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Directors Report of V Mart Retail Ltd.

Mar 31, 2015

We are pleased to present the 13th annual report of the Company for the year ended 31st March, 2015.

FINANCIAL RESULTS

The operating results of the Company for the year under review are as follows:

(Rs. in lacs)

For the year ended For the year ended

Revenue 72,239.84 57,567.30

Profits/(Loss) before Depreciation & Tax 6,171.31 4,871.72

Less: Depreciation 456.54 1,089.44

Less: Provision for Tax 1,858.09 1,266.56

Profits/(Loss) before Appropriation 3,736.71 2,515.72 Prior period items

Profit before Appropriation 3,736.71 2,515.72

Less: Utilized for Dividend Issue 270.23 265.44

Balance carried forward to Balance Sheet 3,649.45 2,250.28

V-MART IPO

Your Company has successfully concluded the pubic issue of equity shares during the year 2012-13 aggregating to Rs.36,435 million.

The initial public offer of the Company was subscribed 1.19 times. While the Qualified Institutional Buyer's portion in the offer was subscribed 1.52 times, the Non-Institutional Investors and Retail Investors segments were subscribed 1.39 and 0.79 times, respectively, your Directors wish to express their sincere appreciation for your support in this regard.

The means of finance for the objects of IPO and status of utilization of proceeds raised through the IPO by the Company as on 31st March, 2015 as referred above are as follows:

Means of finance for the objects of IPO are as under:

Particulars (Rs. in lacs)

Proceeds from the fresh issue (A) 57,98.10

Proceeds from Pre-IPO placement (B) 26,25.00

Internal accruals (C) 717.60

Total 9,140.70

The utilization of the aforementioned means of finance as on 31st March, 2015 is as under:

(Rs.in lacs)

Utilization Particulars planned as Utilization of IPO Adjustments Balance amount to be per prospectus proceeds as on (utilization of surplus utilized as on 31st March, 2015 towards other objects) 31st March, 2015

To open new stores 6,970.40 (6,585.81) 6.60 391.19

Expansion of 438.70 (287.26) - 151.44 distribution centre

Working capital 1,000.00 (1,000.00) - -

Share issue expenses 731.60 (725.00) (6.60)* -

Total 9,140.70 (8,598.07) - 542.63

* Surplus available after actual expenses incurred will be utilized towards other objects of the issue.

Interim utilization of balance IPO proceeds up to 31st March, 2015 is as under:

Particulars (Rs. in lacs)

Balance unutilized amount assuming 542.63 utilization is out of IPO proceeds:

Amount temporary kept in mutual funds: Mutual funds 542.63

PERFORMANCE REVIEW

The Indian retail industry is one of the fastest growing markets in the world due to sound fundamentals such as stable economic growth, favourable demographic profile and rising per capita income. Retail industry in India is expected to grow to US$ 950 billion by 2018, registering a compound annual growth rate (CAGR) of 8.9 percent during 2000-2018. The online retail market is expected to grow from US$ 3.1 billion to US$ 22 billion (from 10 percent to more than 15 percent of the organized retail market) during FY13-FY18.

During the year, the Net Sales of the Company increased by 25% to Rs.718.98 crores in FY14-15 from Rs.574.95 crores in FY13-14. The Operating Profits (EBITDA) has been increased by 25% to H66.02 crores in FY14-15 from H52.96 crores in FY13- 14. The Company posted Profit after Tax (PAT) of H37.37 crores in the current FY14-15 as against the Profit after Tax of H25.16 crores in the previous financial year.

A detailed analysis of Company's operations in terms of performance in markets, business outlook, risks and concerns forms part of the Management Discussion and Analysis, a separate section of this Annual Report.

OPERATIONS REVIEW

During the year the Company continued with its existing approach to endeavour to establish its growth pattern in the Retail Industry with a chain of stores under the "V-Mart" brand in the Retail Industry.

During the year, the Company opened 19 (Nineteen) new stores under the brand V-Mart with spread over an area of 1.71 lacs sq. ft.

During the year, the Company has also completed the transition to a new warehouse and corporate office keeping into account the existing and future growth.

The year under review has been one where the focus of the Company has been on enhancing the capability of the organization and towards the achievement of this goal the Company has been taking a number of initiatives around the three pillars of People, Process and Technology.

AWARDS & ACHIEVEMENTS

During the year, following awards/recognitions were received by the Company:

"Most Admired Retailer of the Year 2014" for the category of concept store

OPERATING RESULTS AND BUSINESS

Your Company completes its thirteenth year in the field of fashion retailing. The existing business model of the Company with a focus on the consumption story based on the growing aspiration for fashion in the Tier-II and Tier-III cities continues to give good results based on which your Company has posted healthy results.

DIVIDENDS

The Board in its meeting held on 4th May, 2015, recommended dividend of H1.50/- per share (@15%) excluding the dividend distribution tax, which is to be paid out of the profit of the Company for the financial year ended 31st March, 2015 on equity shares of the Company, subject to approval of shareholders at the ensuing Annual General Meeting.

RESERVES

We have transferred Rs.9.74/- crores to our general reserves and our general reserves stood at Rs.186.92/- crores which makes the Company even more financial stronger.

MANAGEMENT DISCUSSION AND ANALYSIS

The Management Discussion and Analysis as required under Clause 49 of the Listing Agreement has been dealt with extensively as part of this Annual Report.

LISTING

The equity shares of your Company continue to be listed at the BSE Ltd. (BSE) and the National Stock Exchange of India Ltd. (NSE).

The Company has paid the requisite listing fee to the Stock Exchanges for the financial year 2015-16.

