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Directors Report of Visaka Industries Ltd.

Mar 31, 2017

The Directors are pleased to present the 35th Annual Report of the Company with Audited Financial Statement for the year ended March 31, 2017. The financial highlights are as follows:

(Rs. in Lakhs)

PARTICULARS

2016 - 2017

2015 - 2016

Total Revenues

97050

100758

Profit before depreciation and Taxes

10047

7668

Profit before taxes

6640

4037

Provision for taxes (Incl. Deferred Tax)

2559

1594

Profit for the year after taxes

4081

2443

Balance brought forward from previous year

1041

1054

Profit available for appropriation

5291

3497

PERFORMANCE REVIEW AND THE STATE OF COMPANY''S AFFAIRS

The year gone by has been challenging at times, exciting, stressful and overall, is a mixed bag for the rural and semi-urban economy of the country. There was a normal rainfall unlike for the past two years, lead to a spurt. But the severe cash crunch, an outcome of demonetization and digitization, took away the initial agility. Particularly, unorganised sector of the country, considered to be the back bone of rural economy, has been drastically effected and the initial momentum generated during the first half of the year got disturbed.

Amidst such an economic environment, having major influence on your company''s performance, strategies like aggressive ad campaign, improved operational efficiency, strengthening the Distribution reach, developing new markets and focusing more on high realization applications coupled with reconversions happening from metal sheets to Asbestos Cement Sheets etc., helped to show a good performance during the financial year under review.

The Company''s key performance indicators are as under:

- Revenue from operations decreased marginally by 3.8 per cent to H966 Crores from H1005 Crores of previous year.

- Cash Profit increased by 31 per cent to H100.47 Crores from 76.68 Crores of previous year.

- Net Profit increased by 67 per cent to H40.80 crores from H24.43 crores of previous year.

- The capital expenditure for 2016-17 was H67.03 Crores, which was principally on account of ongoing expansion undertaken at the Textile Plant at Nagpur and other normal capital expenditure at various units. There is no change of business during the year under review.

Your Company''s shares are listed on the National Stock Exchange (NSE) and BSE Limited. Variations in the market capitalization and price earnings ratio are provided hereunder:

As at

As at

Parameter

March 31,

March 31,

2017

2016

Market Capitalization (in Rs, Crores)

430.05*

168.02**

P/E ratio

10.54

6.87

*based on closing price at National Stock Exchange Limited, being the higher of two exchanges

** based on the closing price at BSE Ltd., being the higher of the two exchanges

Your Company made its initial public offer of equity shares in 1984-85. The closing price (quoted on stock exchanges) of your Company''s share of H10/- each fully paid-up as at March 31, 2017 and March 31, 2016, are 1354% and 529% respectively over the price of last public offer made in the year 1991-92.

No material changes and commitments occurred after the close of the year till the date of this Report, which affect the financial position of the Company.

DIVIDEND

Your Directors recommended payment of Final Dividend of H6/- (i.e. 60%) per share of H10/- each for the said financial year, as against H5/- per share (i.e. 50%) of previous year. The Company is absorbing Corporate Dividend Tax of H193.98 Lakhs on the said Dividend.

MANAGEMENT DISCUSSION AND ANALYSIS

Global economic overview:

Global economic growth picked up slightly and rose to 3.1% in 2016. It is expected to rise further to 3.4% in 2017 and 3.6% in 2018. The growth had gained momentum in the final quarter of 2016 on the back of gains in developed and emerging economies. The recovery of the global economic scenario is uneven as the developed nations are leading the upswing in the global growth with a favourable domestic demand aiding growth in the Euro area and the United States. The euro zone is benefitting from strong household spending and a decline in unemployment rates. While the US economy is growing due to gains in household wealth and a turnaround in investment as a result of a rebound in oil-drilling activity, in Japan, despite the slowed private consumption, the weakening of the yen and an improvement in the global scenario is accelerating economic activity.

China''s booming real estate market and stronger global growth are boosting manufacturing output and investment. Most Asian economies are benefitting from strengthening of global trade. Latin America''s growth remains sluggish due to vulnerabilities to external shocks and structural weaknesses. Despite this optimism, lot of events could threaten global economic growth:

- The Brexit process got triggered in 2017 and it will send European Union and the United Kingdom into unchartered waters.

- The right-wing populist Geert Wilders and his Party for Freedom (PVV) have been defeated in the elections in the Netherlands. The election of the new president for France is also expected to be a major highlight in 2017.

- The Federal Reserve recently made its second hike and it could lead to fuelling volatilities in the financial markets, particularly in the developing countries.

(Source: Focus Economics)

Indian economic overview:

India''s GDP growth has improved phenomenally in the past couple of years and is being hailed as a ''bright spot'' among the emerging economies. But it may soon lose its ''fastest-growing major economy'' title to China after winning it from China in the previous fiscal. This would be a result of a downward revision of India''s GDP by the IMF. India''s projected GDP growth of 7.6% has now been revised downward to 6.6% by the IMF. This downward revision had happened primarily due to the cash shortages, payment disruptions in the wake of the demonetization initiative. This is however expected to be a short-term effect which will strengthen the nation''s fundamental structure in the long run. However, this effect is expected to gradually dissipate during FY 2017-18. The quality of India''s fundamentals are expected to become stronger and economic growth is expected to rebound to 7.2% in FY 2018 with growing digitization, the implementation of the GST, favorable monsoons, lowered oil prices, removal of supply chain bottlenecks and a strong consumer confidence. The Indian Government''s decisive policy man oeuvres towards ensuring fiscal consolidation and pegging back inflation will help it maintain economic stability in the years to come. (Source: Hindustan Times, TGI, Livemint).

Segment Analysis A. Building Products:

Global construction and building products industry overview

Building products industry consists of various building materials such as brick, stone, concrete and cement in addition to wood, lumber, wood paneling and mill work products the latest addition being Fibre cement Boards. It also includes roofing materials such as glass and asbestos. The construction and building materials industry is often difficult to track due to its complete dependence on the building sector and its trends. A rise in urbanization and an expanding real estate industry along with an increase in the world population and economic growth has led to a considerable growth of this sector. It is predicted that the global industry in construction supplies will reach US $1.1 trillion by 2020. Certain challenges that are prevalent in the construction and building products sector are listed below:

- Demand cyclicality: Demands of products are not consistent and is affected by seasonality with summers witnessing major outdoor construction activities and thus increase in demands.

- Macroeconomic factors: Global GDP growth, which affects interest rates and cost of mortgage and loans, has an impact on the real estate trade and in turn the sale of construction materials.

- Consumer preferences: Changing consumer preferences can drastically affect the off take of construction materials.

Indian construction and building products industry overview:

The Indian real estate sector is one of the most globally recognized sectors and is expected to reach a market size of US$ 180 billion by 2020. This growth in the real estate sector will also drive the growth of the construction and building products segment in India. This market includes wood based products, plastic boards, metal roofs, tiles and fibre cement products. Out of these, fibre cement building product comprises about 20% of the market and is growing at a robust pace. It is also capturing market share from other products in the industry.

The Indian government is increasing thrust on rural development which is a major driver of the building products segment. And along with rising rural incomes and moderation in rural inflation, the scope of roofing products is very large. It is estimated that about 54% of houses in rural India are kutcha houses and this deficit in rural housing offers tremendous opportunity of sustained growth of new age construction practices as well as building products. (Source IBEF, HDFC Securities)

Governmental initiatives:

Nearly 70% of the Indian population stays in the rural area and thus rural development has been a major focus of the Government. The urban development and housing minister has set the target of providing pucca ''housing to all by 2022''. Besides rural development, homelessness in urban areas is also a major concern and despite India''s growing economic stature, the country has as many as 78 million homeless people. To tackle these problems, the government took initiatives towards housing and development which will also provide a boost to the construction and building products segments. Few of which are listed below:

- Pradhan Mantri Awaas Yojana: Under this scheme, financial assistance will be offered to the homeless for the development of pucca houses. Approximately 2 crore dwelling units are planned to be built and is expected to be completed by 2022.

- Rajiv Aavas Yojana: This is a low-cost housing scheme is for who unable to pay high money for own house. The scheme envisages a ''slum-free India'' where every citizen has access to basic civic infrastructure, social amenities and a decent shelter.

- Credit-linked subsidy scheme for middle income groups: Under this scheme, an interest subsidy of 4% will be provided on housing loans of up to H9 lac for people with an income of H12 lac per year and a 3% subsidy will be provided on loans up to H12 lac for those having an income of H18 lac per year. This will lower the EMIs on the housing loans taken by people in midi come groups by over H2,000 per month.

- Rural Housing Fund: This scheme will provide interest subsidy to every rural household who is not covered under the Pradhan Mantri Aawas Yojana (Grameen), PMAY (G), enabling people in rural areas to construct new houses or add to their existing pucca houses to improve their dwelling units. The beneficiary who takes a loan under the scheme would be provided interest subsidy for loan amount up to H2 lac.

(Source: Indian Express, Livemint, HDFC Securities, makaan.com)

SWOT analysis of the Indian construction and building products industry:

Strengths

- Abundant employment opportunities

- Demand for commercial buildings and private sector housing are on the rise

- Keen emphasis laid by the Indian Government on the infrastructure sector

- Abundant availability of raw materials and low-cost labour

- Increased FDI inflow

Weaknesses

- Large distances between construction projects

- Skilling of labour pool needed on an immediate basis

- Intensely competitive environment

- Lack of well-defined processes

- Capital-intensive industry

Opportunities

- Growth in the private housing sector

- PPP projects

- Rising incomes and easy availability of loans

- Ample employment opportunities

- Weakening rural inflation

- Promotion of FDI in the construction sector

- Good Monsoons

Threats

- Infrastructure safety

- Natural calamities

- Increasing shift towards alternative products Visaka''s standpoint

Visaka''s building products business manufactures two products - cement asbestos products and fibre cement boards (V-Boards and V-Panels).

Overview of Cement Asbestos Business:

Industry structure and developments:

This industry exists for the last 80 years in India. Cement Asbestos Products continue to be in demand because of the efforts made in making inroads into rural markets for the product, its affordability and other qualities such as corrosion resistance, weather and fire proof nature.

Currently there are about 20 entities in the Industry with about 53 manufacturing plants with an annual capacity of approximately 45.00 Lac MT throughout the Country. The products are marketed under their respective brand names mainly through dealers for the retail segment and directly for projects and government departments.

Opportunities and threats:

Cement asbestos sheets are mainly used as roofing materials in rural and semi-urban housing and by industries and poultry sector.

Cement asbestos sheets are popular as they are inexpensive, need no maintenance and last long when compared to competing products such as thatched roofs, tiled roofs and galvanized iron sheets.

According to the information gathered by the Company, about 60% of rural people use thatched roof/tiles for the shelter. Thatched roof need regular replacement and tiled roof needs continued maintenance. Therefore, whenever the economic conditions improve, the first choice of the rural poor is to replace the roof over their head with the affordable and relatively durable product i.e. Cement Asbestos Sheets and thus your Company sees increased potential for usage of Cement Asbestos Sheets in rural areas.

Presence of increased alternative products in the recent past like Galvam and other metal colour coated sheets is creating some impact on the sales volumes of this product to some extent.

Risks and concerns:

Lack of entry barriers: Lack of entry barriers is attracting new entrants into this line of business.

Activities of Ban Asbestos Lobby: The activities of the Ban

Asbestos Lobby instigated by the manufacturers of substitute products continue to be a matter of concern. Government of India along with Russian Government opposed the move to put any condition on this industry in the recent Rotterdam Convention held in Geneva. This proves that the Government is convinced about the product.

Outlook:

The Company is the second-largest cement asbestos sheet brand in the nation with a market share of 18%. The asbestos division''s profits grew by 198% in FY2016-17. The decrease in rural inflation and sales contraction of steel sheets are expected to catalyze the off take of asbestos products.

Your Company is continuously striving to enhance the product''s distribution reach and increased market presence by strengthening network of stockiest, resorting to aggressive advertisement campaign and capitalizing on company''s brand & image. These, coupled with inherent advantages associated with the product such as cost affordability etc., are expected to result in a growth rate of 5% to 10% in the next fiscal. The company effectively staved off the effect of demonetization to a large extent.

Overview of Fibre Cement Boards & Panels:

Industry structure and developments:

There are 6 players in the industry producing identical or similar products with an annual capacity of approximately 470000 MT.

Opportunities and threats:

Fibre Cement Boards (FCB) are environment friendly, save time, cost effective as well as a good substitute for wood and thus help in reducing deforestation. Further it can also be a substitute for gypsum board in certain applications. These products have good aesthetics appeal. They can be used both internally and externally. They are also durable and have a life of over 25 years or more with proper maintenance. Further, the product has Triple advantages of Fire, Water and Termite resistance. FCB suits itself to any type of finish - paint, laminate, wall paper, tiles, marble etc.

FCB products are well accepted in Office and Commercial Segments for partitions, seamless false ceiling and grid false ceilings etc. Wet Area application with the product has become an accepted norm and its ability to take the finish of Marble or Tiles is an added advantage. Industrial segment started using V-Boards for Mezzanine application and Double Skin partitions.

As far as the Residential Segment is concerned, the entry level is with False Ceiling Tiles in bathrooms. In living rooms and kitchens the product can be used as shelves and cupboards, because FCB does not get affected by Termite and it is a long-life product. External Cladding with V Premium Boards, Front Elevation with V Premium Planks and Duct Covering to service pipes are well appreciated & accepted by leading builders in India. Residential dwelling units with all internal walls made of FCB are catching up very fast.

Your company is working on a model to cater to the needs of affordable housing with innovative in-fill Technology called V-in-fill system under which external and internal walls are built with a great speed at competitive cost.

V Premium stands the test of time, when exposed to different weather conditions; High levels of Fire Resistance (up to 3 hrs fire rating) and Noise Reduction Levels (up to 55 dB) enables an entry of V Board, in to Hotel Segment. Star hotels like Marriott, Sahara etc., have started using the same for dry walls / room dividers. Increased awareness to FCB will help acceptance and market growth. Visaka is the only Company to have Green Certification from CII, for its Non Asbestos Fiber Cement Board Products.

On the negative side, Cellulose pulp must be imported. Compared to wood and plywood, workability is a matter of concern. Further, initial handling is comparatively difficult. While consumers are preferring this product, the applicators like Carpenters were resisting initially due to difficulty in working on FCB compared to Plywood. Your Company has overcome this problem in the last couple of years by educating the applicators, through theoretical and practical training programmes.

Risks and Concerns:

Lack of entry barriers as well as import of cement board materials from Philippines/Thailand/China and Malaysia are matters of concern. However, they are not competitively priced.

Outlook:

The industry is growing at an average rate of 20%. Your company''s fibre cement board products contributed 18.24% of the revenues of Visaka''s building product segment in FY 2016-17. It is planning to expand the capacity of V-Boards and V-Panels at an investment of H75 crore during the next year via a Greenfield expansion in Northern India to capitalize on the growing demand emanating from that region.

The markets for V-Boards and V-Panels had thus far been limited to urban centres. Visaka, through its strategic marketing initiatives has been able to raise awareness and foster nationwide acceptance for these products. Although, the Company''s current growth driver is the cement asbestos sheet segment, V-Boards and V-Panels are Visaka''s future.

Saudi Arabia and Middle East markets are slightly down due to drop in crude oil prices, which is a matter of concern. To offset the same, your Company is exploring opportunities in African countries like Tanzania, Kenya; focusing on other Asian countries like Nepal, Sri Lanka and Pakistan. Your Company has enquiries from Philippines and Europe also. As Plywood is turning out to be costlier, it is expected that consumers will shift towards Cement boards in a big way.

Panels

Sandwich Panels are in demand in the market, for use as Partition Material. The ''Reinforced Building Board Sandwiched Panels'' are made of two fibre-reinforced cement sheets enclosing a lightweight core. These panels are fully cured at factory and are ready for installation.

These panels are cheaper compared to masonry partitions / wood partitions and are also easy to fix and take comparatively lesser time for installation.

