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Directors Report of V-Guard Industries Ltd.

Mar 31, 2017

The Directors have great pleasure in presenting the Twenty First Annual Report of the Company on the business and operations together with the Audited Financial Statements for the Financial Year ended March 31, 2017.

1. Financial Summary (rs in crores)

Particulars

Year ended 31.03.2017

Year ended 31.03.2016

Revenue from operations (Gross)

2,179.19

1,877.1 1

Less: Excise Duty

28.56

14.83

Revenue from operations (Net)

2,150.63

1,862.28

Operating expenditure

1,935.58

1,684.27

Operating profit before Depreciation, Interest, Tax & Exceptional Item

215.05

178.01

Finance Cost

2.10

8.92

Depreciation and amortization expense

16.24

15.36

Other Income

13.46

7.23

Profit Before Tax & Exceptional Item

210.17

160.96

Profit Before Tax

210.17

160.96

Tax Expense:

a) Current Tax

60.40

51.05

b) Deferred Tax

-2.03

-1.77

Profit After Tax

151.80

111.68

Basic EPS (Rs.)

3.59

2.66

Diluted EPS (Rs.)

3.54

2.63

2. Company''s Performance

During the Financial Year 2016-17, the Company has registered a net revenue from operations ofRS,2,150.63 crores, as compared to RS,1,862.28 crores in the previous year, an increase of 15% year-on-year. Profit Before Tax for the year under review was RS,210 crores, higher by 30%, as compared to RS,161 crores in the previous year. Profit After Tax for the year under review was RS,152 crores, grown by 36% over RS,112 crores of the previous year. Segment wise performance of products of the Company is detailed under the Section Management Discussion and Analysis Report which forms part of this Annual Report.

3. Details of New Projects

During the year under review the Company has expanded its manufacturing facility of Electronic Voltage Stabilizer at Rangpo in Sikkim by putting up an additional unit, and the enhanced production at full capacity after expansion is 20 Lakhs units per annum. Considering the increased demand for Electric Water Heater, a new manufacturing unit was commissioned in the state of Sikkim during the year under review.

As the demand for the product, House Wiring Cable has been increasing each year, the Board had decided to increase the production capacity at Chavadi, Coimbatore. The project of expansion of House Wiring Cable manufacturing facility has been completed and enhanced production capacity per month is 8.7 lakhs coils. Increased manufacture of House Wiring Cable has necessitated to go for backward integration, by setting up a unit of PVC Compounding, one of the major raw-materials and the unit started commercial production during the year under review.

4. Changes to the Share Capital

During the year under review, the Company had increased the Authorized Capital of the Company from RS,35 crores to RS,40 crores pursuant to the approval of members in the Annual General Meeting held on July 26, 2016 and subsequently, the Company had increased the Authorized Capital of the Company from RS,40 crores to RS,50 crores pursuant to the approval of members in the Extraordinary General Meeting held on March 6, 2017.

During the year under review, the Company has subdivided the Equity Shares of face value of H10/- to Re.1 pursuant to the approval of shareholders in the Annual General Meeting held on July 26, 2016. The sub-division of shares was made effective from September 1, 2016.

During the year under review, the Company has allotted 6,75,790, 17,06,920 and 89,465 number of shares at Re.1, H48.50 and H99.90 respectively under ESOS 2013 of the Company. Both the number and prices of shares allotted have been adjusted in line with the face value of shares after sub-division.

The Board of Directors of the Company has made a bonus issue of shares in the ratio of 2:5 to all the eligible shareholders by capitalizing an amount of RS,12.13 crores from the free reserves as on March 31, 2016, pursuant to the approval of shareholders in the Extraordinary General

Meeting held on March 6, 2017.

The Paid-up Capital of the Company as on March 31, 2017 has increased to RS,42,46,54,461/- due to allotment of shares under ESOS and Bonus issue.

5. Dividend

The Board of Directors are pleased to recommend a final Dividend of RS,0.70 per share (70 Paise per Equity Share of Re.1 each). The final Dividend, if declared as recommended, would involve an outflow of RS,35,77,73,931/-, 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 24, 2017.

The Register of Members and Share Transfer Books will remain closed from July 25, 2017 to July 31, 2017 (both days inclusive).

6. Transfer of Unpaid Dividend to Investor Education and Protection Fund (IEPF)

Pursuant to the provisions of Section 124(5) and (6) of the Companies Act, 2013, your Company has transferred an amount of H3,75,480/- which was lying in the Unpaid Dividend Account of the Financial Year 2008-09 to IEPF. Unclaimed Dividend in respect of the Financial Year 200910 will be due for transfer to IEPF on August 25, 2017.

7. Fixed Deposit

The Company has not accepted any deposit within the meaning of Chapter V of the Companies Act, 2013 and the Rules framed there under.

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.

No material changes and commitments affecting the financial position of the Company occurred between the end of the Financial Year to which this financial statements relate and the date of 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 2016-17.

10. Postal Ballot

The Board of Directors had sought approval of the Shareholders of the Company by Postal Ballot process pursuant to the provisions of Sections 108 & 110 of the Companies Act, 2013 read with Rule 20 & 22 of the Companies (Management and Administration) Rules, 2014 (as amended) and Regulation 44 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, (Listing Regulations) in respect of the Special Resolutions set out in the Postal Ballot Notice dated March 27, 2017. The detailed voting results are given in the section, ''Report on Corporate Governance'' forming part of this Annual Report.

11. Significant or Material Orders passed by Regulators / Courts / Tribunals

There were no significant and material orders passed by the Regulators or Courts or Tribunals impacting the going concern status and Company''s operations in future during the year under review.

12. Business Responsibility Report

As per Regulation 34(2)(f) of the Listing Regulations, a separate section, ''Business Responsibility Report,'' describing the initiatives taken by your Company from environmental, social and governance perspective, forms part of this Annual Report.

13. Board of Directors and its Committees

A. Composition of the Board of Directors

The Board of Directors of the Company comprises of eight Directors, of which three are Executive and five are Non-Executive Directors, which includes, four 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 Companies Act, 2013.

B. Change in Office of Directors and Key Managerial Personnel of the Company during the year under review and details of Directors seeking appointment/re-appointment at the 21st Annual General Meeting

The members of the Company in their 20th Annual General Meeting held on July 26, 2016, approved the re-appointment of Mr. Ramachandran Venkataraman, as Whole Time Director for a period of four years with effect from June 1, 2016 to May 31, 2020. In the said meeting, the members also approved the reappointment of Mrs. Joshna Johnson Thomas, as a Non-Executive Director, liable to retire by rotation.

Pursuant to the provisions of Section 152 of the Companies Act, 2013, Mr. Mithun K Chittilappilly, Managing Director, is liable to retire by rotation in the ensuing Annual General Meeting and being eligible, offers for re-appointment.

The Notice dated July 3, 2017 of the ensuing Annual General Meeting includes the proposal for reappointment of Director and his brief resume, specific information about the nature of his expertise, the names of the Companies in which he hold directorship and membership/chairmanship of the Board Committees, as stipulated in Listing Regulations.

The Board of Directors of the Company at their meeting held on May 19, 2017 appointed Mr. Sudarshan Kasturi, Senior Vice-President - Finance of the Company as Chief Financial Officer & KMP of the Company with effect from June 1, 2017, considering the superannuation of Mr. A Jacob Kuruvilla on May 31, 2017.

C. Declaration by Independent Directors

Pursuant to sub-section (6) of Section 149 of the Companies Act, 2013 and Regulation 16(1)(b) of the Listing Regulations, the Independent Directors of the Company viz. Mr. Ullas K Kamath, Mr. Cherian N Punnoose, Mr. A K Nair and Mr. C J George have given declaration to the Company that they qualify the criteria of independence, as required under the Companies Act, 2013 and the Listing Regulations.

D. Number of Meetings of the Board of Directors

During the Financial Year 2016-17, the Board of Directors of the Company, met ten times, on May 4, 2016, June 16, 2016, July 26, 2016, August 8, 2016, September 21, 2016, October 21, 2016, January 30, 2017, February 27, 2017, March 17, 2017 and March 28, 2017.

A separate meeting of the Independent Directors of the Company was held on March 28, 2017 and the Directors reviewed and assessed the matters enumerated under Schedule IV(VII)(3) to the Companies Act, 2013 and Regulation 25(4) of the Listing Regulations. All the Independent Directors except Mr. C J George attended the said meeting.

E. Committees of the Board

The Sub-Committees of the Board comprises of Audit Committee, Nomination and Remuneration Committee, Stakeholders'' Relationship and Share Transfer Committee and Corporate Social Responsibility (CSR) Committee.

The terms of reference of Audit Committee, Nomination and Remuneration Committee and Stakeholders'' Relationship and Share Transfer Committee were aligned with the requirements of the Companies Act, 2013 and Listing Regulations. A detailed note on the said Committees of the Board of Directors is 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 4,

2016, October 21, 2016 and January 30, 2017. The Committee recommended to the Board the amount of CSR to be spent for the financial year and the various CSR programs/activities to be carried out by the Company, for its consideration and approval.

F. Performance Evaluation

Pursuant to the provisions of the Companies Act, 2013 and Listing Regulations, the Board of Directors, has carried out an annual performance evaluation of Board, Sub-Committees of Board and individual directors, based on the criteria laid down in the Nomination Remuneration and Evaluation Policy of the Company read with SEBI Guidance Note dated January 5, 2017.

The performance evaluation of the Board was carried out on a questionnaire template on the basis of criteria such as effective role played by the Board in decision making, evaluating strategic proposals, discussing annual budgets, assessing the adequacy of internal controls, review of risk management procedures etc.

The performance evaluation of various Sub-Committees of the Board was carried out on the basis of criteria such as constitution of the Sub-Committees in accordance with the provisions of the Companies Act, 2013 and Listing Regulations, effective functioning of the Committees as per the terms of reference, periodical suggestions and recommendations given by the Sub-Committees to the Board etc.

The performance evaluation of individual directors was carried out both by the Nomination and Remuneration Committee and the Board based on criteria such as active participation in the Board deliberations, role played in evaluation of strategic proposals, contributions made for adoption of better corporate governance practices by the Company 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.

G. Directors'' Responsibility Statement

In terms of the requirements of Section 134(3)(c) read with Section 134(5) of the Companies Act, 2013, the Board of Directors of the Company, hereby state and confirm that:

i) in the preparation of the annual accounts, the applicable accounting standards had been followed. Proper explanation relating to material departures, if any, is provided wherever applicable;

ii) such accounting policies were selected and applied consistently and had made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the Financial Year and of the profit of the Company for the period;

iii) proper and sufficient care were taken for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

iv) the annual accounts were prepared on a going concern basis; and

v) the internal financial controls to be followed by the Company were laid down and such internal financial controls were adequate and were operating effectively.

vi) proper systems to ensure compliance with the provisions of all applicable laws were devised and such systems were adequate and operating effectively.

14. Audit Related Matters

A. Statutory Auditors

M/s. S R Batliboi & Associates LLP, Chartered Accountants, Kochi, with firm registration number -101049W/E300004, who are the Statutory Auditors of the Company will hold office, up to the conclusion of the ensuing Annual General Meeting. The Board of Directors upon the recommendation of the Audit Committee proposes the re-appointment of M/s. S R Batliboi & Associates, LLP, Chartered Accountants, as the Statutory Auditors of the Company to hold office from the conclusion of the ensuing Annual General Meeting till the conclusion of 26th Annual General Meeting as per the provisions of Section 139 of the Companies Act, 2013, subject to ratification of members at every Annual General Meeting within the period of the tenure of re-appointment.

The Auditors'' Report for the Financial Year 2016-17, does not contain any qualification, reservation or adverse remarks.

B. Cost Auditors

M/s. Ajeesh & Associates, Cost Accountants, Ernakulam, were appointed as the Cost Auditors of the Company for the Financial Year 2016-17 and the Audit Report will be considered by the Board of Directors. There were no qualifications, reservations or adverse remarks made by Cost Auditors in their Report for the Financial Year 2015-16.

The Board of Directors in their meeting held on May 19, 2017, has approved the appointment of M/s. RA & Co. Cost Accountants, Mumbai, (Firm Registration No. 000242) as the Cost Auditors of the Company for the Financial Year 2017-18 and also fixed the audit fee payable to them. As per the provisions of the Section 148 of the Companies Act, 2013, read with Companies (Audit and Auditors) Rules, 2014, audit fee payable to the Cost Auditors is to be ratified by the members of the Company. Your Directors have proposed a resolution in item no. 5 of the Notice dated July 3, 2017 for the ensuing Annual General Meeting, for approval of the audit fee.

