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Directors Report of Vardhman Special Steels Ltd.

Mar 31, 2015

Dear Members,

The Directors of your Company have pleasure in presenting their 5th Annual Report on the affairs of the Company together with the Audited Accounts of the Company for the year ended, 31st March, 2015.

1. FINANCIAL RESULTS:

The financial results for the year are as under:-

(Rs.in Crore)

PARTICULARS 2014-15 2013-14

Revenue from operations (Gross) 734.18 408.66

Profit before Depreciation, Interest & Tax 1 8.96 4.43 (PBDIT)

Interest and Financial expenses 20.21 11.90

Profit before Depreciation and Tax (PBDT) (1.25) (7.47)

Depreciation 13.87 5.70

Profit before Tax (PBT) (15.12) (13.17)

Provision for Tax - Current 0.009 0.01

- Deferred Tax (Net of - (3.76)

Adjustment)

Profit for the period after tax (PAT) (15.13) (9.42)

Earnings per share (Rs.)

- Basic (8.15) (5.07)

- Diluted (8.15) (5.07)

2. FINANCIAL ANALYSIS AND REVIEW OF OPERATIONS: PRODUCTION & SALES REVIEW:

During the year under review, your Company has registered Revenue from Operations of Rs. 734.18 Crore as compared to Rs.408.66 Crore in the previous year. The exports for the year ended were Rs.28.64 Crore as compared to Rs. 27.29 Crore in the previous year.

PROFITABILITY:

The Company earned profit before depreciation, interest and tax of Rs. 18.96 Crore as against Rs. 4.43 Crore in the previous year. After providing for depreciation of Rs. 13.87 Crore (Previous Year Rs. 5.70 Crore), interest of Rs. 20.21 Crore (Previous Year Rs. 11.90 Crore), provision for current tax Rs. 0.009 Crore (Previous Year Rs. 0.01 Crore), the net loss from operations worked out to Rs. 15.13 Crore as compared to Rs. 9.42 Crore in the previous year.

RESOURCES UTILISATION:

a) Fixed Assets:

The net fixed assets (including capital work-in- progress) as at 31st March, 2015 were Rs. 250.78 Crore as compared to Rs. 239.93 Crore in the previous year.

b) Current Assets:

The current assets as on 31st March, 2015 were Rs. 339.89 Crore as against Rs. 299.92 Crore in the previous year. Inventory level was at Rs. 132.89 Crore as compared to the previous year level of Rs. 119.31 Crore.

FINANCIAL CONDITIONS & LIQUIDITY:

Management believes that the Company's liquidity and capital resources should be sufficient to meet its expected working capital needs and other anticipated cash requirements. The position of liquidity and capital resources of the Company is given below:-

(Rs. in crore)

PARTICULARS 2014-15 2013-14

Cash and Cash equivalents:

Beginning of the year 13.90 30.27

End of the year 8.65 13.90

Net cash provided (used) by:

Operating Activities (32.75) (35.90)

Investing Activities (3.65) 52.37

Financial Activities 31.15 (32.86)

3. DIVIDEND:

No Dividend was declared during the current financial year.

4. CONSOLIDATED FINANCIAL STATEMENT:

As your Company does not have any subsidiary, associate or joint venture company, the provisions of Companies Act, 2013 and Accounting Standards 21, 23 and 27 in relation to consolidation of accounts do not apply.

5. SUBSIDIARIES, JOINT VENTURES AND ASSOCIATE COMPANIES:

The Company does not have any subsidiary, associate or joint venture company.

6. MATERIAL CHANGES AND COMMITMENT IF ANY AFFECTING THE FINANCIAL POSITION OF THE COMPANY OCCURRED BETWEEN THE END OF THE FINANCIAL YEAR TO WHICH THIS FINANCIAL STATEMENTS RELATE AND THE DATE OF THE REPORT:

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

7. CORPORATE SOCIAL RESPONSIBILITY:

Your Company is committed to and fully aware of its Corporate Social Responsibility (CSR), the guidelines in respect of which were more clearly laid down in the recently overhauled Companies Act. The Company's vision is to pursue a corporate strategy that enables shareholders value enhancement and societal value creation in mutually reinforcing and synergistic manner.

The Corporate Social Responsibility Committee of the Company has formulated and recommended to the Board, a Corporate Social Responsibility (CSR) Policy indicating the activities to be undertaken by the Company, which has been approved by the Board.

The CSR policy may be assessed on the Company's website at the link: http://www.vardhmansteel.com/sites/default/files/ corporate social responibility policy.pdf

The Company has identified following thrust areas for CSR:-

* PROMOTION OF EDUCATION: To continue our endeavour for promoting education by setting up schools, colleges to deliver high quality education to students of all strata of society including wards of VSSL employees.