B. Spinning Division:

Global textiles industry overview:

Global textile fibre consumption was pegged at 85 million tonnes, growing at a rate of 3%. Sales of textiles and clothing sector also fell as a result of this by 1.5%. Asia dominated the primary textile production market as Vietnam almost caught up with China. Besides the slower economic growth, another factor that contributed to these sectors stunted growth was the challenging weather conditions which affected the agricultural sector in many countries. But post the bumpy growth of this sector in 2016, this industry expects a slight revival in 2017. Technical textiles are expected to be the next big trend in this sector and will see major investment opportunities in the years ahead. Overall, the global textile industry is expected to grow at a CAGR of 5% as globalization continues. (Source: eulerhermes, techtextil)

Indian textiles industry overview:

The textiles segment is one of the oldest sectors of India and is one of the major contributors to the nation''s exports, contributing to 11% of the total exports. The textile industry employs approximately 40 million workers directly and 60 million indirectly. The total worth of the Indian textile industry is estimated to be US$ 108 billion, which is estimated to reach US$ 223 by 2021The Indian textile sector is very diverse with hand-spun and hand-woven textiles sectors at one end of the spectrum and the capital intensive sophisticated mills sector at the other end. Also the close linkage of this sector with the nation''s agriculture sector makes it unique in comparison to similar sectors in other nations. The Indian textiles and apparel sector is divided into broadly two segments: yarns and fibres and processed fabrics and apparel. India accounts for about 14% of the world''s production of textile fibres and yarns. India''s loom capacity, including handlooms is the highest in the world, contributing to 63% of the world''s market share. The future of the Indian textile industry looks optimistic supported by strong domestic consumption as well as rising export demands. Rising consumerism and higher disposable incomes have provided a boost to this industry in the past decade, which has led to the entry of several international players in the market such as Marks & Spencer, Guess and Next into the Indian market. The expected growth of the organized apparel segment is to be at a CAGR of more than 13% over a 10 year period which will drive the growth of high quality yarn demand. (Source Linkedln, IBEF)

Governmental initiatives:

The Government of India and the Ministry of Textiles took several initiatives to strengthen the nation''s textile industry. Few of which are listed below:

- Encouraging entrepreneurs to invest by increasing allocation of funds to Mudra Bank from Rs,1,36,000 crore (US$ 20.4 billion) to Rs,2,44,000 crore (US$ 36.6 billion)

- Upgrading skills of labourers by allocating H2,200 crore (US$ 330 million)

- Promoting exports and introducing a special package for the creation of jobs in the apparel sector, mostly for women

- Facilitating technological advancements in the textiles sector via ATUFS

- Introducing a special package for the handloom sector which will include social welfare schemes, insurance cover, cluster development, and up-gradation of obsolete looms, along with tax benefits and marketing support

- Signing a MoU worth Rs,8,835 crore for the development of textile parks, textile processing, machinery, carpet development, among others

- Boosting exports via the Focus Product Scheme, which includes a list of products that are entitled for duty credit scrip equivalent to 2% of freight-on-board value of exports

- Undertaking a range of export promotion activities under the aegis of The Cotton Textiles Export Promotion Council (Source: Ministry of Textiles, IBEF)

SWOT analysis of the Indian textile industry:

Strengths

- Easy availability of low-cost and experienced manpower

- Raw material availability

- Significant domestic as well as international demand

- Accelerated demand for fibres

- Large variety of textile products

Weaknesses

- Highly fragmented

- Weak labour laws

- High power costs, interest rates and indirect taxes

- Lack of technological development

- Lack of economies-of-scale

Opportunities

- The organized apparel segment is expected to grow at a CAGR of 13% over the next decade

- Increasing preference for readymade branded apparels

- Growth in online retail and the emergence of malls

- Withdrawal of quota restrictions

- Improvement in product quality to meet global standards

Rise in disposable incomes Threats

- Competition from countries such as China Striking the right balance between price and quality Maintaining a comfortable demand-and-supply balance

- Lack of stringent environmental and labour laws

Visaka''s standpoint:

Your company is continuing to have the largest installation of Murata Twin jet spinning installation in the world giving the advantage of manufacturing superior quality yarn as compared to conventional ring frame yarn. Your company has been gradually adding spinning machines and also continuously fine-tuning the techniques of manufacturing different varieties of yarns from solid and melange dyed Polyester and Viscose fibres, raw white Linen fibres at the highest speeds. In FY 2016-17 Visaka completed a capex of H70 crore which has increased its capacity by 26% and now has 41 MTS machines with 2752 positions, producing about 10,000 Metric tons of yarns per annum. This additional capacity gives your company the economics of scale in the industry and will be used to produce premium yarn which enjoy higher realizations, generate better demand and are comparatively more insulated from price-based competition. This strategy is expected to allow its textile division to tide over difficult times. The location of unit since is in Vidharba region, where the thermal power production is concentrated gives an edge over the mills in the other parts of the country to keep the power cost at lower levels.

The limitation to manufacture 100% cotton yarns and to a certain extent cotton yarns blended with polyester fibre with the aforesaid spinning system is one constraint. However, the cotton touch feel of Air-jet yarn makes up for it.

Opportunities and threats:

The continuing growth of Indian economy at a steady level helps to increase the demand for apparel fabrics, which is a key segment for our yarns. The recycled polyester fibre industry which has been exempted from taxes curtailed our growth during the past 5 years. Once GST is implemented with uniform taxation this year, it helps to create new opportunity for company''s yarns manufactured using virgin fibres in the domestic market. When cotton yarns also come into the GST fold, it will help the synthetic yarn industry to have a level-playing field.

The strengthening Indian Rupee from H70 to 64 dented our profitability in the past year. Any further strengthening could affect the profits from the export markets. If global cotton fibre production expands, it could reduce the demand for the synthetic yarns, thus reducing our margins. The 3D manufacturing capability for apparels is still in the nascent stage. Once this is successfully commercialized at affordable price, it could pose challenges to the traditional spinning and weaving industry.

OPERATIONAL PERFORMANCE:

Building Products Division

The net turnover of Building Products Division during the year was Rs,782 crores as compared to Rs,818 Crores during the previous year. The decrease was due to the tight money conditions coupled with change in consumption pattern among the users. The reduction is more on account of cement asbestos products while there is growth in the FCB business.

Textile Division:

The net turnover of this division during the current year was Rs,175 crores compared to Rs,172 crores during the previous year.

Analysis of financial statements:

The total turnover of the company for the year FY 2017 was H956.85 cr a decline of 3.3% which is after factoring in the effect of demonetization during the 2nd half of the year. The EBIDT for the year was 12.39%, an increase of 25% over the previous year. Finance cost and depreciation costs reduced by Rs,5.47 cr. The PBT for the year FY 2017 increased by 64% from Rs,40 cr to 66 cr. The PAT increased 67% from Rs,24.43 cr to Rs,40.80 cr. Hence both the margins as well as the finance and depreciation costs contributed to the bottom-line.

The overall gross debt came down by Rs,103 cr during the year ended March 2017. The total debt to equity dropped from 1.02 to 0.64 by the end of March 2017. The working capital cycle reduced by 14 days during the year.

Human resources:

Your Company believes that human resource is its most valuable resource and it is the quality and dynamism of human resources that enables it to make a significant contribution to enhance stakeholders'' value. Your Company has taken a lot of initiatives to train its employees both in-house as well as through reputed Institutes. Your Company always strives to maintain good work culture, ethics, values and rewarding remuneration packages to keep its staff highly motivated.

During the year, industrial relations remained cordial. Your Directors would like to record their appreciation of the efficient and loyal service rendered by the Company''s employees.

Internal controls and their adequacy:

Your Company has in place adequate systems of internal financial controls commensurate with its size and the nature of its operations. These have been designed to provide reasonable assurance with regard to recording and providing reliable financial and operational information, complying with applicable statutes, safeguarding assets from unauthorized use or losses, executing transactions with proper authorization and ensuring compliance of internal policies. The Company has a well-defined delegation of power with authority limits for approving revenue as well as capital expenditure. Processes for formulating and reviewing annual and long term business plans have been laid down to ensure adequacy of the control system, adherence to the management decisions and legal compliances. The Company uses ERP (Enterprise Resource Planning) system to record data for accounting and connects online to different locations for efficient exchange of information. This process ensures that all transaction controls are continually reviewed and risks of inaccurate financial reporting, if any, are dealt with immediately. The Company has in place adequate internal financial controls regarding financial statements. During the year, such controls were tested and no reportable material weakness in the design or operation was observed.

FIXED DEPOSITS:

During the year under review, your Company has accepted Rs,6.71 Crores as additional deposits from the public and shareholders thus making the outstanding as on March 31, 2017 to Rs,14.99 Crores. As on March 31, 2017, deposits raised under previous Companies Act, 1956 are fully paid off.

In this regard, it is further stated that:

a) there were no deposits lying unpaid or unclaimed at the end of the year i.e. 31.03.2017;

b) There has been no default in repayment of deposits or payment of interest thereon during the year;

c) There are no deposits lying with the Company which are not in compliance with the requirements of Chapter

V of the new Act and

d) As provided under the new Act, the outstanding deposits accepted under the provisions of previous Act have been repaid and squared off, fully.

UNCLAIMED DIVIDEND:

As per the provisions of Section 205C of the Companies Act, 1956, following unclaimed dividend amounts are transferred to Investor Education and Protection Fund upon expiry of the mandatory 7 years period:

Sl.

Particulars

Date of

Amount

No

Transfer

Rs,

1

Final Dividend for the FY 2008-09

12.09.2016

665562

2

First Interim Dividend for the FY 2009-10

12.09.2016

299521

3

Second Interim Dividend for the FY 2009-10

19.12.2016

296618

BANKS AND FINANCIAL INSTITUTIONS:

Your Company has been prompt in making the payment of interest and repayment of loans to the Financial Institutions and interest on working capital to the banks. Banks and Financial Institutions continue to give their unstinted support. The Board records its appreciation for the same.

CORPORATE SOCIAL RESPONSIBILITY:

Your Company, as a responsible Corporate Citizen established Visaka Charitable Trust in the year 2000 as a non-profit entity, to support initiatives that benefit the society at large. The Trust had been already undertaking various activities like provision of drinking water by digging bore wells, construction of irrigation tanks in remote villages, building of Class Rooms in Schools and Colleges, reimbursement of salaries of teachers and supply of class room furniture and conducting health camps.

Keeping in view the above, your Board, thought it appropriate to spend CSR expenditure as mandated under Section 135 of the Companies Act, 2013 either in part or full through the same trust i.e., Visaka Charitable Trust, objectives of which entail it to undertake the CSR activities as contemplated under Schedule VII of the Companies Act, 2013. Your company has during the financial year under review, out of the prescribed CSR expenditure amounting to Rs,66.72 Lakhs, spent an amount of Rs,51.54 Lakhs directly and an amount of Rs,15.18 Lakhs by way of contribution to the trust.

A report on CSR activities as required under Rule 9 of the Companies (Corporate Social Responsibility) Rules, 2014 is enclosed as Annexure - 1. Your Board undertakes to spend the amount towards the aforesaid identified CSR activities through the trust as per the CSR policy of the Company.

CSR policy of the Company may be accessed on the Company''s website at the link: www.visaka.co

DIRECTORS AND KEY MANAGERIAL PERSONNEL:

In pursuance of Article 130(e) of Articles of Association of the Company, Shri. V.ValLinath, Whole-time Director & CFO is liable to retire by rotation at the ensuing annual general meeting and being eligible, offers himself for reappointment.

All the independent Directors have given declarations stating that for the financial year 2017-18, they meet the criteria of Independence as contemplated under Section 149(6) read with Schedule IV to the Act & SEBI (Listing Obligations and Disclosures Requirements) Regulations, 2015 and the same was taken on record by your Board in its meeting held on May 5, 2017.

Shri.G.Vamsi Krishna has been appointed as Joint Managing Director of the Company for a period of 5 years effective from May 6, 2017.

Shri.V.Vallinath has been reappointed as Whole-time Director & CFO of the Company for a period of 3 years effective from September 9, 2017.

The aforesaid appointments are subject to your approval at the ensuing annual general meeting.

DIRECTORS'' RESPONSIBILITY STATEMENT

Pursuant to Section 134(5) of the Companies Act, 2013, Directors of your Company state that:

a. in the preparation of the annual accounts for the year ended March 31, 2017, the applicable accounting standards have been followed along with proper explanation relating to material departures; the annual accounts have been prepared in compliance with the provisions of the Companies Act, 2013.

b. they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit of the company for the same period;

c. the directors have taken proper and sufficient care 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. they have prepared the annual accounts on a going concern basis;

e. they have laid down internal financial controls in the company that are adequate and were operating effectively.

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

CORPORATE GOVERNANCE:

A report on Corporate Governance, along with a certificate of compliance from the Auditors, forms part of this Report.

AUDITORS AND AUDITORS'' REPORT:

Statutory Audit:

You are aware that the provisions relating to rotation of statutory auditors as contemplated under Section 139 of the Companies Act read with relevant rules issued there under is applicable to your company starting from the financial year 2013-14. However, as permitted under the said provisions M/s. Anandam & Co., Chartered Accountants were appointed as Statutory Auditors of the Company to hold the office for a period of three years from the conclusion of 32nd Annual General Meeting of the Company held on 25.07.2014 till the conclusion of ensuing annual general meeting of the Company. Starting from the financial year 2017-18, your company need to comply with the requirements of rotation of auditors.

The Board, based on the recommendations of its Audit Committee, is considering to appoint M/s Price Waterhouse & Co. Chartered Accountants LLP, Chartered Accountants, Hyderabad as statutory auditors to hold the office from the conclusion of ensuing annual general meeting till the conclusion of 6th consecutive annual general meeting (i.e., AGM to be held in the calendar year 2023) and appropriate resolutions in this connection seeking your approval, have been included in the notice calling ensuing Annual General Meeting of the Company.

Cost Audit:

In terms of the Companies (Cost Records and Audit) Rules, 2014, under Companies Act, 2013, M/s.Sagar & Associates, Cost Accountants, Hyderabad were appointed as Cost Accountants of the Company for conducting the Cost Audit of Building Products Division as well as Textiles Products Division for the financial year 2016-17 at a remuneration of H1,50,000/- exclusive of out of pocket expenses and applicable taxes which was ratified by you at the 34th Annual General Meeting of the Company.

Further, the Board after considering the recommendations of its Audit Committee, resolved to appoint the aforesaid firm as cost auditors for the financial year 2017-18 and appropriate resolution in this connection seeking your approval, has been included in the notice calling ensuing Annual General Meeting of the Company.

Pursuant to section 148(6) of Companies Act, 2013 read with rule 6(6) of the Companies (cost records and audit) Rules, 2014, cost audit report for the financial year ended March 31, 2016 was filed with the Central Government on July 2, 2016.

Secretarial Audit:

Pursuant to Section 204 of the Companies Act, 2013, your Board appointed M/s Tumuluru & Co., Practicing Company Secretaries, Hyderabad as Secretarial Auditors for the financial year 2016-17 and Secretarial Audit Report for the financial year ended March 31, 2017 is enclosed as Annexure-2.

CRITERIA FOR IDENTIFICATION, APPOINTMENT, REMUNERATION AND EVALUATION OF PERFORMANE OF DIRECTORS

Your Company constituted Nomination and Remuneration Committee (hereinafter referred to as "the Committee"), to oversee, inter-alia, matters relating to:

a) identify persons who are qualified to become directors and who may be appointed in senior management in accordance with the criteria laid down, recommend to the Board their appointment and removal;

b) formulate the criteria for determining qualifications, positive attributes and independence of a director;

c) recommend to the Board a policy relating to the remuneration for the directors, key managerial personnel and other employees;

d) carry out evaluation of every director''s performance including that of Independent Directors and

e) devise a policy on Board Diversity.

Criteria to be followed for identification, appointment, remuneration and evaluation of performance of directors including Company''s Board diversity etc., as approved by the Board, aids the committee in discharging aforesaid functions.

The criteria for appointment, qualifications and positive attributes along-with remuneration policy as applicable to Directors, KMPs and other Senior management personnel and criteria to be followed for performance evaluation of each director including Independent Directors of the Company is enclosed as Annexure - 3

FORMAL ANNUAL EVALUATION MADE BY THE BOARD OF ITS OWN PERFORMANCE AND OF ITS COMMITTEES AND INDIVIDUAL DIRECTORS

Your Company believes that it is the collective effectiveness of the Board that impacts Company''s performance and thus, the primary evaluation platform is that of collective performance of the Board.

The parameters for Board performance evaluation, as laid under evaluation criteria adopted by the company, have been derived from the Board''s core role of trusteeship to protect and enhance shareholder value as well as fulfil expectations of other stakeholders through strategic supervision of the Company.

The said criteria also contemplate evaluation of Directors based on their performance as directors apart from their specific role as independent, non-executive and executive directors as mentioned below:

a. Executive Directors, being evaluated as Directors as mentioned above, will also be evaluated based on targets / Criteria given to them by the board from time to time as well as on their respective terms of appointment.

b. Independent Directors, being evaluated as a Director, will also be evaluated on meeting their obligations connected with their independence criteria as well as adherence with the requirements of professional conduct, roles, functions and duties specifically applicable to Independent Directors as contained in Schedule IV to the Companies Act, 2013.

The criteria also specify that the Board would evaluate each committee''s performance based on the mandate on which the committee has been constituted and the contributions made by each member of the said committee in effective discharge of the responsibilities of the said committee.

The Board of Directors of your Company has made annual evaluation of its performance, its committees and directors for the financial year 2016-17 based on afore stated criteria.

EXTRACT OF ANNUAL RETURN

The details forming part of the extract of the Annual Return in Form MGT-9 is annexed herewith as Annexure-4

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

Details of investments and inter corporate deposits made by the Company, are given in the notes to the Financial Statements (Please refer Note Nos.11 and 16.1). During the year under review, your Company did not give any other loans or guarantees, provide any security or made any Investments as covered under Section 186 of the Companies Act, 2013, other than as disclosed above.