EXTRACT OF ANNUAL RETURN

Pursuant to the provisions of Section 92 read with Rule 12 of the Companies (Management and Administration) Rules, 2014, the extracts of Annual Return in prescribed format are appended as Annexure – A to this Report.

CORPORATE GOVERNANCE

It describes our shared long-term values, principles and goals. It reflects our corporate culture and identity. It guides us in our daily work and shows how we want to address opportunities and risks today and in the future. It defines the way in which we assume our corporate responsibilities.

Pursuant to Clause 49 of the Listing Agreement with the Stock Exchanges, a separate section titled Report on Corporate Governance has been included in this Report.

NUMBER OF MEETINGS OF THE BOARD

The Board met five times during the FY14-15, the details of which are given in Corporate Governance report that forms part of this Annual report. The intervening gap between any two meetings was within the period prescribed by the Companies Act, 2013 & Listing Agreement.

BOARD EVALUATION

The Clause 49 of the Listing Agreement states that the Board shall monitor and review the Board evaluation framework. The Companies Act, 2013 states that a formal evaluation needs to be made by the board of its own performance and that of its committees and individual directors. Schedule IV of the Companies Act, 2013 states that the performance evaluation of Independent Directors shall be done by its Board of Directors, excluding the director being evaluated.

The Board has carried out the annual evaluation of its own performance and that of its Directors individually. The evaluation criteria as laid down by the Nomination & Remuneration Committee includes various aspects of functionality of Board such as compositions, process & procedures including adequate & timely information, attendance, delegation of responsibilities, decision-making, roles & responsibilities including monitoring, benchmarking, feedback, stakeholders relationship and committees.

DECLARATION BY INDEPENDENT DIRECTORS

The Company has received necessary disclosures from each of its Independent Directors under Section 149(7) of the Companies Act, 2013, that he/she meets all the criteria laid down in Section 149(6) of the Companies Act, 2013 and Clause 49 of the Listing Agreement.

The details of the familiarization programme for the Independent Directors have been uploaded on the website of the Company and may be accessed through the link: http://www.vmart.co.in/ corporate.html.

POLICY ON DIRECTOR'S APPOINTMENT AND REMUNERATION

The current policy aims to have a mix of independent and executive directors on Board and separate its functions of governance and management.

The policy of the Company on director's appointment and remuneration including criteria for determining qualifications, positive attributes, independence of a director and other matters provided under sub-section (3) of Section 178 is appended as Annexure-B. All the appointment and remuneration paid during the FY14-15 is as per the provisions of the Companies Act, 2013 and as per the terms laid down in policy of Nomination and Remuneration policy of the Company.

TRAINING OF INDEPENDENT DIRECTORS

Every new Independent Director of the Board attends an induction program. Every HOD, KMP, Senior-Executives makes presentation to inductees about the Company's strategy, operations, product and market, finance, risk management.

Further, at the time of the appointment of Independent Directors, the Company issues a formal letter of appointment outlining his/her role, functions, duties and responsibilities as a director.

NEW TO THE BOARD

On recommendations of the Nomination and Remuneration Committee, the Board appointed Mr. Murli Ramachandran and Ms. Sonal Mattoo as Additional Directors in the capacity of Independent Directors effective from 22nd January, 2015, subject to the approval of shareholders at the ensuing Annual General Meeting.

On recommendations of the Nomination and Remuneration Committee, the Board appointed Mr. Hemant Agarwal as an Additional Director, in the capacity of Non-Executive Director, effective from 22nd January, 2015, subject to the approval/ ratification of shareholders at the ensuing Annual General Meeting.

Mr. Hemant Agarwal has been stepped down from the position of Whole-time Director of the Company and was appointed as Additional Director in the capacity of Non-Executive Director of the Company w.e.f. 22nd January, 2015.

RETIREMENT BY ROTATION

In terms of the provisions of Section 152 of the Companies Act, 2013 and Articles of Associations of the Company, Mr. Madan Gopal Agarwal (DIN 02249947), Director is liable to retire by rotation at the forthcoming Annual General Meeting and being eligible, offer himself for re-appointment.

The necessary resolution for obtaining approval of Members has been incorporated in the notice of the ensuing Annual General Meeting. The requisite disclosures regarding appointment/ re- appointment of Directors have been made in the explanatory statement to the notice of the ensuing Annual General Meeting.

The Company has received requisite disclosures and undertakings from all the Directors in compliance with the provisions of the Companies Act.

RESIGNATIONS

During FY14-15, Mr. Krishan Kumar Gupta and Mr. Kamal Kumar Gupta have resigned as Independent Directors w.e.f. 22nd January, 2015. The Board appreciated their efforts in delivering excellence and invaluable contribution for the Company.

COMMITTEES OF THE BOARD

A detailed note on the Board and its Committees is provided under the Corporate Governance report section in this Annual Report.

Currently, there are four committees: Audit Committee, Nomination and Remuneration Committee, Stakeholders Relationship Committee and Corporate Social Responsibility Committee.

PRACTISING COMPANY SECRETARY'S CERTIFICATE ON CORPORATE GOVERNANCE

As required by Clause 49 of the Listing Agreement, the Practising Company Secretary certificate on Corporate Governance is enclosed as Annexure to the Board Report.

SHARE CAPITAL

a) Buy Back of Securities: The Company has not bought back any of its securities during the year under review.

b) Issue of Sweat Equity: The Company has not issued any sweat equity shares during the year under review.

c) Issue of Bonus Shares: The Company has not issued any bonus shares during the year under review.

d) Employees Stock Option / Restricted stock units: The Company has adopted ESOP Scheme, 2012 as per the applicable SEBI regulations and approved by the members at Annual General Meeting. The details of shares allotted under ESOP and ESOPs granted /exercised during the year are as follows:

Details of equity shares allotted under ESOP:

Sr. No Date of Allotment No. of shares allotted

1 29th September, 2014 41,308

2 5th January, 2015 15,603

3 4th May, 2015 14,237

Pursuant to the above allotment of shares, the paid up capital of the Company stands increased to Rs.18,02,99,260 as on 4th May, 2015.