C. Secretarial Auditors

The Board of Directors, pursuant to the provisions of Section 204 of the Companies Act, 2013, appointed M/s. Keyul M Dedhia & Associates, Company Secretaries, Mumbai, as the Secretarial Auditor of the Company, to carry out the Secretarial Audit for the Financial Year 2016-17. Secretarial Audit Report, issued by M/s. Keyul M Dedhia & Associates, Auditors in Form No. MR -3 forms part of this Report and is annexed herewith as Annexure-2. The Auditors have observed that in some instances there were delay in submitting disclosures received from designated employees under SEBI (Prohibition of Insider Trading) Regulations, 2015. Clarification for the above observation is that the delay in filing was due to oversight and disclosures were made subsequently.

15. Policy Matters

A. Nomination Remuneration and Evaluation Policy

Pursuant to the provisions of Section 178(3) of the Companies Act, 2013, the Nomination and Remuneration Committee of the Company has formulated and recommended to the Board a policy, containing the criteria for determining qualifications, positive attributes and independence of a Director 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 1 to this Report.

B. Vigil Mechanism/Whistle Blower Policy

Your Company had, before coming into force of Companies Act, 2013, voluntarily adopted a Whistle Blower Policy, to enable its employees and Directors to report any genuine grievances, illegal or unethical behavior, suspected fraud or violation of laws, rules and regulations, conduct, to the Ombudsman or Vigil Officer. The Whistle blower also has access to the Audit Committee Chairman. 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 said policy has been amended in line with the provisions of Companies Act, 2013 and Listing Regulations and it provides for adequate protection to the whistle blower against victimization or discriminatory practices. The Policy is available on the website of the Company at www.vguard.in., in the page ''Investor Relations''.

C. Corporate Social Responsibility Policy

The Board of Directors of the Company has adopted a policy on Corporate Social Responsibility, pursuant to the provisions of Section 135 of the Companies Act, 2013, read with The Companies (Corporate Social Responsibility Policy) Rules, 2014. The said policy is posted on the web site of the Company www. vguard.in. During the year under review, the Board of Directors amended the CSR policy of the Company to include Government Aided Schools in the list of beneficiaries.

In terms of Section 135 of the Companies Act, 2013 read with The Companies (Corporate Social Responsibility Policy) Rules, 2014, the Annual Report on Corporate Social Responsibility activities of the Company is given in Annexure 3 to this report.

D. Risk Management Policy

The Company has developed and implemented a risk management framework detailing various risks associated with the business of the Company, the process of identification of risks, monitoring and mitigation of identified risks etc. As per the risk profile, the various risks associated with the Company are classified as marketing risks, product risks, inventory risks, compliance risk, financial risks, project risks and Organization risks. The Board has constituted a Risk Management Committee to monitor and review the risks identified by various product risk groups and suggest measures to mitigate the risks identified. A detailed note on Risk Management is given under the section Management Discussion and Analysis Report, which forms part of this Annual Report.

E. Dividend Policy

As per Regulation 43A of Listing Regulations the top 500 listed Companies shall formulate a Dividend policy. Accordingly, the Board of Directors of the Company during the year under review has adopted 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 before or at the time of recommending/declaring of Dividend. The said policy is given in Annexure-5 to this report and posted on the web site of the Company www. vguard.in.

16. Other Matters

A. Internal Financial Controls

The Company has Internal Control Systems commensurate with the nature of its business, size and complexities. Every quarter, Audit committee reviews the adequacy and effectiveness of internal control system and monitors the implementation of the audit recommendations. During the year under review, the Internal Audit Division of the Company, has tested key controls in operational, financial and IT processes to provide assurance regarding compliance with the existing policies and standard operating procedures etc. and no significant weaknesses/deviations were identified in design or operation of the controls.

Further, the Statutory Auditors of the Company also carried out audit of the Internal Financial Controls over Financial Reporting of the Company as of March 31, 2017 and issued their report which forms part of the Independent Auditor''s report.

B. Financial Position and Performance of Subsidiaries, Joint Ventures and Associates

The Company has no subsidiary, associate or has not entered into any joint venture and hence not required to disclose any information.

C. Any revision made in the Financial Statements or 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.

D. Employee Stock Option Scheme 2013

During the Financial Year 2013-14, the Company had granted 91,73,220 options to 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 two years had been completed and during the year under review, considering the parameters for vesting of options, 23,40,270 number of options were vested to eligible employees, being the vesting for the last year of the grant. Out of the options granted, total number of 20,70,190 options were cancelled till the Financial Year 2016-17.

The Company had made a grant of 9,06,280 number of options to eligible employees during the Financial Year 2015-16 with a vesting period of three years from grant. During the year under review, considering the parameters for vesting, 2,92,730 number of options were vested to eligible employees and 6,310 number of options were cancelled.

The Nomination and Remuneration Committee made several grants under ESOS 2013, 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. 27,00,000 and 3,00,000 numbers of options were granted on May 4, 2016 at fair market value of H96.25 and face value of Re.1 respectively. Further 1,85,360 number of options were granted on June 16, 2016, at face value of Re.1.

The Company had obtained the approval of members for grant of options to the extent of 1,12,00,000 under ESOS 2013, by way of a special resolution passed through Postal Ballot process in May, 2013. With a view to attract new talents and retain existing talents and also to provide industry standard compensation, the Nomination and Remuneration Committee has granted options under ESOS to eligible employees from time to time. The options for which approval of members had sought has been completely utilized for making various grants from time to time.

As equity based compensation schemes are an effective tool to reward the employees including the professional Directors in the growth pace of the Company and helps in retaining the existing key resources and attract new talents who are required for the future growth, with the approval of the members at their 20th Annual General Meeting held on July 26, 2016, the Board has created further options to the extent of 22,50,000 for making grant(s) under ESOS 2013 to eligible employees from time to time. Subsequent to the approval of the members of the Company, the Nomination and Remuneration Committee has granted 20,77,830 numbers of options from time to time. As the Board desires to provide equity based compensation to employees at various levels, it has been decided to increase the number of options available for further grant under ESOS 2013 and approval of the members was sought through Postal Ballot Process for creation of options to the extent of 2,00,000 number of options.

During the year under review, the Company has subdivided its equity shares from face value of H10/- to Re.1 effective from September 1, 2016. The number of options granted before the date of sub-division has been adjusted in line with the face value of shares after sub-division.

During the year under review, the Board of Directors has made a bonus issue of shares in the ratio of 2:5 with the approval of the members of the Company. As per the provisions of Employee Stock Option Scheme approved by the members of the Company, the Nomination and Remuneration Committee has made a fair and reasonable adjustment in the number of options and to the exercise price in case of corporate action of bonus issue. Accordingly, the Committee has granted additional options in respect of all outstanding options which were granted at face value and fair market value and are to be vested and exercised in the ratio of 2:5 and revised the exercise price in case of all options which were granted at fair market value. Options to the extent of 33,66,710, convertible into equivalent number of equity shares with face value of Re.1 each were granted to eligible employees as part of making fair and reasonable adjustment for corporate action of bonus issue.

Details of stock options pursuant to SEBI (Share Based Emplyee Benefits) Regulations, 2014 is given in the Annexure - 4, which forms part of this Report.

E. Code of Conduct

As prescribed under Regulation 26(3) of the Listing Regulations, a declaration signed by the Managing Director affirming compliance with the Code of Conduct by the Directors and Senior Management of the Company for the Financial Year 2016-17 is described in ''Report on Corporate Governance'' forming part of this Annual Report.

F. Extract of Annual Return

Extract of the Annual Return in Form No. MGT-9 forms part of the Board''s Report and is annexed herewith as Annexure - 6

G. Management Discussion and Analysis Report

As per requirements of Listing Regulations, a detailed review of the developments in the industry, performance of the Company, opportunities and risks, internal control systems, outlook etc. of the Company is given under the head Management Discussion and Analysis Report, which forms part of this Annual Report.

H. Particulars of Loans, Guarantees and Investments

During the year under review, the Company had accorded approval to give loan up to an amount of H5.40 crores, to Mr. Gopal Singh Cintury for the construction of factory building at West - Pandam Block, Duga Ilaka, East Sikkim, which has been taken on lease by the Company for setting up of manufacturing unit for stabilizers .

I. Related Party Transactions

During the year under review, the Company has not entered into any contract or arrangements with related parties as per the provisions of Section 188(1) of the Companies Act, 2013.

J. Corporate Governance

Your Company has complied with the Corporate Governance norms as stipulated under the Listing Regulations. A detailed report on Corporate Governance forms part of this Annual Report. A certificate from Statutory Auditors confirming compliance of the Corporate Governance requirements by the Company is attached to the Report on Corporate Governance.

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

The information pertaining to conversation of energy, technology absorption, foreign exchange earnings and outgo as required under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014, is furnished in Annexure 7 and forms part of this Report.

L. Remuneration details of Directors, Key Managerial Personnel and Employees

The details of remuneration of Directors, Key Managerial Personnel and the Statement of employees in receipt of remuneration exceeding the limits prescribed under Section 134 of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 including any amendment thereof has been provided in Annexure 8 to this Report.

M. Disclosure as per the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013

The Company is committed in providing and promoting a safe and healthy work environment for all its employees. It has zero tolerance towards sexual harassment at the workplace and has adopted a policy for ''Prevention and Redressal of Sexual Harassment at the Workplace'' in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules framed there under for prevention and redressal of complaints of sexual harassment at workplace, along with a structured reporting and redressal mechanism. The Company has also constituted an Internal Complaints Committee, to inquire into complaints of sexual harassment and recommend appropriate action. 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, the Company has not received any complaint of sexual harassment. The Company has also conducted awareness programs during the year under review for its employees.

17. Event(s) occurred after the Balance Sheet Date

The Board of Directors of the Company in their meeting held on May 19, 2017, accorded approval for acquiring 74% equity stake for cash consideration of RS,6.18 crores in GUTS Electro-mech Ltd., a Company having its registered office at Hyderabad and is engaged in manufacturing and selling of switch gears, circuit breakers, relays, current transformers and similar electromechanical products. Its plants are located at Hyderabad and Haridwar and has achieved a turnover of RS,29.93 crores during the Financial Year 2015-16. The equity investment is made mainly to secure supply for switch gear business vertical of the Company.

The Board has also nominated Dr. George Sleeba and Mr. A Jacob Kuruvilla, to represent the Company on the Board of GUTS Electromech Ltd., on reconstitution of its Board. The transaction will be completed during the Financial Year 2017-18 after obtaining approval from various statutory authorities.

18. Listing of Shares

The equity shares of the Company are listed on the National Stock Exchange of India Limited (NSE) and BSE Limited (BSE). The listing fee for the Financial Year 201718 has already been paid to the credit of both the Stock Exchanges.

19. Acknowledgement

The Board wishes to place on record its sincere appreciation to the Company''s customers, vendors, central and state government bodies, auditors, legal advisors, consultants, registrar and bankers for their continued support to the Company during the year under review. The Directors also wish to place on record their appreciation for the dedicated efforts of the employees at all levels. Finally, the Board expresses its gratitude to the members for their continued trust, co-operation and support.

For and on behalf of the Board of Directors

S/d S/d

Kochouseph Chittilappilly Mithun K Chittilappilly

Chairman Managing Director

(DIN:00020512) (DIN: 00027610)

Date: May 19, 2017

Place: Kochi


Mar 31, 2015

Dear Members,

The Directors have great pleasure in presenting the Nineteenth Annual Report of the Company on the business and operations together with the audited financial statements for the year ended 31st March, 2015.

1. Financial Summary

(Rs. in lakhs)

Particulars Year ended Year ended 31.03.2015 31.03.2014

Revenue from operations (Gross) 1,75,994.74 1,53,792.61

Less : Excise Duty 1,402.67 2,036.30

Revenue from operations (Net) 1,74,592.07 1,51,756.31

Operating expenditure 1,61,290.79 1,39,501.69

Operating profit before Depreciation, 13,301.28 12,254.62 Interest, Tax & Exceptional Item

Finance Cost 2,061.43 2,106.31

Depreciation and amortization expense 1,543.91 1,203.86

Other Income 448.71 483.88

Profit Before Tax & Exceptional Item 0,144.66 9,428.33

Exceptional Item - -

Profit Before Tax 0,144.66 9,428.33

Tax Expense:

a) Current Tax 3,048.44 2,250.54

b) Deferred Tax 24.07 164.39

Profit After Tax 7,072.15 7,013.40

Balance in Profit & Loss account 18,656.84 14,014.84 brought forward

Adjustment on account of change in (106.32) - useful life of fixed assets

Profit available for appropriation 25,622.67 21,028.24

Appropriations

a) Transfer to General Reserve 800.00 800.00

b) Dividend proposed 1,348.79 1,343.13

c) Tax on Dividend proposed 274.58 228.27

d) Balance carried to Balance 23,199.30 18,656.84 Sheet

2. Company's Performance

During the Financial Year 2014-15, the Company has registered net revenue from operations of Rs. 1,745.92 crores, as compared to Rs. 1,517.56 crores in the previous year, an increase of 15% year-on-year. Profit Before Tax for the year under review was Rs. 101.45 crores, higher by 7.61%, as compared to Rs. 94.28 crores in the previous year. Profit After Tax for the year under review was Rs. 70.72 crores, which remained at same level of the previous year. Performance of each product vertical is detailed under the Section Management Discussion and Analysis which forms part of the Annual Report.