* ENVIRONMENT PROTECTION AND ENERGY CONSERVATION: To protect environment and to sustain and continuously improve standards of Environment, Health and Safety through the collective endeavour of Company and its employees at all levels towards attaining world class standards.

* DEVELOPMENT OF HUMAN CAPITAL: To encourage the development of human capital through skills development, vocational training programmes.

* RURAL DEVELOPMENT:

To contribute to development in rural areas through agricultural research and knowledge sharing, promoting superior farm practices, improving cotton production, productivity and quality and other agri-extension practices such as soil and moisture conservation and watershed management etc.

* OTHER INITIATIVES:

* To contribute to empowering women economically, supplementing primary and secondary education and participating in rural capacity building programmes and such other schemes.

* To respond to emergency situations & disasters by providing timely help to affected victims and their families.

* Any other project/ programme pertaining to activities listed in Schedule VII of the Companies Act, 2013 read with Companies (Corporate Social Responsibility) Rules, 2014)

During the year, the Company has not undertaken any CSR initiatives as it has incurred losses and was not in a position to make CSR expenditure.

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

8. RISK MANAGEMENT:

The Board of Directors in their meeting held on 31st January, 2015 had constituted Risk Management Committee of the Company. The Committee has formulated Risk Management Policy of the Company which has been subsequently approved by the Board of Directors of the Company. The aim of risk management policy is to maximize opportunities in all activities and to minimize adversity. The policy includes identifying types of risks and its assessment, risk handling and monitoring and reporting, which in the opinion of the Board may threaten the existence of the Company.

The Risk Management policy may be accessed on the Company's website at the link: http://www.vardhmansteel.com/sites/default/files/ downloadfiles/risk management policy final.pdf

9. INTERNAL FINANCIAL CONTROLS:

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

10. PARTICULARS OF CONTRACTS OR ARRANGEMENTS MADE WITH RELATED PARTIES:

All contracts / arrangements / transactions entered by the Company during the financial year with related parties were in the ordinary course of business and on an arm's length basis.

The details of material contracts/ arrangements/ transactions at arm's length basis for the year ended 31st March, 2015 is annexed hereto and form part of this report as Annexure II.

The Policy on dealing with related party transactions as approved by the Board may be accessed on the Company's website at the link: http://www.vardhmansteel.com/sites/default/files/ downloadfiles/related party transaction final.pdf

Your Directors draw attention of the members to Note 37 to the financial statement which sets out related party disclosures.

11. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS MADE UNDER SECTION 186 OF THE COMPANIES ACT, 2013:

Particulars of loans given/ taken, investments made, guarantees given and securities provided along with the purpose for which the loan or guarantee or security is proposed to be utilized by the recipient are provided in the standalone financial statement (Please refer to Note 13, 14, and 15 to the financial statement).

12. DIRECTORS AND KEY MANAGERIAL PERSONNEL:

Mrs. Suchita Jain, Director of the Company, retire by rotation at the conclusion of the forthcoming Annual General Meeting, pursuant to the provisions of the Articles of Association of the Company and being eligible, offer herself for re-appointment. The Board recommended her appointment for the consideration of the members of the Company at the ensuing Annual General Meeting.

During the year under review, the members approved the appointments of Mr. Prafull Anubhai, Mr. Rajeev Gupta, Mr. Jayant Davar, Mr. Sanjeev Pahwa and Mr. Mukund Choudhary as Independent Directors of the Company who are not liable to retire by rotation.

Mr. Mukund Choudhary has resigned from the Board of Directors of the Company w.e.f. 7th October, 2014.

The following persons were appointed as KMP of the Company:

Sr. Whole Time Key Present position in Company No. Managerial Personnel

1. Sachit Jain Managing Director (MD)

2. Sonam Taneja* Company Secretary (CS)

3. Sanjeev Singla Chief Financial Officer (CFO)

*Sonam Taneja has been appointed as Company Secretary (KMP) of the Company w.e.f. 31st January, 2015.

Declaration under Section 149(6):

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

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

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

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

Familiarisation programmes for Board Members:

The Board members are provided with necessary documents/ brochures, reports and internal policies to enable them to familiarise with the Company's procedures and practices. Periodic presentations are made at the Board and Board Committee Meetings on business and performance updates of the Company, global business environment, business strategy and risks involved. Quarterly updates on relevant statutory changes and landmark judicial pronouncements encompassing important laws are regularly circulated to the Directors. Site visits to various plant locations are organized for the Directors to enable them to understand the operations of the Company.