The Information required to be disclosed under SEBI (Share Based Employee Benefits) Regulations, 2014 as on 31st March, 2015 are as follows:

Particulars Details

Options granted 175602

Pricing Formula The Nomination & Remuneration Committee has been authorized to determine the exercise price of ESOPs.

Total Options vested 91950

Options exercised 56911

Total Number of Equity Shares arising as a result of 56911 exercise the options

Options forfeited/lapsed Nil

Variation of terms of options Nil

Money realized by exercise of options 85,36,650

Total number of ESOPs in force 96341

Person-wise details of options granted during the Financial Year 2014-15:

i) Senior managerial personnel/key managerial Mr. Venugopal Konchada - 12700 personnel Ms. Anjali Goel- 3000

Mr. Vineet Kailash Khanna - 2150

Mr. Ramesh Kumar Agarwal - 3000

Mr. Sudhir Kumar - 1500

ii) Any other employee who received a grant in any Nil one year of options amounting to 5% or more options granted during the year

iii) Identified employees who are granted options Nil during any one year equal to or exceeding 1% of the issued capital (excluding outstanding warrants and conversions) of the Company at the time of grant.

Fully-diluted EPS pursuant to issue of shares on exercise 20.78 of options in accordance with relevant Accounting Standards

Lock-in None

Particulars Details

Impact on profits and EPS of the last three years Impact on profit: (1669827)

Impact on EPS: (.09)

Impact of the difference on the profits of the Company Impact on profit: (1669827) and on the EPS Impact on EPS: (.09)

Difference, if any, between employee compensation There is no difference between employee compensation cost using cost (calculated according using the intrinsic value of intrinsic value of stock options and fair value of stock options. stock options) and the employee compensation cost (calculated on the basis of fair value of stock options)

Weighted average exercise price of options whose Exercise price exceeds market price : Not applicable exercise price either equals or exceeds or is less than Exercise price equals market price : Not applicable the market price of the stock Exercise price is less than market price: 150

Weighted average fair values of options whose exercise Exercise price exceeds market price : Not applicable price either equals or exceeds or is less than the market Exercise price equals market price : Not applicable price of the stock Exercise price is less than market price : 150

Method and significant assumptions used to estimate There is no impact on profit and loss since the ESOPs have been granted the fair value of options granted during the year on fair market value. The fair market value has been calculated on the basis of the Black Scholes model'.

Particulars 45,975 45,975 61,302 ESOPs ESOPs ESOPs

Price per option (in Rs.) 150.00 150.00 150.00

Risk free return (in %) 8.30 8.30 8.30

Average weighted cost of 10.80 10.80 10.80 capital (in %)

Average rate of return on the 7.25 7.25 7.25 stock market (in %)

Terminal growth (in %) 10.00 10.00 10.00

Average cost of equity based 13.55 13.55 13.55 on CAPM (in %)

Beta 1.26 1.26 1.26

Price of underlying shares at 150.00 150.00 150.00 the time of the options grant

RELATED PARTY TRANSACTIONS

All related party transactions that were entered into during the financial year were on arm's length basis and were in the ordinary course of the business. There were no materially significant related party transactions made by the Company with the Promoters, Key Management Personnel or other designated persons which may have potential conflict with interest of the Company at large. The Company has formulated a policy on Related Party Transaction which is available on the website of the Company at the link http://www.vmart.co.in/corporate. html. The details of related party transactions entered during the year are provided in the accompanying financial statements.

DEPOSITS

During the FY14-15, your Company has not accepted any deposits within the meaning of Section 73 and 76 of the Companies Act, 2013 read with the Companies (Acceptance of Deposits) Rules, 2014 and other applicable laws and as such no amount of principal or interest was outstanding as on date of the Balance Sheet.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS UNDER SECTION 186 OF THE COMPANIES ACT, 2013. The Company has not given any loan or guarantees covered under the provisions of Section 186 of the Companies Act, 2013.

MATERIAL CHANGES AND COMMITMENTS AFFECTING FINANCIAL POSITION OF THE COMPANY BETWEEN 31ST MARCH, 2015 AND THE DATE OF BOARD'S REPORT.

There are no such material changes and commitments affecting 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.

SUBSIDIARY COMPANIES, JOINT VENTURES & ASSOCIATE COMPANIES

The Company does not have any Subsidiary, Joint Venture and Associate Company.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

Our Company has constituted a Corporate Social Responsibility Committee of the Board and of which Mr. Lalit Agarwal is the Chairman, and Mr. Madan Gopal Agarwal, Mr. Aakash Moondhra and Ms. Sonal Mattoo are the members. The Committee is responsible for formulating and monitoring the CSR policy of the Company. Details about the CSR policy of the Company and initiatives taken by the Company on CSR during the year are available on our website.

As per the Companies Act, 2013 Every company having net worth of rupees five hundred crore or more, or turnover of rupees one thousand crore or more or a net profit of rupees five crore or more during any financial year shall spend in every financial year, at least two percent of the average net profits of the company made during the three immediately preceding financial year, in pursuance of its Corporate Social Responsibility Policy. Accordingly, our Company requires to spend H53,72,487 on CSR activities during the year.

The annual report on CSR Activities is appended in Annexure-C to this Board Report.