3. Changes to the Share Capital

During the year, the Company has vested 56,606 and 1,83,869 number of options of Rs. 10/- and Rs. 485/- respectively to eligible employees under ESOS 2013 and out of total number of 2,40,475 options vested, the employees have exercised 51,241 and 74,380 number of options of Rs. 10/- and Rs. 485/- respectively. The options exercised were allotted and subsequent to the allotment, the paid-up capital of the Company as on 31st March, 2015 has increased to Rs. 29.97 crores.

4. Appropriations made from the profits

a) Transfer to Reserves

Your Directors proposes to transfer an amount of Rs. 8.00 crores to the General Reserve out of the profits available for appropriation during the year.

b) Final Dividend

Your Directors are pleased to recommend a final dividend of Rs. 4.50 per share (45% on par value of Rs. 10/- per share). The final dividend, if declared as recommended, would involve an outflow of Rs. 13.49 crores and Rs. 2.74 crores towards dividend tax, resulting in a total outflow of Rs. 16.23 crores. If approved by the shareholders at the ensuing Annual General Meeting, the dividend will be paid as per the applicable regulations. Dividend would be payable to all the shareholders / beneficial owners whose names appear in the Register of Members as on the Book Closure Date.

The Register of Members and Share Transfer Books will remain closed from 28th July, 2015 to 3rd August, 2015 (both days inclusive).

5. Fixed Deposit

The Company has not accepted any fixed deposits during the year under review.

6. 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.

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

7. Change in the Nature of Business, if any

There was no change in the nature of business of the Company during the Financial Year 2014-15.

8. Significant or Material Orders passed by Regulators / Courts / Tribunals

During the year under review, there were no significant or material orders passed by the regulators or courts or tribunals impacting the going concern status and Company's operations in future.

9. Board of Directors and its Committees

A. Composition of the Board of Directors

The Board of Directors of the Company comprises eight Directors of which three are Executive and five are Non-Executive Directors, which includes, four Independent Directors. The composition of the Board of Directors is in compliance with Clause 49 of the Listing Agreement and Section 149 of the Companies Act, 2013.

B. Details of Directors and KMPs of the Company and change in their offices

Mr. Kochouseph Chittilappilly (Executive Chairman, DIN: 00020512)

One of the promoters of V-Guard Industries Limited, a visionary and a person with a strong commitment to the principles of Quality and Good Governance, Mr. Kochouseph Chittilappilly has lead the Company to the heights of many achievements.

He holds a Master's degree in physics. He was appointed as the Executive Vice Chairman of the Company by the members in their meeting held on 25th July, 2012 for a term of 3 years effective from 1st April, 2012 and was re-designated as Chairman of the Board effective from 1st November, 2012. The Board of Directors, upon the recommendation of the Nomination and Remuneration Committee, in their meeting held on 16th March, 2015, re- appointed Mr. Kochouseph Chittilappilly, as Executive Chairman of the Company, for a term of 3 years, with effect from 1st April, 2015, subject to the approval of the members in the ensuing Annual General Meeting.

Mr. Cherian N Punnoose (Vice Chairman, DIN: 00061030)

Mr. Cherian N Punnoose is a Chartered Accountant having vast experience in the field of Finance and General Administration in various organisations. He was appointed by the members as an Independent Director, in their meeting held on 29th July, 2014, for a term of 5 years. He has been appointed as the Chairman of the Audit Committee of the Board.

Mr. Mithun K Chittilappilly (Managing Director, DIN: 00027610)

He holds a Master's degree in Marketing & Finance. He has played an active role in taking the Company to new markets in Non-South India thereby building the brand pan India. He was instrumental in introducing various new products to the portfolio and has led many new initiatives in the Company. He was appointed as the Managing Director of the Company by the Members at their meeting held on 25th July, 2012, for a period of three years with effect from 1st April, 2012.

The Board of Directors, upon the recommendation of the Nomination and Remuneration Committee, in their meeting held on 16th March, 2015, re- appointed him as the Managing Director for a period of 3 years w.e.f. 1st April, 2015, subject to the approval of the members in the ensuing Annual General Meeting. He is liable to retire by rotation.

Mr. Ramachandran Venkataraman (Director- Marketing and Strategy, DIN: 06576300)

Mr. Ramachandran Venkataraman, a Masters' in Management Studies (Marketing) having vast experience in the field of Marketing and Strategy, was appointed by the members of the Company as a Whole-time Director, in their meeting held on 23rd July, 2013, effective from 1st June, 2013. Presently, he is leading various transformation initiatives in the Company.

In terms of section 152 of the Companies Act, 2013, Mr. Ramachandran V, Director - Marketing and Strategy, is liable to retire by rotation at the ensuing Annual General Meeting and being eligible, offers himself for re-appointment.

Mr. C J George (Independent Director, DIN: 0003132)

Mr. C J George was appointed as an Independent Director, by the Members of the Company in their Meeting held on 29th July, 2014 for a term of 5 years. He is holding Master's degree in Commerce and Certificate of Financial Planning. He is having vast experience in the field of Finance, Capital Market, General Administration and is presently the Managing Director of Geojit BNP Paribas Financial Services Limited, a Company listed at BSE Ltd. and National Stock Exchange of India Ltd.

The Board has also appointed him as the Chairman of Nomination and Remuneration Committee and Stakeholders' Relationship and Share Transfer Committee.

Mr. A K Nair (Independent Director, DIN: 00009148)

Mr. A K Nair was appointed as an Independent Director, by the Members of the Company in their Meeting held on 29th July, 2014 for a term of 5 years. He is a Mechanical Engineer and Management degree holder, having more than 45 years of Industry experience especially in the field of Engineering, Finance, Management and General Administration.

Mr. Ullas K Kamath (Independent Director, DIN: 00506681)

Mr. Ullas K Kamath, was appointed as an Independent Director, by the Members of the Company in their Meeting held on 29th July, 2014 for a term of 5 years. He is a member of the Institute of Chartered Accountants of India, Institute of Company Secretaries of India, holds a degree in Law and has also attended Advanced Program at The Wharton Business School, USA and Harvard Business School, USA. He is currently the Joint Managing Director of Jyothy Laboratories Limited.

Mrs. Joshna Johnson Thomas (Non-Executive Director, DIN: 02613030)

Mrs. Joshna Johnson Thomas was appointed as a Non-Executive Director liable to retire by rotation, by the Members of the Company in their Meeting held on 29th July, 2014. She holds a Management degree in Human Resources and is having rich experience in the Human Resources areas with her association with many organisations.

Mr. A Jacob Kuruvilla (Chief Financial Officer & Compliance Officer)

Mr. A Jacob Kuruvilla, Chief Financial Officer of the Company has been noted as a Key Managerial Personnel by the Board in its meeting held on 2nd May, 2014. He is also designated as the Compliance officer as per Clause 49 of the Listing Agreement and Chief Investor Relations Officer under SEBI (Prohibition of Insider Trading) Regulations, 2015.

Mrs. Jayasree K (Company Secretary)

Mrs. Jayasree K, Company Secretary of the Company has been noted as a Key Managerial Personnel by the Board in its meeting held on 2nd May, 2014.

The Notice dated 7th July, 2015 of the ensuing Annual General Meeting includes the proposals for re-appointment of the Directors. Brief resume of the directors proposed to be re-appointed have been provided in the notice convening the ensuing Annual General Meeting. Specific information about the nature of their expertise and the names of the Companies in which they hold directorship and membership / chairmanship of the Board Committees, as stipulated under clause 49 of the Listing Agreement, have also been included.

C. Declaration by Independent Directors

The Company has received necessary declarations from the Independent Directors stating that they meet the criteria of independence as specified in Section 149(6) of the Companies Act, 2013 and Clause 49 of the Listing Agreement.

D. Number of Meetings of the Board of Directors

During the Financial Year 2014-15, the Board of Directors of the Company, met five times, on 2nd May, 2014, 29th July, 2014, 4th November, 2014, 16th January, 2015 and 16th March, 2015.

A separate meeting of the Independent Directors of the Company was also held on 21st March, 2015, and the Directors held reviews and assessment enumerated under Schedule IV(VII) (3) to the Companies Act, 2013 and Clause 49II(B)(6)(b) of the Listing Agreement. All the Independent Directors of the Company attended the meeting.

E. Committees of the Board

The Sub-Committees of the Board comprises of Audit Committee, Nomination and Remuneration Committee, Stakeholders' Relationship and Share Transfer Committee and Corporate Social Responsibility (CSR) Committee.

During the year under review Audit Committee and Nomination and Remuneration Committee were re-constituted. Mr. Ullas K Kamath, Independent Director, was inducted as a member of the Audit Committee. Mrs. Joshna Johnson Thomas, was appointed as a member of the Nomination and Remuneration Committee and Mr. Kochouseph Chittilappilly, a member of the said Committee has resigned.

The terms of reference of Audit Committee, Nomination and Remuneration Committee and Stakeholders' Relationship and Share Transfer Committee were aligned with the requirements of the Companies Act, 2013 and Clause 49 of the Listing Agreement. A detailed note on the said Committees of the Board of Directors is given in the Corporate Governance Report forming part of the 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 five times during the year under review, on 2nd May, 2014, 29th July, 2014, 4th November, 2014, 16th January, 2015 and 16th March, 2015 and recommended to the Board, the various CSR programs / activities to be carried out by the Company, for its consideration and approval.

F. Performance Evaluation

Pursuant to the provisions of Companies Act, 2013 and Clause 49 of the Listing Agreement, the Board of Directors, has carried out an annual performance evaluation of its own, Sub-Committees of Board and individual directors, based on the criteria laid down in the Nomination Remuneration and Evaluation Policy of the Company.

The performance evaluation of the Board was carried out on a questionnaire template on the basis of criteria such as flow of information to the Board, effective role played by the Board in decision making etc.

The performance of evaluation of various Sub- Committees of the Board were carried out on the basis of criteria such as constitution of the sub- committees in accordance with the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement, effective functioning of the committees as per the terms of reference etc.

The performance of evaluation of individual Directors was carried out both by the Nomination and Remuneration Committee and the Board on the basis of criteria such as active participation in the Board deliberations, contributions made for adoption of better corporate governance practice by the Company 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 on the basis of 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 on the basis of their contribution to the Board deliberations.

G. Directors' Responsibility Statement

In terms of the requirements of Section 134(3)(c) read with Section 134(5) of the Companies Act, 2013, Board of Directors of the Company, hereby state and confirm that:

i) in the preparation of the annual accounts, the applicable accounting standards had been followed. Proper explanation relating to material departures, if any, is provided wherever applicable;

ii) such accounting policies were selected and applied consistently and had made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the Financial Year and of the profit of the Company for the period;

iii) proper and sufficient care were taken for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

iv) the annual accounts were prepared on a going concern basis; and

v) the internal financial controls to be followed by the Company were laid down and such internal financial controls were adequate and were operating effectively.

vi) proper systems to ensure compliance with the provisions of all applicable laws were devised and such systems were adequate and operating effectively.

10. Audit Related Matters

A. Statutory Auditors

M/s. S R Batliboi & Associates LLP, Chartered Accountants, Kochi, with firm registration number - 101049W, who are the Statutory Auditors of the Company will hold office, upto the conclusion of the ensuing Annual General Meeting. The Board of Directors upon the recommendation of the Audit Committee proposes the re-appointment of M/s. S R Batliboi & Associates, LLP, Chartered Accountants, Kochi, as the Statutory Auditors of the Company to hold office from the conclusion of the ensuing Annual General Meeting till the conclusion of 21st Annual General Meeting as per the provisions of Section 139 of the Companies Act, 2013.

The Auditors' Report for the Financial Year 2014- 15, does not contain any qualification, reservation or adverse remarks.

B. Cost Auditors

M/s. Ajeesh & Associates, Cost Accountants, Ernakulam, were appointed as the Cost Auditors of the Company for the Financial Year 2014-15. Since the Company was not required to carry out Cost Audit mandatorily for the Financial Year 2014-15, it is not required to file the Audit Report with the Ministry of Corporate Affairs.