RELATED PARTY TRANSACTIONS

Related party transactions entered during the financial year under review are disclosed in Note No.29 of the Financial Statements of the company for the financial year ended March 31, 2017. These transactions entered were at an arm''s length basis and in the ordinary course of business. There were no materially significant related party transactions with the Company''s Promoters, Directors, Management or their relatives, which could have had a potential conflict with the interests of the Company. Form AOC-2, containing the note on the aforesaid related party transactions is enclosed as Annexure-5

The Policy on materiality of related party transactions and dealing with related party transactions as approved by the Board may be accessed on the Company''s website under investor relations/listing compliances tab at www.visaka.co

RISK MANAGEMENT FRAMEWORK

As a diversified enterprise, your Company believes that, periodical review of various risks which have a bearing on the business and operations is vital to proactively manage uncertainty and changes in the internal and external environment so that it can limit negative impacts and capitalize on opportunities.

Risk management framework enables a systematic approach to risk identification, leverage on any opportunities and provides strategies to manage, transfer and avoid or minimize the impact of the risks and helps to ensure sustainable business growth with stability of affairs and operations of the Company.

Keeping the above in view, your Company''s risk management is embedded in the business processes. As a part of review of business and operations, your Board with the help of the management periodically reviews various risks associated with the business and products of the Company and considers appropriate risk mitigation process. However, there are certain risks which cannot be avoided but the impact can only be minimized. The risks and concerns associated with each segment of your company''s business are discussed while reviewing segment-wise Management and Discussion Analysis. The other risks that the management reviews include:

a. Industry & Services Risk: this includes Economic risks like demand and supply chain, Profitability, Gestation period etc.; Services risk like infrastructure facilities; Market risk like consumer preferences and distribution channel etc.; Business dynamics like inflation/deflation etc.; Competition risks like cost effectiveness.

b. Management and Operational Risk: this includes Risks to Property; Clear and well defined work process; Changes in technology / upgradation; R&D Risks; Agency network Risks; Personnel & labour turnover Risk; Environmental and Pollution Control Regulations etc.; Locational benefits near metros.

c. Market Risk: this includes Raw Material rates; Quantities, quality, suppliers, lead time, interest rate risk and forex risk.

d. Political Risk: this includes Elections; War risk; Country/ Area Risk; Insurance risk like Fire, strikes, riots and civil commotion, marine risk, cargo risk etc.; Fiscal/Monetary Policy Risk including Taxation risk.

e. Credit Risk: this includes Creditworthiness; Risk in settlement of dues by clients and Provisions for doubtful and bad debts.

f. Liquidity Risk: this includes risks like Financial solvency and liquidity; Borrowing limits, delays; Cash/Reserve management risks and Tax risks.

g. Disaster Risk: this includes Natural calamities like fires, floods, earthquakes etc.; Manmade risk factors arising under the Factories Act, Mines Act etc.; Risk of failure of effective disaster Management plans formulated by the Company.

h. System Risk: this includes System capacities; System reliability; Obsolescence risk; Data Integrity risk & Coordination and Interface risk.

i. Legal Risk: this includes Contract risk; Contractual liability; Frauds; Judicial Risk and Insurance risk.

j. Government Policy: This includes Exemptions, import licenses, income tax and sales tax holidays, subsidies, tax benefits etc. Further your Board has constituted a Risk Management Committee, inter-alia, to monitor and review the risk management framework.

OTHER DISCLOSURES

Board Meeting

Four meetings of the Board of Directors were held during the year. For further details, please refer report on Corporate Governance on page no. 74 of this Annual Report.

Audit Committee

The Audit Committee comprises Independent Directors namely Shri B.B. Merchant (Chairman), Shri.V.Pattabhi and Shri. Gusti J. Noria apart from Smt. G. Saroja Vivekanand, Managing Director. All the recommendations made by the Audit Committee were accepted by the Board.

Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo Information required under section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014, is enclosed herewith as Annexure-6.

Vigil Mechanism

Pursuant to the provisions of section 177(9) & (10) of the Companies Act, 2013, a Vigil Mechanism for directors and employees to report genuine concerns has been established. The Vigil Mechanism Policy has been uploaded on the website of the Company under investor relations/ listing compliances tab at www.visaka.co

Remuneration of Directors, Key Managerial Personnel and Employees:

Statement showing disclosures pertaining to remuneration and other details as required under Section 197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is enclosed as Annexure-7. In terms of Section 197(12) of the Companies Act, 2013 read with Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, a statement showing the names and other particulars of the employees drawing remuneration in excess of limits set out in said rules forms part of the annual report. Considering the first proviso to Section 136(1) of the Companies Act, 2013 this annual report, excluding the aforesaid information, is being sent to the shareholders of the Company and others entitled thereto. The said information is available for inspection at the registered office of the Company during business hours on working days of the Company up to the date of the ensuing Annual General Meeting. Any shareholder interested in obtaining a copy thereof, may write to the Company Secretary in this regard.

General:

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:

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

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

iii. Neither the Managing Director nor the Whole-time Directors of the Company receive any remuneration or commission from any of its subsidiaries and

iv. No significant or material orders were passed by any Regulator or Court or Tribunal which impacts 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.

Acknowledgements:

Your Directors would like to express their sincere appreciation for the assistance and co-operation received from the financial institutions, banks, Government authorities, customers, vendors and members during the year under review. Your Directors also wish to place on record once again their deep sense of appreciation for the committed services by the Company''s executives, staff and workers.

On behalf of the Board of Directors

Date: May 5, 2017 BHAGIRAT B. MERCHANT

Place: Secunderabad Chairman


Mar 31, 2016

Board’s Report $

The Directors are pleased to present the 34th Annual Report of the Company with Audited Financial Statement for the year ended March 31, 2016. The financial highlights are as follows:

(Rs. in lakhs)

PARTICULARS

2015 - 2016

2014 - 2015

Total Revenues

100758

102355

Profit before depreciation and taxes

7668

7630

Profit before taxes

4037

3321

Provision for taxes (Incl. Deferred Tax)

1594

1197

Profit for the year after taxes

2443

2124

Balance brought forward from previous year

1054

* (114)

Profit available for appropriation

3497

2010

Dividend on equity share capital

794

794

Corporate Dividend Tax

162

162

Transfer to general reserve

1500

-

Balance carried to balance sheet

1041

1054

PERFORMANCE REVIEW AND THE STATE OF COMPANY''S AFFAIRS

Performance of your company has a strong connection to the performance of the rural and semi-urban economies of our country. Due to two consecutive below average monsoons, sluggishness in the economy continued during the financial year under review. There was no agility in the market due to poor demand conditions. Amidst the gloomy economic environment, strategies like aggressive ad campaign, improved operational efficiency, strengthening the Distribution reach, developing new markets and focusing more on higher realization applications etc., helped your company to show a reasonably good performance during the financial year under review.

The Company''s key performance indicators are as under:

- Revenue from operations decreased marginally by 2% to 1005 Crores from 1021 Crores of previous year.

- Cash Profit increased marginally to Rs.76.68 Crores from Rs.76.30 Crores of previous year.

- Net Profit increased to Rs.24.43 crores from Rs.21.24 crores of previous year.

- The capital expenditure for 2015-16 was Rs.18.68 Crores, which was principally on account of ongoing expansion undertaken at the Textile Plant at Nagpur and other normal capital expenditure at various units.

There is no change of business during the year under

review.

Your Company''s shares are listed on the National Stock Exchange (NSE) and Bombay stock exchange Limited (BSE). Variations in the market capitalization and price earnings ratio are provided hereunder:

Parameter

As at March 31, 2016

As at March 31, 2015

Market Capitalisation1 (in Rs. Crores)

168.02

146.10

P/E ratio

6.87

6.88

(* based on closing price at Bombay Stock Exchange Limited, being the higher of two exchanges, as on the respective dates)

Your Company made its initial public offer of equity shares in 1984-85. The closing price (quoted on stock exchanges) of your Company''s share of Rs.10/- each fully paid-up as at March 31, 2016 and March 31, 2015, are 529% and 460% respectively over the price of last public offer made in the year 1991-92.

No material changes and commitments occurred after the close of the year till the date of this Report, which affect the financial position of the Company.

During the year under review:

1. The Hon''ble Arbitral Tribunal constituted to adjudicate the dispute between your Company and M/s. Hyderabad Cricket Association (HCA) with regard to violation of certain Advertisement and displaying rights etc., granted in pursuance of an agreement entered on 16.10.2004 by HCA, passed an award dated March 15, 2016. As per the award it was held inter-alia, that the termination of the agreement by HCA is unsustainable and bad in law and thus, Rs.25.92 Crores were awarded as damages for the various violations committed by HCA under the agreement. Your Company awaits the compliance of the same by HCA.

2. In a defamation suit filed by your company, inter-alia, against Google Inc. USA, Hon''ble 1st Additional Chief Judge, City Civil Court, Secunderabad, the Appellant Court has set aside the judgment cum decree of the trial court, pursuant to which, withdrawal of certain defamatory material placed on the Google blog by one Mr. Gopal a Kri shna, against your Company including promoters was ordered.

The said person, an anti-asbestos lobbyist with vested interest, had posted certain derogatory remarks against the Company''s Asbestos Cement Sheets business and Promoters on a blog ban asbestos India hosted by Google Inc. through Google India Pvt. Ltd. Aggrieved by the said post, your Company pursued the matter with Google Inc. USA and vexed with its attitude had filed a suit in the nature of mandatory injunction directing Google Inc. to remove the said content.

The said lobbyist neither presented himself nor represented even once and his whereabouts are also not known. As on date the said content is not yet withdrawn and the compliance of the Appellate Order by Google Inc., USA., is awaited.

DIVIDEND AND GENERAL RESERVE

Your Directors declared interim dividend of Rs.3/- (i.e., 30%) per share of Rs.10/- each during the financial year under review. Your Directors recommend payment of Final Dividend of Rs.2/- (i.e. 20%) per share of Rs.10/- each for the said Financial Year. With the above, the total dividend recommended would be Rs.5/- (i.e., 50%) per share of Rs.10/-, which is on par with the previous year of Rs.5/-per share (i.e. 50%). The Company is absorbing Corporate Dividend Tax of Rs.161.65 Lakhs on the said Dividend.

Your Company proposes to transfer Rs.1,500 lacs to the general reserve for the financial year ended March 31, 2016.

MANAGEMENT DISCUSSION AND ANALYSIS

Your Company is in the Business of Manufacture and Sale of Cement Asbestos Sheets, Fiber Cement Sheets (V-Boards), Panels and Spinning (Synthetic Spun Yarn). Segment-wise Management Discussion and Analysis is provided hereunder:

A. BUILDING PRODUCTS

i. Cement Asbestos Business Industry structure and developments:

This industry exists for the last 80 years in India.

Cement Asbestos Products continue to be in demand because of the efforts made in making inroads into rural markets for the product, its affordability and other qualities such as corrosion resistance, weather and fire proof nature.

Currently there are about 20 entities in the Industry with about 72 manufacturing plants with an annual capacity of 57.00 Lac MT throughout the Country. The products are marketed under their respective brand names mainly through dealers for the retail segment and directly for projects and government departments.

Opportunities and threats:

Cement asbestos sheets are mainly used as roofing materials in rural and semi-urban housing and by industries and poultry sector.

Cement asbestos sheets are popular as they are inexpensive; need no maintenance and last long when compared to competing products such as thatched roofs, tiled roofs and galvanized iron sheets.

According to the information gathered by the Company, about 60% of rural people use thatched roof/tiles for the shelter. Thatched roof need regular replacement and tiled roof needs continued maintenance. Therefore, whenever the economic conditions improve, the first choice of the rural poor is to replace the roof over their head with the affordable and relatively durable product i.e. Cement Asbestos Sheets. Therefore, your Company sees increased potential for usage of Cement Asbestos Sheets in rural areas.

Presence of increased alternative products in the recent past like Galvam and other metal colour coated sheets is creating some impact on the sales volumes of this product to some extent. However, your Company is introducing new colour coated sheets to overcome the same.

Risks and concerns:

Lack of entry barriers: Lack of entry barriers is attracting new entrants into this line of business.

Activities of Ban Asbestos Lobby: The activities of the Ban Asbestos Lobby instigated by the manufacturers of substitute products continue to be a matter of concern.

Outlook:

In the last year, growth of the Industry was not encouraging due to tight monetary conditions, low demand, low spend on infrastructure development, compounded by pressure on prices and also change of consumption pattern among the users. However, your Company could reduce the said impact to some extent by resorting to aggressive marketing strategies.

Your Company is continuously striving to enhance the product''s distribution reach and increased market presence by strengthening network of stockiest, resorting to aggressive advertisement campaign and introduction of new colour coated sheets. These, coupled with inherent advantages associated with the product such as cost affordability etc., are expected to result in a growth rate of 5% to 10% in the next fiscal.

ii. Boards Industry structure and developments:

There are 8 players in the industry producing identical or similar products with an annual capacity of 396000 MT.

Opportunities and threats:

Fibre Cement Boards (FCB) are environment friendly, save time, cost effective as well as a good substitute for wood and thus help in reducing deforestation. Further it can also be a substitute for gypsum board in certain applications. These products have good aesthetics appeal. They can be used both internally and externally. They are also durable and have a life of over 25 years or more with proper maintenance. Further, the product has Triple advantages of Fire, Water and termite resistance. FCB lends itself to any type of finish - paint, laminate, wall paper, tiles, marble etc.

FCB products are well accepted in Office and Commercial Segments. Of late, Hotel Industry started accepting

Drywalls as Guest Room Dividers. Wet Area application with the product has become an accepted norm and its ability to take the finish of Marble or Tiles is an added advantage.

As far as the Residential Segment is concerned, the entry level is with False Ceiling Tiles in bathrooms. In living rooms and kitchens, the product can be used as shelves and cupboards, because FCB does not get affected by Termite and it is a long life product; External Cladding with

V Premium Boards, Front Elevation with V Premium Planks and Duct Covering to service pipes are well appreciated & accepted by leading builders in lndia; Residential dwelling units with all internal walls made of FCB are catching up very fast.

V Premium stands the test of time, when exposed to different weather conditions; High levels of Fire Resistance (up to 3 hrs fire rating) and Noise Reduction Levels (up to 55 dB) enables easy entry of V Board, in to Hotel Segment. Increased awareness to FCB will help acceptance and market growth. Visaka is the only Company to have Green Certification from CII, for its Non Asbestos Fiber Cement Board Products.

On the negative side, Cellulose pulp has to be imported. Compared to wood and plywood, workability is a matter of concern. Further, initial handling is comparatively difficult. While consumers are preferring this product, the applicators like Carpenters are resisting initially due to difficulty in working on FCB compared to Plywood. Your Company is in the process of educating the applicators, through theoretical and practical training programmes, to ensure better acceptance.

Risks and Concerns:

Lack of entry barriers as well as import of cement board materials from Philippines/Thailand/China and Malaysia are matters of concern.

Outlook:

The industry is growing at an average rate of 15%. Saudi Arabia and Middle East markets are slightly down due to drop in crude oil prices, which is a matter of concern. To offset the same, your Company is exploring opportunities in African countries like Tanzania, Kenya; focusing on other Asian countries like Nepal, Sri Lanka and Pakistan. Your Company has enquiries from Philippines also. New applications for Acoustics and Tile underlay, wall lining etc., is gaining popularity. As Plywood is turning out to be costlier, it is expected that manufacturers will shift towards Cement boards.

iii. Panels

Sandwich Panels are in demand in the market, for use as Partition Material. The ''Reinforced Building Board Sandwiched Panels'' are made of two fibre-reinforced cement sheets enclosing a lightweight core. These panels are fully cured at factory and are ready for installation. These panels are cheaper compared to masonry partitions / wood partitions and are also easy to fix and takes comparatively less time for installation.

Performance of Building Products Division

As against a production of 855293 tonnes made during the previous year the Division has produced 797157 tonnes during the Financial Year ended 31st March, 2016. The sales during the Financial Year Ended on 31st March, 2016 is 796239 tonnes as against 805604 tonnes during the previous Financial year, registering a marginal decrease of 1.16%.

The net turnover of Building Products Division during the year was Rs.818 crores as compared to Rs.833 Crores during the previous year. The decrease was due to the subdued market conditions, modest growth in agriculture sector in the country coupled with change of consumption pattern among the users. The reduction is more on account of cement asbestos products while there is growth in the FCB business.

B. SYNTHETIC YARN BUSINESS

Industry structure and development:

The year 2015-16 witnessed wide fluctuation in oil price between USD 28 and USD 70 per barrel, resulting in bottoming out of prices of petroleum products including Polyester fibre. This led to wild swings in the demand for Polyester based yarns. Timely purchase of raw material and execution of yarn contracts significantly helped your Company to reduce the impact of the vagary in oil prices. As a result of reduction in raw material and yarn prices in the year under review, the turnover of the company was less by about 8 Crores, though the volume of sales went up by about 241 tonnes.

The uncertainty in Chinese economy and its manufacturing facilities also had an impact on the supply side of yarns globally. There were not many new installations of Spinning capacity.

As the oil price is expected to increase in the coming months, it is expected that the demand for textiles will pick up and your Company is expected to perform better in 2016-17.

Opportunities and threats:

With more and more customers consistently requiring good quality yarns, demand for your Company''s yarns will continue to grow. Since, your Company has the largest installation of Murata Twin jet installation in the world, customers approach willingly as one-stop shopping for all their airjet spun yarn needs. The continued increase in per-capita consumption of textiles in India also provides further opportunities.