JUSTIFICATION FOR NOT SPENDING THE PRESCRIBED AMOUNT ON CSR ACTIVITIES

As per the requirements of Section 135 of Companies Act, 2013, V- Mart has contributed an amount of Rs.21,00,000/- (Rupees Twenty One Lac Only) for the benefit of the Society out of Rs.53,72,487/- (Rupees Fifty Three Lac Seventy Two Thousand Four Hundred And Eighty Seven Only) which is required to be spent as per the provisions.

The Shortfall of Rs.32,72,487/- (Thirty Two Lac Seventy Two Thousand Four Hundred and Eighty Seven Only) is due to unavailability of adequate proposals. The Company is evaluating various proposals to spend the required amount and serve the society at its best.

CONSERVATION OF ENERGY

The operational activity of the Company does not involve large energy consumption. In any case, conservation of energy is considered to be a priority and therefore ensuring minimum consumption by way of better energy conservation programs, training/ awareness of the employees, layout of machines and prompt upkeep is a continuous exercise.

TECHNOLOGY ABSORPTION

The Company is taking care of latest development and advancements in technology and all steps are being taken to adopt the same.

FOREIGN EXCHANGE EARNINGS AND OUTGO

CODE OF CONDUCT

The Board of Directors has approved a Code of Conduct which is applicable to the Members of the Board and all employees in the course of day to day business operations of the Company. The Company believes in "Zero Tolerance" against bribery, corruption and unethical dealings / behaviors of any form and the Board has laid down the directives to counter such acts. The code laid down by the Board is known as "Code of Business Conduct" which forms an Appendix to the Code. The Code has been posted on the Company's website.

VIGIL MECHANISM / WHISTLE BLOWER POLICY

The Company has a Whistle Blower Policy / Vigil Mechanism to deal with instances of fraud and mismanagement, if any. The purpose of this mechanism is to provide a framework to report concern about unethical behavior, actual or suspected fraud or violation of the Company's Code of Conduct or ethics policy and provide adequate safeguards against victimization of the person availing this mechanism. This Policy has been appropriately communicated within the organization and is effectively operational. The policy provides mechanism whereby whistle blower may send protected disclosures directly to the Chairman of Audit Committee or Vigilance Officer.

PREVENTION OF INSIDER TRADING

The Company has adopted a Code of Conduct for Prevention of Insider Trading with a view to regulate dealing in securities by the Directors and designated employees of the Company. The Code requires pre-clearance for dealing in the Company's shares and prohibits the purchase or sale of Company shares by the Directors and the designated employees while in possession of unpublished price sensitive information in relation to the Company and during the period when the Trading Window is closed. The Board is responsible for implementation of the Code.

All Board of Directors and the designated employees have confirmed compliance with the code.

RISK MANAGEMENT

Your Company is working in an open environment and hence faces various types of risk. Company has analyzed all the possible types of risk and has taken steps to cover as much as possible if the tools of risk management are reasonably priced and available .Company has a clear policy and management to cover the various risks.

HUMAN RESOURCE MANAGEMENT

We are focused to attract and retain talented skills and make them motivated through various skill-development programmes. We provide quality workplace to our employees and provide platform to develop and to grow.

The statement containing the names and other particulars of employees in accordance with Section 197 (12) of the Companies Act, 2013, read with Rules 5(1) & 5(2)of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is appended as Annexure-D to the Board Report.

No employee of the Company employed throughout the financial year was in receipt of remuneration of H60 Lac or more, or employed for the part of the year and in receipt of Rs.5 lac or more a month under Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, except Mr. Lalit Agarwal, Chairman & Managing Director of the Company.

AUDITORS

At the Annual General Meeting held on 23rd September, 2014, M/s Walker Chandiok & Co. LLP, Chartered Accountants, were appointed as statutory auditors of the Company to hold office till the conclusion of the Annual General Meeting to be held in the calendar year 2017. In terms of first proviso to Section 139 of the Companies Act, 2013 the appointment of the auditors shall be placed for ratification at every AGM, accordingly the appointment of M/s Walker Chandiok & Co. LLP, Chartered Accountants, as Statutory Auditors of the Company, is placed for ratification by the shareholders. In this regard, the Company has received a certificate from the auditors to the effect that if they are reappointed, it would be in accordance with the provisions of Sections 141 of the Companies Act, 2013.

SECRETARIAL AUDITOR

VKC & CO., Practicing Company Secretaries, was appointed as Secretarial Auditors to conduct the Secretarial Audit of the Company for the FY14-15, as required under Section 204 of the Companies Act, 2013 and rules there under. The Secretarial Audit report forms part as Annexure-E to the Board's report.

AUDITORS REPORT

There was no observation or qualification in the Auditors Report for the financial year ended 31st March, 2015, it is self explanatory in nature.

INTERNAL FINANCIAL CONTROL

The Board has adopted adequate policies and procedures for ensuring orderly and efficient conduct of its business, including adherence to the Company's policies, the safeguarding of its assets, prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial disclosures.

SIGNIFICANT AND MATERIAL ORDERS

There was no such order passed by the regulators or courts or tribunals impacting the going concern status and Company's operations in future during the year under review.

DISCLOSURE UNDER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013

The disclosures as per the Anti-Sexual Harassment Policy of the Company and applicable Act, thereof are as follows :

(a) Number of complaints of sexual harassment received in the year: NIL

(b) Number of complaints disposed off during the year: NIL

(c) Number of cases pending for more than ninety days: NIL

(d) Number of workshops on awareness programme against sexual harassment carried out:1

(e) Nature of action taken by the employer or district officer: NIL

DIRECTOR'S RESPONSIBILITY STATEMENT

Pursuant to Section 134(3)(c) of the Companies Act, 2013, the Directors hereby state and confirm that :

a) in the preparation of the annual accounts, the applicable accounting standards have been followed.

b) the Directors have selected such accounting policies and applied them consistently and 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 or loss of the Company for that period.

c) the Directors have taken proper and sufficient care 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.

d) the Directors have prepared the annual accounts on a going concern basis.

e) the Directors had laid down Internal Financial Controls to be followed by the Company and that such internal financial controls are adequate and operating effectively.