Vide the Companies (Cost Records and Audit) Amendment Rules, 2014, the Company has to now maintain cost records and get the same audited by a Cost Accountant in practice. Accordingly, the Board of Directors in their meeting held on 4th May, 2015, have approved the appointment of M/s. Ajeesh & Associates, Cost Accountants, Ernakulam, as the Cost Auditors of the Company for the Financial Year 2015-16 and also fixed the audit fee payable to them subject to ratification by members at the ensuing Annual General Meeting. Necessary resolution for ratification of remuneration payable to Cost Auditors for the Financial Year 2015- 16 has been included in the notice dated 7th July, 2015, convening the ensuing Annual General Meeting and requisite details have been provided in the explanatory statement of the notice.

C. Secretarial Auditors

The Board of Directors, pursuant to the provisions of Section 204 of the Companies Act, 2013, appointed M/s. Keyul M Dedhia & Associates, Company Secretaries, Mumbai, as the Secretarial Auditor of the Company, to carry out the Secretarial Audit for the Financial Year 2014-15.

Secretarial Audit Report

Secretarial Audit Report, issued by M/s. Keyul M Dedhia & Associates, Secretarial Auditors in Form No. MR -3 forms part of this Board Report and is annexed herewith as Annexure 1.

While confirming that the company has complied with the provisions of applicable acts, rules, etc., the auditors made few observations. The Board's clarifications for the same are as follows.

Intimation to stock exchanges regarding allotment of shares under ESOS: Company has provided all information relating to allotment of shares to eligible employees under ESOS 2013, along with requisite declarations and disclosures to the stock exchanges, where the shares of the Company are listed, at the time of seeking approval for listing of the shares alloted and therefore, separate intimation in respect of allotment of shares was not given.

Intimation regarding date on which dividend shall be paid/ dispatched not included with filing of result: The Company had made the payment of dividend to the shareholders within the time specified. However, the date of disbursement of dividend was not included in the intimation filed with the Stock Exchanges, regarding recommendation of dividend.

Filing of annual return on foreign liabilities and assets with RBI: In the said case, omission in intimation was by oversight. Same will be complied with, in future.

11. Policy Matters

A. Nomination Remuneration and Evaluation Policy

Pursuant to the provisions of Section 178(3) of the Companies Act, 2013, the Nomination and Remuneration Committee of the Company has formulated and recommended to the Board a policy containing the criteria for determining qualifications, positive attributes and independence of a director 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 2 to this Report.

B. Vigil Mechanism / Whistle Blower Policy

Your Company had, before the coming into force of Companies Act, 2013, voluntarily adopted a Whistle Blower Policy, to enable its employees and Directors to report any genuine grievances, illegal or unethical behavior, suspected fraud or violation of laws, rules and regulations, conduct, to the Ombudsman or Vigil Officer. The Whistle blower also has access to the Audit Committee Chairman. The policy has been circulated among the employees of the Company working at various locations, divisions / units.

The said policy has been amended in line with the provisions of Companies Act, 2013 and Clause 49 of the Listing Agreement and it provides for adequate protection to the whistle blower against victimization or discriminatory practices. The Policy is available on the website of the Company www.vguard.in., in the page 'Investor Relations'

C. Corporate Social Responsibility Policy

The Board of Directors of the Company has adopted a policy on Corporate Social Responsibility, pursuant to the provisions of Section 135 of the Companies Act, 2013, read with The Companies (Corporate Social Responsibility Policy) Rules, 2014, as amended. The said policy is posted on the web site of the Company www.vguard.in./CSR.

In terms of Section 135 of the Companies Act, 2013 read with The Companies (Corporate Social Responsibility Policy) Rules, 2014, the annual report on Corporate Social Responsibility activities of the Company is given in Annexure 3 to this report.

D. Risk Management Policy

The Company has developed and implemented a risk management framework detailing various risks associated with the business of the Company, the process of identification of risks, monitoring and mitigation of identified risks etc. As per the risk profile, the various risks associated with the Company are classified as marketing risks, product risks, inventory risks, compliance risk, financial risks and Organisation risks. In compliance with the provisions of Clause 49 of the Listing Agreement, the Board has constituted a Risk Management Committee to monitor and review the risks identified by various product risk groups and also suggest measures to mitigate the risks identified. During the year under review, the Board of Directors has adopted an Enterprise Risk Management Policy, formalizing the Company's policy of identification, assessment, monitoring, mitigation and reporting procedures of enterprise risks and covering the structure and role of various forums constituted for monitoring and reviewing the risks.

12. Other Matters

A. Internal Financial Controls

Company had adequate internal financial controls in place with reference to the Financial Statements. During the year under review, the controls were evaluated by the Internal Audit Team and no significant weakness was identified, in design or operations of the controls.

B. Financial Position and Performance of Subsidiaries, Joint Ventures and Associates

The Company has no subsidiary, associate or has not entered into any joint venture and hence not required to disclose any information.

C. Any revision made in the Financial Statements or 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.

D. Employee Stock Option Scheme 2013

The Company had, during the Financial Year 2013-14, granted 9,17,322 options to eligible employees to be vested over a period of three years

in accordance with the Employee Stock Option Scheme (ESOS) 2013. Out of the total number of options granted, 24,004 numbers of options were cancelled during the said year.

During the year under review, the Company had obtained in-principle approval of the Stock Exchanges where the shares of the Company are listed, for listing of 11,20,000 number of options granted under ESOS 2013. Considering the parameters for vesting of options, 2,40,475 number of options were vested during the first year to eligible employees and out of total number of shares vested, 1,25,621 numbers of options were exercised by the employees. Details of options granted, vested and exercised are given in the Annexure 4, which forms part of this Report.

E. Code of Conduct

As prescribed under Clause 49 of the Listing Agreement, a declaration signed by the Managing Director affirming compliance with the Code of Conduct by the Directors and Senior Management of the Company for the Financial Year 2014-15 forms part of the Corporate Governance Report.

F. Extract of Annual Return

Extract of the Annual Return in Form No. MGT -9 forms part of the Board's Report and is annexed herewith as Annexure 5

G. Management Discussion and Analysis Report

As per provisions of Clause 49 of the Listing Agreement, a detailed review of the developments in the industry, performance of the Company, opportunities and risks, internal control systems, outlook etc. of the Company is given under the head Management Discussion and Analysis Report, which forms part of this Annual Report.

H. Particulars of Loans, Guarantees and Investments

During the year under review, the Company had granted inter corporate loan of Rs. 5.00 crores, to Sakthi Accumulators Pvt. Ltd., Bangalore, one of the vendors of the Company at an interest rate of 18% per annum and the loan is repayable in five years after three years from the date of disbursement of last installment.

I. Related Party Transactions

During the year under review, the Company has not entered into any contract or arrangements with related parties as per the provisions of Section 188(1) of the Companies Act, 2013, read with Clause 49 of the Listing Agreement. There was nil information to be given in Form AOC-2 and accordingly, the same is not provided.

J. Corporate Governance

Your Company has complied with the Corporate Governance norms as stipulated under the provisions of Clause 49 of the Listing Agreement entered into with the Stock Exchanges. A detailed report on Corporate Governance forms part of the Annual Report. A certificate of Statutory Auditor confirming compliance of the Corporate Governance requirements by the Company is attached to the Report on Corporate Governance.

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

The information pertaining to conversation of energy, technology absorption, foreign exchange earnings and outgo as required under section 134(3)(m) of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014, is furnished in Annexure 6 and forms part of this Report.

L. Remuneration Details of Directors, Key Managerial Personnel and Employees

The details of remuneration of Directors, Key Managerial Personnel and the Statement of employees in receipt of remuneration exceeding the limits prescribed under Sections 134 and 197 of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 as amended, has been provided in Annexure 7 to this Report.

M. Disclosure as per the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013

The Company is committed in providing and promoting a safe and healthy work environment for all its employees. It has zero tolerance towards sexual harassment at the workplace and has adopted a policy for 'Prevention and Redressal of Sexual Harassment at the Workplace' in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules framed thereunder for prevention and redressal of complaints of sexual harassment at workplace, along with a structured reporting and redressal mechanism. The Company has also constituted an Internal Complaints Committee, to inquire into complaints of sexual harassment and recommend appropriate action. The policy has been circulated among 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, the Company has not received any complaint of sexual harassment.

13. Acknowledgement

The Board wishes to place on record its sincere appreciation to the Company's customers, vendors, central and state government bodies, auditors, legal advisors, consultants, registrar and bankers for their continued support to the Company during the year under review. The Directors also wish to place on record their appreciation for the dedicated efforts of the employees at all levels. Finally, the Board expresses its gratitude to the members for their continued trust, co-operation and support.

For and on behalf of the Board of Directors

Sd/- Sd/- Kochouseph Chittilappilly Mithun K Chittilappilly Chairman Managing Director

Place: Kochi Date : 4th May, 2015


Mar 31, 2014

Dear Members,

The Directors have great pleasure in presenting the Eighteenth Annual Report of the Company on the business and operations together with the audited financial statements for the year ended 31st March, 2014.

1. Financial Results (Rs. in lakhs)

Particulars Year ended Year ended 31st March, 2014 31st March, 2013

Revenue from operations (Gross) 153,792.61 138,371.92

Less : Excise Duty 2,036.30 2,350.47

Revenue from operations (Net) 151,756.31 136,021.45

Operating expenditure 139,501.69 125,027.93

Operating profit before Depreciation, Interest, Tax & Exceptional Item 12,254.62 10,993.52

Finance Cost 2,106.31 1,997.06

Depreciation and amortization expense 1,203.86 1,141.10

Other Income 483.88 362.21

Profit Before Tax & Exceptional Item 9,428.33 8,217.57

Exceptional Item - -

Profit Before Tax 9,428.33 8,217.57

Tax Expense:

a) Current Tax 2,250.54 1,562.29

b) Deferred Tax 164.39 363.77

Profit After Tax 7,013.40 6,291.51

Balance in Statement of Profit & Loss brought forward 14,014.84 9,645.53

Profit available for appropriation 21,028.24 15,937.04

Appropriations

a) Transfer to General Reserve 800.00 700.00

b) Dividend proposed 1,044.66

Tax on Dividend proposed 228.27 177.54

c) Balance carried to Balance Sheet 18,656.84 14,014.84

2. Company''s Performance

During the financial year ended 31st March, 2014, the Company achieved 12% growth in its net revenue from operations which grew to Rs. 1,517.56 crores in 2013-14 from Rs. 1,360.21 crores in 2012-13. Operating profit before interest, depreciation and tax for the year under review was Rs. 122.55 crores, as compared to Rs. 109.94 crores of preceding year, registering a growth of 11%. Profit After Tax for the financial year ended 31st March, 2014 was Rs. 70.13 crores, higher by 11% than Rs. 62.91 crores in financial year 2012-13. Growth of each product vertical is detailed under the Section, Management Discussion and Analysis which forms part of the Annual Report.

3. Changes to the Share Capital

There was no change in the share capital of the Company, during the year under review.

4. Appropriations made from the profits

a) Transfer to Reserves

Your Directors transferred an amount of Rs. 8.00 crores 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.

b) Final Dividend

Your Directors are pleased to recommend a final dividend of Rs. 4.50 per share (45% on par value of Rs. 10/- per share). The final dividend, if declared as recommended, would involve an outflow of Rs. 13.43 crores and Rs. 2.28 crores towards dividend distribution tax, resulting in a total outflow of Rs. 15.71 crores. 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 19th July, 2014 to 29th July, 2014 both days inclusive.

5. New Projects

The project of doubling the capacity at the Kashipur plant in Uttarakhand from 3.3 million coils per annum to 6.6 million coils per annum in two phases has been completed and commercial production has started. Construction of warehouse at Angamaly and Perundurai has been completed and the work relating to construction of central warehouse at Palakkad has been commenced. With a view to enhance the overall customer service experience, process effectiveness and operational efficiency, a transformation initiative was carried out in the customer service domain and a new service delivery model is being institutionalized with the support of robust IT solution. The new service delivery system being implemented by the Company would become a new benchmark for customer service in the electrical appliance industry.

6. Productivity Improvement & Cost Reduction Activities

Newly Constituted Industrial Engineering Department of the Company is actively engaged in auditing the process across its manufacturing locations as well as warehouses to identify possible opportunities for improving productivity and thereby achieving cost reduction. Standard production norms development, Method improvements, Material Handling systems development and Process Automation are initiated in various locations with the active support of respective plant management during the year. They are also closely working with selected manufacturing locations for bringing operational excellence in manufacturing by introducing the concepts of Lean manufacturing during the financial year 2014-15.

7. Fixed Deposit

The Company has not accepted any fixed deposits during the year.

8. Board of Directors

The Company had, pursuant to the provisions of clause 49 of the Listing Agreement entered into with Stock Exchanges, appointed Mr. C J George, Mr. A K Nair and Mr. Cherian N Punnoose as Independent Directors of the Company under the category of directors liable to retire by rotation.