The El Nino effect which brought drought to India, resulted in water shortage for the fabric processing units. The temperature is set to decline from June 2016 onwards. With the onset of La Nina, bountiful rain all over the country is expected, which should trigger growth in textile business.

With more than 11 million cotton bales in stock (equivalent to half of annual global production), China is expected to flood the market with cotton fibre, which may result in lower price for cotton. Polyester, being a substitute for Cotton will also have immediate impact, in spite of increasing oil price. This could be a threat during the year 2016-17.

With India being the only well managed country amongst the BRICS nations, Rupee has strengthened from about Rs. 69/- to about Rs. 66/- during the first 2 months of 201617. If this strengthening trend of Indian Rupee continues, it will affect the export margins.

Risks and concerns:

The improved power situation in India during the last year is helping the spinners in Tamilnadu to compete with our fine yarns with attractive prices. This may affect your Company''s profitability. The ongoing expansion of spinning capacity of your Company will give an additional production of about 250 tons per month from September 2016 onwards. Steps are initiated for improving Company''s customer base for selling this additional volume. Any delay in acquiring new customers may increase its medium term inventory levels.

Production and Sales volumes:

The production in the spinning unit during the year 2015-16 was 9290 metric tonnes as compared to 8900 metric tonnes during the previous year. The sales were 9199 metric tonnes of yarn (including export of 2429 metric tonnes) during the year under review as compared to 8958 metric tonnes of yarn (including export of 2095 metric tonnes) in the previous year.

Financial Performance:

The net turnover of this division during the Current Year was Rs. 172 crores compared to Rs. 180 crores during the previous year.

INTERNAL FINANCIAL CONTROL SYSTEMS AND THEIR ADEQUACY

Your Company has in place adequate systems of internal financial controls commensurate with its size and the nature of its operations. These have been designed to provide reasonable assurance with regard to recording and providing reliable Financial and Operational information, complying with applicable statutes, safeguarding assets from unauthorized use or losses, executing transactions with proper authorization and ensuring compliance of internal policies. The Company has a well-defined delegation of power with authority limits for approving revenue as well as capital expenditure. Processes for formulating and reviewing annual and long term business plans have been laid down to ensure adequacy of the control system, adherence to the management decisions and legal compliances. The Company uses ERP (Enterprise Resource Planning) system to record data for accounting and connects online to different locations for efficient exchange of information. This process ensures that all transaction controls are continually reviewed and risks of inaccurate Financial Reporting, if any, are dealt with immediately.

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 were observed.

MATERIAL DEVELOPMENTS IN HUMAN RESOURCES / INDUSTRIAL RELATIONS FRONT

Your Company believes that Human Resource is its most valuable resource and it is the quality and dynamism of human resources that enables it to make a significant contribution to enhance stakeholders'' value. Your Company has taken a lot of initiatives to train its employees both in-house as well as through reputed Institutes. Your Company always strives to maintain good work culture, ethics, values and rewarding remuneration packages to keep its staff highly motivated.

During the year, the industrial relations at all the workplaces of the Company were cordial.

Your Directors would like to record their appreciation of the efficient and loyal service rendered by the Company''s employees.

FIXED DEPOSITS

During the year under review, your Company has accepted deposits of Rs. 5.38 Crores from the public and shareholders. The amount of deposits outstanding as on March 31, 2016 was Rs. 10.88 Crores out of which Rs.9.98 Crores was accepted under the provisions of Chapter V of the Companies Act, 2013 (new Act) and the balance of Rs.0.90 Crores was accepted as per the provisions of the Companies Act, 1956 (old Act).

In this regard, it is further stated that

a) there were no deposits lying unpaid or unclaimed at the end of the year i.e. 31.03.2016;

b) There has been no default in repayment of deposits or payment of interest thereon during the year;

c) There are no deposits lying with the Company which are not in compliance with the requirements of Chapter

V of the new Act other-than the deposits accepted under the provisions of old Act as aforesaid and

d) As provided under the new Act, the outstanding deposits accepted under the provisions of previous Act are being repaid as per the terms of each deposit.

UNCLAIMED DIVIDEND

As per the provisions of Section 205C of the Companies Act, 1956, unclaimed dividend amount of Rs. 8,84,304/in respect of the year 2007 - 2008 has been transferred to Investor Education and Protection Fund on 03.09.2015 upon expiry of the mandatory 7 years period.

BANKS AND FINANCIAL INSTITUTIONS

Your Company has been prompt in making the payment of interest and repayment of loans to the Financial Institutions and interest on working capital to the banks. Banks and Financial Institutions continue to give their unstinted support. The Board records its appreciation for the same.

CORPORATE SOCIAL RESPONSIBILITY

Your Company, as a responsible Corporate Citizen established Visaka Charitable Trust in the year 2000, as a non-profit entity, to support initiatives that benefit the society at large. The Trust had been already undertaking various activities like provision of drinking water by digging bore wells, construction of irrigation tanks in remote villages, building of Class Rooms in Schools and Colleges, reimbursement of salaries of teachers and supply of class room furniture and conducting health camps.

Keeping in view the above, your Board, thought it appropriate to spend CSR expenditure as mandated under Section 135 of the Companies Act, 2013 either in part or full through the same trust i.e., Visaka Charitable Trust, objectives of which entail, it to undertake the CSR activities as contemplated under Schedule VII of the Companies Act, 2013. Your company has during the financial year under review, out of the prescribed CSR expenditure amounting to Rs.85.01 Lacs, spent an amount of Rs29.01 Lakhs directly and the balance amount of Rs.56.00 Lakhs by way of contribution to the trust.

A report on CSR activities as required under Rule 9 of the Companies (Corporate Social Responsibility) Rules,

2014 is enclosed herewith as Annexure - 1. Your Board undertakes to spend the amount towards the aforesaid identified CSR activities through the trust as per the CSR policy of the Company.

CSR policy of the Company may be accessed on the Company''s website at the link: www.visaka.in/

DIRECTORS AND KEY MANAGERIAL PERSONNEL

In pursuance of Article 130(e) of Articles of Association of the Company, Shri. G. Vamsi Krishna, Whole-time Director is liable to retire by rotation at the ensuing annual general meeting and being eligible, offers himself for reappointment.

All the independent Directors have given declarations stating that for the financial year 2016-17, they meet the criteria of Independence as contemplated under Section 149(6) read with Schedule IV to the Act/SEBI (Listing Obligations and Disclosures Requirements) Regulations, 2015 and the same was taken on record by your Board in its meeting held on 10th May, 2016.

DIRECTORS'' RESPONSIBILITY STATEMENT

Pursuant to Section 134(5) of the Companies Act, 2013, Directors of your Company state that:

a. in the preparation of the annual accounts for the year ended 31st March, 2016, the applicable accounting standards have been followed along with proper explanation relating to material departures; the annual accounts have been prepared in compliance with the provisions of the Companies Act, 2013.

b. they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit of the company for the same period;

c. the directors have taken proper and sufficient care 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. they have prepared the annual accounts on a going concern basis;

e. they have laid down internal financial controls in the company that are adequate and were operating effectively.

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

CORPORATE GOVERNANCE

A report on Corporate Governance, along with a certificate of compliance from the Auditors, forms part of this Report.

AUDITORS AND AUDITORS'' REPORT

Statutory Audit:

M/s. M. Anandam & Co., Chartered Accountants were appointed as Statutory Auditors of the Company to hold office for a period of three years from the conclusion of Annual General Meeting of the Company held on

25.07.2014. The said appointment needs to be ratified by the members of the Company at every annual general meeting during the staid period. The Statutory Auditors have confirmed their eligibility to the effect that their reappointment, if made, would be within the prescribed limits under the Act and that they are not disqualified for re-appointment.

As required above, the Board has, after considering the recommendations of its Audit Committee, incorporated a suitable resolution for your consideration in the notice calling ensuing Annual General Meeting of the Company.

The Notes on financial statement referred to in the Auditors'' Report are self-explanatory and do not call for any further comments. The Auditors'' Report neither contain any qualification, reservation or adverse remark nor reported any incident of fraud to the Audit Committee or Board for the year under review.

Cost Audit:

In terms of notification dated December 31, 2014 read with the Companies (Cost Records and Audit) Rules, 2014, under Companies Act, 2013, M/s. Sagar & Associates, Cost Accountants, Hyderabad were appointed as Cost Accountants of the Company for conducting the Cost Audit of Building Products Division as well as Textiles Products Division for the financial year 2015-16 at a remuneration of C1,50,000/- exclusive of out of pocket expenses and applicable taxes which was ratified by you at the 33rd Annual General Meeting of the Company.

Further, the Board after considering the recommendations of its Audit Committee, resolved to appoint the aforesaid firm as cost auditors for the financial year 2016-17 and appropriate resolutions in above connection seeking your approval, have been included in the notice calling ensuing Annual General Meeting of the Company.

Pursuant to section 148(6) of Companies Act, 2013 read with rule 6(6) of the Companies (cost records and audit) Rules, 2014, cost audit report for the financial year ended March 31, 2015 was filed with the Central Government on September 22, 2015.

Secretarial Audit:

Pursuant to Section 204 of the Companies Act, 2013, your Board appointed M/s Tumuluru & Co., Practicing Company Secretaries, Hyderabad as Secretarial Auditors for the financial year 2015-16 and Secretarial Audit Report for the Financial Year ended 31st March, 2016 is enclosed herewith as Annexure-2.

CRITERIA FOR IDENTIFICATION, APPOINTMENT, REMUNERATION AND EVALUATION OF PERFORMANE OF DIRECTORS

Your Company constituted Nomination and Remuneration Committee (hereinafter referred to as "the Committee"), to oversee, inter-alia, matters relating to:

a) identify persons who are qualified to become directors and who may be appointed in senior management in accordance with the criteria laid down, recommend to the Board their appointment and removal;

b) formulate the criteria for determining qualifications,

positive attributes and independence of a director;

c) recommend to the Board a policy relating to the remuneration for the directors, key managerial personnel and other employees;

d) carry out evaluation of every director''s performance including that of Independent Directors and

e) devise a policy on Board Diversity

Criteria to be followed for identification, appointment, remuneration and evaluation of performance of directors including Company''s Board diversity etc., as approved by the Board, aids the committee in discharging aforesaid functions.

The criteria for appointment, qualifications and positive attributes along-with remuneration policy as applicable to Directors, KMPs and other Senior management personnel and criteria to be followed for performance evaluation of each director including Independent Directors of the Company is enclosed herewith as Annexure - 3

FORMAL ANNUAL EVALUATION MADE BY THE BOARD OF ITS OWN PERFORMANCE AND OF ITS COMMITTEES AND INDIVIDUAL DIRECTORS

Your Company believes that it is the collective effectiveness of the Board that impacts Company''s performance and thus, the primary evaluation platform is that of collective performance of the Board as a whole.

The parameters for Board performance evaluation, as laid under evaluation criteria adopted by the company, have been derived from the Board''s core role of trusteeship to protect and enhance shareholder value as well as fulfill expectations of other stakeholders through strategic supervision of the Company.

The said criteria also contemplates evaluation of Directors based on their performance as directors apart from their specific role as independent, non-executive and executive directors as mentioned below:

a. Executive Directors, being evaluated as Directors as mentioned above, will also be evaluated on the basis of targets / Criteria given to executive Directors by the board from time to time as well as terms of their appointment.

b. Independent Directors, being evaluated as a Director, will also be evaluated on meeting their obligations connected with their independence criteria as well as adherence with the requirements of professional conduct, roles, functions and duties specifically applicable to Independent Directors as contained in Schedule IV to the Companies Act, 2013.

The criteria also specifies that the Board would evaluate each committee''s performance based on the mandate on which the committee has been constituted and the contributions made by each member of the said committee in effective discharge of the responsibilities of the said committee.

The Board of Directors of your Company has made annual evaluation of its performance, its committees and directors for the financial year 2015-16 based on afore stated criteria.

EXTRACT OF ANNUAL RETURN

The details forming part of the extract of the Annual Return in Form MGT-9 is annexed herewith as Annexure-4

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

Details of investments and inter corporate deposits made by the Company, are given in the notes to the Financial Statements (Please refer Note Nos.12 and 17.1). During the year under review, your Company did not give any other loans or guarantees, provide any security or made any Investments as covered under Section 186 of the Companies Act, 2013, other than as disclosed above.

RELATED PARTY TRANSACTIONS

Related party transactions entered during the financial year under review are disclosed in Note No.28 of the Financial Statements of the company for the financial year ended March 31, 2016. These transactions entered were at an arm''s length basis and in the ordinary course of business. There were no materially significant related party transactions with the Company''s Promoters, Directors, Management or their relatives, which could have had a potential conflict with the interests of the Company. Form AOC-2, containing the note on the aforesaid related party transactions is enclosed herewith as Annexure-5

The Policy on materiality of related party transactions and dealing with related party transactions as approved by the Board may be accessed on the Company''s website at the link: http://www.visaka.in/vilrptpolicy.pdf

RISK MANAGEMENT FRAMEWORK

As a diversified enterprise, your Company believes that, periodical review of various risks those have a bearing on the business and operations is vital to proactively manage uncertainty and changes in the internal and external environment so that it can limit negative impacts and capitalize on opportunities. Risk management framework enables a systematic approach to risk identification, leverage on any opportunities and provides strategies to manage, transfer and avoid or minimize the impact of the risks and also helps to ensure sustainable business growth with stability of affairs and operations of the Company.

Keeping the above in view, your Company''s risk management is embedded in the business processes. As a part of review of business and operations, your Board with the help of the management periodically reviews various risks associated with the business and products of the Company and considers appropriate risk mitigation process. However, there are certain risks which cannot be avoided but the impact can only be minimized. The risks and concerns associated with each segment of your company''s business are discussed while reviewing segment-wise Management and Discussion Analysis. The other risks that the management reviews also include:

a. Industry & Services Risk: this includes Economic risks like demand and supply chain, Profitability, Gestation period etc.; Services risk like infrastructure facilities; Market risk like consumer preferences and distribution channel etc.; Business dynamics like inflation/deflation etc.; Competition risks like cost effectiveness.

b. Management and Operational Risk: this includes Risks to Property; Clear and well defined work process; Changes in technology / up gradation; R&D Risks; Agency network Risks; Personnel & labour turnover Risk; Environmental and Pollution Control Regulations etc.; Vocational benefits near metros.

c. Market Risk: this includes Raw Material rates; Quantities, quality, suppliers, lead time, interest rate risk and forex risk.

d. Political Risk: this includes Elections; War risk; Country/Area Risk; Insurance risk like Fire, strikes, riots and civil commotion, marine risk, cargo risk etc.; Fiscal/Monetary Policy Risk including Taxation risk.

e. Credit Risk: this includes Creditworthiness; Risk in settlement of dues by clients and Provisions for doubtful and bad debts.

f. Liquidity Risk: this includes risks like Financial solvency and liquidity; Borrowing limits, delays; Cash/Reserve management risks and Tax risks.

g. Disaster Risk: this includes Natural calamities like fires, floods, earthquakes etc.; Manmade risk factors arising under the Factories Act, Mines Act etc.; Risk of failure of effective disaster Management plans formulated by the Company.

h. System Risk: this includes System capacities; System reliability; Obsolescence risk; Data Integrity risk & Co-ordination and Interface risk.

i. Legal Risk: this includes Contract risk; Contractual liability; Frauds; Judicial Risk and Insurance risk.

j. Government Policy: This includes Exemptions, import licenses, income tax and sales tax holidays, subsidies, tax benefits etc.

Further your Board has constituted a Risk Management Committee, inter-alia, to monitor and review the risk management framework.

OTHER DISCLOSURES

Board Meeting

Five meetings of the Board of Directors were held during the year. For further details, please refer report on Corporate Governance on page no. 62 of this Annual Report.

Audit Committee

The Audit Committee comprises Independent Directors namely Shri B.B.Merchant (Chairman), Shri. VPattabhi and Shri. Gusti J. Noria apart from Smt. G. Saroja Vivekanand, Managing Director. All the recommendations made by the Audit Committee were accepted by the Board.

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

Information required under section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014, is enclosed herewith as Annexure-6.

Vigil Mechanism

In pursuant to the provisions of section 177(9) & (10) of the Companies Act, 2013, a Vigil Mechanism for directors and employees to report genuine concerns has been established. The Vigil Mechanism Policy has been uploaded on the website of the Company at www.visaka.biz under investors/policy documents/Vigil Mechanism Policy link.

Particulars of Employees and related disclosures

In terms of the provisions of Section 197(12) of the Act read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, a statement showing the names and other particulars of the employees drawing remuneration in excess of the limits set out in the said rules is enclosed herewith as Annexure-7.

Remuneration ratio of the Directors / Key Managerial Personnel/ Employees:

Statement showing disclosures pertaining to remuneration and other details as required under Section 197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is enclosed herewith as Annexure-8

GENERAL

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:

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

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

iii. Neither the Managing Director nor the Whole-time Directors of the Company receive any remuneration or commission from any of its subsidiaries.

iv. 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.

