9 and 12 to the standalone financial statement).

21. Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo:

Energy conservation continues to be an area of major emphasis in our Company. Efforts are made to optimize the energy cost while carrying out the manufacturing operations. Particulars with respect to conservation of energy and other areas as per Section 134(3)(m) of the Companies Act, 2013 read with the Companies (Accounts) Rules, 2014, are annexed hereto and form part of this report as Annexure V.

22. Annual Return:

Pursuant to the provisions of Section 134(3)(a) of Companies Act, 2013, as substituted by Companies (Amendment) Act, 2017, w.e.f. 31st July, 2018, the web address of the extract of Annual Return of the Company is https://www.vardhman.com/user_files/investor/MGT-9.pdf.

23. Human Resources /Industrial Relations:

Human resource is considered as the most valuable of all resources available to the Company. The Company continues to lay emphasis on building and sustaining an excellent organization climate based on human performance. The Management has been continuously endeavoring to build high performance culture on one hand and amiable work environment on the other hand. As on 31st March, 2018, the Company employed around 20,919 employees on permanent rolls.

Pursuit of proactive policies for industrial relations has resulted in a peaceful and harmonious situation on the shop floors of the various plants.

24. Particulars of Employees and Related Disclosures:

The disclosures in respect of managerial remuneration as required under section 197(12) read with Rule 5(1) of the Companies (Appointment & Remuneration of Managerial Personnel) Rules, 2014 is annexed hereto and form part of this report.

A statement showing the names and other particulars of the employees drawing remuneration in excess of the limits set out in Rule 5 (2) and 5 (3) Companies (Appointment & Remuneration of Managerial Personnel) Rules, 2014 is annexed hereto and forms part of this report.

In terms of section 197(14) of the Companies Act, 2013, the Company does not have any Holding Company. However, the details regarding remuneration or commission received from any holding or subsidiary of the Company by any Managing or Whole Time Director is annexed hereto and form part of this report.

All the above details are provided in Annexure VI.

25. Material Changes and Commitments, if any, affecting the Financial Position of the Company occurred between the end of the Financial Year to which these Financial Statements relate and the date of this Report:

No material changes and commitments affecting the financial position of the Company occurred between the end of the financial year to which these financial statements relate and the date of this report.

26. Directors’ Responsibility Statement:

Pursuant to the provisions of Section 134 (5) of the Companies Act, 2013, the Board hereby submit its responsibility Statement:—

a. in the preparation of the annual accounts, the applicable accounting standards have been followed along with the proper explanation relating to material departures;

b. appropriate accounting policies have been selected and applied consistently, and have made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31st March, 2018 and of the profit of the Company for the year ended on 31st March, 2018;

c. proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d. the annual accounts have been prepared on a going concern basis;

e. the Internal financial controls have been laid down to be followed by the Company and that such internal financial controls are adequate and are operating effectively; and

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

27. General Disclosures:

Your Directors state that no disclosure or reporting is required in respect of the following items as there were no transactions on these items during the year under review:

1. Details relating to deposits covered under Chapter V of the Act.

2. Issue of equity shares with differential rights as to dividend, voting or otherwise.

3. Significant or material orders passed by the Regulators or Courts or Tribunals which impact the going concern status and Company''s operations in future.

4. Change in nature of Business of Company.

Further, your Directors state that the Company has complied with the provisions relating to constitution of Internal Complaints Committee under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and there was no case filed under the said Act.

28. Vardhman Textiles Limited Employee Stock Option Plan, 2016:

The Company has granted options to its employees under Vardhman Textiles Limited Employee Stock Options Plan, 2016 (hereinafter referred as ESOP Plan). As per the terms of the plan, the Company can grant a maximum of 6,36,518 options to eligible employees from time to time. One option entitles the holder to apply for one equity share of the Company in terms of ESOP Plan. Accordingly, during the financial year, a total of 49,250 options were exercised by the eligible employees. Out of this, 42,450 equity shares were allotted during the year ended 31st March, 2018 and 6800 equity shares were allotted on 9th April, 2018. So, the paid up equity share capital of the Company stood increased to RS, 57,43,34,600 as on 31st March, 2018.

The ESOP Plan of the Company is being implemented in accordance with SEBI (Share Based Employee Benefits) Regulations, 2014 and the resolution passed by the shareholders approving the said plan. A certificate received from the Auditors of the Company in this regard would be available at the Annual General Meeting for the inspection by the Members.

The details as required to be disclosed are put on the Company''s website and may be accessed at https://www. vardhman.com/user_files/investor/ESOP%20Disclosure.pdf

29. Acknowledgement:

Your Directors are pleased to place on record their sincere gratitude to the Government, Financial Institutions, Bankers, Business Constituents and Shareholders for their continued and valuable co-operation and support to the Company and look forward to their continued support and co-operation in future too.

They also take this opportunity to express their deep appreciation for the devoted and sincere services rendered by the employees at all levels of the operations of the Company during the year.

For and on behalf of The Board

Place : Ludhiana (S.P. Oswal)

Dated : 13th August, 2018 Chairman & Managing Director

Director’s Report