As per Section 149(4) of the Companies Act, 2013, which came into effect from 1st April, 2014, every listed public company is required to have at least one-third of the total number of directors as Independent Directors and such directors are not liable to retire by rotation.

The Board of Directors of your Company, in terms of provisions of Sections 149, 150 and 152 of the Companies Act, 2013, are seeking the approval of members for the appointment of all the three Independent Directors to hold office as per the tenure of appointment mentioned in the Notice of the ensuing Annual General Meeting of the Company.

The Board has as per the provisions of Section 161 of the Companies Act, 2013, appointed Mr. Ullas K Kamath and Mrs. Joshna Mithun, as Additional Directors on the Board of the Company with effect from 2nd May, 2014 and they will hold office upto the date of the ensuing Annual General Meeting. The Company has received notices under Section 160 of the Companies Act, 2013, along with the deposit proposing their candidature for the office of Director and your Directors are seeking the approval of members for their appointment.

The details of Directors being recommended for appointment/re-appointment as required in Clause 49 of the Listing Agreement are contained in the Notice convening the ensuing Annual General Meeting of the Company.

Appropriate resolution(s) seeking your approval to the appointment/re-appointment of Directors are also included in the Notice.

9. Employee Stock Option Scheme 2013

During the year under review, the Company has instituted ESOS 2013, with a view to reward the employees of the Company in line with the growth of the Company. The members of the Company accorded their approval by way of special resolution under Section 81(1A) of the Companies Act, 1956, passed on 14th May, 2013, through postal ballot procedure for implementation of ESOS 2013 in accordance with SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 for issue of options exercisable into not more than 11,20,000 equity shares of the Company.

Under the Scheme, the Company has granted 9,17,322 options to eligible employees which works out to 3.07% of the paid up share capital of the Company as at 31st March, 2014. Details of the options granted and pricing formula and other details are given in the Annexure A to the Directors'' Report.

10. Human Resources

Your Company believes in the ability of each of its employees and hence provides ample opportunities to tap into their potential and also invest in their growth and development. Their combined Experience, Knowledge and Vigour continue to be our competitive advantage.

Talent Acquisition, Talent Development, and Talent Management have been the key focus areas for benchmarking and further development. In line with this commitment, this year, the Company has strengthened its focus to align the business functionally and build individuals'' capability.

With the Vision to be an "Employer of Choice" in its operating geographies, your Company undertook several projects in FY 2013-14 to create building blocks for a world-class organisation. Some of these initiatives are:

- Revamping of Talent Acquisition processes with the best market practices implemented across levels including employment verification, medical check up, and psychometric test.

- Revamping of online Performance Management system.

- Service being the back bone of the Company, it has been strengthened further through introduction of training and certification program covering close to 1000 employees.

- Partnering with outsourcing agency to supplement the manpower requirements in customer service and support services.

The employees are encouraged to live the vision and values adopted by the Company and develop themselves as good corporate citizens. During the year, an Engagement Survey was carried out to assess the engagement level. Based on the findings, a detailed action plan was put in place to further the engagement bar higher in the years ahead. Employee relations continued to be strengthened across all locations through a process of continuous dialogue and openness to find mutually acceptable solutions to issues.

11. Corporate Social Responsibility

Your Company''s CSR policy focuses on social sustainability, healthcare initiatives, environment sustainability and inclusive growth. The Company have undertaken various initiatives during the year to sustain the environment and to improve the quality of life of the people in and around its manufacturing units at Chavadi (Coimbatore), Kashipur (Uttarakhand), Perundurai (Tamil Nadu) and Kala Amb (Himachal Pradesh). Community development activities were also undertaken in areas close to our Branch offices and warehouses at Bangalore, Hyderabad,

Vijayawada, Angamaly and Kannadi (Palakkad).

Educational assistance was extended to 200 students belonging to the underprivileged communities through the Rajagiri Outreach Society. Financial assistance was given to 8 schools and educational societies near our Head Office and Warehouses. As part of this program, School Bags, Note Books, umbrellas and writing materials were also distributed to students belonging to below poverty line. Drinking water facility was provided to the children of Govt. schools. Quality improvement programmes were conducted at selected schools for improving the quality of education. Special programmes were organised for parents of the children covered under the educational assistance scheme of the Company. In addition, financial support was extended to the Thomas Chittilappilly Trust that runs an old age home for destitute women and a home for girl children.

Medical assistance was given to cancer/kidney patients from the locality for undergoing treatment at specialist hospitals. To provide quality primary and preventive health care to the underprivileged, as part of its Healthcare initiative, the Company had donated an Ambulance equipped with all essential healthcare equipment, to the Parakkadavu Grama Panchayath, Angamali. This facility is intended for use by the Paliative Care Unit under the Grama Panchayath and will benefit the village community. Financial support was also extended for electrification of Parakkadavu Grama Panchayath area near to our Warehouse at Angamaly. To support the victims of natural calamities, the Company had extended financial help to the disaster relief measures of the Govt. of Uttarakhand, during the year under review.

12. Corporate Governance

Your Company has complied with the Corporate Governance norms as stipulated under the provisions of the Listing Agreement entered into with the Stock Exchanges. A detailed Report on Corporate Governance forms part of the Annual Report. A certificate of Statutory Auditor confirming compliance of the Corporate Governance requirements by the Company is attached to the Report on Corporate Governance.

13. Management Discussion and Analysis Report

A detailed review of the industrial growth vis- à-vis the growth of the Company and the future outlook is given under the head Management Discussion and Analysis Report, which forms part of this Report.

14. Auditors

M/s. S R Batliboi & Associates LLP, Chartered Accountants, Kochi, with firm registration number-101049W, 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. The Board of Directors upon the recommendation of the Audit Committee proposes the re-appointment of M/s. S R Batliboi & Associates LLP, Chartered Accountants, Kochi, as the Statutory Auditors of the Company to hold office from the conclusion of the ensuing Annual General Meeting till the conclusion of the next Annual General Meeting as per the provisions of Section 139 of the Companies Act, 2013.

15. Cost Auditors

Your Directors have, with the approval of the Ministry of Corporate Affairs, appointed M/s. Ajeesh & Associates, Cost Accountants, as the Cost Auditors of the Company for the financial year 2013-14 and cost audit report will be filed.

The Board of Directors in their meeting held on 2nd May, 2014, have approved the appointment of M/s. Ajeesh & Associates, Cost Accountants, as the Cost Auditors of the Company for the financial year 2014-15 and also fixed the audit fee payable to them. As per the provisions of Section 148 of the Companies Act, 2013, read with Companies (Audit and Auditors) Rules, 2014, audit fee payable to the Cost Auditors is to be ratified by the Members of the Company. Your Directors have proposed a resolution in item no.10 of the Notice for the ensuing Annual General Meeting.

16. Disclosure of Particulars of employees

Particulars of employees required under Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 as amended, form part of this report and are annexed herewith. However, in terms of Section 219(1)(b)(iv) of the Companies Act, 1956, the report and accounts are being sent to the shareholders excluding the aforesaid annexure. Any shareholder interested in obtaining copy of the same may write to the Company at the Registered Office.

17. Energy conservation, Technology absorption and Foreign exchange earnings and outgo

The information required under Section 217(1)(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 B to the Directors'' Report which forms part of the Annual Report.

18. 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 judgments 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, 2014 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.

19. Response to Auditor''s Observations

The Board gives the following clarifications, on the observations of the Auditor''s in the Annexure to Auditor''s Report to the Members:

Refer Annexure point (xxi). It was detected by the Company that an employee together with few dealers have misappropriated the materials sold by Company and defaulted in related payments. Company has suspended the employee and has fully provided for these receivables amounting to Rs. 249.96 lakhs as at 31st March, 2014 in the financial statements and has initiated legal actions to recover these amounts.

20. Acknowledgement

The Board wishes to place on record its sincere appreciation to the Company''s customers, vendors, Central and State Government bodies, auditors, legal advisors, consultants, registrar and bankers for their continued support to the Company during the year under review. The Directors also wish to place on record their appreciation for the dedicated efforts of the employees at all levels. Finally, the Board expresses its gratitude to the members for their continued trust, co-operation and support.

For and on behalf of the Board of Directors Sd/- Sd/-

Kochi Kochouseph Chittilappilly Mithun K Chittilappilly

2nd May, 2014 Chairman Managing Director


Mar 31, 2013

Dear Members,

The Directors have great pleasure in presenting the Seventeenth Annual Report of the Company on the business and operations together with the audited financial statements for the year ended 31st March, 2013.

1. Financial Results

(Rs. in lakhs)

Year ended Year ended 31-03-2013 31-03-2012

Revenue from operations (Gross) 138,371.92 97,778.26

Less : Excise Duty 2,350.47 1,315.25

Revenue from operations (Net) 136,021.45 96,463.01

Operating expenditure 125,027.91 87,109.22

Operating profit before Depreciation, Interest, Tax & Exceptional Item 10,993.54 9,353.79

Finance Cost 1,997.06 1,702.53

Depreciation and amortization expense 1,141.12 969.36

Other Income 362.21 235.22

Profit Before Tax & Exceptional Item 8,217.57 6,917.12

Exceptional Item - -

Profit Before Tax 8,217.57 6,917.12

Tax Expense:

a) Current Tax 1,562.29 2,023.00

b) Deferred Tax 363.77 (185.98)

Profit After Tax 6,291.51 5,080.10

Balance in Profit & Loss account brought forward 9,645.53 6,479.56

Profit available for appropriation 15,937.04 11,559.66

Appropriations

a) Transfer to General Reserve 700.00 700.00

b) Dividend proposed 1,044.66 1,044.66

Tax on Dividend proposed 177.54 169.47

c) Balance carried to Balance Sheet 14,014.84 9,645.53

2. Company''s Performance

During the financial year 2012-13, the Company achieved net revenue from operations of Rs. 1,36,021.45 lakhs, registering a growth of 41% over the net revenue from operations of Rs. 96,463.01 lakhs achieved during the previous year. The Profit After Tax for the year increased to Rs. 6,291.51 lakhs from Rs. 5,080.10 lakhs achieved during the previous year. Growth of each product vertical is detailed under the section Management Discussion and Analysis, which forms part of the Annual Report.

3. Changes to the Share Capital

There was no change in the share capital of the Company, during the year under review.

4. Appropriations made from the profits

a) Transfer to Reserves

Your Directors transferred an amount of Rs. 700.00 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.

b) Final Dividend

Your Directors are pleased to recommend a final dividend of Rs. 3.50 per share (35% on par value of Rs. 10/- per share). The final dividend, if declared as recommended, would involve an outflow of Rs. 1,044.66 lakhs and Rs. 177.54 lakhs towards dividend tax, resulting in a total outflow of Rs. 1,222.20 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 13th July, 2013 to 23rdJuly, 2013, both days inclusive.

5. New Projects

Considering the strong demand for wires, Your Directors decided to double the capacity at the Kashipur plant in Uttaranchal from 3.3 million coils per annum to 6.6 million coils per annum in two phases. The total cost estimated for the capacity expansion is Rs. 18 Cr. In the first phase, the capacity will be expanded to the tune of 1.8 million coils and production is expected to commence by July, 2013. The second phase of the expansion for the remaining 1.5 million coils is expected to complete by January, 2014. Construction of warehouse at Angamali was commenced during the year and the same is expected to complete by January, 2014. The other projects for the current financial year include construction of another central warehouse at Palakkad and a warehouse for solar water heater at Perundurai.

6. Fixed Deposit

The Company has not accepted any fixed deposits during the year.

7. Change in Directors

During the year under review, Mr. P G R Prasad, Chairman and Independent Director resigned from the Board and its sub committees with effect from 01st November, 2012. Consequent to the resignation of Mr. P G R Prasad, Mr. Kochouseph Chittilappilly was re-designated as Chairman of the Board with effect from 01st November, 2012. The Board appointed Mr. Cherian N Punnoose as an Additional Director with effect from 01st November, 2012 in the independent category and he has been designated as Vice Chairman of the Board.

Dr. George Sleeba, Joint Managing Director, whose term of office expires on 31st May, 2013 has not offered for re-appointment and he will be relived from the Board with effect from 01st June, 2013. The Board has appointed Mr. Ramachandran V as an Additional Director of the Company and also as a Whole-time Director to hold office with effect from 01st June, 2013.

In terms of the provisions of Section 260 of the Companies Act, 1956, Mr. Cherian N Punnoose and Mr. Ramachandran V, Directors will hold office only up to the date of the ensuing Annual General Meeting of the Company. The Company has received notices from members under Section 257 of the Act, in respect of the above Directors proposing their appointment as Directors of the Company, along with the requisite deposit of Rs. 500/- each. Keeping in view the experience and expertise of these persons, their appointment as Directors of the Company is recommended by the Board of Directors. Resolutions seeking approval of the Members for the appointment of Mr. Cherian N Punnoose and Mr. Ramachandran V as Directors liable to retire by rotation have been incorporated in the Notice of the 17th Annual General Meeting. The Board of Directors appointed Mr. Ramachandran V as Whole-time Director of the Company with effect from 01st June, 2013 and the said appointment will be subject to the approval of the members in the ensuing Annual General Meeting.