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

ACKNOWLEDGEMENT

Your Directors take this opportunity to express their sincere appreciation for the excellent support and co-ordination extend by the shareholders, customers, suppliers, bankers and other business associates. Your Directors gratefully acknowledges ongoing co-operation and support provided by Central Government and State Government and all regulatory authorities. Your Directors also place on records their appreciation for the contribution made by employees at all levels.



By the order of Board

For and on behalf of Board of Directors



Place: Gurgaon Lalit Agarwal

Date: 30th July, 2015 Chairman & Managing Director

DIN: 00900900


Mar 31, 2014

Dear members

The Directors have great pleasure in the presenting the 12th Annual Report of the Company together with the audited accounts for the year ended 31st March, 2014.

FINANCIAL RESULTS

The operating results of the Company for the year under review are as follows:

Particulars For the year ended For the year ended 31.3.2014 31.3.2013

Revenue 57,567.30 38,364.87

Profits/(Loss) before 4,871.72 3,422.59 Depreciation & Tax

Less: Depreciation 1,089.44 761.85

Less: Provision for Tax 1,266.56 860.31

Profits/(Loss) before 2,515.72 1,800.43 Appropriation

Prior period items Nil (63.60)

Profit before Appropriation 2,515.72 1,800.43

Less: Utilised for 265.44 154.78 Dividend Issue

Balance carried 2,250.28 1,645.66 forward to Balance Sheet

V-MART IPO

Your Company has successfully concluded the pubic issue of equity shares during the year 2012-13 aggregating to Rs.36,435 million.

The initial public offer of the Company was subscribed 1.19 times. While the qualified institutional buyers portion in the offer was subscribed 1.52 times, the non-institutional investors and retail investors segments were subscribed 1.39 and 0.79 times, respectively, your Directors wish to express their sincere appreciation for your support in this regard.

The means of finance for the objects of IPO and status of utilisation of proceeds raised through the IPO by the Company as on 31st March, 2014 as referred above are as follows:

Means of finance for the objects of IPO are as under:

Particulars (Rs. in lacs)

Proceeds from the fresh issue (A) 5,798.10

Proceeds from Pre-IPO placement (B) 2,625.00

Internal accruals (C)" 717.60

9,140.70

The utilisation of the aforementioned means of finance as on 31st March 2014 is as under:

Particulars Utilisation Utilisation of Adjustments Balance amount planned as IPO proceeds (utilisation to be utilised per prospectus as on 31 of surplus as on 31 March March 2014 (D) towards 2014 other objects)

To open new stores 6,970.40 4,052.41 6.60 2,924.59

Expansion of 438.70 130.19 - 308.51 distribution center

Working capital 1,000.00 1,000.00 - Nil Share issue expenses 731.60 725.00 (6.60)* Nil

9,140.70 5,907.60 - 3,233.10

* Surplus available after actual expenses incurred will be utilised towards other objects of the issue.

Interim utilisation of balance IPO proceeds up to 31st March 2014 is as under:

Particulars (Rs. in lacs)

Balance unutilised amount 3,233.10 assuming utilisation is out of IPO proceeds: (E=A B C-D)

Amount temporary kept in mutual 3,233.10 funds:

PERFORMANCE REVIEW

The Indian retail sector accounts for over 20% of the country''s gross domestic product (GDP) and contributes 8% to total employment. The current estimated value of the Indian retail sector IS about 500 billion USD. The penetration level of modern retail (currently 5%) will increase around six-fold from the current 27 billion USD to 220 billion USD in 2020. The Indian retail sector is expected to grow at a CAGR of 15 to 20%.Your Company continues with its existing approach to endeavor to establish its growth pattern in the retail industry with a chain of stores under the "V-Mart" brand in the Retail Industry.

During the year the Net Sales of the Company increased by 50% from Rs.383.46 crores in F.Y. 2012-13 to Rs.574.95 crores in F.Y. 2013-14. The Operating Profits (EBITDA) has been increased by 36% from Rs.39.97 crores in F.Y.2012-13 to Rs.54.49 crores in F.Y. 2013-14. The Company posted Profit after Tax (PAT) of Rs.25.15 crores in the current financial year 2013-14 as against the Profit after Tax of Rs.18.00 crores in the previous financial year.

A detailed analysis of Company''s operations in terms of performance in markets, business outlook, risks and concerns forms part of the Management Discussion and Analysis, a separate section of this Annual Report.

OPERATIONS REVIEW

During the year the Company has continued with its approach to expand its business taking the advantage of its Brand value it has created in the market.

During the year, the Company opened 23 new stores under the brand V-Mart with spread over an area of 712,256 sq ft.

With a view to improve operational efficiencies and to minimise the transportation and other costs, the Company is in process to shift/relocating all its warehouses from Delhi to one consolidated warehouse at Bilaspur, Haryana.

During the year 3 stores were closed due to lower footfall, poor sales and nonprofit making.

The Company has during the year implemented a space policy at the stores with an objective of allocating space to the line of biz which has the higher propensity to generate better returns on the space allocated. The initial results are very encouraging and the Company is in the process of further streamlining the same.

Factors like negotiating rentals, store opening and rationalisation, working capital management, regionalisation, cost optimisation and manpower planning are some of the key issues for the Company in the current context of re establishment.

