Directors Report of Valson Industries Ltd.

Mar 31, 2015

TO THE MEMBERS OF VALSON INDUSTRIES LIMITED

The Directors take pleasure in presenting the Thirty First Annual Report together with the audited financial statements for the year ended 31st March, 2015. The Management Discussion and Analysis has also been incorporated into this report.

1 FINANCIAL RESULTS : (Rs. in Lacs)

Particulars Year ending Year ending 31.03.15 31.03.14

Revenue from operations (net) 10627.19 10562.74

Operating Profit (PBIDT) 719.36 634.53

Finance Cost 122.42 184.48

Depreciation 306.82 241.15

Profit before Tax 290.12 208.89

Taxation (74.84) (53.44)

Profit after Tax 215.28 155.45

Balance of Profit brought forward 1041.42 972.68

Amount available for appropriations 1256.70 1128.13

Appropriations:

Transfer to General Reserve 15.00 15.00

Dividend on Equity Shares 76.61 61.29

Dividend Tax on Equity Shares 15.68 10.42

Balance carried forward to Balance Sheet 1149.41 1041.42

Total 1256.70 1128.13

EPS (Basic & Diluted) 2.81 2.03

The Company proposes to transfer an amount of Rs 15.00 Lacs to the General Reserves. An amount of Rs. 76.61 Lacs is proposed to be retained in the Statement of Profit and Loss.

2. HIGHLIGHTS OF PERFORMANCE

- Total net sales for the year were Rs. 10627.19 Lacs as compared to Rs. 10562.74 Lacs in 2014.

- Total Export sales for the year were Rs. 861.54 Lacs as compared to Rs. 675.86 Lacs in 2014.

- Total other income for the year increased by 78.3% to Rs. 199.54 Lacs as compared to Rs. 111.90 Lacs in 2014.

- Total Operating profit for the year was Rs. 719.36 Lacs as compared to Rs. 634.53 Lacs in 2014

- The Finance cost has been reduced to Rs. 122.42 Lacs as compared to Rs. 184.48 Lacs in 2014.

- Total profit before tax for the year was Rs. 290.12 Lacs as compared to Rs. 208.89 Lacs in 2014

- Total profit after tax for the year was Rs. 215.28 Lacs as compared to Rs. 155.45 Lacs in 2014

3. BUSINESS OPERATIONS

The company is one of the leading manufacturers of Polyester Texturised Dyed Yarn and Processors of Cotton and other Fancy yarns with Customers having diverse uses. Quality Products and Services has been the top most priority and after continuous research and efforts, the company has ventured into the dyeing of various qualities of yarns. The Company today has wide range of Polyester Dyed Yarn with a strong market acceptance and niche position for exclusive shades and grades.

After the continuous efforts and research this year the company has focused on producing and marketing it's value added products i.e. dyed yarns compared to white yarn and it has also focused on denier wise costing / profitability which will result into the best product mix to sell season wise so that the company always gets the better profitability.

The company has done the consolidation and shifted its all plant and machinery to Silli units from the small units situated at D & N H which result into the saving on manpower cost, power cost, Administration cost and other miscellaneous cost.

The company has sold its Silvassa Unit 1 in month of February 2015 and in April 2015 the company has sold its Dadra unit.

During the financial year 2014-2015 the company has improved its performance in many ways:

1) There is a growth of 8.60% in Texturising Production (4781 MT) and 6.5% in Dyeing production (4588 MT) compare to last year.

2) The growth of 4% in the quantity sold compare to last year and also the growth of 12% the dyed yarn sale compare to last year.

3) The Export turnover has increased to 27.5% i.e. Rs. 861.54 Lacs compare to Last year Rs.675.86 Lacs.

4) The Company has repaid it's term loan and Deposits and manage the working capital efficiently which results in reduction in finance cost drastically to Rs. 122.43 Lacs from Rs. 184.48 Lacs (i.e. reduction of 34%).

5) As per the schedule II of the Companies Act 2013 there is changes in the depreciation calculation which result into increase of depreciation by 27% i.e. Rs. 306.82 Lacs from Rs. 241.15 Lacs.

6) The Operating profit of the company is 6.75% compare to last year 6.01% (i.e. growth of 12.25%).

7) The Net profit before Tax of the company is 2.73% compare to last year 1.98% (i.e. growth of 38 %).

8) The Net profit after Tax of the company is 2.03% compare to last year 1.47% (i.e. growth of 37.6 %).

9) The Return of Net worth of the company is 9.02% compare to last year 6.76% (i.e. growth of 33.5 %).

4. DIVIDEND

Your Directors are pleased to recommend a final dividend of Rs. 1/- per equity share of Rs. 10 each. The total outgo for the current year amounts to Rs. 92.29 Lacs, including dividend distribution tax of Rs.15.68 Lacs as against Rs. 71.70 Lacs including dividend distribution tax of Rs.10.42 Lacs in the previous year.

5. SHARE CAPITAL

The paid up Equity Share Capital as on 31st March, 2015 was Rs. 766.08 Lacs. During the year under review, the Company has not issued shares with differential voting rights nor granted stock options nor sweat equity. As on 31st March, 2015, the Directors of the Company hold the equity shares of the Company as follows:

Name of the Director Number of Shares % of Total Capital

Mr.Suresh N. Mutreja 15,87,000 20.72

Mrs. Asha S. Mutreja 6,19,000 8.08

Mr. Varun S. Mutreja 2,93,000 3.82

Mr. Chandan S. Gupta Nil Nil

Mr. Surendra Kumar Suri 400 0.0052

Mr. Pradip C. Shah Nil Nil

6. FINANCE

Cash and cash equivalent as at 31st March, 2015 was Rs. 24.78 Lacs. The Company continues to focus on judicious management of its working capital. Receivables, inventories and other working capital parameters were kept under strict check through continuous monitoring.