Annual Evaluation of the Board Performance:

The meeting of Independent Directors of the Company was held on 30th March, 2015 to evaluate the performance of Non-Independent Directors, Chairman of the Company and the Board as a whole for the financial year 2014-15. The evaluation was done by way of discussions on the performance of the Non-Independent Directors, Chairman and Board as a whole and the minutes of the meeting was submitted to the Chairman of the Company.

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

13. AUDITORS AND AUDITORS REPORT:

Statutory Auditors:

At the Annual General Meeting held on 24th September, 2014, M/s. S.S. Kothari Mehta & Company, Chartered Accountants, Panchkula were appointed as Statutory Auditors of the Company to hold office till the conclusion of 9th Annual General Meeting of the Company. In terms of provisions of Section 139 (1) of the Companies Act, 2013, the appointment of Statutory Auditors shall be placed for ratification at every Annual General Meeting. Accordingly, the appointment of M/s. S.S. Kothari Mehta & Company as Statutory Auditors is placed for ratification by the members.

Further, the Statutory Auditors of the Company have submitted Auditors' Report on the accounts of the Company for the accounting year ended 31st March, 2015. This Auditors' Report is self-explanatory and requires no comments.

Secretarial Auditor:

M/s. Khanna Ashwani & Associates, Company Secretary in Practice, were appointed as Secretarial Auditors of the Company by the Board of Directors of the Company in their meeting held on 17th May, 2014 for the financial year 2014-15.

The Secretarial Auditors of the Company have submitted their Report in Form No. MR-3 as required under Section 204, of the Companies Act, 2013 for the financial year ended 31st March, 2015. This Report is self-explanatory and requires no comments. The Report forms part of this report as Annexure IV.

Cost Auditor:

The Board of Directors has appointed M/s Ramanath Iyer & Company, Cost Accountants, New Delhi, as the Cost Auditors of the Company to conduct Cost Audit of the Accounts for the financial year ended 2015-16. However, as per provisions of Section 148 of the Companies Act, 2013, read with Companies (Cost Records and Audit) Rules, 2014, the remuneration to be paid to the Cost Auditors is subject to ratification by members at the Annual General Meeting. Accordingly, the remuneration to be paid to M/s Ramanath Iyer & Company, Cost Accountants, New Delhi, for financial year 2015-16 is placed for ratification by the members.

The Cost Auditor's Report for the Financial Year 2014-15 will be forwarded to the Central Government as required under law.

14. NUMBER OF BOARD MEETINGS CONDUCTED DURING THE YEAR UNDER REVIEW:

Four meetings of the Board were held during the year.

15. AUDIT COMMITTEE DISCLOSURES:

Composition:

The Audit Committee consists of Mr. Prafull Anubhai, Independent Director, Mr. Rajeev Gupta, Independent Director, Mr. Sanjeev Pahwa, Independent Director and Mr. R.K. Jain, Non-Executive Director. Mr. Prafull Anubhai is the Chairman of the Committee and Ms. Sonam Taneja is the Secretary of the Committee. All the recommendations made by the Audit Committee were accepted by the Board.

Vigil Mechanism:

The Vigil Mechanism of the Company, which also incorporates a whistle blower policy in terms of the Listing Agreement aims to provide a channel to the employees and Directors to report to the management concerns about unethical behaviour, actual or suspected fraud or violation of the Codes of conduct or policy. The mechanism provides for adequate safeguards against victimization of employees and Directors to avail of the mechanism and also provide for direct access to the Chairman/ Chairman of the Audit Committee in exceptional cases.

The Policy on Vigil Mechanism and whistle blower policy as approved by the Board may be accessed on the Company's website at the link: http://www.vardhmansteel.com/sites/default/files/ downloadfiles/vigil mechanism final.pdf

16. CORPORATE GOVERNANCE:

The Company has in place a system of Corporate Governance. A separate report on Corporate Governance forming part of the Annual Report of the Company is annexed hereto. A certificate from the Auditors of the Company regarding compliance of conditions of Corporate Governance as stipulated under Corporate Governance Clause of the Listing Agreement is annexed to the report on Corporate Governance.

17. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO:

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

18. ANNUAL RETURN:

The extracts of Annual Return pursuant to the provisions of Section 92 read with Rule 12 of the Companies (Management and Administration) Rules, 2014 for the financial year 2014-15 in Form No. MGT-9 is annexed hereto and form part of this report as Annexure VI.

19. HUMAN RESOURCES /INDUSTRIAL RELATIONS:

The Company continues to lay emphasis on building and sustaining an excellent organization climate based on human performance. Performance management is the key word for the company. During the year the Company employed around 827 employees.