ACKNOWLEDGEMENT

Your Directors would like to express their sincere appreciation for the assistance and co-operation received from the financial institutions, banks, Government authorities, customers, vendors and members during the year under review. Your Directors also wish to place on record their deep sense of appreciation for the committed services by the Company''s executives, staff and workers.

On behalf of the Board of Directors

Date: 10.05.2016 BHAGIRAT B. MERCHANT

Place: Secunderabad Chairman


Mar 31, 2015

Dear Members,

The Directors are pleased to present the 33rd Annual Report of the Company with Audited Financial Statement for the year ended March 31, 2015. The financial highlights are as follows:

PARTICULARS (Rs. in lakhs)

2014-15 2013-14

Total Revenues 102355 89746

Profit before depreciation and Taxes 7630 4125

Profit before taxes 3321 1880

Provision for taxes (Incl. Deferred Tax) 1197 683

Profit for the year after taxes 2124 1197

Balance brought forward from previous year * (114) 1040

Profit available for appropriation 2010 2237

Dividend on Equity Share Capital 794 397

Corporate Dividend Tax 162 68

Transfer to General Reserve - 600

Balance carried to Balance Sheet 1054 1172

* the amount shown is after the adjustment for depreciation on Fixed Assets of which the useful life expired as on 1st April, 2014 against the opening retained earnings.

Performance review or results of operations and the State of Company's affairs

Your company has entered into growth path once again with the improved market conditions. The Net Turnover touched Rs.1013 crores which is 14.7% more than last year and the Profit before depreciation and taxes was Rs.76.30 Crores against Rs.41.25 Crores of previous year Segment-wise/product- wise details are provided in Management Discussion and Analysis as appended hereunder.

The highlights of the Company's performance are as under:

* Revenue from operations increased by 14% to 1021 Crores from 892 Crores.

* PBDIT increased to Rs.98.33 Crores from Rs.62.65 crores

* Cash Profit increased to Rs.76.30 Crores from Rs.41.25 Crores

* Net Profit increased to Rs.21.24 crores from Rs.11.97 crores.

* The capital expenditure for 2014-15 was Rs.41 Crores, which was principally on account of setup of 2.5 MW Solar Power Plant at V-Boards & V-Panels Division, Miryalaguda and modernization cum expansion at AC Division, Raebareli and other normal capital expenditure at various units.

There is no change of business occurred during the year under review.

During the year under review, Visaka Thermal Power Limited (VTPL) ceased to be an associate Company of your Company.

Your Company's shares are listed on the National Stock Exchange (NSE) and Bombay stock exchange Limited (BSE). The variations in the market capitalisation of the company, price earnings ratio is provided hereunder:

Parameter As at March 31,2015 As at March 31, 2014

Market Capitalisation* (in Rs. Crores) 146.10 115.69

P/E ratio 6.88 9.66

(* based on closing price at Bombay Stock Exchange Limited, being the higher of two exchanges, as on the respective dates)

Your Company has made its initial public offer of equity shares in 1984-85. The closing price quoted on stock exchanges of your Company's share of Rs.10/- each fully paid up as at March 31, 2015 and March 31, 2014 are 460% and 364% over the price of last public offer made in the year 1991-92.

No material changes and commitments have occurred after the close of the year till the date of this Report, which affect the financial position of the Company.

DIVIDEND:

Your Directors recommend payment of Final Dividend of Rs.5/- (i.e. 50%) Per Share of Rs.10/- each for the Financial Year ended on March 31, 2015 as against the previous year of Rs.2.50 per share (i.e. 25%). The Company is absorbing Corporate Dividend Tax of Rs.161.65 lakhs on the Equity Dividend and the Dividend declared and paid this year is not taxable in the hands of Shareholders.

The dividend will be paid to members whose names appear in the Register of Members as on July 18, 2015 and in respect of shares held in dematerialised form, it will be paid to members whose names are furnished by National Securities Depository Limited and Central Depository Services (India) Limited, as beneficial owners as on that date.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:

Your Company has in place adequate systems of internal control commensurate with its size and the nature of its operations. These have been designed to provide reasonable assurance with regard to recording and providing reliable Financial and Operational information, complying with applicable statutes, safeguarding assets from unauthorized use or losses, executing transactions with proper authorization and ensuring compliance of internal policies. The Company has a well defined delegation of power with authority limits for approving revenue as well as capital expenditure. Processes for formulating and reviewing annual and long term business plans have been laid down to ensure adequacy of the control system, adherence to the management instructions and legal compliances. The Company uses ERP (Enterprise Resource Planning) system to record data for accounting and connects to different locations for efficient exchange of information. This process ensures that all transaction controls are continually reviewed and risks of inaccurate Financial Reporting, if any are dealt with immediately.

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 were observed.

MATERIAL DEVELOPMENTS IN HUMAN RESOURCES / INDUSTRIAL RELATIONS FRONT:

The Company believes that Human Resource is its most valuable resource which has to be nurtured well and equipped to meet the challenges posed by the dynamics of Business Developments. The Company has a policy of continuous training of its employees both in-house as well as through reputed Institutes. The staff is highly motivated due to good work culture, training, remuneration packages and the values, which the company maintains.

The total number of people employed in the company as on 31.03.2015 is 4350. Your Directors would like to record their appreciation of the efficient and loyal service rendered by the Company's employees.

FIXED DEPOSITS:

During the year under review, your Company has accepted deposits of Rs.5.17 Crores from the public and shareholders. The amount of deposits outstanding as on March 31, 2015 was Rs.7.24 Crores out of which Rs.5.10 Crores was accepted under the provisions of Chapter V of the Companies Act, 2013 (new Act) and the balance of H2.14 Crores was accepted as per the provisions of the Companies Act, 1956 (old Act).

In this regard, it is further stated that

a) there were no deposits lying unpaid or unclaimed at the end of the year i.e. 31.03.2015;

b) There has been no default in repayment of deposits or payment of interest thereon during the year;

c) There are no deposits lying with the Company which are not in compliance with the requirements of Chapter V of the new Act other-than the deposits accepted under the provisions of old Act as aforesaid and

d) As provided under the new Act, the outstanding deposits accepted under the provisions of previous Act are being repaid as per the terms of each deposit.

UNCLAIMED DIVIDEND:

As per the provisions of Section 205C of the Companies Act, 1956, Unclaimed Dividend amount of Rs.6,89,811/- in respect of the year 2006 - 2007 has been transferred to Investor Education and Protection Fund on 05.08.2014 upon expiry of the mandatory 7 years period.

BANKS AND FINANCIAL INSTITUTIONS:

The Company has been prompt in making the payment of interest and repayment of loans to the Financial Institutions and interest on working capital to the banks. Banks and Financial Institutions continue to give their unstinted support. The Board records its appreciation for the same.

CORPORATE SOCIAL RESPONSIBILITY:

Your Company, as a responsible Corporate Citizen has established in the year 2000 a Charitable Trust in the name and style of Visaka Charitable Trust as a non-profit entity to support initiatives that benefit the society at large. The Trust has already undertaken various activities like provision of Drinking Water by digging bore wells, construction of irrigation tanks in remote villages, building of Class Rooms in Schools and Colleges, reimbursement of salaries of teachers and supply of class room furniture and conducting of health camps.

In terms of section 135 of the Companies Act, 2013 (the Act), the Board of Directors of your Company have constituted a CSR Committee and framed a CSR Policy to undertake various initiatives contemplated under Schedule VII of the Act which has been uploaded on the website of the Company at www.visaka.biz under investors/ policy documents/ CSR Policy link. A report on CSR activities as required under Rule 9 of the Companies (Corporate Social Responsibility) Rules, 2014 is enclosed herewith as Annexure - 1.

Keeping in view the various CSR initiatives undertaken through Visaka Charitable Trust as detailed above, your Board has thought it appropriate to spend CSR expenditure for 2014-15 as mandated under Section 135 of the Companies Act, 2013 through the same trust i.e., Visaka Charitable Trust. The Charitable Trust amended its objects incorporating the CSR activities as contemplated under Schedule VII of the Companies Act, 2013. Accordingly to meet the requirements of the Act in this regard, your company has contributed the prescribed CSR expenditure of 2% of average net profits of the company for last three preceding financial years amounting to Rs.97.00 Lacs to Visaka Charitable Trust.

DIRECTORS AND KEY MANAGERIAL PERSONNEL:

At the 32nd Annual General Meeting of the Company held on 25th July, 2014;

i. Shri. Bhagirat B Merchant, Shri. V.Pattabhi, Shri. P. Abraham and Shri. Gusti J Noria were appointed as Independent Directors of the Company to hold office as such for period upto 5 years from 01.04.2014; so long as their appointment is in compliance with provisions of subsections (6) to (8) of Section 149 read with Schedule IV.

ii. Smt. G. Saroja Vivekanand was reappointed as Managing Director of the Company for a period of 5 years effective from 24.10.2014.

iii. Shri. G Vamsi Krishna was appointed as Wholetime Director of the Company for a period of 5 years effective from 01.06.2014.

All the aforesaid independent Directors have given declarations stating that for the financial year 2015-16; they meet the criteria of Independence as contemplated under Section 149(6) read with Schedule IV to the Act and clause 49 (II)(B)(e) of the listing agreement and the same was taken on record by your Board in its meeting held on 7th May, 2015.

During the year under review, Shri. P. Srikar Reddy was appointed as Additional Director of the Company effective from September 6, 2014 and holds the office as such until the date of ensuing Annual General Meeting of the Company.

Shri. P Srikar Reddy has furnished a declaration under Section 149(7) to the effect that he meets the criteria of independent Director and in the opinion of Board of Directors, he fulfils the criteria of independence as mentioned under Companies Act, 2013 read with Schedule IV and relevant rules made thereunder and is independent of Management of the Company. In view of the same, he is eligible for appointment as Independent Director of the Company to hold the office as such for a period upto 5 years effective from the date of ensuing Annual General Meeting, so long as his appointment is in compliance with provisions of subsections (6) to (8) of Section 149 read with Schedule IV to the Act.

Shri. V. Vallinath, who was working as President (Finance) and CFO has been appointed as Whole-time Director and CFO of the Company effective from 09.09.2014 for a period of 3 years.

Further, Shri J. P. Rao, who was working as President (Marketing - AC Sheets Division) has been appointed as Whole-time Director of the Company effective from 07.05.2015 for a period of 3 years.

The Company has received notices in writing from members along-with the deposit of requisite amount under Section 160 of the Act read with Articles of Association of the Company, proposing the candidatures of Shri.P.Srikar Reddy for the office of Independent Director for a period of 5 consecutive years effective from the date of ensuing Annual General Meeting of the Company and Shri.V.Vallinath and Shri. J. P. Rao as Directors of the Company.

The aforesaid appointment of Independent Director and Whole-time directors are subject to your approval and appropriate resolutions are included in the notice calling ensuing Annual General Meeting of the Company for seeking your approval.

Shri. Nagam Krishna Rao, is retiring at the ensuing Annual General Meeting and is eligible for reappointment.

Shri. M P V Rao, who was reappointed as Whole-time Director to hold the office from 01.04.2014 to 31.07.2014 in the last Annual General Meeting of the Company, resigned from the Board effective from closing hours of 31st July, 2014 and the Board places on record its word of appreciation in recognition to the valuable contributions made by Shri. Rao during his long stint of 30 years with the Company in various positions of the Company.

Pursuant to obtaining your approval under postal ballot by way of special resolution, clause 130(e) of the Articles of Association is amended and now Whole-time Directors are liable to retire by rotation. In view of the same, your company complies with all the requirements relating to composition of Board including the one stipulated under Section 152(6)(a) of the Companies Act, 2013 as to having sufficient number of Directors liable to retire by rotation on the Board.

DIRECTORS' RESPONSIBILITY STATEMENT:

Pursuant to Section 134(5) of the Companies Act, 2013, Directors of your Company here by state and confirm that:

a. in the preparation of the annual accounts for the year ended 31st March, 2015, the applicable accounting standards have been followed along with proper explanation relating to material departures; the annual accounts have been prepared in compliance with the provisions of the Companies Act, 2013.

b. they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and

fair view of the state of affairs of the company at the end of the financial year and of the profit of the company for the same period;

c. the directors have taken proper and sufficient care 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. they have prepared the annual accounts on a going concern basis;

e. they have laid down internal financial controls in the company that are adequate and were operating effectively.

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

CORPORATE GOVERNANCE:

A report on Corporate Governance, along with a certificate of compliance from the Auditors, forms part of this Report.

AUDITORS AND AUDITORS' REPORT:

Statutory Audit:

M/s. M. Anandam & Co., Chartered Accountants were appointed as Statutory Auditors of the Company to hold the office for a period three years from the conclusion of last Annual General Meeting of the Company held on 25.07.2014. The said appointment needs to be ratified by the members of the Company at every annual general meeting during the said period and the Statutory Auditors have confirmed their eligibility to the effect that their re-appointment, if made, would be within the prescribed limits under the Act and that they are not disqualified for re-appointment.

As required above, the Board has, after considering the recommendations of its Audit Committee, incorporated a suitable resolution for your consideration and approval in the notice calling ensuing Annual General Meeting of the Company.

The Notes on financial statement referred to in the Auditors' Report are self-explanatory and do not call for any further comments. The Auditors' Report does not contain any qualification, reservation or adverse remark.

Cost Audit:

As per the Companies (Cost Records and Audit) Rules, 2014, issued on 30th June, 2014 under Companies Act, 2013, Company's products were not included under the purview of Cost Audit. However, Ministry of Corporate Affairs vide their Notification dated 31st December, 2014 amended the said rules, pursuant to which, the requirement of cost audit of cost accounting records is applicable to the Company as follows:-

Building Products - From Financial Year 2014-15.

Textiles Products - From Financial Year 2015-16.

In View of the same, the Company had appointed M/s. Sagar & Associates, Cost Accountants, Hyderabad as cost auditors of the Company for conducting cost audit of Synthetic Yarn Division as well as Building Products Division of the Company for the financial year 2014-15 at a remuneration of Rs.1,50,000/- exclusive of out of pocket expenses and applicable taxes subject to your ratification in the ensuing Annual General Meeting of the Company.

Further, the Board has after considering the recommendations of its Audit Committee, resolved to appoint the aforesaid firm as cost auditors for the financial year 2015-16 and appropriate resolutions in above connection seeking your approval, have been included in the notice calling ensuing Annual General Meeting of the Company.

Pursuant to section 233B(4), 600(3)(b) of the Companies Act, 1956 read with Companies (Cost Audit Report) Rules, 2011; cost audit report for the financial year ended 31st March, 2014 was filed with the Central Government on 26th September, 2014.

Secretarial Audit:

Pursuant to Section 204 of the Companies Act, 2013, your Board has appointed M/s Tumuluru & Co., Practicing Company Secretaries, Hyderabad as Secretarial Auditors for the financial year 2014-15 and Secretarial Audit Report for the Financial Year ended 31st March, 2015 is enclosed herewith as Annexure-2.

As regards the comments made in the said report, it is stated that pursuant to obtaining your approval under postal ballot by way of special resolution, clause 130(e) of the Articles of Association is amended and now Whole-time Directors are liable to retire by rotation. In view of the same as on the date of this report, your company complies with all the requirements relating to composition of Board including the one stipulated under Section 152(6)(a) of the Companies Act, 2013 as to having sufficient number of Directors liable to retire by rotation on the Board. Further, constant up- gradation of e-forms on certain technical grounds caused the delay in filing of e-forms.

CRITERIA FOR IDENTIFICATION, APPOINTMENT, REMUNERATION AND EVALUATION OF PERFORMANE OF DIRECTORS:

Your Company as required under the provisions of Section 178 of the Companies Act, 2013 and clause 49 of the listing agreement entered with Stock Exchanges, constituted a Board level committee titled "Nomination and Remuneration Committee" (herein after referred as the "Committee") to oversee, inter-alia, matters relating to

a) identify persons who are qualified to become directors and who may be appointed in senior management in accordance with the criteria laid down, recommend to the Board their appointment and removal;

b) formulate the criteria for determining qualifications, positive attributes and independence of a director;

c) recommend to the Board a policy relating to the remuneration for the directors, key managerial personnel and other employees;

d) carry out evaluation of every director's performance including that of Independent Directors and

e) devise a policy on Board Diversity

Your Company's Board of Directors, after considering the recommendations of its Nomination and Remuneration Committee in above connection, have approved a document setting out criteria to be followed by nomination and remuneration committee for identification, appointment, remuneration and evaluation of performance of directors including Company's Board diversity.

The aforesaid criteria of appointment, qualifications and positive attributes along-with remuneration policy as applicable to Directors, KMPs and other Senior management personnel and criteria to be followed for performance evaluation of each director including Independent Directors of the Company is enclosed herewith as Annexure - 3

FORMAL ANNUAL EVALUATION MADE BY THE BOARD OF ITS OWN PERFORMANCE AND OF ITS COMMITTEES AND INDIVIDUAL DIRECTORS:

Keeping in view the various provisions of the Companies Act, 2013 and listing agreement dealing with powers, duties and functions of the Board of the Company your Company has adopted criteria for evaluating the performance of its Board, Committees and other Directors including Independent Directors applicable from the financial year 2014-15. The said criteria contemplates evaluation of Directors based on their performance as directors apart from their specific role as independent, non-executive and executive directors as mentioned below:

a. Executive Directors, being evaluated as Directors as mentioned above, will also be evaluated on the basis of targets / Criteria given to executive Directors by the board from time to time as well as per their terms of appointment.

b. Independent Directors, being evaluated as a Director, will also be evaluated on meeting their obligations connected with their independence criteria as well as adherence with the requirements of professional conduct, roles, functions and duties specifically applicable to Independent Directors as contained in Schedule IV to the Companies Act, 2013.