6.1 DEPOSITS

The Company has not accepted deposits from Public. The Company has accepted deposit from the members and directors falling within the ambit of Section 73 of the Companies Act, 2013 and the Companies (Acceptance of Deposits) Rules, 2014. The outstanding deposits as on 31st March, 2015 is Rs. 80.00 Lacs accepted from members and directors. There are no defaults in repayment of deposits and interest and no overdue deposits are outstanding as on 31st March, 2015.

6.2 PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

Details of Loans, Guarantees and Investments covered under the provisions of Section 186 of the Companies Act, 2013 are given in the notes to the Financial Statements.

7. CORPORATE SOCIAL RESPONSIBILITY INITIATIVES

The criteria prescribed for the applicability of Corporate Social Responsibility under Section 135 of the Companies Act, 2013 is not applicable to the Company.

8. BUSINESS RISK MANAGEMENT

The nature of business is manufacturing of Dyed Yarn. The inherent risk to the business of the company is as follows:

a) Foreign Exchange Risk

b) Yarn Price Risk

c) Stiff Global Competition

d) Government Policy on incentives for exports

e) Risk elements in business transactions

f) Success of Cotton Crop

All the above risk has been discussed in the Management Discussion and Analysis Report. The nature of risk is dynamic of business and entrepreneurship. The Company has not formed Risk Management Committee and considered it as optional item as prescribed under Clause 49 of Listing Agreement.

9. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has an Internal Control System, commensurate with the size, scale and complexity of its operations. The scope and authority of the Internal Audit (IA) function is defined in the Internal Audit Charter. To maintain its objectivity and independence, the Internal Audit function reports to the Chairman of the Audit Committee of the Board.

The Company monitors and evaluates the efficacy and adequacy of internal control system in the Company, its compliance with operating systems, accounting procedures and policies at all locations of the Company. Based on the report of internal audit function, process owners undertake corrective action in their respective areas and thereby strengthen the controls. Significant audit observations and corrective actions thereon are presented to the Audit Committee of the Board.

10. VIGIL MECHANISM / WHISTLE BLOWER POLICY

The Company has a vigil mechanism to deal with instance of fraud and mismanagement, if any. The details of the Whistle Blower Policy are explained in the Corporate Governance Report.

11. SUBSIDIARY COMPANIES

The Company has no Subsidiary Company.

12. DIRECTORS

In terms of the Articles of Association of the Company, Mr. Suresh N. Mutreja, Managing Director, retires by rotation at the ensuing Annual General Meeting and being eligible, offers himself for re-appointment.

Pursuant to Section 149, 161(1) of the Companies Act, 2013 and Articles of Association of the Company, Mrs. Asha S. Mutreja was appointed as a Woman Director of the Company at the Board meeting held on 14th February, 2015. Mr. Pradip C. Shah was appointed as an Independent Director of the Company at the Board Meeting held on 14th February, 2015. Mr. Varun S. Mutreja was appointed as an Additional Director of the Company at the Board Meeting held on 14th November, 2014. In terms of provisions of Section 161(1) of the Act, Mrs. Asha S. Mutreja, Mr. Pradip C. Shah and Mr. Varun S. Mutreja would hold office up to the date of the ensuing Annual General Meeting. The Company has received notices in writing from members along with a deposit of requisite amount under Section 160 of the Act proposing the candidatture of Mrs. Asha S. Mutreja, Mr. Pradip C. Shah and Mr. Varun S.Mutreja for the office of Director of the Company.

The Company has also received declaration from Mr. Pradip C. Shah that he met with the criteria of independence as prescribed both under sub-section (6) of Section 149 of the Act and under Clause 49 of the Listing Agreement.

The Company proposes to appoint Mrs. Asha S. Mutreja as a Woman Director under Section 149 of the Act and Clause 49 of the Listing Agreement, liable to retire by rotation. It is proposed to appoint Mr. Pradip C. Shah as an Independent Director under Section 149 of the Act and Clause 49 of the Listing Agreement who shall hold office for a term up to 5 (five) consecutive years on the Board of the Company and he shall not be included in the total number of directors for retirement by rotation. It is proposed to appoint Mr. Varun S. Mutreja as a Director under Section 152 of the Act and Clause 49 of the Listing Agreement, liable to retire by rotation and the resolution number 5, 6 & 7 has been included in the notice for the same.

The Nomination and Remuneration Committee has recommended the appointment and payment of remuneration to Mr. Varun S. Mutreja as Chief Financial Officer and Mrs. Asha S. Mutreja as Whole-Time Director of the Company. The Board of Directors proposes to appoint Mr. Varun S. Mutreja as Chief Financial Officer and Mrs. Asha S. Mutreja as Whole-Time Director of the Company and Resolution No.8 & 9 has been included in the notice respectively.

12.1 Board Evaluation

Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement, the Board has carried out an annual performance evaluation of its own performance, the directors individually as well as the evaluation of the working of its Audit, Nomination & Remuneration and Stakeholders' Relationship Committees. The manner in which the evaluation has been carried out has been explained in the Corporate Governance Report.

12.2 Remuneration Policy

The Board has, on the recommendation of the Nomination & Remuneration Committee framed a policy for selection and appointment of Directors, Senior Management and their remuneration. The Remuneration Policy is stated in the Corporate Governance Report.

12.3 Meetings

A calendar of Meetings is prepared and circulated in advance to the Directors.

During the year four Board Meetings and four Audit Committee Meetings were convened and held. The details of which are given in the Corporate Governance Report. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013.