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

20. PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES:

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

None of the employee of the Company receives salary in excess of the limits set out in Rule 5 (2) and 5 (3) Companies (Appointment & Remuneration of Managerial Personnel) Rules, 2014.

In terms of section 197(14) of the Companies Act, 2013, the Company does not have any Holding or Subsidiary Company.

21. DIRECTORS RESPONSIBILITY STATEMENT:

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

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

b. appropriate accounting policies have been selected and applied consistently, and have made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31st March, 2015 and of the profit of the Company for the year ended on 31st March, 2015;

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

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

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

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

22. GENERAL DISCLOSURES:

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

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

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

3. Issue of shares (including sweat equity shares) to employees of the Company under any scheme.

4. No significant or material orders were passed by the Regulators or Courts or Tribunals which impact the going concern status and Company's operations in future.

Your Directors further state that during the year under review, there were no cases filed pursuant to the Sexual

Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

23. ACKNOWLEDGEMENT:

Your Directors are pleased to place on record their sincere gratitude to the Government, Financial Institutions, Bankers and Business Constituents for their continued and valuable co-operation and support to the Company. They also take this opportunity to express their deep appreciation for the devoted and sincere services rendered by the employees at all levels of the operations of the Company during the year.

FOR AND ON BEHALF OF THE BOARD

Place : Gurgaon (PRAFULL ANUBHAI) Dated : 2nd May, 2015 Chairman


Mar 31, 2014

Dear Members,

The Directors of your Company have pleasure in presenting their 4th Annual Report on the affairs of the Company together with the Audited Accounts of the Company for the year ended 31st March, 2014.

1. FINANCIAL RESULTS:

The Financial Results for the year are as under:-

(Rs. In Crore)

PARTICULARS 2013-14 2012-13

Revenue from operations (Gross) 408.66 494.75

Profit before Depreciation, Interest & Tax 4.43 23.24

(PBDIT)

Interest and Financial expenses 11.90 10.87

Profit before Depreciation and Tax (PBDT) (7.47) 12.37

Depreciation 5.70 3.98

Profit before Tax (PBT) (13.17) 8.39

Provision for Tax - Current 0.01 3.91

- Deferred Tax (3.76) (0.37)

Profit after Tax (PAT) (9.42) 4.85

Earnings per share (Rs. )

- Basic (5.07) 2.61

- Diluted (5.07) 2.61

2. DIRECTORS:

Mrs. Ramni Nirula has resigned from the Board of Directors of the Company w.e.f. 9th November, 2013. Mr. Jayant Davar has been appointed as an Additional Director on the Board of the Company pursuant to Section 161 (1) of the Companies Act, 2013 and Articles of Association of the Company w.e.f. 9th November, 2013.He will hold office upto the date of ensuing Annual General Meeting.

Mr. B.K. Choudhary, Director of the Company, retires by rotation at the conclusion of the forthcoming Annual General Meeting, pursuant to the provisions of Section 152 (6) of the Companies Act, 2013 and being eligible, offer himself for re-appointment. The Board recommended his re-appointment for the consideration of the members of the Company at the ensuing Annual General Meeting.

3. CORPORATE GOVERNANCE:

The Company has in place a system of Corporate Governance. A separate report on Corporate Governance forming part of the Annual Report of the Company is annexed hereto. A certificate from the Auditors of the Company regarding compliance of conditions of Corporate Governance as stipulated under Corporate Governance Clause of the Listing Agreement(s) is annexed to the report on Corporate Governance.

4. AUDITORS:

M/s. S. S. Kothari Mehta & Co., Chartered Accountants, Panchkula, Auditors of the Company, retire at the conclusion of the forthcoming Annual General Meeting and being eligible, offer themselves for re-appointment.

5. AUDITORS'' REPORT:

The Statutory Auditors of the Company have submitted Auditors'' Report on the accounts of the Company for the accounting year ended 31st March, 2014. This Auditors'' Report is self-explanatory and requires no comments.

6. COST AUDITORS:

The Board of Directors has appointed M/s. Ramanath Iyer & Company, Cost Accountants, New Delhi, as the Cost Auditors of the Company subject to shareholders'' approval under Section 148 of the Companies Act, 2013, read with Companies (Cost Records and Audit) Rules, 2014 for the Financial Year 2014-15.

7. STATEMENT OF PARTICULARS OF EMPLOYEES:

A Statement of Particulars of Employees pursuant to the provisions of Section 217(2A) of the Companies Act, 1956 read with Companies (Particulars of Employees) Rules, 1975 including amendments thereon is enclosed and forms part of this report.

8. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO:

Energy conservation continues to be an area of major emphasis in your Company. Efforts are made to optimize the energy cost while carrying out the manufacturing operations. Particulars with respect to conservation of energy and other areas as per Section 217(1)(e) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, are annexed hereto and form part of this report.

9. DIRECTORS'' RESPONSIBILITY STATEMENT:

Pursuant to Section-217 (2AA) of the Companies Act, 1956, the Directors confirm that in the preparation of the annual accounts, the applicable accounting standards have been followed;

(a) appropriate accounting policies have been selected and applied consistently, and have made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31st March, 2014 and Statement of the Profit & Loss of the Company for the year ended on 31st March, 2014;

(b) proper and sufficient care has been taken 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

(c) the annual accounts have been prepared on a going concern basis.

10. ACKNOWLEDGEMENT:

Your Directors are pleased to place on record their sincere gratitude to the Government, Financial Institutions, Bankers and Business Constituents for their continued and valuable co-operation and support to the Company. They also take this opportunity to express their deep appreciation for the devoted and sincere services rendered by the employees at all levels of the operations of the Company during the year.

FOR AND ON BEHALF OF THE BOARD

PLACE : GURGAON (PRAFULL ANUBHAI) DATED : 17th MAY, 2014 Chairman


Mar 31, 2013

Dear Members,

The Directors of your Company have pleasure in presenting their 3rd Annual Report on the affairs of the Company together with the Audited Accounts of the Company for the year ended 31st March, 2013.

1. FINANCIAL RESULTS:

The Financial Results for the year are as under:-

(Rs. in crore)

PARTICULARS 2012-13 2011-12

Revenue from operations (Gross) 494.75 581.19

Profit before Depreciation,

Interest and Tax (PBDIT) 23.24 52.21

Interest and Financial expenses 10.87 6.60

Profit before Depreciation and Tax (PBDT) 12.37 45.61

Depreciation 3.98 4.06

Profit before Tax (PBT) 8.39 41.55

Provision for Tax - Current 3.91 15.66

- Deferred Tax

(Net of Adjustment) (0.37) (0.01)

Profit after Tax (PAT) 4.85 25.90

Earnings per share (Rs.)

- Basic 2.61 14.15

- Diluted 2.61 14.15

2. DIRECTORS:

Mr. Rajeev Gupta and Mr. Sanjeev Pahwa, Directors of the Company, retire by rotation at the conclusion of the forthcoming Annual General Meeting, pursuant to the provisions of Article 108 of the Articles of Association of the Company and being eligible, offer themselves for re-appointment. The Board recommended their re-appointment for the consideration of the members of the Company at the ensuing Annual General Meeting.

3. CORPORATE GOVERNANCE:

The Company has in place a system of Corporate Governance. A separate report on Corporate Governance forming part of the Annual Report of the Company is annexed hereto. A certificate from the Auditors of the Company regarding compliance of conditions of Corporate Governance as stipulated under Corporate Governance Clause of the Listing Agreement(s) is annexed to the report on Corporate Governance.

4. AUDITORS:

M/s. S. S. Kothari Mehta & Co., Chartered Accountants, Panchkula, Auditors of the Company, retire at the conclusion of the forthcoming Annual General Meeting and being eligible, offer themselves for re-appointment.

5. AUDITORS'' REPORT:

The Statutory Auditors of the Company have submitted Auditors'' Report on the accounts of the Company for the accounting year ended 31st March, 2013. In their report, they have given a qualified opinion so far as re-instatement of liability in respect of ECB is concerned (Refer Note 32 to Financial Statements).

The Company had raised ECB of US$ 16.66 million in December, 2011 and drawdown of the same happened at conversion rate of Rs. 52.48 per US$. As on 30th June, 2012 the liability in respect of the said ECB was reinstated as the rupee had depreciated to a level of Rs. 55.61 per US$ on that date.

However, as on 31st March, 2013, while following the conservative approach, the Company did not provide for notional foreign exchange gains amounting to Rs. 220 lac arising because of appreciation of rupee and decided to carry the liability in respect of ECB at a level determined as on 30th June, 2012. The other points of Auditors'' Report are self explanatory and needs no comments.

6. COST AUDITORS:

The Board of Directors has appointed M/s. Ramanath Iyer & Company, Cost Accountants, New Delhi as the Cost Auditors of the Company under Section 233B of the Companies Act, 1956 read with Cost Audit Rules, 2011 for the year 2013-14. The Cost Auditors'' Report for the financial year 2012-13 will be forwarded to the Central Government as required under law.

7. STATEMENT OF PARTICULARS OF EMPLOYEES:

A Statement of Particulars of Employees pursuant to the provisions of Section 217(2A) of the Companies Act, 1956 read with Companies (Particulars of Employees) Rules, 1975 including amendments thereon is enclosed and forms part of this report.

8. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO:

Energy conservation continues to be an area of major emphasis in your Company. Efforts are made to optimize the energy cost while carrying out the manufacturing operations. Particulars with respect to conservation of energy and other areas as per Section 217(1)(e) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, are annexed hereto and form part of this report.

9. DIRECTORS'' RESPONSIBILITY STATEMENT:

Pursuant to Section-217 (2AA) of the Companies Act, 1956, the Directors confirm that in the preparation of the annual accounts, the applicable accounting standards have been followed;

a. appropriate accounting policies have been selected and applied consistently and have made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31st March, 2013 and of the profit of the Company for the year ended on 31st March, 2013;

b. proper and sufficient care has been taken 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

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

10. ACKNOWLEDGEMENT:

Your Directors are pleased to place on record their sincere gratitude to the Government, Financial Institutions, Bankers and Business Constituents for their continued and valuable co-operation and support to the Company. They also take this opportunity to express their deep appreciation for the devoted and sincere services rendered by the employees at all levels of the operations of the Company during the year.

FOR AND ON BEHALF OF THE BOARD

PLACE : LUDHIANA (PRAFULL ANUBHAI)

DATED : 10th May, 2013 Chairman


Mar 31, 2012

The Directors of your Company have pleasure in presenting their 2nd Annual Report on the affairs of the Company together with the Audited Accounts of the Company for the year ended, 31st March, 2012. As you are aware, pursuant to the Scheme of Arrangement & Demerger between Vardhman Textiles Limited (VTXL) and Vardhman Special Steels Limited (VSSL) and their respective Shareholders & Creditors as approved by the Board of Directors and shareholders of respective Companies and sanctioned by the Hon'ble High Court of Punjab & Haryana at Chandigarh under section 391 -394 vide its order dated 12th January, 2011, the steel business undertaking of VTXL has been demerged and got vested in VSSL w.e.f. 1st January, 2011. Therefore, the figures given herein for the previous period include operational figures in respect of the said steel business undertaking for 3 months i.e 1st January, 2011 to 31st March, 2011.

1. FINANCIAL RESULTS:

The Financial Results for the Current year as well as Previous period are as under:-

(Rs. In Crore)

PARTICULARS 2011-12 2010-11

Revenue from operations (Gross) 581.19 124.51

Profit before Depreciation, Interest and Tax (PBDIT) 52.21 12.72

Interest and Financial expenses 6.60 1.04

Profit before Depreciation and Tax (PBDT) 45.61 11.68

Depreciation 4.06 0.95

Profit before Tax (PBT) 41.55 10.73

Provision for Tax - Current 15.66 3.86

- Deferred Tax (0.01) (0.09)

Profit after Tax (PAT) 25.90 6.96

Surplus carried to Balance Sheet 25.90 6.96

Earnings per share (Rs.)

- Basic 14.15 11.95

-Diluted 14.15 11.95

2. DIRECTORS:

Mr. Rajinder Kumar Jain and Mrs. Ramni Nirula, Directors of the Company, retire by rotation at the conclusion of the forthcoming Annual General Meeting, pursuant to the provisions of Article 108 of the Articles of Association of the Company and being eligible, offer themselves for re- appointment. The Board recommended their re- appointment for the consideration of the members of the Company at the ensuing Annual General Meeting.

3. CORPORATE GOVERNANCE:

The Company has in place a system of Corporate Governance. A separate report on Corporate Governance forming part of the Annual Report of the Company is annexed hereto. A certificate from the Auditors of the Company regarding compliance of conditions of Corporate Governance as stipulated under Corporate Governance Clause of the Listing Agreement is annexed to the report on Corporate Governance.

4. AUDITORS:

M/s. S. S. Kothari Mehta & Co., Chartered Accountants, Panchkula, Auditors of the Company, retire at the conclusion of the forthcoming Annual General Meeting and being eligible, offer themselves for re-appointment.

5. AUDITORS' REPORT:

The Statutory Auditors of the Company have submitted Auditors' Report on the accounts of the Company for the accounting year ended 31st March, 2012. In their report, they have made an observation regarding non-compliance of Accounting Standard - 11 so far as re-instatement of liability in respect of ECB is concerned (Refer Note 25 to Financial Statements).

The Company had raised ECB of US$ 16.66 million in December, 2011 and drawdown of the same happened at conversion rate of Rs. 52.48 per US$. As on 31st December, 2011, the liability in respect of the said ECB was reinstated as the rupee had depreciated to a level of Rs. 53.10 per US$ on that date.