In terms of Section 256 of the Companies Act, 1956 and Articles 137 and 139 of the Articles of Association of the Company, Mr. C J George, Director, is liable to retire by rotation and being eligible has offered himself for re-appointment.

Brief resume of the Directors seeking appointment and re-appointment, nature of their expertise in specific functional areas and names of Companies in which they hold Directorship / Membership / Chairmanship of the Board Committees, as stipulated under Clause 49 of the Listing Agreement with the Stock Exchanges has been provided as an Annexure to the Notice convening the Annual General Meeting.

8. Employee Stock Option Scheme 2013

With a view to reward the employees of the Company in line with the growth of the Company, Your Directors with the approval of the shareholders by way of a special resolution under Section 81(1)(A) of the Companies Act, 1956 passed on 14th May, 2013 through postal ballot procedure, have implemented ESOS 2013 in accordance with SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 for issue of shares to the employees. The Board of Directors in their meeting held on 25th March, 2013 had appointed Mr. M D Selvaraj, Practicing Company Secretary to act as the scrutinizer for conducting the Postal Ballot. Details of the votes cast are given in the section "Report on Corporate Governance" which forms part of this Annual Report.

9. Human Resources

Company recognizes people as its primary source of competitiveness, and continues to focus on their development by leveraging technology and creating a continuously learning human resource base to unleash their potential and fulfill their aspirations. The year saw the HR activities directed towards this end through initiatives in areas of talent management, training & employee compensation.

In view of the increasing need for the right type of personnel for the Company''s growth plans and current requirements, the primary emphasis during the year was on the quality of talent which could only be achieved by institutionalization of a robust talent acquisition process. With this objective, the Company introduced a Talent Management System, a fully hosted and an integrated online solution that will enable the Company to simplify & automate talent management lifecycle, from pre-hiring to post hiring. The selection process has been further strengthened by the inclusion of a psychometric test (People Profile Analysis) and a vigorous interview process. A new scheme for Management Trainee selection for attracting freshers and a loyalty scheme for retaining key employees in the organization were also introduced during the year. These measures are intended to help in meeting the talent requirements as per the needs of the business.

The identification of training needs continues to be a major focus area that enables the Company to organise need-based Training & Development programs. Nominations of employees for external programs are also made based on the training need analysis. During the year, the Company launched a Leadership Development Program for Senior Management personnel to identify employees with potential who could be groomed for taking up positions of responsibility in future. The senior/middle Management employees were also put through a three day outbound training program as part of experiential learning. All these programs were aimed at building effective teams with shared vision and values that can equip the Company to meet the emerging challenges.

The Company firmly believes that in the quest for maintaining a high performance culture, an effective system for performance management is essential. Action has been initiated during the year to design a system for objective assessment of performance and for a reward system based on performance contribution of employees. Steps are also being taken to align the compensation structure of the Company to the market so as to attract and retain the best talent. The Performance Appraisal & Development System is being made more effective by introducing Key Result Areas and Key Performance Indicators (KPI) also, against which the employees can make a self-assessment and plan for improving their performance.

The employee strength as on 31st March, 2013 has increased from 1599 during last year to 1872 during the year under review. The major increase has been in Marketing and Customer Service, to take care of the expanding market for the Company''s products in non-South.

10. Corporate Social Responsibility

The CSR activities of the Company mainly focus on areas like Health, Education, Environment, Women empowerment and Youth and Community Development with the objective of bringing about improvements in the quality of life of people, especially those living in and around the operating Divisions and various establishments of the Company such as Warehouses and Branch Offices.

Some of the on-going CSR activities are:

- Providing free medicines to the ailing cancer patients of District Hospital Ernakulam from a Social Welfare Fund created by voluntary contribution from Employees.

- Supporting the Charitable units engaged in the manufacture of electronic products for V-Guard.

- Extending educational assistance to poor students in Ernakulam District through the Rajagiri Outreach Programme.

- Caring for the aged women and differently abled children through the Thomas Chittilappilly Trust (TCT).

- Adopting the Govt Higher Secondary School, Vennala with the objective of improving its physical infrastructure and quality of education.

- Educational Sponsorship and Community Development projects at Kannadi (Palakkad) and Ettimadai (Coimbatore).

- Associating with the Heart Care Foundation, in its activities for saving lives of Heart patients through installation of AED (Automatic External Defibrillator) in Public places.

- Associating with the Voluntary Agencies and Institutions that promote Blood Donation and Organ Donation for saving lives.

- Distribution of reusable / recyclable carry bags to households in association with Grama Panchayathu to promote green environment.

11. Corporate Governance

Your Company has complied with the Corporate Governance norms as stipulated under the provisions of the Listing Agreement entered into with the Stock Exchanges. A detailed Report on Corporate Governance forms part of the Annual Report. A certificate of Statutory Auditor confirming 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 given under the head Management Discussion and Analysis Report, which forms part of this Report.

13. Auditors

M/s S R Batliboi & Associates LLP, Chartered Accountants, Kochi with firm registration number 101049W, 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 being eligible, offer themselves for re-appointment. The Board of Directors upon the recommendation of the Audit Committee proposes the re-appointment of M/s S R Batliboi & Associates LLP, Chartered Accountants, as the Statutory Auditors of the Company.

14. Cost Auditors

Your Directors have, with the approval of the Ministry of Corporate Affairs, appointed M/s Ajeesh & Associates, Cost Accountants, as the Cost Auditors of the Company for the financial year 2012-13 and Cost Audit Report will be filed. Compliance Report in respect of the financial year 2011-12 was filed by the Cost Auditor with the Ministry of Corporate Affairs.

15. Disclosure of Particulars of Employees

Particulars of Employees required under Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 as amended, form part of this report and are annexed herewith. However, in terms of Section 219(1)(b)(iv) of the Companies Act, 1956 the report and accounts are being sent to the shareholders excluding the aforesaid annexure. Any shareholder interested in obtaining copy of the same may write to the Company at the registered office.

16. Energy conservation, Technology absorption and Foreign exchange earnings and outgo

The information required under Section 217(1)(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 I to the Directors'' Report which forms part of the Annual Report.

17. Directors'' Responsibility Statement

In accordance with the provisions of Section 217(2AA) of the Companies Act 1956, your Directors hereby 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 judgments 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, 2013 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.

18. Acknowledgement

The Board wishes to place on record its sincere appreciation to the Company''s Customers, Vendors, Central and State Government Bodies, Auditors, Legal Advisors, Consultants, Registrar and Bankers for their continued support to the Company during the year under review. The Directors also wish to place on record their appreciation for the dedicated efforts of the employees at all levels. Finally, the Board expresses its gratitude to the members for their continued trust, co-operation and support.

For and on behalf of the Board of Directors

Sd/- Sd/-

Kochouseph Chittilappilly Mithun K Chittilappilly

Chairman Managing Director

Kochi

15th May, 2013


Mar 31, 2012

The Directors have great pleasure in presenting the Sixteenth Annual Report of the Company on the business and operations together with the audited financial statements for the year ended 31st March, 2012.

1. Financial Results

(Rs.in lakhs)

Year ended Year ended

Particulars 31-3-2012 31-3-2011

Revenue from operations (gross) 100,677.92 73,774.66

Less:Excise duty 1,315.25 1,112.44

Revenue from operations (net) 99,362.67 72,662.22

Operating expenditure 90,008.88 65,358.69

Operating profit before Depreciation, Interest, 9,353.79 7,303.53 Tax & Exceptional Item

Finance costs 1,702.53 1,133.38

Depreciation and amortization expense 969.36 793.67

Other income 235.22 170.83

Profit Before Tax & Exceptional Item 6,917.12 5,547.31

Exceptional Items - 363.61

Profit Before Tax 6,917.12 5,910.92

Tax expense:

a) Current Tax 2,023.00 1,607.80

b) Deferred tax (185.98) 39.45

1,837.02 1,647.25

Net Profit 5,080.10 4,263.67

Balance brought forward 6,479.56 3,930.02

Profit available for appropriation 11,559.66 8,193.69 Appropriations

Transfer to General Reserve 700.00 500.00 Dividend proposed:-

Final dividend proposed 1,044.66 1,044.66

Tax on final dividend proposed 169.47 169.47

1,914.13 1,714.13

Balance carried to Balance Sheet 9,645.53 6,479.56

2. Company's Performance

After a promising start to the decade in 2010-11, with achievements like maintaining GDP growth rate around 8%, bringing down fiscal deficit to 4.8% of GDP as well as containing current account deficit to 2.6%, the fiscal year 2011-12 has been challenging for the Indian Economy. The year started on a note of optimism through impressive growth in exports and high levels of foreign exchange inflows, only to moderate as the year progressed through continued monetary tightening in response to the untamed inflationary pressures. High levels of inflation and higher interest rates gradually gave way to a slow-down in the growth of economy. Despite the consumer durables, electrical, electronic industries witnessing one of its worst performances last year, Your Company was able to secure double digit growth with its strong distribution net work and delivery of quality products to its consumers.

Net revenue from operations for the year under review was Rs 993.63 crores representing a growth of 36.75% over the net revenue from operations of Rs 726.62 crores for the previous year. The Profit After Tax increased from Rs 39.70 crores in 2010-11 to Rs 50.80 crores in 2011-12, an increase of 28%. Growth of each product vertical is detailed under the section Management Discussion and Analysis, which forms part of the Annual Report.

3. Changes to the Share Capital

There was no change in the share capital of the Company, during the year under review.

4. Appropriations made from the profits

a) Transfer to Reserves

Your Directors transferred an amount of Rs 700.00 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.

b) Final Dividend

Your Directors are pleased to recommend a final dividend of Rs 3.50 per share (35% on par value of Rs 10/- per share) considering the improved profit. The final dividend if declared as recommended, would involve an outflow of Rs 1044.66 lakhs and Rs 169.47 lakhs towards dividend tax, resulting in a total outflow of Rs 1214.13 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 14thJuly, 2012 to 25th July, 2012, both days inclusive.

5. Projects of the Initial Public Offer

Your Company has successfully completed all the projects of the Initial Public Offer i.e. construction of LT Cable and Building Wire factories at Coimbatore and Kashipur respectively, Pilot Production Unit for Pumps and Water Heater and Fan at Coimbatore and Kala Amb, Himachal Pradesh respectively and Service and Distribution Centre at Bangalore, Hubli and Vijayawada.

6. New Projects

Considering the growth potential, Your Directors had decided to strengthen the manufacturing base of Solar Water Heater and construction of a state of art facility for the manufacture of Solar Water Heater of different capacities at the industrial land acquired in Perundurai has been completed during the year under review. Commercial production is expected to commence during the Financial Year 2012-13. Also the expansion of storage space available at Palakkad, Kochi and Bangalore was also successfully completed and work relating to strengthening of the existing production unit of Electric Water Heater and Fan at Kala Amb, Himachal Pradesh is progressing. The projects of expansion for the current fiscal include construction of new ware house at Kochi and Hyderabad and increasing the production capacity of Kashipur.

7. Fixed Deposit

The Company has not accepted any fixed deposit during the year under review.

8. Change in Directors

Your Company's Board consists of total six Directors- three Executive and three Non-Executive Independent Directors. During the year under review, there was no change in the Board of Directors.

In terms of Section 256 of the Companies Act, 1956 and Articles 137 and 139 of the Articles of Association of the Company, Mr. P G R Prasad, Chairman and Independent Director is liable to retire by rotation and being eligible has offered himself for re-appointment.

Your Directors in their meeting held on 26th March, 2012 appointed Mr. Mithun K Chittilappilly and Mr. Kochouseph Chittilappilly, as Managing Director and Executive Vice-Chairman of the Company respectively for a period of three years effective from 1st April, 2012. The said appointments will be subject to the approval of the members, in the ensuing Annual General Meeting. Resolutions seeking approval of the members for the said appointments have been incorporated in the Notice of the 16th Annual General Meeting.

Brief resume of the Directors seeking appointment and re-appointment, nature of their expertise in specific functional areas and names of Companies in which they hold Directorship / Membership/ Chairmanship of the Board Committees, as stipulated under Clause 49 of the Listing Agreement with the Stock Exchanges has been provided as an annexure to the Notice convening the Annual General Meeting.

9. Human Resources

The HR Team at your Company ensures the core function of Human Resource Management in meeting the organizational requirements. The HR Team is fully backed and guided by a professional Management Team and work closely to ensure that the Company Vision is perpetuated down the line to meet the Company's targeted results and goals.