13. DIRECTORS' RESPONSIBILITY STATEMENT

To the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors make the following statements in terms of Section 134(3)(c) of the Companies Act, 2013:

a) that in the preparation of the annual financial statements for the year ended 31st March, 2015, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;

b) that such accounting policies as mentioned in Note 2 of the Notes to the Financial Statements have been selected and applied consistently and judgment and estimates have been made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31st March, 2015 and of the profit of the Company for the year ended on that date;

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

d) that the annual financial statements have been prepared on a going concern basis;

e) that proper internal financial controls were in place and that the financial controls were adequate and were operating effectively.

f) that systems to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively.

14. RELATED PARTY TRANSACTIONS

All related party transactions that were entered into during the financial year were on an arm's length basis and were in the ordinary course of business. There are no materially significant related party transactions made by the Company with Promoters, Directors, Key Managerial Personnel or other designated persons which may have a potential conflict with the interest of the Company at large. However, the Company proposes to sale of 1705, IIIrd Phase, GIDC, Vapi, Gujarat to M/s. L. N. Industries (Mr. Lalit N. Mutreja, Partner and is brother of Mr. Suresh N. Mutreja) for consideration of Rs. 2,88,57,950/- which exceeds the limits /criteria as mentioned in the Act and SEBI Circulars. The necessary items for approval of members have been included in item No.11 of the notice.

All Related Party Transactions are placed before the Audit Committee as also the Board for approval. Prior omnibus approval of the Audit Committee is obtained on yearly basis for the transactions which are of a foreseen and repetitive nature. The transactions entered into pursuant to the omnibus approval so granted are at arm's length and a statement giving details of all related party transactions is placed before the Audit Committee and the Board of Directors for their approval on a quarterly basis.

As required under Section 134(3)(h) read with Rule 8(2) of Companies (Accounts) Rules, 2014, the details of Related Party Transactions is given in Form AOC-2 as "Annexure A" to the Directors Reports.

15. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS

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

16. AUDITORS

16.1 Statutory Auditors

The Company's Auditors, M/s Mehta Chokshi & Shah, Chartered Accountants, Mumbai who retire at the ensuing Annual General Meeting of the Company are eligible for reappointment. They have confirmed their eligibility under Section 141 of the Companies Act, 2013 and the Rules framed there under for reappointment as Auditors of the Company. As required under Clause 49 of the Listing Agreement, the auditors have also confirmed that they hold a valid certificate issued by the Peer Review Board of the Institute of Chartered Accountants of India.

Members' attention is invited to the observation made by the Auditors under "Emphasis of Matter" appearing in the Auditors Reports.

16.2 Secretarial Audit

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed Mr. Punit Shah, Company Secretary in Practice to undertake the Secretarial Audit of the Company. The Report of the Secretarial Audit Report is annexed herewith as "Annexure B".

16.3 Qualifications in Secretarial Audit Report

1. As per section 203(1)(ii), the Company is require to appoint Company Secretary. The Company has not appointed Company Secretary.

Management Response:

(i) The Company has appointed Mr. Pritesh H. Shah, Chartered Accountant as Compliance Officer of the Company who looks after the compliance of Companies Act, 2013 and SEBI Act and rules made thereunder.

(ii) The Company has avail the services of Practising Company Secretary for advising on compliance of Companies Act, 2013 and SEBI Act and rules made there under.

(iii) The Volume and Scope of work for the Company Secretary is less and it is not a full time work and the job of Company Secretary is not attractive commensurate with the scope of work and salary.

17. ENHANCING SHAREHOLDERS VALUE

Your Company believes that its Members are among its most important stakeholders. Accordingly, your Company's operations are committed to the pursuit of achieving high levels of operating performance and cost competitiveness, consolidating and building for growth, enhancing the productive asset and resource base and nurturing overall corporate reputation. Your Company is also committed to creating value for its other stakeholders by ensuring that its corporate actions positively impact the socio-economic and environmental dimensions and contribute to sustainable growth and development.

18. CORPORATE GOVERNANCE

As per Clause 49 of the Listing Agreement with the Stock Exchanges, a separate section on corporate governance practices followed by the Company, together with a certificate from the Company's Auditors confirming compliance forms an integral part of this Report.

19. ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

The information on conservation of energy, technology absorption and foreign exchange earnings and outgo stipulated under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014, is annexed herewith as "Annexure C".

20. EXTRACT OF ANNUAL RETURN

The details forming part of the extract of the Annual Return in form MGT-9 is annexed herewith as "Annexure D".

21. PARTICULARS OF EMPLOYEES

There is no employee in the Company drawing monthly remuneration of Rs. 5 Lacs per month or Rs.60 Lacs per annum. Hence the Company is not required to disclose any information as per Rule 5(2) of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.

22. REMUNERATION RATIO OF THE DIRECTORS/ KEY MANAGERIAL PERSONNEL (KMP)/EMPLOYEES

The information required pursuant to Section 197 read with Rule 5 (1) (i) of The Companies (Appointment and Remuneration) Rules, 2014 in respect of ratio of remuneration of each director to the median remuneration of the employees of the Company for the Financial Year are as follows

Name of the Director Designation Remuneration Per Annum (Rs. In Lacs )

Mr. Suresh N Mutreja* Managing Director 18.24

Mr. Varun S Mutreja Chief Financial Officer 7.05

Mr. Kunal S Mutreja Chief Executive Officer 7.30

includes the PF Employer's contribution

Total remuneration is Rs. 7.05 Lacs which includes Rs. 3.65 Lacs as Salary till Oct 2014 and Rs. 3.40 Lacs as Director's remuneration, as he was appointed as an additional director on 14.11.2014.

23. ACKNOWLEDGEMENTS

Your Directors thank the various Central and State Government Departments, Organizations and Agencies for the continued help and co-operation extended by them. The Directors also gratefully acknowledge all stakeholders of the Company viz. customers, members, dealers, vendors, bankers and other business partners for the excellent support received from them during the year. The Directors place on record their sincere appreciation to all employees of the Company for their unstinted commitment and continued contribution to the Company.