However, as on 31st March, 2012, while following the conservative approach, the Company did not provide for notional foreign exchange gains amounting to Rs. 3.70 Crores arising because of appreciation of rupee and decided to carry the liability in respect of ECB at a level determined as on 31st December, 2011. The other points of Auditors' Report are self explanatory and needs no comments.

6. COST AUDITORS:

The Board of Directors has re-appointed M/s. Ramanath Iyer & Company, Cost Accountants, New Delhi, as the Cost Auditors of the Company under Section 233B of the Companies Act, 1956, for the year 2012-13. The Cost Auditors' Report for the financial year 2011-12 will be forwarded to the Central Government as required under law.

7. STATEMENT OF PARTICULARS OF EMPLOYEES:

A Statement of Particulars of Employees pursuant to the provisions of Section 217(2A) of the Companies Act, 1956 is enclosed and forms part of this report.

8. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO:

Energy conservation continues to be an area of major emphasis in your Company. Efforts are made to optimize the energy cost while carrying out the manufacturing operations. Particulars with respect to conservation of energy and other areas as per Section 217(1)(e) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, are annexed hereto and forms part of this report.

9. DIRECTORS' RESPONSIBILITY STATEMENT:

Pursuant to Section-217 (2AA) of the Companies Act, 1956, the Directors confirm that in the preparation of the annual accounts, the applicable accounting standards have been followed;

a. appropriate accounting policies have been selected and applied consistently, and have made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31st March, 2012 and of the profit of the Company for the year ended on 31st March, 2012;

b. proper and sufficient care has been taken 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

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

10. ACKNOWLEDGEMENT:

Your Directors are pleased to place on record their sincere gratitude to the Government, Financial Institutions, Bankers and Business Constituents for their continued and valuable co-operation and support to the Company. They also take this opportunity to express their deep appreciation for the devoted and sincere services rendered by the employees at all levels of the operations of the Company during the year.

FOR AND ON BEHALF OF THE BOARD

PLACE: GURGAON (PRAFULL ANUBHAI)

DATED : 21ST APRIL, 2012 CHAIRMAN


Mar 31, 2011

The Directors of your Company have pleasure in presenting their 151 Annual Report on the affairs of the Company together with the Audited Accounts of the Company for the period ended, 31st March, 2011.

As you are aware, pursuant to the Scheme of Arrangement & Demerger between Vardhman Textiles Limited (VTXL) and Vardhman Special Steels Limited (VSSL) and their respective shareholders & creditors as approved by the Board of Directors and Shareholders of respective Companies and sanctioned by the Humble High Court of Punjab & Haryana at Chandigarh under Section 391 -394 vide its Order dated 12th January, 2011, the Steel Business Undertaking of VTXL has been demerged into VSSL w.e.f 1 st January, 2011. Therefore the figures given herein include operational figures in respect of said Steel Business Undertaking for a period of 3 months i.e. from 1st January, 2011 to 31st March, 2011.

1. FINANCIAL RESULTS:

The financial results for the period are as under:-

(Rs. In Crores)

PARTICULARS 2010-2011

Turnover 124.55

Profit before Depreciation, Interest & Tax (PBDIT) 12.72

Interest and Financial expenses 1.04

Profit before Depreciation and Tax (PBDT) 11.68

Depreciation 0.95

Profit before Tax (PBT) 10.73

Provision for Tax - Current 3.86

- Deferred Tax (0.09)

Profit after Tax (PAT) 6.96

Surplus carried to Balance Sheet 6.96

Earnings per share (Rs.)

- Basic 11.95

- Diluted 11.95

3. DIRECTORS:

The Board of Directors in its meeting held on 15th March, 2011 has appointed Mr. Prafull Anubhai, Mr. R. K. Jain, Mrs. Ramni Nirula, Mr. Rajeev Gupta, Mr. Mukund Choudhary, Mr. Sanjeev Pahwa and Mr. B. K. Choudhary as Additional Directors on the Board of the Company, pursuant to Article 105 of the Articles of Association of the Company and Section 260 of the Companies Act, 1956. Further, the members of the Company in their Extra- Ordinary General Meeting held on 1st April, 2011 have appointed Mr. Sachit Jain as the Managing Director of the Company for a period of five years w.e.f. 15th March, 2011.

The Board of Directors in its Meeting held on 2nd April, 2011 has appointed Mr. Prafull Anubhai as the Chairman to chair all the Board and General Meetings. Mrs. Shakun Oswal, however, has resigned from the Board of Directors of the Company w.e.f. 2nd April, 2011.