AWARDS & ACHIEVEMENTS

During the year no awards/recognitions were received by the Company.

OPERATING RESULTS AND BUSINESS:

Your Company completes its twelth year in the field of fashion retailing.

Sustained focus on retail operational efficiency coupled with a diversified cost effective geographic footprint has contributed to a satisfactory business performance.

Revenue growth can be attributed to the encouraging performance of stores located in strategic catchments spread across northern, western and eastern parts of India. The Company has executed strategic measures like store expansion in prospective catchments, inventory rationalisation, focus on garnering higher top lines and control of operational costs.

DIVIDEND

Your Directors recommend for your consideration a dividend of 10% (Rs.1.79 crores) (i.e. Re. 1 per equity share), excluding the Dividend Distribution Tax, be paid out of the profits of the Company for the year 2013-14 on the Equity Shares, subject to approval by the members at the Annual General Meeting.

FINANCE

Your Company continues with various initiatives for bringing down the cost of borrowings which includes a judicious mix of short-term working capital borrowing, long term loans for expansion at competitive terms, so as to have funds at competitive cost.

PUBLIC DEPOSITS

Your Company has not accepted any deposit within the meaning of Section 58A of the Companies Act, 1956 and the rules framed there under, during the period.

INDUSTRIAL RELATIONS

The Company has developed a climate of cooperation, & confidence for its employees.

Our relation with employees is based on mutual trust & respect and we continue to maintain the same spirit at all times.

PARTICULARS OF EMPLOYEES

There was no employee of the Company during the period, whose particulars are required to be given in the Director''s Report under section 217 (2A) of the Companies Act, 1956 read with Companies (Particulars of Employees) Rules, 1975.

Employee stock option scheme

Your Company has implemented an Employee Stock Option Scheme, which was approved by the Board of Directors and the shareholders vide resolution dated 2 July, 2012 and 10, July 2012 respectively (the V-Mart ESOP Scheme 2012), consequent to which 300,000 Equity Shares of ''10 each will be granted upon exercise of as stock options (ESOPs) to eligible employees.

The options will vest over a period of 12 months to 36 months of continued employment from the grant date.

On 20th July 2012, the Company has granted 153,252 ESOPs at an exercise price, as determined by the Remuneration Committee, of ''150.00 per option with graded vesting (i.e. 45.975 options vesting after 12 months from the date of grant, 45.975 options vesting after 24 months from the date of grant and 61,302 options vesting after 36 months from the date of grant). The vesting of options is subject to the continued employment of the grantee over the vesting period. The options granted can be exercised after vesting at any time before the expiry of eight years from the grant date.

The particulars of Employees Stock Option Plan (ESOP) Schemes, as required by SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999, as amended, are appended herewith and forms part of this Report.

Listing

The equity shares of your Company continue to be listed at the BSE Ltd. (BSE) and the National Stock Exchange of India Ltd. (NSE).

The Company has paid the requisite listing fee to the Stock Exchanges for the financial year 2014-15.

MANAGEMENT DISCUSSION AND ANALYSIS

The Management Discussion and Analysis as required under Clause 49 of the Listing Agreement has been dealt with extensively as part of this Annual Report.

AUDITORS

M/s Walker, Chandiok & Co., Chartered Accountants, Statutory Auditors of the Company hold office till the conclusion of the ensuing Annual General Meeting and being eligible, offer themselves for re-appointment. The Company has received a letter from the Statutory Auditors to the effect that their re-appointment, if made at the ensuing Annual General Meeting, would be within the limits prescribed under Section 141 of the Companies Act, 2013.

The observations of the Auditors in the Auditor''s Report are explained, whenever necessary, in appropriate note to accounts.

DIRECTORS

The Board of Directors of the Company is duly constituted.

In terms of the provisions of Section 152 of the Companies Act, 2013 and Articles of Associations of the Company, Mr. Hemant Agarwal (DIN 02242019), Director is liable to retire by rotation at the forthcoming Annual General Meeting and being eligible, offer themselves for reappointment.

The necessary resolution for obtaining approval of Members have been incorporated in the notice of the ensuing Annual General Meeting. The requisite disclosures regarding appointment/ re-appointment of Directors have been made in the explanatory statement to the notice of the ensuing Annual General Meeting.

The Company has received requisite disclosures and undertakings from all the Directors in compliance with the provisions of the Companies Act.

DIRECTORS'' RESPONSIBILITY STATEMENT

Pursuant to the requirements of Section 217(2AA) of the Companies Act, 1956 the Directors of yours Company hereby state and confirm that:-

1. In the preparation of the Annual Accounts for the year, applicable Accounting Standards have been followed along with proper explanation relating to material departures, if any;

2. They have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at the end of the financial year ended March 31st, 2014 and of the profit of the Company for that period;

3. They have taken proper and sufficient care 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;

4. They have prepared the Annual Accounts for the year ended March, 31st, 2014 on a going concern basis.

COMPLIANCE WITH CODE OF CONDUCT

The Company has evolved and adopted a code of conduct for its Board of Directors and its management personnel based on the principles of good corporate governance and best management practices. The declaration of compliance with the Code of Conduct has been received from them. The Code is available on the website of the Company.

REPORT ON CORPORATE GOVERNANCE

The Company has taken adequate steps to ensure that the conditions of Corporate Governance as stipulated in Clause 49 of the Listing Agreement with the Stock Exchanges are complied with. A separate section on Corporate Governance and Auditors Certificate is annexed hereto and forms part of this Report.

CONSEVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

In view of the nature of activities which are being carried on by the Company, the particulars prescribed under Section 217(1)(e) of the Companies Act, 1956 read with Companies (Disclosures of Particular''s in the report of Board of Directors) rules, 1988 regarding conservation of Energy & Technology Absorption are not applicable to the company.