24. CAUTIONARY STATEMENT

Statements in the Board's Report and the Management Discussion & Analysis describing the Company's objectives, expectations or forecasts may be forward-looking within the meaning of applicable securities laws and regulations. Actual results may differ materially from those expressed in the statement. Important factors that could influence the Company's operations include global and domestic demand and supply conditions affecting selling prices of finished goods, input availability and prices, changes in government regulations, tax laws, economic developments within the country and other factors such as litigation and industrial relations.

For and on behalf of the Board of Directors

Mumbai (Mr. Suresh N. Mutreja) Date: 22nd May, 2015 Chairman & Managing Director

(Mr. Varun S. Mutreja) Chief Financial Officer

(Mr. Kunal S. Mutreja) Chief Executive Officer

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Mar 31, 2014

Dear Shareholders,

The Board of Directors have pleasure in presenting the 30th Annual Report on the business operations of your Company together with Audited Financial Accounts for the year ended March 31,2014.

FINANCIAL RESULTS : (Rs. in Lacs)

Particulars Year ending Year ending 31.03.14 31.03.13

Revenue from operations (net) 10562.74 9323.23

Operating Profit (PBIDT) 634.53 603.82

Finance Cost 184.48 207.38

Depreciation 241.15 247.49

Profit before Tax 208.89 148.95

Taxation 53.44 61.36

Profit after Tax 155.45 87.59

Balance of Profit brought forward 972.68 944.90

Amount available for appropriations 1128.13 1032.49

Appropriations:

Transfer to General Reserve 15.00 15.00

Dividend on Equity Shares 61.29 38.30

Dividend Tax on Equity Shares 10.00 6.51

Balance carried forward to Balance Sheet 1041.84 972.68

Total 1128.13 1032.49

EPS (Basic & Diluted) 2.03 1.14

(Previous Year''s figure have been recast, reclassified and regrouped wherever necessary to make them comparable with the figures of the Current Year.)

BUSINESS OPERATIONS:

The Company continues to retain its leadership in the dyed yarns segment.

FY 2014-15 proved to be a challenging year amidst global economic undertainies and distur- bances in many parts of the world. Despite these constraints and challenging environment, the company performed reasonably well and the highlights of the performance are as under:

- Revenue from operations increased by 13.94% to Rs 10562.74 lacs.

- Exports increased by 42.51% to Rs 675.86 lacs.

- PBDIT increased by 5.09% to Rs 634.53 lacs. This year company has reduce the power cost by 2.56% and staff cost has been increased by16.02%

- Net Profit after tax increased by 77.48% to Rs 155.45 lacs mainly due to control in power cost and finance cost compare to turnover.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT:

Management''s Discussion and Analysis Report for the year under review, as stipulated under Clause 49 of the Listing Agreement with the Bombay Stock Exchange, is presented in a separate section forming part of the Annual Report.

THRUST ON HIGHER VALUE ADDITION CONTINUES:

Your Company shall always continue its endeavor in Value Addition and Innovation drive. Our R&D Department remains actively engaged in fulfilling this objective by constantly developing new shades and proving our strength in terms of versatility in dyeing and colour innovation.

SEGMENT-WISE PERFORMANCE:

Your Company''s business activity falls within a single business segment viz. ''Yarns'' The sales are substantially in the domestic market, and the said financial statements are reflective of the information required by Accounting Standard 17"Segment Reporting", noti fied under the Companies (Accounting Standards) Rules,2006.

INSURANCE:

All the insurable interest of your company including inventories, buildings, plant and machinery and other assets under legislative enactments are adequately insured

ISO CERTIFICATION:

Your Company has successfully completed its recertification audit for further period of 3 years for the ISO 9001-2008 Certification from AGSI Certification Pvt Ltd. There by meeting the global quality and international standards.

UPGRADATION AND MODERNISATION:

During the year your company has done a need based changes by installing new techno and power savy ancillary machines i.e. Fully Electronic and automatic rewinding machines and other necessary utilities and electrical installations were acquired to give the best quality products to the customer and company has also started constructing building and roof at Silli units for it''s goal to consolidate the Texturising and Twisting activities under one roof to reduce power, manpower, administration cost and smooth functioning of business. The estimated capital cost is Rs. 95 Lacs. The company had already incurred Rs. 55 Lacs. This was financed from the internal accruals of the Company.

FIXED DEPOSITS:

The Company has accepted deposit from the Promoter, their relatives, friends and associates for expansion of Silli Unit.

EXPORT:

Your Comnany is exploring new avenues to increase the export base and has chalked out strategic growth plan for the potential market in Middle East, U K, Egypt, Mexico and other European markets.

APPROPRIATIONS:

DIVIDEND:

The Board of Directors have recommended Dividend of 8% i.e. Rs.0.80 per Equity Share for

the Financial Year ended March 31, 2014 (Previous Year Rs. 0.50 paise) amounting to Rs.61.29 Lacs (Previous Year Dividend of Rs. 38.30 Lacs).

The dividend tax liability borne by your Company is Rs. 10.00 Lacs (Previous Year Rs. 6.51 Lacs).

TRANSFER TO RESERVES:

The Company has transferred Rs. 15.00 Lacs to General Reserve.

TAXATION:

Provision for Taxation has been made in accordance with prevailing income-tax laws for the relevant Assessment year.

Provision is made for Deferred Tax to account for the timing differences.

TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO:

The information as prescribed under Section 217(1)(e) of the Companies Act, 1956 read with Rule 2 of the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 is given in Annexure I and forms part of this Report.

PERSONNEL:

There are no employees of your Company who comes within the purview of Section 217 (2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 during the year under review.