The criteria also specifies that the Board would evaluate each committee's performance based on the mandate on which the committee has been constituted and the contributions made by each member of the said committee in effective discharge of the responsibilities of the said committee.

The Board of Directors of your company has made annual evaluation of its performance, its committees and directors for the financial year 2014-15 based on afore stated criteria.

EXTRACT OF ANNUAL RETURN:

The details forming part of the extract of the Annual Return in Form MGT-9 is annexed herewith as Annexure-4

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS:

Details of loans given by the Company, covered under the provisions of Section 186 of the Companies Act, 2013 are given in the notes to the Financial Statements (Please refer Note No.17.1) pertaining to the year under review. During the year under review, your Company did not give any other loans or guarantees, provide any security or made any Investments.

RELATED PARTY TRANSACTIONS:

Related party transactions entered during the financial year under review are disclosed in Note No.30 of the Financial Statements of the company for the financial year ended March 31,2015. These transactions entered were at an arm's length basis and in the ordinary course of business. There were no materially significant related party transactions with the Company's Promoters, Directors, Management or their relatives, which could have had a potential conflict with the interests of the Company. Form AOC-2, containing the note on the aforesaid related party transactions is enclosed herewith as Annexure-5

The Policy on materiality of related party transactions and dealing with related party transactions as approved by the Board may be accessed on the Company's website at the link: http://www.visaka.biz/vilrptpolicy.pdf

RISK MANAGEMENT FRAMEWORK:

In today's economic environment, Risk Management is a very important part of business. The main aim of risk management is to identify, monitor and take precautionary measures in respect of the events that may pose risks for the business. Your Company's Board believes that to ensure sustainable business growth with stability of affairs and operations of the Company periodical review of various risks having a bearing on the business and operations is vital to proactively manage uncertainty and changes in the internal and external environment to limit negative impacts and capitalize on opportunities. Further, it is also belief of your management that Risk Management Framework enables a systematic approach to risk identification, leverage of any opportunities and provides treatment strategies to manage, transfer and avoid or minimize the impact of the risks.

Keeping in view of the above, your Company's risk management is embedded in the continuous business processes and as a part of review of business and operations, your Board with the help of the management periodically reviews various risks associated with the business and products of the Company and considers appropriate risk mitigation process. However there are certain risks which cannot be avoided but the impact can only be minimized. The risks and concerns associated with each segment of your company's business are discussed while reviewing segment-wise Management and Discussion Analysis. The other risks that the management reviews also include:

a. Industry & Services Risk: this includes Economic risks like demand and supply chain, Profiatability Gestation period etc.; Services risk like infrastructure facilities; Market risk like consumer preferences and distribution channel etc.; Business dynamics like inflation/deflation etc.; Competition risks like cost effectiveness

b. Management and Operational Risk: this includes Risks to Property; Clear and well defined work process; Changes in technology / up gradation; R&D Risks; Agency network Risks; Personnel & labour turnover Risk; Environmental and Pollution Control Regulations etc.; Locational benefits near metros

c. Market Risk: this includes Raw Material rates; Quantities, quality, suppliers, lead time, interest rates risk and forex risk.

d. Political Risk: this includes Elections; War risk; Country/ Area Risk; Insurance risk like Fire, strikes, riots and civil commotion, marine risk, cargo risk etc.; Fiscal/ Monetary Policy Risk including Taxation risk.

e. Credit Risk: this includes Creditworthiness; Risk in settlement of dues by clients and Provisions for doubtful and bad debts

f. Liquidity Risk: this includes risks like Financial solvency and liquidity; Borrowing limits, delays; Cash/Reserve management risks and Tax risks

g. Disaster Risk this includes Natural calamities like fires, floods, earthquakes etc.; Man made risk factors arising under the Factories Act, Mines Act etc.; Risk of failure of effective disaster Management plans formulated by the Company.

h. System Risk this includes System capacities; System reliability; Obsolescence risk; Data Integrity risk & Co-ordination and Interface risk.

i. Legal Risk: this includes Contract risk; Contractual liability; Frauds; Judicial Risk and Insurance risk

j. Government Policy: This includes Exemptions, import licenses, income tax and sales tax holidays, subsidies, tax benefits etc.

Further your Board has constituted a Risk Management Committee, inter-alia, to monitor and review the risk management framework.

OTHER DISCLOSURES:

Board Meetings:

Seven meetings of the Board of Directors were held during the year For further details, please refer report on Corporate Governance on page no. 58 of this Annual Report.

Audit Committee:

The Audit Committee comprises Independent Directors namely Shri B.B.Merchant (Chairman), Shri. V.Pattabhi and Shri. Gusti j. Noria apart from Smt. G. Saroja Vivekanand, Managing Director. All the recommendations made by the Audit Committee were accepted by the Board.

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

Information required under section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014, is enclosed herewith as Annexure-6.

Vigil Mechanism:

In pursuant to the provisions of section 177(9) & (10) of the Companies Act, 2013, a Vigil Mechanism for directors and employees to report genuine concerns has been established. The Vigil Mechanism Policy has been uploaded on the website of the Company at www.visaka.biz under investors/policy documents/Vigil Mechanism Policy link.

Particulars of Employees and related disclosures:

In terms of the provisions of Section 197(12) of the Act read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, a statement showing the names and other particulars of the employees drawing remuneration in excess of the limits set out in the said rules is enclosed herewith as Annexure-7.

Remuneration ratio of the Directors / Key Managerial Personnel/ Employees:

Statement showing disclosures pertaining to remuneration and other details as required under Section 197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is enclosed herewith as Annexure-8

GENERAL:

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:

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

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

iii. Neither the Managing Director nor the Whole-time Directors of the Company receive any remuneration or commission from any of its subsidiaries.

iv. 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.

ACKNOWLEDGEMENT:

Your Directors would like to express their sincere appreciation for the assistance and co-operation received from the financial institutions, banks, Government authorities, customers, vendors and members during the year under review. Your Directors also wish to place on record their deep sense of appreciation for the committed services by the Company's executives, staff and workers.

On behalf of the Board of Directors

Date: 07.05.2015 BHAGIRAT B. MERCHANT Place: Secunderabad Chairman


Mar 31, 2014

Dear Members,

The Directors are pleased to present the 32nd Annual Report of the Company with Audited Financial Statement. The financial highlights are as follows:

(Rs. in lakhs)

Particulars 2013 - 2014 2012 - 2013

Total Revenue 89746 91816

Profit for the year before taxation 1880 7464

Provision for taxation 683 2395

Profit for the year after taxation 1197 5069

Balance brought forward from previous year 1040 1083

Profit available for appropriation 2237 6152

Dividend on Equity Share Capital 397 953

Corporate Dividend Tax 68 159

Transfer to General Reserve 600 4000

Balance carried to Balance Sheet 1172 1040

DIVIDEND

Your Directors recommend payment of Dividend of H2.50 (i.e. 25 %) Per Share of H10/- each for the Financial Year ended on 31st March, 2014. The Company is absorbing Corporate Dividend Tax of H67.48 lakhs on the Equity Dividend and the Dividend declared and paid this year is not taxable in the hands of Shareholders.

MANAGEMENT DISCUSSION AND ANALYSIS:

Your Company is in the Business of Manufacture and Sale of Cement asbestos Sheets, V – Boards (Fiber Cement Sheets), Panels and Spinning Yarn.

A. BUILDING PRODUCTS

i. Cement Asbestos Business:

Industry Structure and Developments:

This industry exist in India for the last 80 years.

Cement Asbestos Products continue to be in demand because of the efforts made in making inroads into rural markets for the product, its affordability, and other qualities such as corrosion resistance, weather and fire proof nature.

Currently there are about 20 entities in the Industry with about 68 manufacturing plants throughout the Country. The products are marketed under their respective brand names mainly through dealers for the retail segment and directly for projects and government departments.

Opportunities and Threats:

Cement asbestos Sheets are mainly used as roofing materials in rural and semi-urban housing and by industries and poultry sector.

Cement asbestos Sheets are popular as they are inexpensive; need no maintenance and last long when compared to competing products such as thatched roofs, tiled roofs and galvanized iron sheets.

According to the information gathered by us, almost 75 - 80% of rural people use thatched roof/tiles for the shelter. Thatched roof need regular replacement and tiled roof needs continued maintenance. Therefore, whenever the economic conditions improve, the first choice of the rural poor to replace the roof over their head is the affordable and relatively durable product Cement asbestos Sheets. Therefore, we see increased potential for usage of Cement asbestos Sheets in rural areas.

Presence of increased alternative products in the recent past has created some impact on the sales volumes of this product.

Risks and Concerns:

Lack of entry barriers: Lack of entry barriers is attracting new entrants into this line of business. Closure of Canadian and Zimbabwe asbestos mines are matter of concern.

Increase in input costs: The continuous increase in cost of inputs is a matter of concern.

Activities of Ban Asbestos Lobby: The activities of the Ban Asbestos Lobby instigated by the manufacturers of substitute products continue to be a matter of concern.

Production and sales Volumes:

As against a production of 743624 tonnes during the previous year, the production during the Financial Year ended 31st March, 2014 was 599011 tonnes. The sales during the Financial Year Ended on 31st March, 2014 was 640184 tonnes as against 683008 tonnes sold during the Financial Year 2012 – 2013 recording a decrease of 6%.

Financial Performance:

The net turnover of Cement asbestos Division during the year was H629 crores as compared to H684 crores during the previous year, due to overall economic slowdown and availability of alternative products at competitive price.

Outlook:

Due to slow down of economy, market has not improved and alternate products have made some inroad in to the market. However, news that is coming suggest that bottoming out of economic slow-down is taking place. Hence, we may expect improved performance in the near future.

ii. Boards:

Industry Structure and Developments:

The Capacity of the Industries producing same or similar product is 396000 Metric Tonnes per Annum with totally 8 players.

Opportunities and Threats:

The product is environmental friendly, saves time and cost effective as well as a good substitute for wood and helps in reducing deforestation. It has aesthetics appeal and can take paint of choice. It can be used both internally and externally. It is also durable and can stand for over 25 years or more with proper maintenance. Further, it has Triple advantage of Fireproof, Water resistant and termite resistant. It is being widely accepted in residential Segment, especially wet areas. It is also finding good acceptance in Hotels, Hospitals and Colleges due to its fire rating and acoustic properties.

On the negative side, Cellulose pulp has to be imported. Compared to wood/plywood workability is a matter of concern. Further, initial handling is comparatively difficult. While the consumers are preferring this product, the applicators like Carpenters would not find convenient due to difficulty in working on this product compared to Plywood. We are in the process of educating the applicators to ensure acceptance.

Risks and Concerns:

Lack of entry barriers: Import of Cement board materials from Philippines/Thailand / China and Malaysia is a matter of concern.

Production and sales Volumes:

The total production for the year ended 31st March, 2014 was 56249 Metric tonnes as against production for the year ended 31st March, 2013 of 45810 Metric Tonnes, and sales for the year ended on 31st March, 2014 was 48892 Metric Tonnes (including export of 12568 Metric Tonnes) as against 40365 (including export of 11062) Metric Tonnes for the previous year.

Financial Performance:

The net turnover from this division during the year was H 66 crores as compared to H53 crores during the previous year. During the later part of the year the Board unit at Daund, Pune has commenced its commercial operations, which is expected to result in increased production and turnover.

Outlook

The industry is growing at an average rate of 13% to 15% annually. Export opportunities in African and GCC countries is encouraging. Australian / Sri Lankan and Maldives markets are also opening up. New applications such as Tile Underlay and Kitchen cabinets are gaining popularity. In areas of Acoustics like Theatres and Hospitals, use of Cement boards is increasing.

iii. Panels

Sandwiched Panels are in demand in the market, for use as Partition Material. The ''Reinforced Building Board Sandwiched Panels'' are made of two fibre-reinforced cement sheets enclosing a lightweight core. These panels are fully cured at factory and are ready for installation. These panels are cheaper compared to masonary partitions / wood partitions and are also easy to fix and takes comparatively less time for installation.

The production during the year was 9176 metric tonnes as against 7514 during the previous year. Sales was 8638 metric tonnes as against 6875 metric tonnes during the previous year.

The net turnover was H12.47 crores as against H9.90 crores during the previous year.

B. SYNTHETIC YARN BUSINESS: Industry structure and development

The demand for textiles and clothing in our country is on a steady upward trend resulting from increased disposable income. This growth and our efforts to increase our presence in the niche markets helped our company to command a premium in the market place, thus improving the profits. Weak Indian Rupee helped us gain better margins from the export earnings. In the first half of the year, there had been good amount of cotton yarn export to China. The power shortage situation in Tamil Nadu still continues. These factors also have helped us maintain the sales without undue seasonal fluctuations. The addition of 10% capacity and effective energy management have helped us reigning the costs. We have been certified for ISO 50001 for energy management.

Opportunities and Threats

Our country''s growing economy with expected GDP growth of 6 to 7% will create new avenues of demand for textiles and clothing.

The power shortage in the Country is expected to continue and may keep the yarn supply position tight. If the export of cotton yarn to China is revived, it will bring an opportunity to improve yarn prices in general.

The strengthening of Indian Rupee against USDollar may reduce our export margins in the months ahead.

Many spinning mill projects have been initiated in Maharashtra and Gujarat. Once these mills start the production in full swing, there could be an imbalance of supply demand position.

Risks and Concerns

The strengthening of Indian Rupee against US Dollar may reduce our export margins in the months ahead.

Production and Sales Volumes:

The production in the spinning unit during the year 2013-14 was 8614 metric tonnes as compared to 7897 metric tonnes during the previous year. The sales were 8522 metric tonnes of yarn (including export of 1609 metric tonnes) during the year 2013 - 2014 as compared to 8252 metric tonnes (including export of 2094 metric tonnes) in the previous year.

Financial Performance:

The net turnover of this division during the current year was H178 crores compared to H165 crores during the previous year.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:

Your Company has in place adequate systems of internal control commensurate with its size and the nature of its operations. These have been designed to provide reasonable assurance with regard to recording and providing reliable Financial and Operational information, complying with applicable statutes, safeguarding assets from unauthorized use or losses, executing transactions with proper authorization and ensuring compliance of internal policies. The Company has a well defined delegation of power with authority limits for approving revenue as well as capital expenditure. Processes for formulating and reviewing annual and long term business plans have been laid down to ensure adequacy of the control system, adherence to the management instructions and legal compliances. The Company uses ERP (Enterprise Resource Planning) system to record data for accounting and connects to different locations for efficient exchange of information. This process ensures that all transaction controls are continually reviewed and risks of inaccurate Financial Reporting, if any, are dealt with immediately.

MATERIAL DEVELOPMENTS IN HUMAN RESOURCES / INDUSTRIAL RELATIONS FRONT:

The Company believes that Human Resource is its most valuable resource, which has to be nurtured well and equipped to meet the challenges posed by the dynamics of Business Developments. The Company has a policy of continuous training of its employees both in-house as well as through reputed Institutes. The staff is highly motivated due to good work culture, training, remuneration packages and the values, which the company maintains.

The total number of people employed in the company as on 31.03.2014, is 4119. Your Directors would like to record their appreciation of the efficient and loyal service rendered by the Company''s employees.

FIXED DEPOSITS:

Your Company has been inviting and accepting deposits from the public and shareholders. The amount of deposits outstanding as on March 31, 2014 was H7.37 Crores.

Due to change of procedure for accepting public deposits under new Companies Act, 2013; effective from 01.04.2014, your company is not accepting nor renewing deposits. Further as provided under the new Act, the aforesaid outstanding deposits, which were raised under the provisions of previous Act will be repaid as per the terms of each deposit. Further, your Company has already sought your approval under Postal Ballot mode for accepting the deposits as per the provisions of the new Act and once the said approval is obtained, your Company would be initiating steps for accepting the public deposits.

There are no unclaimed deposits, which are transferable to the Investor Education and Protection Fund under Section 205C of the Companies Act, 1956.

UNCLAIMED DIVIDEND:

As per the provisions of Section 205C of the Companies Act, 1956, Unclaimed Dividend amount of H4,95,033/- in respect of the year 2005 – 2006 has been transferred to Investor Education and Protection Fund on 4.07.2013 upon expiry of the mandatory 7 years period.

BANKS AND FINANCIAL INSTITUTIONS:

The Company has been prompt in making the payment of interest and repayment of loans to the Financial Institutions and interest on working capital to the banks. Banks and Financial Institutions continue to give their unstinted support. The Board records its appreciation for the same.