The details of foreign exchange earnings and outgo during the year under review are as follows:

Current Year (Rs.)

(a) Earnings Nil

(b) Outgoing 9,14,967

ACKNOWLEDGEMENT

Yours Directors take this opportunity to express their sincere appreciation for the excellent support and co-operation extend by the shareholders, customers, suppliers, bankers and other business associates. Your Directors gratefully acknowledge ongoing cooperation and support provided by Central and State Government and all regulatory authorities. Your Directors also place on record their appreciation of the contribution made by employees at all levels.

Place: New Delhi By the Order of Board Date: 01-05-2014 For on behalf of Board of Directors

CHAIRMAN


Mar 31, 2013

The Directors have great pleasure in the presenting the 11th Annual Report of the Company together with the audited accounts for the year ended 31st March, 2013.

FINANCIAL HIGHLIGHTS

The operating results of the Company for the year under review are as follows:

( Rs. in million)

Year ended Year ended March 31, 2013 March 31,2012

Revenue 3,836.49 2,819.54

Profits/(Loss) before Depreciation & Tax 342.25 215.70

Less: Depreciation 76.18 58.30

Less: Provision for Tax 86.03 52.84

Profit before Appropriation 180.04 104.56

Less: Utilised for Dividend Issue 15.47 3.42

Balance carried forward to Balance Sheet 164.57 101.14

V-MART IPO

Your Company has concluded a public issue of 57, 46,000 Equity Shares of face value of Rs.10 each for cash at a price of Rs.210 per Equity Share (including a share premium of Rs.200 per Equity Share) aggregating to Rs.120,666 million comprising of a fresh issue of 4,011,000 Equity Shares by our Company aggregating to Rs.84,231 million and an offer for sale of 1,735,000 Equity Shares aggregating to Rs.36,435 million.

The Company has also made a pre-IPO placement of 1,250,000 Equity Shares of the face value of Rs.10 each at a price of Rs.210 per Equity Shares to pre-IPO investors.

The funds raised through the IPO will be utilised to finance V-Mart''s plans to open 60 new stores, for the expansion of distribution centeres, for working capital requirements, for general corporate purposes and to meet the issue expenses.

The initial public offer of V-Mart Retail Ltd has been subscribed 1.19 times. While the qualified institutional buyer''s portion in the offer was subscribed 1.52 times, the non-institutional investors and retail investors segments were subscribed 1.39 and 0.79 times, respectively.

Pursuant to Clause 5A of the Listing Agreement the Company has opened separate suspense accounts for share issued in dematerialised and physical forms which have remained unclaimed.

PERFORMANCE REVIEW

The Indian retail industry has experienced significant growth over the last decade with a noticeable shift towards organised retailing formats. The industry is moving towards a modern concept of retailing. India''s retail market is expected to grow at 7 per cent over the next 10 years, reaching a size of US$ 850 billion by 2020. Traditional retail is expected to grow at 5 per cent and reach a size of US$ 650 billion (about 76 per cent), while organised retail is expected to grow at 25 per cent and reach a size of US$ 200 billion by 2020. By working under the brand name of V-Mart Retail we feel that a significant business opportunities lie ahead for the retailers. The overall retail market continues to grow and consumer aspiration for a better service environment still remains intact. Your Company continues to endeavour to reinstate its growth pattern in the retail industry with a chain of stores under the V-Mart brand in the retail industry.

OPERATIONS REVIEW

During the year, the Company was involved in the process to overhauling its business taking the advantage of its brand value it has created in the market thus far.

During the year, Company opened 16 new stores under the brand V-Mart with spread over an area of 122,928 sq.ft.

The Company has also opened a warehouse at Mundka-2, Head Office during FY 2012-13.

The store at Karnal was closed due to an absence of footfall, poor sales and lack of financial viability.

Factors like new store openings, monitoring the financial viability of stores, financial management, HR management and manpower planning are some of the key issues for the Company in the current context.

AWARDS AND ACHIEVEMENTS

We have been chosen as an ‘Indian Power Brand 2012 – 13'' by Planman Media. We were placed as a finalist in the ‘Most Admired Retailer of the Year: Discount Retail category'' at the Images Retail Awards 2011.

OPERATING RESULTS AND BUSINESS:

Your Company completes its eleventh year in the field of fashion retailing.

Sustained focus on understanding customer preferences, fashion merchandise, operational efficiency coupled with a strong orientation mediated towards sales and cost control has helped eke out a satisfactory business performance.

Revenue growth can be attributed to the encouraging performance of stores located in strategic catchments spread across northern, western and eastern parts of India. The Company has executed strategic measures like store expansion in prospective catchment areas, inventory rationalisation, focus on garnering higher toplines and better control of operational costs.

DIVIDEND

The Directors recommend for your consideration a dividend of Rs.1,79,58,738 (Rs. one crore seventy nine lakh fifty eight thousand seven hundred and thirty eight only) (i.e. Rs. 1 per share), excluding the Dividend Distribution Tax, be paid out of the profits of the Company for the year 2012-13 on the Equity Shares to those shareholders whose name appear in the Register of Members of the Company on September 25, 2013, subject to approval by the members at the Annual General Meeting.

FINANCE

Your Company continues to implement various initiatives for bringing down the cost of borrowings which includes a judicious mix of short-term working capital borrowing, long- term loans for expansion at competitive terms, so as to have funds available at competitive costs.

PUBLIC DEPOSITS

Your Company has not accepted any deposit within the meaning of Section 58A of the Companies Act, 1956 and the rules framed there under, during the period.