DIRECTORS:

In terms of the articles of association of the Company, Mr. Lalit Mutreja, Director, retires by rotation at the ensuing annual general meeting and being eligible, offers himself for re-appointment.

In terms of the articles of association of the Company, section 149 (10) of the Companies Act, 2013 and revised clause 49 of Listing Agreement dealing with Corporate Governance norms, Mr. Chandan Gupta and Mr. Surendrakumar Suri has completed 5 years term as Independent Directors as on 1st April, 2014. The Company proposes to re-appoint them, as Independent Directors for a further period of 5 years till 2019. The Company has received requisite notices in writing from members proposing Mr. Chandan Gupta and Mr. Surendrakumar Suri for appointment as Independent Directors.

The Company has received declarations from all the Independent Directors of the Company confirming that they meet with the criteria of independence as prescribed both, under subsection 6 of section 149 of the Companies Act, 2013 and under clause 49 of the listing agreement with the stock exchanges.

DIRECTORS'' RESPONSIBILITY STATEMENT:

Pursuant to the requirement under Section 217 (2AA) of the Companies Act, 1956 with respect to Directors'' Responsibility Statement, it is hereby confirmed that:

(i) in the preparation of the annual accounts for the financial year ended March 31, 2014, all the applicable accounting standards have been followed along with proper explanations relating to material departures.

(ii) 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 as at March 31,2014 and of the profit of the Company for the said period;

(iii) the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

(iv) the Directors have prepared the accounts for the financial year ended March 31, 2014 on a ''going concern'' basis.

CORPORATE GOVERNANCE:

Your Company has taken adequate steps to ensure that the conditions of Corporate Governance as stipulated in clause 49 of the Listing Agreement of the Stock Exchange are complied with. A separate section on Corporate Governance forms part of the Annual Report. A certificate from the Practicing Company Secretary regarding compliance of conditions of Corporate Governance as stipulated under clause 49 of the Listing Agreement is given in Annexure.

TRANSFER OF AMOUNTS TO INVESTOR EDUCATION AND PROTECTION FUND:

Pursuant to the provisions of section 205A (5) and section 205C of the Companies Act, 1956, relevant amounts which remained unpaid or unclaimed for a period of 7 years have been transferred by the Company from time to time on due dates to the Investor Education and Protection Fund.

AUDITORS:

M/s. Mehta Chokshi & Shah, Chartered Accountants, will retire as Auditors of the Company at the conclusion of the Annual General Meeting and are eligible for re-appointment. The company has received letter from them to the effect that their appointment, if made would be with in the prescribed limit under section 224 (1B) of the Company''s Act 1956.

Audit Committee and Board has recommended their re-appointment.

INDUSTRIAL RELATIONS:

The relationship with employees, suppliers and customers across the Company are cordial. ACKNOWLEDGEMENT:

Your Directors thank our customers, bankers and suppliers for their continued support during the year. Your Company places on record a deep sense of appreciation of the contribution made by the staff and workers at all levels. Our consistent growth was made possible by their hard work, solidarity, co-operation and support.

For and On behalf of the Board Suresh N. Mutreja Chairman & Managing Director

Place: Mumbai Date: 30th May, 2014

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Mar 31, 2013

Dear Shareholders,

The Board of Directors have pleasure in presenting the 29th Annual Report on the business operations of your Company together with Audited Financial Accounts for the year ended March 31,2013.

FINANCIAL RESULTS : (Rs. in Lacs)

Particulars Year ending Year ending 31.03.13 31.03.12

Revenue from operations (net) 9323.23 8308.98

Operating Profit (PBIDT) 603.82 483.26

Finance Cost 207.38 122.88

Depreciation 247.49 217.95

Profit before Tax 148.95 142.43

Taxes 61.36 25.67

Profit after Tax 87.59 116.76

Balance of Profit brought forward 944.90 843.14

Amount available for appropriations 1032.49 959.90

Appropriations:

Transfer to General Reserve 15.00 15.00

Dividend on Equity Shares 38.30 0.00

Dividend Tax on Equity Shares 6.51 0.00

Balance carried forward to Balance Sheet 972.68 944.90

Total 1032.49 959.90

EPS (Basic & Diluted) 1.14 1.52

(Previous Year''s figure have been recast, reclassified and regrouped wherever necessary to make them comparable with the figures of the Current Year.) BUSINESS OPERATIONS:

FY 2012-13 proved to be a challenging year amidst global economic undertainies and distur- bances in many parts of the world. Despite these constraints and challenging environment, the company performed reasonably well and the highlights of the performance are as under:

- Revenue from operations increased by 12.21 % to Rs 9323.23 lacs.

- Exports increased by 204.64% to Rs 438.99 lacs

- PBDIT increased by 24.95% to Rs 603.82 lacs

- Net Profit after tax decreased by 24.99% to Rs 87.59 lacs mainly due to increase in finance cost and enhanced deprecation.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT:

Management''s Discussion and Analysis Report for the year under review, as stipulated under Clause 49 of the Listing Agreement with the Mumbai Stock Exchange, is presented in a separate section forming part of the Annual Report.

THRUST ON HIGHER VALUE ADDITION CONTINUES:

Your Company continues its endeavor in Value Addition and Innovation drive. Our R&D Department remains actively engaged in fulfilling this objective by constantly developing new shades and proving our strength in terms of versatility in dyeing and colour innovation.

SEGMENT-WISE PERFORMANCE:

Your Company''s business activity falls within a single business segment viz. ''Yarns'' The sales are substantially in the domestic market, and the said financial statements are reflec- tive of the information required by Accounting Standard 17 "Segment Reporting", notified under the Companies (Accounting Standards) Rules, 2006.

INSURANCE:

All the insurable interests of your company including inventories, buildings, plant and machinery and other assets under legislative enactments are adequately insured.