CORPORATE SOCIAL RESPONSIBILITY:

Your Company, as a responsible Corporate Citizen established in the year 2000, a Charitable Trust in the name and style of Visaka Charitable Trust as a non-profit entity, to support initiatives that benefit the society at large. The Trust supports programs devoted to the cause of destitute, rural poor and providing the basic necessities of life to the rural poor. This has helped to enhance the image of the Company.

Main area of activity of the Trust is to provide Drinking Water by digging bore wells, construction of irrigation tanks in remote villages, building of Class Rooms in Schools and Colleges, reimbursement of salaries of teachers, supply of class room furniture and conducting of health camps.

Further, as required under the new Companies Act, 2013; commencing from financial year 2014-15, your Company, each year, has to spend at least 2% of its average profits during three immediately preceding financial years towards Corporate Social Responsibility (CSR) Policy. Your Board of Directors have constituted CSR Committee to formulate and recommend CSR Policy and to comply with other requirements as mandated under the new Companies Act.

DIRECTORS:

In terms of the provisions of the new Companies Act, 2013; your Company need to have at least one-third of the total number of directors as independent directors, who shall hold the office for term up to 5 consecutive years. Section 149 of the new Act further provides that any tenure of Independent Director on the date of commencement of the Companies Act, 2013 i.e. 01.04.2014 shall not be counted as term for aforesaid period of 5 years and also lays down additional criteria apart from the criteria specified under clause 49 of listing agreement with stock exchanges for becoming an Independent Directors of the Company.

Shri. Bhagirat B Merchant, Shri. Gusti J Noria, Shri. P Abraham, Shri. Nagam Krishna Rao and Shri. V. Pattabhi were earlier appointed as Director liable to retire by rotation under erstwhile Companies Act, 1956 and holds office as Independent Director of the Company under clause 49 of the listing agreement with stock exchanges. They have held the positions as such for more than 5 years.

Shri. Bhagirat B Merchant, Shri. P. Abraham, Shri. V. Pattabhi and Shri. Gusti J Noria have furnished declarations under Section 149(7) of the new Act to the effect that they meet the criteria of independent Directors and in the opinion of the Board of Directors, the said independent Directors fulfil the conditions specified in the Companies Act, 2013 and rules made thereunder and they are independent of the Management. In view of the same, they are eligible for appointment as Independent Directors of the company to hold office as such for a period upto 5 years effective from 01.04.2014; so long as their appointment is in compliance with provisions of subsections (6) to (8) of Section 149 read with Schedule IV.

The Company has received notices in writing from members along with the deposit of requisite amount under Section 160 of the Act, proposing the candidatures of Shri. Bhagirat B Merchant, Shri. Gusti J Noria, Shri. V. Pattabhi and Shri. P Abraham respectively for the office of Independent Directors of the Company for a period of 5 consecutive years effective from 01.04.2014.

Effective from 01.04.2014, pursuant to new criteria under the new Companies Act, 2013; Shri. Nagam Krishna Rao had become non-Independent non-executive Director, whose office is liable to retire by rotation. Shri. Nagam Krishna Rao is retiring at the ensuing Annual General Meeting and is eligible for reappointment.

Smt. G. Saroja Vivekanand is proposed to be reappointed as Managing Director of the Company for a period of 5 years effective from 24.10.2014.

Shri. M. P. V. Rao, is re-appointed as Whole-time Director of the Company to hold office from 01.04.2014 to 31.07.2014.

Further, Mr. G. Vamsi Krishna is appointed as Whole-time Director of the Company effective from 01.06.2014 for a period of 5 years.

The aforesaid appointment/reappointment of Independent Directors, Managing Director and Whole-time directors are subject to your approval.

DIRECTORS'' RESPONSIBILITY STATEMENT:

As required by the provisions of Section 217(2AA) of the Companies Act, 1956, the Directors'' Responsibility Statement is appended hereto and forms part of this Report.

CORPORATE GOVERNANCE:

A report on Corporate Governance, along with a certificate of compliance from the Auditors, forms part of this Report.

AUDITORS:

M/s. M. Anandam & Co., Chartered Accountants, retire as Auditors in this Annual General Meeting and are eligible for reappointment.

Your Company would comply with the requirement of Rotation of Auditors within 3 years as permitted under the new Companies Act, 2013.

COST AUDITORS:

In terms of Cost Audit Orders issued by Ministry of Corporate Affairs in 2012, M/s. Sagar & Associates, Cost Accountants were appointed as cost auditors of the Company for conducting cost audit of Synthetic Yarn Division as well as Building Products Division of the Company for the financial year 2013 -14 at a remuneration of H1,50,000/- exclusive of out of pocket expenses and applicable taxes. The Cost Auditor is expected to give his report by end of September, 2014.

As regards the Cost Audit for the financial year 2014-15; your company awaits the rules to be issued in this connection under the new Companies Act, 2013 and your Directors undertake to comply with the same in due course. The remuneration to be payable in that connection to the cost auditors would be placed before the shareholders in the ensuing Annual General Meeting for ratification, to comply with the requirements of Companies Act, 2013.

GENERAL:

The information required under Section 217(1) (e) of the Companies Act, 1956 read with the Companies (Disclosure of particulars in the Report of the Board of Directors) Rules, 1988 with respect to conservation of energy, technology absorption and foreign exchange earnings / outgo is appended hereto and forms part of this Report.

Information as per Section 217(2A) of the Companies Act, 1956 read with the Companies (particulars of employees) Rules, 1975, as amended, forms part of this Report.

On behalf of the Board of Directors

Date: 24.05.2014 BHAGIRAT B. MERCHANT

Place: Secunderabad Chairman


Mar 31, 2013

Visaka Industries Limited

The Directors are pleased to present the 31st Annual Report of the Company with Audited Balance Sheet and Statement of Accounts. The financial highlights are as follows

(Rs.lakhs)

PARTICULARS 2012-2013 2011-2012

Total Revenue 91816 75512

Profit for the year before taxation 7464 5124

Provision for taxation 2095 1690

Profit for the year after taxation 5069 3434

Balance brought forward from previous year 1082 1570

Profit available for appropriation 6151 5004

Dividend on Equity Share Capital 953 794

Corporate Dividend Tax 159 128

Transfer to General Reserve 4000 3000

Balance carried to Balance Sheet 1039 1082

Dividend:

Your Directors Declared Interim Dividend of Rs.2.50 (i.e. 25%) per share of Rs.10 each during the Financial Year 2012 -2013 Your Directors recommend payment of Final Dividend of Rs.3.50 (i.e. 35 %) Per Share of Rs.10 each for the Financial Year ended on 31st March, 2013. With the above the total Dividend Paid will be Rs.6 (i.e. 60%) per Share of Rs.10 each. The Company is absorbing Corporate Dividend Tax of Rs.158.87 lakhs on the Equity Dividend and the Dividend declared and paid this year is not taxable in the hands of Shareholders

Management Discussion and Analysis:

Your Company is in the business of manufacturing and selling cement asbestos sheets, V - Boards (fibre cement sheets), panels and spinning yarn

a) BUILDING PRODUCTS BUSINESS:

Cement Asbestos division:

This industry is more than 75 years old in India

Cement asbestos products continue to be in demand because of the industry''s efforts in making more roads in rural regions, its affordability, and other qualities such as corrosion resistance, weather resistance and fire-proof nature.

Currently there are about 20 entities in the industry with about 68 manufacturing plants throughout the country. The products are marketed under their respective brand names mainly through dealers for the retail market and directly for projects and Government departments.

Opportunities and threats:

Cement asbestos sheets are mainly used as roofing materials in rural and semi-urban housing and by industries like the poultry sector.

Cement asbestos sheets are popular as they are inexpensive, need no maintenance and last longer when compared to competing products such as thatched roofs, tiled roofs and galvanised iron sheets.

According to the information gathered by us almost 80 - 85% of rural people use thatched roof/tiles for shelter. Thatched roofs need regular replacement and tiled roof needs continued maintenance. Therefore whenever the economic conditions improve the first choice of the rural population is to replace the roof over their head with the affordable and relatively durable product namely, cement asbestos sheets. Therefore, we see increased potential for usage of Cement asbestos Sheets in rural areas

The Central and State Governments have been giving lot of thrust on housing for the rural population and cement asbestos sheets are widely used for this purpose.

Both the existing and new manufacturers are venturing into setting up of new cement asbestos sheet producing plants This could increase the competition and will have an effect on the margins.

The increased input cost is also a matter of concern

Risks and concerns:

Lack of entry barriers is attracting new entrants into this line of business. Closure of Canadian and Zimbabwean asbestos mines is a matter of concern

The continuous increase in cost of inputs is a matter of concern

The activities of the ''Ban Asbestos'' lobby instigated by the manufacturers of substitute products continue to be a matter of concern

Production and sales volumes:

As against a production of 654198 tonnes during the previous year the production during the financial year ended 31st March, 2013 was 743624 tonnes. The sales during the financial year ended on 31st March, 2013 were 683243 tonnes as against 654439 tonnes sold during FY 2011-12 recording an increase of 4.4%.

Financial performance:

The net turnover of the cement asbestos division during the year was Rs.684 cr as compared to Rs.558 cr during the previous year.

Outlook:

The arrival of new entrants have caused the competition to become more acute.

BOARDS DIVISION AND PANELS DIVISION:

Industry structure and developments:

The capacity of the industries producing same or similar product is 281000 metric tonnes per annum with total of seven players

Opportunities and threats:

These are environmentally-friendly products which save time and are cost-effective. They are a good substitute for wood and helps in reducing deforestation. They have an aesthetic appeal and can be painted in any colour and can be used both internally and externally. They are durable and can stand for over 25 years or more with proper maintenance.

They bring in the triple advantage of being fireproof, water- resistant and termite-resistant.

Cellulose pulp needed to manufacture these boards and panels have to be imported. Compared to wood/plywood workability is a matter of concern, moreover initial handling is comparatively difficult as well

Risks and concerns:

There is a lack of entry barriers. Import of cement board materials from Philippines/Thailand/China and Malaysia is a matter of concern

Production and sales volumes:

The total production for the period ended 31st March, 2013 was 45,810 metric tonnes as against production for the year ended 31st March, 2012 of 40,047 Metric Tonnes, and sales for the year ended on 31st March, 2013 was 40,365 metric tonnes (including export of 11,062 metric tonnes) as against 36,377 (including export of 16,966) metric tonnes for the previous year.

Financial performance:

The net turnover from this division during the year was Rs.53 cr as compared to Rs.44 cr during the previous year.

Outlook

The industry is growing at an average rate of 13% to 15% annually. Export opportunities in African and GCC countries are encouraging. Australian/Sri Lankan and Maldivian markets are also opening up. New applications such as tile underlay and kitchen cabinets are gaining popularity. In areas like acoustics in theatres and hospitals, use of cement boards is increasing

Sandwiched panel unit

Sandwiched panels are in demand in the market, for use as partition material. The ''Reinforced Building Board Sandwiched Panels'' are made of two fibre-reinforced cement sheets enclosing a lightweight core. These panels are fully cured at the factory and are ready for installation. These panels are cheaper compared to masonary partitions/wood partitions and are also easy to fix and takes comparatively less time for installation

The production during the year was 7,514 metric tonnes as against 5,957 metric tones during the previous year. Sales were 6.875 metric tonnes as against 5,279 metric tonnes during the previous year.

The net sales turnover was Rs.9.89 cr as against Rs.7.40 cr during the previous year.

b) SYNTHETIC YARN BUSINESS:

Industry structure and development

Spinning division did well during the year 2012-13

The drastic increases in power tariff in our country coupled with higher polyester fibre prices have made our yarns uncompetitive in the international market place. Also, rampant usage of recycled polyester fibre by the ring spinning industry has taken away the market for commodity products

Price of synthetic yarns from South-East Asian nations continue to be much lower than the Indian yarn prices in the international marketplace.

Opportunities and threats

With about 50% of installed spinning capacity in our country, with severe power shortage during the year 2012-13, Tamil Nadu has virtually paralysed the spinning activity in our country.

Our spinning mill, which is strategically located in power- surplus Vidharba region has worked with 95.2% utilisation, thus we have enjoyed the second best performing year in our spinning history.

The introduction of TUFS (Technological Upgradation Fund Scheme), will bring in unprecedented facilities for investment in textiles. Gujarat and Maharashtra are poised to increase the spinning capacity by about two million spindles during 2013-14. As the capacity addition in weaving and knitting is not commensurate with spinning, there could be an over supply of yarn for a while, till a balance is achieved

Risks and concerns

The major concerns include currency fluctuations and fall in fibre prices

Outlook for 2013-14

Our yarns are used for the manufacture of high-end garments in India. The continued strong growth in per capita consumption of textiles in our country, especially in the readymade garments sector should augur well for further growth and ensure profits for our spinning division. Also, the current surge in demand for Indian cotton yarns from China has created a shortage of yarn in India, which should help us to do well in 2013-14 as well.

Production and sales volumes:

The production in the spinning unit during the year 2012 - 2013 was 7,897 metric tonnes as compared to 8,030 metric tonnes during the previous year. The sales were 8,252 metric tonnes of yarn (including export of 2,094 metric tonnes) during the year 2012 - 2013 as compared to 7,717 metric tonnes (including export of 2,416 metric tonnes) in the previous year.

Financial Performance:

The net turnover of this division during the last fiscal was Rs.165 cr compared to Rs.137 cr during the previous year.

Internal control systems and their adequacy:

Your Company has in place adequate systems of interna control commensurate with its size and the nature of its operations. These have been designed to provide reasonable assurance with regard to recording and providing reliable financial and operational information, complying with applicable statutes, safeguarding assets from unauthorised use or losses, executing transactions with proper authorisation and ensuring compliance of internal policies. The Company has a well-defined delegation of power with authority limits for approving revenue as well as capital expenditure. Processes for formulating and reviewing annual and long-term business plans have been laid down to ensure adequacy of the control system, adherence to the management instructions and legal compliances. The Company uses ERP (Enterprise Resource Planning) system to record data for accounting and connects to different locations for efficient exchange of information. This process ensures that all transaction controls are continually reviewed and risks of inaccurate financial reporting, if any, are dealt with immediately.

Material developments in human resources / industrial relations front:

The Company believes that human resource is its most valuable resource which has to be nurtured well so that it is equipped to meet the challenges posed by the changing dynamics of business developments. The Company has a policy of continuous training of its employees both in-house as well as through reputed Institutes. The staff is highly motivated due to good work culture, training, remuneration packages and the values, which the Company maintains.

The total number of people employed in the Company as on 31.03.2013 is 3,970. Your Directors would like to record their appreciation of the efficient and loyal service rendered by the Company''s employees.

Fixed deposits:

Your Company has been inviting and accepting deposits from the public, shareholders and others. The amount of deposits outstanding as on March, 31, 2013 was Rs.7.86 cr. There are no unclaimed deposits, which are transferable to the Investor Education and Protection Fund under Section 205C of the Companies Act, 1956.

Unclaimed dividend

As per the provisions of Section 205C of the Companies Act, 1956, unclaimed dividend amount of Rs.4,82,243 in respect of the year 2004 - 2005 has been transferred to Investor Education and Protection Fund on 27.09.2012 upon expiry of the mandatory seven year period

Banks and Financial Institutions:

The Company has been prompt in making the payment of interest and repayment of loans to the Financial Institutions and interest on working capital to the banks. Banks and financial institutions continue to give their unstinted support. The Board records its appreciation for the same.

Corporate Social Responsibility:

Your Company, as a responsible corporate citizen had established in the year 2000, a Charitable Trust in the name and style of Visaka Charitable Trust as a non-profit entity, to support initiatives that benefit the society at large. The Trust supports programmes devoted to the cause of the destitute, the rural poor by providing the basic necessities of life to them. This has helped to enhance the image of the Company.

The main areas of activity of the Trust include providing drinking water by digging bore wells, construction of irrigation tanks in remote villages, building of class rooms in schools and colleges, reimbursement of salaries of teachers, supply of class room furniture and conducting of health camps.

Directors:

Shri M P V Rao, Whole-time Director is reappointed for a period of two Years with effect from 01.04.2012.

As per Article 120 of the Articles of Association of the Company, Shri Bhagirat B. Merchant, Shri Gusti J. Noria and Shri P. Abraham retire by rotation and being eligible offer themselves for reappointment.

Directors'' Responsibility Statement

As required by the provisions of Section 217(2AA) of the Companies Act, 1956, the Directors'' Responsibility Statement is appended hereto and forms part of this Report.

Corporate Governance

As a listed Company, necessary measures have been taken to comply with the Listing Agreements of Stock Exchanges. A report on Corporate Governance, along with a certificate of compliance from the Auditors, forms part of this Report.

Auditors

M/s. M. Anandam & Co., Chartered Accountants, retires as

Auditors in this Annual General Meeting and are eligible for reappointment.

Cost Auditors

Ministry of Corporate Affairs vide Order No. F. No. 52/26/ CAB - 2010 dated 24th January, 2012 has ordered for auditing of cost records for those industries which are specified in the order. In the said order blended fibres/ Textiles are required to get the cost records audited by a Practicing Cost Accountant or a Firm of Cost Accountants.