INDUSTRIAL RELATIONS

The Company has developed a climate of cooperation, and confidence for its employees.

Our relation with employees is based on mutual trust and respect and we continue to maintain the same spirit at all times.

PARTICULARS OF EMPLOYEES

There was no employee of the Company during the period, whose particulars are required to be given in the Director''s Report under Section 217 (2A) of the Companies Act, 1956 read with Companies (Particulars of Employees) Rules, 1975.

EMPLOYEE STOCk OPTION SCHEME

Your Company has implemented an Employee Stock Option Scheme, which was approved by the Board of Directors and the shareholders vide resolution dated 2 July 2012 and 10 July 2012 respectively (the V-Mart ESOP Scheme 2012), consequent to which 300,000 Equity Shares of Rs.10 each will be granted upon exercise of as stock options (ESOPs) to eligible employees. The options will vest over a period of 12 months to 36 months of continued employment from the grant date.

On 20 July 2012, the Company has granted 153,252 ESOPs at an exercise price, as determined by the Remuneration Committee, of Rs.150.00 per option with graded vesting (i.e. 45,975 options vesting after 12 months from the date of grant, 45,975 options vesting after 24 months from the date of grant and 61,302 options vesting after 36 months from the date of grant). The vesting of options is subject to the continued employment of the grantee over the vesting period. The options granted can be exercised after vesting at any time before the expiry of eight years from the grant date.

The particulars of Employees Stock Option Plan (ESOP) Schemes, as required by SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999, as amended, are appended herewith and forms part of this Report.

MANAGEMENT DISCUSSION AND ANALYSIS The Management Discussion and Analysis as required under Clause 49 of the Listing Agreement has been dealt with extensively as part of this Annual Report.

AUDITORS

M/s Walker, Chandiok & Co., Chartered Accountants, Chartered Accountants, Statutory Auditors of the Company, retire at the conclusion of the ensuing Annual General Meeting and being eligible, offer themselves for reappointment. They have expressed their willingness to act as Auditors of the Company, if appointed, and have further confirmed that the said appointment would be in conformity with the provisions of Section 224 (1B) of the Companies Act, 1956. The Board recommends their appointment.

AUDITOR''S QUALIFICATION

The observations made in the Auditor''s Report are self- explanatory and therefore do not call any further comments under Section 217(3) of the Companies Act, 1956.

Your Directors request you to appoint Auditors for the current year as set out in the accompanying notice of the Annual General Meeting.

DIRECTORS

The Board of Directors of the Company is duly constituted.

At the ensuing annual general meeting Sh. Aakash Moondhra, will retire by rotation and, being eligible, offer themselves for reappointment in terms of provisions of Articles of Association of the Company.

The brief resume/details relating to Directors who are to be appointed/reappointed are furnished in the explanatory statement to the notice of the ensuing Annual General Meeting.

The Company has received requisite disclosures and undertakings from all the Directors in compliance with the provisions of the Companies Act, 1956.

DIRECTORS'' RESPONSIBILITY STATEMENT Pursuant to the requirements of Section 217(2AA) of the Companies Act, 1956 the Directors of yours Company hereby state and confirm that:- 1. In the preparation of the Annual Accounts for the year, applicable Accounting Standards have been followed along with proper explanation relating to material departures, if any;

2. They have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at the end of the financial year ended March 31st, 2013 and of the profit of the Company for that period;

3. They have taken proper and sufficient care 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;

4. They have prepared the Annual Accounts for the year ended March, 31st, 2013 on a going concern basis.

COMPLIANCE WITH THE CODE OF CONDUCT The Company had evolved and adopted a Code of Conduct for its Board of Directors and its management personnel based on the principles of good corporate governance and best management practices. The declaration of compliance with the Code of Conduct has been received from them. The Code is available on the website of the Company.

REPORT ON CORPORATE GOVERNANCE The Company has taken adequate steps to ensure that the conditions of Corporate Governance as stipulated in Clause 49 of the Listing Agreement with the Stock Exchanges are complied with. A separate section on Corporate Governance and Auditors Certificate is annexed hereto and forms part of this Report.

CONSEVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO In view of the nature of activities which are being carried on by the Company, the particulars prescribed under Section 217(1)(e) of the Companies Act, 1956 read with Companies (Disclosures of Particular''s in the report of Board of Directors) Rules, 1988 regarding conservation of Energy & Technology Absorption are not applicable to the Company.

The details of foreign exchange earnings and outgo during the year under review are as follows:

Current Year (Rs.)

(a) Earnings Nil

(b) Outgoing 1,764,932

IMPORTANT INTIMATION TO THE MEMBERS As you may be aware, the Ministry of Corporate Affairs, Government of India (''MCA'') as recently introduced ''Green Initiative in Corporate Governance'' by allowing paperless compliance by companies i.e. service of notice/documents including Annual Report can be sent by e-mail to its members. Keeping in view the underlying spirit and pursuant to the said initiative of MCA, we request to the members who have not registered their e-mail addresses, so far, to register their e-mail addresses, in respect of electronic holdings with the depository through their respective Depository Participants. Members'' holding shares in physical form are also requested to register their e-mail addresses with Company''s Registrar & Share Transfer Agent viz. Karvy Computershare Private Limited.

ACkNOWLEDGEMENT

Yours Directors take this opportunity to express their sincere appreciation for the support and cooperation provided by the shareholders, customers, suppliers, bankers and other business associates. Your Directors gratefully acknowledge the ongoing cooperation and support provided by Central and State Governments and all regulatory authorities. Your Directors also place on record their appreciation of the contribution made by employees across all levels.

By the Order of Board

For on behalf of Board of Directors

Place : New Delhi

Date : 16th May, 2013 CHAIRMAN

 
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