ISO CERTIFICATION:

Your Company has successfully completed its surveillance audit for the ISO 9001 -2008 Certification from AGSI Certification Pvt. Ltd. thereby meeting the global quality and international standards.

EXPANSION:

The substantial expansion project of the Silli unit has been completed during the year. The total CAPEX incurred for the same over the period of years was Rs. 1051.95 Lacs.

FIXED DEPOSITS:

Your Company has accepted deposit from the Promoters, their relatives, friends and associates for the expansion of Silli Unit.

EXPORT:

Your Company is exploring new avenues to increase the export base and has chalked out strategic growth plan for the potential market in Middle East, U K, Egypt, Mexico, Ghana, Brazil and other European markets.

APPROPRIATIONS: DIVIDEND:

The Board of Directors have recommended Dividend of 5% i.e. Rs. 0.50 per Equity Share for the Financial Year ended March 31, 2013 (Previous Year Rs. Nil/-) amounting to Rs. 38.30 lacs (Previous Year Dividend of Rs. Nil). The dividend tax liability borne by your Company is Rs. 6.51 lacs (Previous Year Rs. Nil/-).

TRANSFERTO RESERVES:

The Company has transferred Rs. 15.00 Lacs to Generai Reserve.

TAXATION:

Provision for Current Taxation has been made in accordance with prevailing income-tax laws for the relevant Assessment year.

Provision is made for Deferred Tax to account for the timing differences.

TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO:

The information as prescribed under Section 217(1)(e) of the Companies Act, 1956 read with Rule 2 of the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 is given in Annexure I and forms part of this Report.

PERSONNEL:

There are no employees of your Company who comes within the purview of Section 217 (2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 during the year under review.

DIRECTORS:

Shri Chandan Gupta, Non Executive Independent Director retires by rotation and being eligible, offers himself for re-appointment.

DIRECTORS'' RESPONSIBILITY STATEMENT:

Pursuant to the requirement under Section 217 (2AA) of the Companies Act, 1956 with respect to Directors'' Responsibility Statement, it is hereby confirmed that:

(i) In the preparation of the annual accounts for the financial year ended March 31, 2013, all the applicable accounting standards have been followed along with proper explanation relating to materia) departures.

(ii) 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 as at March 31,2013 and of the profit of the Company for the said period;

(iii) the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

(iv) The Directors have prepared the financial statements ended March 31,2013 on a ''going concern'' basis.

CORPORATE GOVERNANCE:

Your Company has taken adequate steps to ensure that the conditions of Corporate Gover- nance as stipulated in clause 49 of the Listing Agreement of the Stock Exchange are complied with. A separate section on Corporate Governance forms part of the Annual Report. A certificate from the Practicing Company Secretary regarding compliance of con- ditions of Corporate Governance as stipulated under clause 49 of the Listing Agreement is given in Annexure.

AUDITORS:

M/s. Mehta Chokshi & Shah, Chartered Accountants, will retire as Auditors of the Company at the conclusion of the Annual General Meeting and are eligible for re-appointment. The company has received letter from them to the effect that their appointment, if made would be within the prescribed limit under section 224 (1B) of the Company''s Act 1956.

INDUSTRIAL RELATIONS:

The relationship with employees, suppliers and customers across the Company are cordial.

ACKNOWLEDGEMENT:

Your Directors thank our customers, bankers and suppliers for their continued support during the year. Your Company places on record a deep sense of appreciation of the contribution made by the staff and workers at all levels. Our consistent growth was made possible by their hard work, solidarity, co-operation and support.

For and On behalf of the Board

Suresh N. Mutreja

Chairman & Managing Director

Place: Mumbai

Date: 30th May, 2013

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Mar 31, 2012

The Board of Directors have pleasure in presenting the 28th Annual Report on the business operations of your Company together with Audited Financial Accounts for the year ended March 31, 2012.

FINANCIAL RESULTS : (Rs. in Lacs)

Particulars Year ending Year ending 31.03.12 31.03.11

Revenue from operations (net) 8308.98 8192.28

Operating Profit (PBIDT) 483.26 704.82

Finance Cost 122.88 80.28

Depreciation 217.95 225.68

Profit before Tax 142.43 398.86

Taxes 25.67 130.56

Profit after Tax 116.76 268.30

Balance of Profit brought forward 843.13 678.87

Amount available for appropriations 959.89 947.17

Appropriations:

Transfer to General Reserve 15.00 15.00

Dividend on Equity Shares 0.00 76.61

Dividend Tax on Equity Shares 0.00 12.43

Balance carried forward to Balance Sheet 944.89 843.13

Total 959.89 947.17

EPS (Basic & Diluted) 1.52 3.50

(Previous Year's figure have been recast, reclassified and regrouped wherever necessary to make them comparable with the figures of the Current Year.)

BUSINESS OPERATIONS:

During the year the Company has achieved marginal improvement in turnover. However it witnessed decline in operating Profit. The Turnover increased to Rs. 8308.98 Lacs from Rs. 8192.28 lacs - a growth of 1.42% and the Net Profit after tax declined to Rs. 116.76 lacs from Rs. 268.30 lacs in the previous year - a decline of 56.48% mainly due to fluctuations in Raw-materials prices (crude base), increase in Power & fuel, Manpower cost and uncertainty in global markets.

The export (FOB value) have however increased to Rs. 144.10 Lacs from Rs. 82.84 Lacs in the previous year.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT:

Management's Discussion and Analysis Report for the year under review, as stipulated under Clause 49 of the Listing Agreement with the Mumbai Stock Exchange, is presented in a separate section forming part of the Annual Report.

THRUST ON HIGHER VALUE ADDITION CONTINUES: -

Your Company shall always continue its endeavor in Value Addition and Innovation drive. As a result our R&D Department remains actively engaged in fulfilling this objective by constantly developing new shades and proving our strength in terms of versatility in dyeing and colour innovation.