M/s. Sagar & Associates, Cost Accountants were appointed as cost auditors of the Company for cost audit of Synthetic Yarn Division of the Company for the financial year 2012 - 2013 who is expected to give his report for the year 2012-2013 by September.

General

The information required under Section 217(1) (e) of the Companies Act, 1956 read with the Companies (Disclosure of particulars in the Report of the Board of Directors) Rules, 1988 with respect to conservation of energy, technology absorption and foreign exchange earnings/outgo is appended hereto and forms part of this Report.

Information as per Section 217(2A) of the Companies Act, 1956 read with The Companies (particulars of employees) Rules, 1975, as amended, forms part of this Report.

On behalf of the Board of Directors

Date: 20.05.2013 Bhagirat B. Merchant

Place: Secunderabad Chairman


Mar 31, 2011

The Members,

Visaka Industries Limited

The Directors are pleased to present the 29th Annual Report of the Company with Audited Balance Sheet and Statement of Accounts. The financial highlights are as follows:

(Rs. in lakhs)

Particulars 2010 – 2011 2009 – 2010

Gross Income 66552 63841

Profit for the year before taxation 6829 8637

Provision for taxation 2322 2916

Profit for the year after taxation 4507 5721

Balance brought forward from previous year 1489 696

Profit available for appropriation 5996 6417

Dividend on Equity Share Capital 794 794

Corporate Dividend Tax 132 134

Transfer to General Reserve 3500 4000

Balance carried to Balance Sheet 1570 1489

Dividend

Your Directors Declared Interim Dividend of Rs. 3/- (i.e. 30%) per share of Rs. 10/- each during the Financial Year 2010 -2011. Your Directors recommend payment of Final Dividend of Rs. 2/- (i.e. 20%) Per Share of Rs. 10/- each for the Financial Year ended on 31st March, 2011. With the above the total Dividend Paid will be Rs. 5/- (i.e. 50%) per Share of Rs. 10/- each. The Company is absorbing Corporate Dividend Tax of Rs. 131.89 lakhs on the Equity Dividend and the Dividend declared and paid this year is not taxable in the hands of Shareholders.

Fixed deposits

Your Company has been inviting and accepting deposits from the Public, Shareholders and Others. The amount of deposits outstanding as on March 31, 2011 was Rs. 6.80 Crores. Deposits amounting to Rs. 8.74 Lacs remained unclaimed as on 31.03.2011. There are no unclaimed deposits which are transferable to the Investor Education and Protection Fund under Section 205C of the Companies Act, 1956.

Unclaimed dividend

As per the provisions of Section 205C of the Companies Act, 1956, Unclaimed Dividend amount of Rs. 4,54,173.00 in respect of the year 2002 – 2003 has been transferred to Investor Education and Protection Fund on 19.08.2010 upon expiry of the mandatory 7 years period. Letters have been sent to shareholders in respect of unpaid dividend for the year 2003-2004 advising them to encash their dividend warrants.

Banks and financial institutions

The Company has been prompt in making the payment of interest and repayment of loans to the Financial Institutions and also interest on working capital to the banks. Banks and Financial Institutions continue to give their unstinted support. The Board records its appreciation for the same.

Corporate social responsibility

Your Company, as a responsible Corporate Citizen established in the year 2000 a Charitable Trust in the name and style of Visaka Charitable Trust as a non-profit entity, to support initiatives that benefit the society at large. The Trust supports programs devoted to the cause of destitute, rural poor and providing the basic necessities of life to the rural poor. This has helped to enhance the image of the Company.

Main area of activity of the Trust is to provide Drinking Water by digging bore wells, construction of irrigation tanks in remote villages, building of Class Rooms in Schools and Colleges, reimbursement of salaries of teachers, supply of class room furniture and conducting of health camps.

Directors

As per Article 120 of the Articles of Association of the Company, Shri. Gusti J Noria and Shri. P. Abraham retires by rotation. Shri. Gusti J Noria and Shri. P. Abraham being eligible offers themselves for reappointment.

Directors' responsibility statement

As required by the provisions of Section 217(2AA) of the Companies Act, 1956, the Directors' Responsibility Statement is appended hereto and forms part of this Report.

Corporate governance

As a listed Company, necessary measures have been taken to comply with the Listing Agreements of Stock Exchanges. A report on Corporate Governance, along with a certificate of compliance from the Auditors, forms part of this Report.

Auditors

M/s. M. Anandam & Co., Chartered Accountants, retires as Auditors in this Annual General Meeting and are eligible for reappointment.

General

The information required under Section 217(1) (e) of the Companies Act, 1956 read with the Companies (Disclosure of particulars in the Report of the Board of Directors) Rules, 1988 with respect to conservation of energy, technology absorption and foreign exchange earnings / outgo is appended hereto and forms part of this Report.

Information as per Section 217(2A) of the Companies Act, 1956 read with The Companies (particulars of employees) Rules, 1975, as amended, forms part of this Report.

On behalf of the Board of Directors

Bhagirat B. Merchant Chairman

Place: Secunderabad Date : 27.05.2011


Mar 31, 2010

The Directors are pleased to present the 28th Annual Report of the Company with Audited Balance Sheet and Statement of Accounts.

The financial highlights are as follows:

(Rs. in lakbs) Particulars 2009-2010 2008-2009 Gross Income 63841.07 55451.79 Profit for the year before taxation 8636.82 5543.02 Provision for taxation 2915.68 1949.18 Profit for the year after taxation 5721.14 3593.84 Balance brought forward from previous year 695.45 644.81 Profit available for appropriation 6416.59 4238.65 Divisiond on Equity Share Capital 794.05 476.43 Special Silver Jubilee Year Dividend - 158.81 Corporate Dividend Tax 133.72 107.96 Transfer to General Reserve 4000.00 2800.00 Balance carried to Balance Sheet 1488.82 695.45

Dividend

Your Directors declared an interim dividend of Rs. 3 (i.e. 30%) per share of Rs. 10 each during the financial year 2009-2010. Your Directors recommend a payment of final dividend of Rs. 2 (i.e. 20%) per share of Rs. 1 0 each for the financial year ended on 31st March, 2010. With the above, the total dividend paid will be Rs. 5 (i.e. 50%) per share of Rs. 10 each. The Company is absorbing a Corporate Dividend Tax of Rs. 133.72 lakhs on the equity dividend. The dividend declared and paid this year is not taxable in the hands of shareholders.

Management discussion and analysis:

Your Company is in the business of the manufacture and sale of

Asbestos Cement Sheets, V-Boards (Fiber Cement Sheets) and Spinning Yarn.

A. Asbestos cement business

Industry structure and developments: This industry is more than 72 years old industry in India.

Asbestos Cement Products continue to be in demand because of the industrys effort in making inroads into Indias rural markets, affordability and other qualities such as corrosion resistance, weather and fire-proof nature.

Currently there are 1 7 entities in the industry with about 63 manufacturing plants throughout the country. The products are

marketed under their respective brand names mainly through dealers for the retail market and directly for projects and government departments. The total production for the year 2009-2010 was estimated at 42 lakh metric tonnes. The industry demand as measured by the total sales of the industry has been growing considerably over the years, the growth for the last year being 5% i.e sales increased from 39 lakh metric tonnes in 2008-2009 to 41 lakh metric tonnes during the year 2009- 2010.

Opportunities and threats: Asbestos Cement Sheets are mainly used as roofing material in rural and semi-urban housing and by general industries and the poultry sector.

Asbestos Cement Sheets are popular as they are inexpensive, need no maintenance and last long when compared to competing products such as thatched roofs, tiled roofs and galvanised iron sheets.

According to the information gathered by us, almost 80-85% of rural people use thatched roof/tiles for shelter. Thatched roof need regular replacement and tiled roof needs continued maintenance. Therefore, whenever economic conditions improve, the first choice of the rural poor to replace the roof over their head are the affordable and relatively durable Asbestos Cement Sheets. Therefore, we see increased potential for the use of Asbestos Cement Sheets in rural areas.

The Central and State Governments have been giving a lot of thrust for housing for rural poor. Asbestos Cement Sheets are widely used for this purpose.

Both the existing and new manufacturers are venturing into setting up new Asbestos Cement Sheet producing plants and some eight new units are expected to be commenced. This could increase competition and will have an effect on margins. However, being an established company, your Company will have an advantage.

Risks and concerns:

Lack of entry barriers: Lack of entry barriers is attracting new entrants into this line of business. However it takes a lot time for a new entrant to establish in the market.

Increase in input costs: The continuous increase in cost of inputs is a matter of concern. We are confident of passing on increases to customers.

Ban asbestos lobby: The activities of the Ban asbestos lobby instigated by the manufacturers of substitute products continue to be a matter of concern. We are educating users that this is a misrepresentation campaign.

Production and sales volumes:

As against a production of 550438 tonnes during the previous year the production during the financial year ended 31st March 2009 was 6,01,973 tonnes, an increase of 9.00%. Sales during the financial year ended on 31st March 2010 was 5,58,001 tonnes as against 5,85,084 tonnes sold during the preceding year.

Financial performance: The gross turnover of Asbestos Cement Division during the year 2009-2010 was Rs. 502.76 crores as compared to Rs. 479.67 crores during the previous year. The profit before tax for the year was Rs. 77.05 crores as compared to Rs. 57.03 crores in the previous year.

Outlook: As stated earlier, there are still vast number of tiled and thatched roof houses waiting for replacement with durable and affordable roofing. Hence, subject to raw material prices remaining within reasonable limits, the demand for asbestos cement products is expected to remain firm.

Future plans Expansion of Pune project:

For expanded capacity of 1 20,000 TPA Public Hearing was over on 6.1.2010. Environmental clearance is expected by May end, after which we can pursue our expansion.

Asbestos Cement Sheets project at Sambalpur district, Orissa.

After Ministry of Environment and Forests (MOEF) approved our site at Sambulpur, we acquired the land. In the meanwhile for obtaining environmental clearance, a public hearing has been fixed on 12th May 2010. We hope to commence work after MOEF clearance. The plant and machinery for this unit has already been ordered. The contract has been awarded for civil construction work. The proposed capacity of this plant is 21 6,000 tonnes per annum for which MOEF has given Terms of Reference (TOR) clearance.

Boards Division

The total production for the period ended March 2010 was 1 9,1 74 metric tonnes as against a production for the year ended March, 2009 of 1 2,760 metric tonnes. Sales for the year ended on 31st March, 2010 was 16,806 metric tonnes (including export of 1 131 metric tonnes) as against 10,050 metric tonnes sales for the previous year. The turnover from this division was Rs. 1 5.80 crores for the year ended 31st March 201 0 compared to Rs. 9.32 crores in the previous year. This division is expected to make profits in the current year.

Outlook

The market characteristics for cement boards over the coming year look positive because of intense construction activity and shift of consumers from particle boards and plywood to cement reinforced sheets. This is a product of the future.

Sandwiched Panels Unit

Sandwiched Panels are in demand, for use as partition material. The Reinforced Building Board Sandwiched Panels are made of two fibre-reinforced cement sheets enclosing a lightweight core. These panels are fully cured at the factory and ready for installation. These panels are cheaper compared with masonry partitions / wood partitions, are easy to fix and take a comparatively lower time for installation.

The unit commenced commercial production on 1st January, 2010. Commercial production upto 31st March, 2010 was 1021 tonnes and sales was 838 tonnes. Sales turnover was Rs. 1.12 Crores. Our major customers are GMR, Punj Llyod, Shapoorji Pallonji & Co. Ltd., Soma Enterprises, TCS, Gujarat Ambuja Port, Eenadu Group, Coastal Projects Pvt. Ltd., Uranium Corporation, Larsen & Toubro, etc.

B. Synthetic Yarn Business

Industry structure and developments: The demand for Synthetic Yarn was good during the year 2009-201 0 due to high cotton fibre / yarn prices, short supply of yarn due to power cuts in various parts of the country, and a good demand for Indian fabrics in international markets.

Opportunities and threats: The continued growth in GDP and demand for the Indian fabric in the domestic and international market is an opportunity for us. The expected reduction in cotton fiber and yam prices is a threat to the synthetic industry. However, in such a case, we expect synthetic fiber prices to come down.

Risks and concerns: Fluctuating Rupee and crude oil prices are likely to affect the divisions performance. The likely shrinking of demand for Indian fabrics in the international market is a matter of concern. However, since the domestic market is growing, we should be able to cover this.

Outlook: We have introduced several measures to improve performance. Barring unforeseen circumstances, we hope to do better in this Division in the coming year.

Product-wise performance: The production in the spinning unit during the year 2009-2010 was 8,705 metric tonnes as compared to 8,741 metric tonnes during the previous year. The sales were 8,883 metric tonnes of yarn during the year 2009- 2010 as compared to 9,283 metric tonnes in the previous year.

Financial performance: The turnover of this division during 2009-2010 was Rs. 119.61 crores compared to Rs. 117.35 during the previous year. The profit before tax during the year was Rs. 14.97 crores as compared to Rs. 4.32 crores during the previous year, recording an increase of 246%.

Internal control systems and their adequacy:

Your Company has in place adequate systems of internal control commensurate with its size and the nature of its operations. These have been designed to provide reasonable assurance with regard to recording and providing reliable financial and operational information, complying with applicable statutes, safeguarding assets from unauthorised use or losses, executing transactions with proper authorisation and ensuring compliance of internal policies. The Company has a well defined delegation of power with authority limits for approving revenue as well as capital expenditure. Processes for formulating and reviewing annual and long term business plans have been laid down to ensure adequacy of the control system, adherence to the management instructions and legal compliances. The Company uses ERP (Enterprise Resource Planning) system to record data for accounting and connects to different locations for efficient exchange of information. This process ensures that all transaction controls are continually reviewed and risks of inaccurate financial reporting, if any, are dealt with immediately.

Material developments in human resources/ industrial relations

The Company believes that human resource is its most valuable resource which has to be nurtured well and equipped to meet the challenges posed by the dynamics of business development. The Company has a policy of continuous training of employees, both in-house as well as through reputed institutes. The staff is highly motivated due to a good work culture, training, remuneration packages and values, which the Company maintains.

The total number of people employed in the Company as on 31.03.2010 is 3128. Your Directors would like to record their appreciation of the efficient and loyal service rendered by the Companys employees.

Fixed deposits

Your Company has been inviting and accepting deposits from the public, shareholders and others. The amount of deposits outstanding as on 31st March 2010 was Rs. 4.85 crores. Deposits amounting to Rs. 10.65 lakhs remained unclaimed as on 31.03.2010. There are no unclaimed deposits which are transferable to the Investor Education and Protection Fund under Section 205C of the Companies Act, 1 956.

Unclaimed dividend

As per the provisions of Section 205C of the Companies Act, 1956, Unclaimed Dividend amount of Rs. 4,27,321.00 in respect of the year 2001-2002 has been transferred to the Investor Education and Protection Fund on 22.08.2009 upon the expiry of seven years period.

Banks and financial institutions

The Company has been prompt in making the payment of interest and repayment of loans to financial institutions and also interest on working capital to banks. Banks and financial institutions continue to give their unstinted support. The Board records its appreciation for the same.

Corporate Social Responsibility

Your Company, as a responsible corporate citizen established in the year 2000 a charitable trust in the name of Visaka Charitable Trust as a non-profit entity, to support initiatives that benefit society at large. The Trust supports programs devoted to the cause of destitute and in providing the basic life necessities to the rural poor. This has helped enhance the image of the Company.

The main activity of the Trust is to provide drinking water by digging bore wells, construction of irrigation tanks in remote villages, building class rooms in schools and colleges, reimbursement of salaries of teachers, supply of class room furniture and conducting health camps.

Directors

Dr. G. Vivekanand stepped down as Managing Director effective from 26th October, 2009. The Board records deep appreciation for the services rendered by Dr. G. Vivekanand. He has now been re-designated as Non-Executive Vice Chairman of the Company.

The Board welcomes Smt. G. Saroja Vivekanand as Managing Director.

As per Article 120 of the Articles of Association of the Company, Shri B. B Merachant and Shri V. Pattabhi retire by rotation. Shri Bhagirath B. Merchant and Shri V. Pattabhi being eligible offers themselves for reappointment.

Directors Responsibility Statement

As required by the provisions of Section 217(2AA) of the Companies Act, 1956, the Directors Responsibility Statement is appended hereto and forms part of this Report.

Corporate Governance

As a listed Company, necessary measures have been taken to comply with the Listing Agreements of Stock Exchanges. A report on Corporate Governance, along with a certificate of compliance from the Auditors, forms part of this Report.

Auditors

M/s. M. Anandam & Co., Chartered Accountants, retire as Auditors in this Annual General Meeting and are eligible for reappointment.

General

The information required under Section 217(1) (e) of the Companies Act, 1956 read with the Companies (Disclosure of particulars in the Report of the Board of Directors) Rules, 1988 with respect to conservation of energy, technology absorption and foreign exchange earnings / outgo is appended hereto and forms part of this Report.

Information as per Section 21 7(2A) of the Companies Act, 1 956 read with The Companies (particulars of employees) Rules, 1 975, as amended, forms part of this Report.

On behalf of the Board of Directors Place: Secunderabad Bhagirath B. Merchant Date: 10.05.2010 Chairman

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