The Company has received notices from some members under Section 257 of the Companies Act, 1956, proposing the candidature of Mr. Prafull Anubhai, Mr. R. K. Jain, Mrs. Ramni Nirula, Mr. Rajeev Gupta, Mr. Mukund Choudhary, Mr. Sanjeev Pahwa and Mr. B. K. Choudhary as Directors of the Company. Requisite approval for their appointment is being sought at the ensuing Annual General Meeting.

Mrs. Suchita Jain, Director of the Company, retires by rotation at the conclusion of the forthcoming Annual General Meeting, pursuant to the provisions of Article 108 of the Articles of Association of the Company and being eligible, offers herself for re-appointment. The Board recommended her appointment for the consideration of the members of the Company at the ensuing Annual General Meeting.

4. SCHEME OF ARRANGEMENT AND DEMERGER:

During the period under review, the Company had filed a petition under section 391-394 of the Companies Act, 1956 for a Scheme of Arrangement and Demerger between Vardhman Textiles Ltd. (VTXL) and Vardhman Special Steels Ltd. (VSSL) and their respective shareholders & creditors which was approved by the shareholders & creditors of the respective companies in the court convened meetings. The Humble High Court of Punjab & Haryana, at Chandigarh vide its Order dated 1 2th January, 2011 has sanctioned the Scheme of Arrangement and Demerger pursuant to which the Steel Business Undertaking of VTXL stood vested in your Company w.e.f. 1sl January, 2011.

The Company, in consideration, of the Steel Business Undertaking has allotted 1,27,30,376 Equity Shares of Rs. 10/- each on 8th April, 2011 to the shareholders of VTXL in the ratio of 1 (one) Equity Share of Rs. 10/- each for every 5 (five) shares held by the shareholders of VTXL as on the record date i.e. 30"1 March, 2011 fixed for the purpose.

5. CORPORATE GOVERNANCE:

The Company has in place a system of Corporate Governance. A separate report on Corporate Governance forming part of the Annual Report of the Company is annexed hereto. A certificate from the Auditors of the Company regarding compliance of conditions of Corporate Governance as stipulated under Corporate Governance Clause of the Listing Agreement is annexed to the report on Corporate Governance.

6. AUDITORS:

M/s. S. S. Kothari Mehta & Co., Chartered Accountants, Panchkula, Auditors of the Company, retire at the conclusion of the forthcoming Annual General Meeting and being eligible, offer themselves for re-appointment.

7. AUDITORS' REPORT:

The Auditors' Report on the accounts is self-explanatory and requires no comments.

8. COST AUDITORS:

The Board of Directors had appointed M/s. Ramanath Ayer & Company, Cost Accountants, New Delhi, as the Cost Auditors of the Company under Section 233B of the Companies Act, 1956, for a period of 3 months from 1sl January, 2011 to 319 March, 2011. The Cost Auditors' Report for the aforesaid period of 3 months will be forwarded to the Central Government as required under law.

9. STATEMENT OF PARTICULARS OF EMPLOYEES:

A Statement of Particulars of Employees pursuant to the provisions of Section 21 7(2A) of the Companies Act, 1956 is enclosed and forms part of this report.

10. GROUP:

The Company, inter-alia with the following entities, constitutes a 'Group' as defined under the Monopolies and Restrictive Trade Practices Act, 1969: -

a) Vardhman Textiles Limited

b) Vardhman Holdings Limited

c) VTL Investments Limited

d) Adinath Investment and Trading Company

e) Defacer Investment and Trading Company Private Limited

11. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO:

Energy conservation is an area of major emphasis in your Company. Efforts are made to minimize the energy cost while carrying out the manufacturing operations. Particulars with respect to conservation of energy and other areas as per Section 21 7(e) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, are annexed hereto and form part of this report.

12. DIRECTORS' RESPONSIBILITY STATEMENT:

Pursuant to Section-21 7 (2AA) of the Companies Act, 1956, the Directors confirm that in the preparation of the annual accounts, the applicable accounting standards have been followed;

a. appropriate accounting policies have been selected and applied consistently, and have made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31sl March, 2011 and of the profit of the Company for the period ended on 31st March, 2011;

b. proper and sufficient care has been taken 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

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

13. ACKNOWLEDGEMENT:

Your Directors are pleased to place on record their sincere gratitude to the Government, Financial Institutions, Bankers and Business Constituents for their continued and valuable co-operation and support to the Company. They also take this opportunity to express their deep appreciation for the devoted and sincere services rendered by the employees at all levels of the operations of the Company during the period under review.

FOR AND ON BEHALF OF THE BOARD

PLACE: NEW DELHI (PRAFULL ANUBHAI)

DATED: 27th APRIL, 2011 CHAIRMAN

 
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