To strengthen the Management Team, your Company has inducted competent professionals at various levels which includes Director (Marketing & Strategy), Sr. General Manager (HR) and General Manager (R & D). In addition, the Company has also recruited a Vice President (R&D) who will be joining shortly.

To supplement the business growth, extensive training programmes have been planned for employees across verticals for knowledge and skill development. The training programmes include a week long orientation programme for new joinees, Leadership Development Programme including Out Bound Training for Top Management employees and skill development programme for middle level. In order to develop a talent pool to take up responsibilities at higher levels in future, the Company has introduced a Management Trainee (MT) Scheme from the year 2012. The first batch of MTs have joined the service. Your Company is also working on implementing Balance Score Card for aligning business activities to the Vision and Strategy of the Company and for effective Performance Management System.

Total Employee strength was 1363 as on 1st April, 2011 and as on 31st March 2012, the number has increased to 1599. The increase has been mainly due to the business growth and expansion activities undertaken during the Financial Year 2011-12.

10. Corporate Social Responsibility

Your Company has been making meaningful contributions to the society in different areas, for decades now. CSR activities at V-Guard Industries Ltd. extend well beyond its business objectives, and the Company's concerns for the society are evident from the various initiatives it has taken in different fields. V-Guard aims at bringing about a radical transformation in the quality of life of people living in and around the operating divisions of the Company through positive intervention in social upliftment programs. Its key areas of focus are Health, Education, Environment, Women Empowerment and Youth Development.

Some of the CSR activities undertaken are:

A. Social Welfare Fund for Ailing Cancer Patients

B. Employment Opportunities to Women & Underprivileged

C. Extending Educational assistance to poor students through Rajagiri Outreach Program

D. Caring for the aged women and differently abled children through the Thomas Chittilappilly Trust

E. Children Education Sponsorship Project (CESP)

F. Adoption of Government Vennala Higher Secondary School, Ernakulam with the objective of improving its physical infrastructure and quality of education.

11. Adequacy of Internal Control Systems

The Company has formulated comprehensive Internal Control Manual for the entire operations of the Company to ensure that all transactions are carried out adhering to the laid down procedures. The Company has appointed M/s. Varma &Varma, Chartered Accountants to conduct the internal audit of the Company. It has also an in-house Internal Audit Cell that regularly does the audit of branch offices and factories. Internal Audit is conducted on a quarterly basis. The report and findings of Internal Auditors are placed before the Audit Committee and are reviewed in detail by the members. All significant observations and comments are placed before the Board of Directors and appropriate actions are taken and improvements made in the systems wherever required.

12. Implementation of Information Systems

In order to strengthen the internal control systems and improve the management information system, the Company has implemented SAP based ERP system during the year under review which went live with effect from 13th February, 2012. The Board is pleased to state that the new system has been successfully implemented and is getting stabilized.

13. Corporate Governance

Your Company has complied with the 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 Auditor confirming compliance of the Corporate Governance requirements by the Company is attached to the Report on Corporate Governance.

14. 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 given under the head Management Discussion and Analysis Report, which forms part of this Report.

15. Auditors

M/s. Deloitte Haskins & Sells, Chartered Accountants, with firm registration number-008072S, who are the Statutory Auditors of the Company, hold office, in accordance with the provisions of the Companies Act, 1956, up to the conclusion of the ensuing Annual General Meeting.

Your Company has received a Special Notice from a member, in terms of the provisions of Section 190 of Companies Act, 1956, signifying his intention to propose the appointment of M/s. S R Batliboi & Associates, Chartered Accountants, with firm registration no. 101049W as Statutory Auditors of the Company in the place of retiring Auditors, in the ensuing Annual General Meeting of the Company. The Company has forthwith communicated to the retiring Auditors of the Special Notice received and they have not made any representation against the said Special Notice. A written certificate has been obtained from M/s. S R Batliboi & Associates to the effect that in case of their appointment as Statutory Auditors of the Company, the appointment will be in accordance with the limits prescribed under Section 224(1B) of the Companies Act, 1956.

The Board of Directors upon the recommendation of the Audit Committee proposes the appointment of M/s. S R Batliboi & Associates, as the Statutory Auditors of the Company to hold office from the conclusion of the ensuing Annual General Meeting until the conclusion of the next Annual General Meeting.

16. Disclosure of Particulars of employees

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 Companies (Particulars of Employees) Rules, 1975 and Companies (Particulars of Employees) Amendment Rules, 2011 are given in Annexure I, which forms part of this report.

17. Energy Conservation, Technology absorption and Foreign exchange earnings and outgo

The information required under Section 217(1)(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.

18. Directors' Responsibility Statement

In accordance with the provisions of Section 217 (2AA) of the Companies Act 1956, Your Directors hereby 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 judgment 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, 2012 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.

19. Acknowledgement

Your Directors would like to place on record their sincere appreciation to the Company's customers, vendors, registrar and bankers for their continued support to the Company during the year under review. The Directors also wish to place on record their appreciation of the contribution made by employees at all levels for achieving the outstanding performance and growth in the turnover and the Central Government and various State Governments and other Government agencies for their assistance and co-operation and look forward to their continued support in future. Finally, the Board expresses its gratitude to the members for their continued trust, co-operation and support.

For and on behalf of the Board of Directors

Sd/- Sd/-

Kochouseph

Chittilappilly Mithun K Chittilappilly

Vice Chairman Managing Director

Kochi

30th May, 2012


Mar 31, 2011

Dear Members,

The Directors have great pleasure in presenting the Fifteenth Annual Report of the Company on the business and operations together with the audited financial statements for the year ended 31st March, 2011.

1. Financial Results (Rs. in lakhs)

Year ended Year ended 31st March, 2011 31st March, 2010

Gross Sales 73,746.63 46,229.03

Less : Excise Duty 1,112.44 820.12

Net Sales 72,634.19 45,408.91

Other income 198.86 142.44

Total Income 72,833.05 45,551.35

Operating Profit before Depreciation, Interest, 7,474.36 5,179.48

Tax & Exceptional Item

Less: Depreciation 793.66 714.96

Profit Before Interest, Tax & Exceptional Item 6,680.70 4,464.52

Less : Financial charges 1,133.38 513.25

Profit Before Tax & Exceptional Item 5,547.32 3,951.27

Add: Exceptional profit 363.61 -

Profit Before Tax 5910.93 3951.27

Provision for tax:

Current Tax 1,607.80 1,270.26

Deferred Tax 39.46 130.22

For earlier years - 3.53

Net Profit 4,263.67 2,547.26

Balance in P & L account brought forward 3,930.02 2,926.91

Profit available for appropriation 8,193.69 5,474.17

Appropriations

a) Transfer to General Reserve 500.00 500.00

b) Dividend proposed: -

Final dividend proposed 1,044.66 895.43

Tax on Final Dividend proposed 169.47 148.72

1,714.13 1,544.15

c) Balance carried to Balance Sheet 6,479.56 3,930.02

8,193.69 5,474.17

2. Company's Performance

The Indian economy resurged after the global recession and showed a robust and steady growth in all spheres and it was very impressive in the core sectors like manufacturing, agriculture, construction and services. The country's GDP has grown by 8.5% during the year under review. Rural prosperity in the country has also contributed significantly to the industrial growth. Your Company was favourably positioned with a wide range of products with different models and excellent distribution network to take advantage of the opportunities that emanated from the economic growth and could perform exceptionally well in terms of growth in revenue and profit.

Net Sales for the year under review was significantly higher at Rs. 726.34 crores representing a growth of 59.96%, over the Net Sales of Rs. 454.09 crores for the previous year. Following the robust growth achieved in sales, the Company recorded a Net Profit of Rs. 39.70 crores, without considering exceptional profit of Rs. 3.63 crores during the year under review, which is 55.84 % up over the previous year. The contribution from Non-South Indian markets to the turnover is more than Rs. 160.00 crores in the fiscal 2010-11. The significant improvement in the revenue and profit was attained mainly due to increase in market share, growth in sales volume across all product lines and higher capacity utilization. Growth of each product vertical is detailed under the section Management Discussion and Analysis, which forms part of the Annual Report.

3. Changes to the Share Capital

There was no change in the share capital of the Company, during the year under review.

4. Appropriations made from the profits

a) Transfer to Reserves

Your Directors transferred an amount of Rs. 500.00 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.

b) Final Dividend

Your Directors are pleased to recommend a final dividend of Rs. 3.50 per share (35% on par value of Rs. 10/- per share) considering the improved profit. The final dividend, if declared as recommended, would involve an outflow of Rs. 1,044.66 lakhs and Rs. 169.47 lakhs towards dividend tax, resulting in a total outflow of Rs. 1,214.13 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 15th July, 2011 to 25th July, 2011, both days inclusive.

5. Projects of the Initial Public Offer

Your Company has successfully completed four of the projects mentioned in the Offer Document dated 29th February, 2008, i.e. construction of LT Cable and Building Wire factories at Coimbatore and Kashipur respectively, Pilot Production Unit for Pumps and Water Heater and Fan at Coimbatore and Kala Amb, respectively and Service and Distribution Center at Bangalore.

Construction work relating to setting up of Service and Distribution Centers at Hubli and Vijayawada has commenced and it is expected to be completed by the end of the third quarter of the fiscal 2011-12.

6. New Projects

Considering the growth potential, Your Directors have decided to strengthen the manufacturing base of Solar Water Heater and it has been decided to set up a state of art facility for the manufacture of Solar Water Heater of different capacities with improved technology at the industrial land acquired in Perundurai. It has also been decided to strengthen the existing pilot production units of Electric Water Heater and Fan at Kala Amb and Pumps at Coimbatore. The other projects for expansion during the current fiscal include expanding the storage space available at Palakkad, Bangalore and Kochi. All the projects are expected to be implemented during the financial year 2011-12.

7. Fixed Deposit

The Company has not accepted any fixed deposits during the year.

8. Change in Directors

During the year under review, Dr. George Sleeba, was co-opted as an Additional Director of the Board of the Company with effect from 27th May, 2010. He was appointed as the Joint Managing Director of the Company for a period of three years with effect from 1st June, 2010 with the approval of the members in the 14th Annual General Meeting held on 26th July, 2010.

In terms of Section 256 of the Companies Act, 1956 and Articles 137 and 139 of the Articles of Association of the Company, Mr. A K Nair, Independent Director is liable to retire by rotation and being eligible has offered himself for re-appointment.

Brief resume of the Director proposed to be re-appointed, nature of his expertise in specific functional areas and names of companies in which he hold directorship and membership / chairmanship of the Board Committees, as stipulated under Clause 49 of the Listing Agreement with the Stock Exchanges has been provided as an annexure to the Notice convening the Annual General Meeting.

9. Human Resources

The function of Human Resource Department is to ensure availability of the right type of skills at the right time at the right place and at the right cost to meet the organizational requirements. The HR Dept of your Company is making all-out effort in accomplishing this objective by selecting and developing quality Human resources to meet the challenges of a competitive business environment. The recruitment process for attracting the right talents in the identified areas is initiated through job portals, Newspaper advertisements and through outside consultants. Marketing being one of the most significant areas of your Company's activity, timely action is to be initiated to appoint efficient and skilled manpower at various locations and for timely replacement of people who leave the organization. To meet this need, the HR Dept closely associates with the top management in planning, developing and retaining talent. It also shares responsibility as a strategic partner in business for achieving the organizational goals and targets through a system of continuous performance monitoring and appraisal of critical human resources of the Company.

Considering the need for upgrading the knowledge and skills of the employees, your Company continues to invest in its human resources through various Learning & Development initiatives. Programmes for In-house training are conducted on an ongoing basis and your Company has invested 6000 man hours in training during the year under review, which is almost double that of the previous financial year. In addition to the in-house programmes, employees are nominated for External training programs conducted by professional bodies, Academic Institutions and Training agencies. New Employees from all Branches across India are provided a week's Induction Training and Orientation Program at Corporate Office, Cochin, covering all aspects of the organization. These induction programmes and opportunity provided for visiting the various units and departments of the Company as part of the orientation programme have helped to develop a positive feeling among the new comers and their continuity in the organization.

Besides training and development activities, your Company has also been conducting various Employee engagement programs for involving the employees and for keeping them motivated.

Total Employee strength was 955 as on 1st April, 2010 and as on 31st March, 2011, the number has increased to 1220. The increase has been mainly due to the growth and expansion activities undertaken during the year.

10. Corporate Social Responsibility

Your Company believes in nurturing positive relationships across the entire range of stakeholders and the public which helps the Company understand pertinent issues, develop businesses, enhance stakeholder value and manage risks better. It is this relationship, trust and commitment to stakeholder interest and the warm reciprocity of the same by the stakeholders that make V-Guard robust, resilient and sustainable.