SEGMENT-WISE PERFORMANCE:

Since the Company operates only in one segment as the Manufacturer of Polyester Dyed Yarn and Processors of Cotton and other fancy Dyed Yarn, no further analysis is required and the operational results are mentioned elsewhere in this report.

INSURANCE:

Your Company has insured its assets and all its operations against all insurable risk including fire, earthquake, flood etc. as part of its overall risk management strategy.

ISO CERTIFICATION:

Indicating our commitments to meeting the global quality and international standards your Company has successfully completed its surveillance audit for the ISO 9001-2008 Certification from AGSI Certification Pvt. Ltd.

EXPANSION:

During the year the company has implemented substantial expansion by setting up a new unit at Silli Village, Union Territory, D. & N. H. The Company has incurred the CAPEX of Rs. 804.69 Lacs (approx) against the envisaged project cost of Rs. 1504 lacs.

FIXED DEPOSITS:

The Company has accepted deposit from the Promoters, their relatives, friends and associates for the expansion of Silli Unit.

EXPORT:

Your Company is exploring new avenues to increase the export base and has chalked out strategic growth plan for the potential market in Middle East, U K, Egypt, Mexico and other European markets.

APPROPRIATIONS: DIVIDEND:

The Board of Directors have decided to skip the Dividend for the Financial Year 2011-12 in order to augment the resources for ongoing expansion.

Last year the company had paid equity dividend @ 10% i.e. Re. 1 per Equity Share of Rs. 76.61 Lacs and Rs.12.43 Lacs as dividend tax there on for the Financial Year 2010-11.

TRANSFER TO RESERVES:

The Company has transferred Rs. 15 lacs to General Reserve.

TAXATION:

Provision for Current Taxation has been made in accordance with prevailing income-tax laws for the relevant Assessment year.

Provision is made for Deferred Tax to account for the timing differences.

TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO:

The information as prescribed under Section 217(1 )(e) of the Companies Act, 1956 read with Rule 2 of the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 is given in Annexure I and forms part of this Report.

PERSONNEL:

There are no employees of your Company who comes within the purview of Section 217 (2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 during the year under review.

DIRECTORS:

Shri Surendra Kumar Suri, Non Executive Independent Director retires by rotation and being eligible, offers himself for re-appointment.

DIRECTORS' RESPONSIBILITY STATEMENT:

Pursuant to the requirement under Section 217 (2AA) of the Companies Act, 1956 with respect to Directors' Responsibility Statement, it is hereby confirmed that:

(i) in the preparation of the annual accounts for the financial year ended March 31, 2012, all the applicable accounting standards have been followed along with proper explanation relating to material departures.

(ii) 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 as at March 31, 2012 and of the profit of the Company for the said period;

(iii) the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

(iv) the Directors have prepared the accounts for the financial year ended March 31, 2012 on a 'going concern' basis.

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 of the Stock Exchange are complied with. A separate section on Corporate Governance forms part of the Annual Report. A certificate from the Practicing Company Secretary regarding compliance of conditions of Corporate Governance as stipulated under clause 49 of the Listing Agreement is given in Annexure.

AUDITOR'S REPORT:

The remarks in the Auditors' Report have been properly dealt with in the Notes on Account, which are self explanatory.

AUDITORS:

M/s. Mehta Chokshi & Shah, Chartered Accountants, will retire as Auditors of the Company at the conclusion of the Annual General Meeting and are eligible for re-appointment. The company has received letter from them to the effect that their appointment, if made would be with in the prescribed limit under section 224 (1B) of the Company's Act 1956.

INDUSTRIAL RELATIONS:

The relationship with employees, suppliers and customers across the Company are cordial.

ACKNOWLEDGEMENT:

Your Directors thank our customers, bankers and suppliers for their continued support during the year. Your Company places on record a deep sense of appreciation of the contribution made by the staff and workers at all levels. Our consistent growth was made possible by their hard work, solidarity, co-operation and support.

For and On behalf of the Board

Suresh N. Mutreja

Place: Mumbai Chairman & Managing Director

Date: 13 August,2012

---

Mar 31, 2010

The Board of Directors have pleasure in presenting the 26th Annual Report on the business operations of your Company together with Audited financial accounts for the year ended March 31, 2010.

FINANCIAL RESULTS : (Rs. in Lacs)

Particulars Year ending Year ending

31.03.10 31.03.09

Turnover (exclusive of Interdivisional

transfer) 6839.21 5939.00

Less: Excise duty 61.61 27.13

Turnover (Net of Excise) 6777.60 5911.87

Operating Profit (PBIDT) 664.55 479.38

Interest 41.51 50.71

Depreciation 251.44 186.05

Profit before Tax 371.60 242.62

Taxation 124.39 86.41

Profit for the year 247.21 156.21

Balance of Profit brought forward 581.10 553.55

Amount available for appropriations 828.31 709.76

Appropriations:

Transfer to General Reserve 15.00 15.00

Dividend on Preference Shares - 1.43

Dividend on Equity Shares 114.91 95.76

Dividend Tax on Preference shares - 0.20

Dividend Tax on Equity Shares 19.53 16.27

Balance carried forward to Balance Sheet 678.87 581.10

Total 828.31 709.76

EPS (Basic & Diluted)

3.23* 4.04 * (1:1 Bonus Shares issued on Dec. 9,2009)

(Previous Years figure have been recast, reclassified and regrouped wherever necessary to make them comparable with the figures of the Current Year.)

BUSINESS OPERATIONS :

The Company continues to retain its leadership in the dyed yarns segment.