A "Social welfare fund" was started during the year as an Employees' initiative with the objective of helping the ailing cancer patients in General Hospital, Cochin. Every month, Employees voluntarily contribute to this fund from their salary. The fund so collected is utilized for providing medicines to the cancer patients. With this amount, medicines worth Rs. 3,00,000/- has been purchased and supplied during the financial year.

Education of children, especially those belonging to the lower strata of society continues to be one of the major thrust areas of your Company's CSR interventions. During the year, the Company has adopted a Government school near our Corporate Office at Vennala and has associated with them in improving the welfare of students and basic amenities of the school. It has benefitted many students who belong to the under privileged section of the society. Your Company plans to undertake more activities in the coming financial year to reaffirm its commitment to the societal development.

11. Adequacy of Internal Control Systems

The Company has formulated comprehensive Internal Control Manual for the entire operations of the Company. All the transactions of the Company are routed through the laid down procedures. The Company has also appointed M/s. Varma & Varma, Chartered Accountants to conduct the internal audit of the Company. It has also formed an in-house Internal Audit Department, which regularly does the audit of branch offices and factories. 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 by the members. All significant observations and comments are placed before the Board of Directors and appropriate actions are taken based on the observations made by the Auditors.

The Company has an Enterprise Wide Risk Management System in place and has laid down procedures for risk assessment and mitigation procedures. As part of risk management process, the Company has formed committees at two levels, one being the apex body, known as Risk Management Team, headed by the Executive Director and comprising of Sr. Vice President and Vice Presidents, who are heading various Product Risk Groups and Chief Risk Officer and Assistant Risk Officer as members. The other committee, known as Product Risk Team for various products is headed by the Vice President concerned and comprising of product heads and representatives from other functions like Finance, Systems, Customer Service, Human Resource, Legal etc. The consolidated quarterly risk report is placed before the Audit Committee for its review and recommendation to the Board.

12. Corporate Governance

Your Company has complied with the Corporate Governance norms as stipulated under the provisions of the Listing Agreement entered into with the Stock Exchanges. A detailed Report on Corporate Governance forms part of the Annual Report. A certificate of Statutory Auditor confirming compliance of the Corporate Governance requirements by the Company is attached to the Report on Corporate Governance.

13. Management Discussion and Analysis Report

A detailed review of the industrial growth vis-à-vis the growth of the Company and the future outlook is given under the head Management Discussion and Analysis Report, which forms part of the Annual Report.

14. Auditors

M/s. Deloitte Haskins & Sells, Chartered Accountants, with firm registration number-008072S, 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 being eligible, offer themselves for re-appointment. The Board of Directors upon the recommendation of the Audit Committee proposes the re-appointment of M/s. Deloitte Haskins & Sells, Chartered Accountants, as the statutory auditors of the Company.

15. Disclosure of Particulars of employees

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 Companies (Particulars of Employees) Rules, 1975 and Companies (Particulars of Employees) Amendment Rules, 2011 are given in Annexure I to the Directors' Report, which forms part of the Annual Report.

16. Energy conservation, Technology absorption and Foreign exchange earnings and outgo

The information required under Section 217(1)(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 to the Directors' Report which forms part of the Annual Report.

17. 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, 2011 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.

18. Acknowledgement

The Directors would like to place on record their sincere appreciation to the Company's customers, vendors, registrar and bankers for their continued support to the Company during the year under review. The Directors also wish to place on record their appreciation to the contribution made by employees at all levels for achieving the remarkable growth in the turnover and profit and thank the Central Government and various State Governments and other Government agencies for their assistance and co-operation and look forward to their continued support in future also. Finally, the Board expresses its gratitude to the members for their continued trust, co-operation and support.

For and on behalf of the Board of Directors

Sd/- Sd/-

Kochi Kochouseph Chittilappilly Dr. George Sleeba 17th May, 2011 Managing Director Joint Managing Director


Mar 31, 2010

The Directors have great pleasure in presenting the Fourteenth Annual Report of the company on the business and operations together with the audited financial statements for the year ended 31st March, 2010.

1. Financial Results (Rs. in lakhs)

Year ended Year ended 31st March, 2010 31st March, 2009

Gross Sales 46,229.03 32,604.17

Less : Excise Duty 820.12 926.50

Net Sales 45,408.91 31,677.67

Other income 142.44 364.03

Total Income 45,551.35 32,041.70

Operating profit before Depreciation,

Interest and Tax 5,179.48 3,506.06

Less: Depreciation 714.96 404.89

Profit before Interest & Tax 4,464.52 3,101.17

Less : Financial charges 513.25 473.26

Profit before Tax 3,951.27 2,627.91

Provision for tax:

Current Tax 1,270.26 819.86

Deferred Tax 130.22 23.40

Fringe Benefit Tax - 50.00

For earlier years 3.53 -

Net Profit 2,547.26 1,734.65

Balance in P&L account brought forward 2,926.91 2,415.26

Profit available for appropriation 5,474.17 4,149.91 Appropriations

a) Transfer to General Reserve 500.00 350.00

b) Dividend proposed:

Final dividend proposed 895.43 746.19

Tax on Final Dividend proposed 148.72 126.81

1,544.15 1,223.00

c) Balance carried to Balance Sheet 3,930.02 2,926.91

5,474.17 4,149.91

2. Review of Business and Operations

Your Company recorded net revenue of Rs.45,408.91 lakhs, during the year under review, an increase of 43.35% over the previous year of Rs.31,677.67 lakhs. The Net Profit after tax increased from Rs.1,734.65 lakhs in 2008-09 to Rs.2,547.26 lakhs in 2009-10, an increase of 46.85%. Indian economy has revived from the slowdown and has shown a growth of 7-7.25% during the year under review. All the core sectors of the economy like construction, power, automobiles, consumer durables, and infrastructure have achieved significant growth. The overall growth in the different sectors has contributed to achieve the magnificent growth in the top line of the Company over the last financial year. Your Company was able to give an impressive performance both in the South and North Indian markets and increase the market presence across the country by many fold.

During the year under review, Wires & Cables, A.C. and Digital Stabilizers, Pumps, Electric Water Heaters and Fans had shown an excellent performance. With the Commissioning of the new cable factory set up at Kashipur, production of wires has increased by 75% and this has helped the Company to meet the increasing demand for the product in different parts of the north Indian markets. The Company was able to achieve the growth in the product by concentrating more on retail segment in different classes of cities and steadily increasing the project orders. The new product LT Power Cable has also contributed in a moderate way and the Company was able to make a good entry in South Indian market. Growth in the white goods segment has given a fillip to the sale of the Company’s flagship product stabilizers meant for LCD TV, Air Conditions and refrigerator and the market share of the new markets was also encouraging. Your Company was able to achieve a 30% growth in the revenue of pumps by concentrating on domestic and three phase pumps. The pump division was able to supply good numbers of three phase pumps for agricultural purposes in different cities in South India and focus will be given to produce more customized models in the years to come to meet the increased demand. Electric Water Heaters has also shown a good growth and the Company was able to introduce Gas Water Heaters during the year under review, which was well accepted by the market. Your Company was able to introduce different models of Electrical Fan and many of the new models have been well accepted by customers. Other products like UPS, Digital UPS and Solar Water Heaters have also progressed in terms of quantity and value and our strategy for these products will be to enter the untapped market in different parts of the Country.

Your Company was able to add more number of channel partners in many parts of north India and this has resulted in increase of revenue from north India significantly. Emphasis was given to the penetration of markets in different classes of cities and introducing more number of models of all the products to suit with the local demands. Your Directors will continue to follow the existing strategies formulated to penetrate the north Indian markets and will take full advantage of the progress in different industrial sectors of the Country. To facilitate better distribution and handling of the products, Distributors/consignment agents will be appointed, wherever it is needed. All the pilot units will be geared to come out with better features for the existing products and thrust will be given to add new products to folder.

With an intention to increase and strengthen the existing manufacturing facilities, your company has acquired 34.66 acres of industrial land on lease basis at Perundurai, near Erode-Dist., allotted by SIPCOT, Chennai. After analyzing the detailed project report, steps will be initiated for the execution of the project.

3. Changes to the Share Capital

There was no change in the share capital of the Company, during the year under review.

4. Appropriations made from the profits

a) Final Dividend

Your Directors are pleased to recommend a final dividend of Rs.3/- per share (30% 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.895.43 lakhs and Rs.148.72 lakhs towards dividend tax, resulting in a total outflow of Rs. 1,044.15 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 16th July 2010 to 26th July, 2010, both days inclusive.

b) Transfer to Reserves

Your directors transferred an amount of Rs.500 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. Projects of the Initial Public Offer

Your Company has successfully completed four of the projects mentioned in the Offer Document dt. 29th February, 2008, i.e. construction of LT Cable factory at Coimbatore, Building Wire factory at Kashipur, Pilot Production Unit for pumps at Coimbatore and Service and Distribution Center at Bangalore. Your Company has identified suitable land at Hubli and purchased the same. Your company has made application to the Local Town Planning Authority, at Vijayawada and Hubli for construction of distribution and service center at the respective places. Both the projects will be completed in the current fiscal 2010-2011.

6. Fixed Deposit

The Company has not accepted any fixed deposits during the year.

7. Change in Directors

During the year under review, Mr. N Sreekumar and Mr. A K Nair, were co-opted as Additional Directors of the Board of the Company with effect from 27th May, 2009, of whom, Mr. A K Nair was appointed as an independent Director. He was also co-opted as a member of the Audit and Remuneration Committees. He was appointed in the 13th Annual General Meeting of the Company held on 27th July, 2009 as a Director liable to retire by rotation.

Mr. N Sreekumar was appointed as Joint Managing Director of the Company for a period of three years with effect from 1st June, 2009 with approval of the members in the 13th Annual General Meeting held on 27th July, 2009. He resigned from the Company with effect from 28th January, 2010.

Your Directors have appointed Dr. George Sleeba, as an Additional Director with effect from 27th May, 2010. Your Directors also considered and approved the proposal of appointing Dr. George Sleeba as Joint Managing Director of the Company for a period of three years with effect from 1st June, 2010 on the terms and conditions stipulated in the agreement entered with him. The said appointment will be subject to the approval of the members, in the ensuing Annual General Meeting. A copy of the agreement is kept at the Registered Office of the Company and is available for inspection to the members, during the business hours on any day, upto the date of the ensuing Annual General Meeting.

Resolutions seeking approval of the Members for appointment of Dr. George Sleeba as a Director liable to retire by rotation and his appointment as Joint Managing Director have been incorporated in the Notice of the 14th Annual General Meeting.

Mr. C J George, Director is liable to retire by rotation and being eligible has offered himself for re-appointment. Brief details of the Directors seeking appointment or re-appointment are given in the Annual Report, in compliance with the provisions of Clause 49 of the listing agreement.

8. Human Resources

Human Resource Department plays a pivotal role in achieving organizational excellence. Your company constantly strives to develop Quality Human Resources, to meet the challenges of competitive business environment. The strategic HR framework aims to leverage and align HR practices to build critical capabilities in achieving the Company’s objectives and goals.

The Human Resources function closely associates with the top management in the continual process of planning, attracting, recruiting, developing, motivating and retaining talent with a view of accomplishing organizational vision. HR functions as a nervous system enabling proper flow of information and communication down the line thereby sharing the common vision and mission of the organization. V-Guard is a company focused on Employee development and continuously train and retrain the Employees through In House and External training programmes throughout India. New Employees from all branches across India are provided a week’s Induction training and Orientation programme at Corporate Office, Cochin, covering all basic aspects of the organization. During the year under review 3130 man hours of training has been provided to employees working in various cadres.

Total Employee strength was 955 as on 1st April, 2009, and as on 31st March, 2010 the number increased to 1220. This increase has been mainly because of the growth and expansion activities in the organization.

9. 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 has also formed 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 of the Board and are reviewed in detail. All significant observations and comments are placed before the Board of Directors and appropriate actions are taken based on the observations made by the Auditors.

10. Corporate Governance

Your Company has complied with the 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 Auditor confirming compliance of the Corporate Governance requirements by the Company is attached to the Report on Corporate Governance.

11. Management Discussion and Analysis Report

A detailed review of the industrial growth vis-à-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.

12. Auditors

M/s. Deloitte Haskins & Sells, Chartered Accountants, with firm Registration No. 008072S 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.

13. Disclosure of Particulars of employees

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.

14. Energy conservation, Technology absorption and Foreign exchange earnings and outgo

The information required under Section 217(1)(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.

15. 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, 2010 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.

16. Acknowledgement

We would like to place on record our sincere thanks to our Clients, Bankers, Vendors, RTA 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/- Kochi P G R Prasad 28th May, 2010 Chairman

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