During the year the Company has achieved substantial improvement both in turnover and operating Profit after Tax. The Turnover increased to Rs. 6777.60 Lacs from Rs. 5911.87 lacs - a growth of 14.6% and the Net Profit after tax increased to Rs. 247.21 lacs from Rs. 156.21 lacs in the previous year - a growth of 58.3%. As a result of the same the Cash Earnings Per Share increased to Rs. 6.51 (Ex-Bonus) from Rs. 8.89 of the previous year.

The export (FOB value) has also increased to Rs. 117.77 lacs from Rs. 80.00 lacs in the previous year.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT:

Managements Discussion and Analysis Report for the year under review, as stipulated under Clause 49 of the Listing Agreement with the Bombay Stock Exchange, is presented in a separate section forming part of the Annual Report.

THRUST ON HIGHER VALUE ADDITION CONTINUES:

Your Company shall always continue its endeavor in Value Addition and Innovation drive. As a result our R&D Department remains actively engaged in fulfilling this objective by constantly developing new shades and proving our strength in terms of versatility in dyeing and colour innovation.

SEGMENT-WISE PERFORMANCE:

Since the Company operates only in one segment as the Manufacturer of Polyester Dyed Yarn and Processors of Cotton and other fancy Dyed Yarn, no further analysis is required and the operational results are mentioned elsewhere in this report.

INSURANCE:

Your Company has insured its assets and all its operations against all insurable risk including fire, earthquake, flood etc. as part of its overall risk management strategy.

ISO CERTIFICATION:

Indicating our commitments to meeting the global quality and international standards our Company has successfully obtained the ISO 9001-2008 Certification from AGSI Certification Pvt. Ltd.

MODERNISATION:

During the year your company has done a need based changes by installing new techno and power savy machines in place of obsolete old machines resulting into cost reduction in recurring expenses and increasing the Texturising & Twisting capacity, Fully Electronic and automatic cone winding machines were acquired to give the best quality products to the customer.

This was partly financed by Term loan from Bank of India under Technology Upgradation Fund Scheme and from the internal accruals of the Company.

As a result Texturising Capacity increased from 4000 MT to 4500 MT an increase of 12.5%, Twisting Capacity increased from 3075 MT to 3400 MT an increase of 10.6%.

FIXED DEPOSITS:

The Company has accepted deposit from the Promoter, Directors, their relatives and shareholders for need base up-gradation, modernization and expansion of Vapi and Silvassa units.

EXPORT:

Your Company is exploring new avenues to increase the export base and has chalked out strategic growth plan for the potential market in Middle East and European markets.

APPROPRIATIONS:

DIVIDEND:

The Board of Directors have recommended post bonus Final Dividend of Rs. 1.50 per Equity Share for the Financial Year ended March 31, 2010 (Previous Year Final Dividend of Rs. 2.50/-) amounting to Rs. 114.91 lacs

(Previous Year Final Dividend of Rs. 95.76 Lacs). The company is continuously paying dividend since last 17 years.

The dividend tax liability borne by your Company is Rs. 19.53 lacs (Previous Year Rs. 16.48 lacs).

TRANSFER TO RESERVES:

Your Company proposes to transfer Rs. 15.00 lacs from Profit and Loss Account to General Reserve. An amount of Rs. 678.87 lacs are proposed to be retained as year end balance in the Profit and Loss Account.

TAXATION:

Provision for Taxation has been made in accordance with prevailing income-tax laws for the relevant Assessment year.

Provision is made for Deferred Tax to account for the timing differences.

TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO:

The information as prescribed under Section 217(1)(e) of the Companies Act, 1956 read with Rule 2 of the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 is given in Annexure I and forms part of this Report.

PERSONNEL:

There are no employees of your Company who comes within the purview of Section 217 (2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 during the year under review.

DIRECTORS:

Shri Chandan Gupta, Non-Executive Director retires by rotation and being eligible, offers himself for re-appointment.

Shri. Suresh N. Mutreja and Shri Lalit N. Mutreja, has been re-appointed as Managing Director & Executive Director respectively w.e.f. 1st July, 2010. The necessary special resolution for the re-appointment is given at item No. 5 & 6 of the notice.

DIRECTORS RESPONSIBILITY STATEMENT:

Pursuant to the requirement under Section 217 (2AA) of the Companies Act, 1956 with respect to Directors’ Responsibility Statement, it is hereby confirmed that:

(i) in the preparation of the annual accounts for the financial year ended March 31, 2010, all the applicable accounting standards have been followed along with proper explanations relating to material departures.

(ii) 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 as at March 31, 2010 and of the profit of the Company for the said period;

(iii) the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

(iv) the Directors have prepared the accounts for the financial year ended March 31, 2010 on a ‘going concern’ basis.

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 of the Stock Exchange are complied with. A separate section on Corporate

Governance forms part of the Annual Report. A certificate from the Practicing Company Secretary regarding compliance of conditions of CorporateGovernance as stipulated under clause 49 of the Listing Agreement is given in Annexure.

AUDITORS REPORT:

The remarks in the Auditors’ Report have been properly dealt with in the Notes on Account, which are self-explanatory.

AUDITORS:

M/s. Mehta Chokshi & Shah, Chartered Accountants, will retire as Auditors of the Company at the conclusion of the Annual General Meeting and are eligible for re-appointment. The company has received letter from them to the effect that their appointment, if made would be with in the prescribed limit under section 224 (1B) of the Company’s Act 1956.

INDUSTRIAL RELATIONS:

The relationship with employees, suppliers and customers across the Company are cordial.

ACKNOWLEDGEMENT:

Your Directors thank our customers, bankers and suppliers for their continued support during the year. Your Company places on record a deep sense of appreciation of the contribution made by the staff and workers at all levels. Our consistent growth was made possible by their hard work, solidarity, co-operation and support.

By order of the Board

VALSON INDUSTRIES LTD.

Suresh N. Mutreja

Place: Mumbai Chairman & Managing Director

Date: September 4, 2010