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Directors Report of V2 Retail Ltd.

Mar 31, 2018

Dear Member’s

It gives me great pleasure to share with you the performance of your company along with audited accounts for the financial year ended March 31, 2018.

1. State of company Affairs

The Financial Year 2017-18 was marked with volatility and disruptions due introduction of GST and its impacts. Your company however continued to perform consistently well in these challenging times and deliver better results. With sales at RS.559 Crore, V2 retail has registered an overall growth of 19% in the turnover. EBIDTA at RS.55 Crore has also grown by 28% over previous year.

In order to strengthen its market share, the company have added 12 stores and also taken steps to improve the supply chain network. Besides, efficiency improvement and cost optimisation have been followed vigorously across all the functions of the organisation.

Financial Results

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

(Rs. in lakhs)

Particulars

For the Year ended

For the Year ended

31.03.2018

31.03.2017

Revenue

56,265.91

47,363.75

Profit before Interest, Depreciation & Taxation

5,498.92

4,311.62

Interest & Finance Costs

57.49

861.39

Depreciation and amortisation

840.64

614.48

Profit from Operations before Exceptional Items and Tax

4,600.79

2,835.75

Exceptional Items

-

2,331.44

Profit before Taxation

4,600.79

5,167.19

Less : Provision for Taxation

- Current Tax

-

-

- Deferred Tax

1,492.59

1,264.03

Profit After Taxation

3,108.20

3,903.16

2. Operations Review

The Company continued with its strategy to establish “V2” brand of Retail stores across north, east and central part of India during the year. It is one of the fastest growing retail company in India and enjoys strong brand equity from customers across segments.

During the year, the number of “V2” stores increased to 49 (forty-nine) with total retail area in excess of 5.56 lakhs sq. ft. The Company added 16 (sixteen) and closed 4 (four) stores during the year.

During the year under review, the Company continued to focus on enhancing the capability of the organization and towards the achievement of this goal, the Company has been taking a number of initiatives.

3. Dividend

Implementation of landmark reforms like GST and immense growth opportunity for the organised retail industry in India, your Directors intend to retain internal accrual for business growth of company. Therefore, the Board of Directors does not propose to declare any dividend for this year.

4. Transfer to Reserve

Your Directors do not propose to transfer any amount to the general reserve.

5. Material changes and commitments

Company have adopted IND-AS for the first time from financial year 2017-18, except the above No material changes and commitments have occurred from the date of close of the financial year till the date of this Report, which might affect the financial position of the Company.

6. Share Capital

The paid - up share capital of the Company was increased from RS.3092.27 lakhs to RS.3392.27 lakhs as on March 31, 2018.

During the year the Company made allotment of 20,00,000 shares to India 2020 Fund II, Limited at a price of RS.380/- per Equity Shares amounting to RS.7600 lakhs and conversion of 10,00,000 warrants into 10,00,000 Equity Shares amounting to RS.562.50 lakhs (being remaining 75% amount) pursuant to exercise of option for conversion of warrants by M/s Ricon Commodities Private Limited (Promoter Group).

7. Transfer to Investor Education Protection Fund

Pursuant to the provisions of Section 205C of the Companies Act, 1956 (Section 125 of the Companies Act, 2013), your Company has not transferred any amount during the year 2017-18 to the Investor Education and Protection Fund.

8. Employee Stock Option Scheme

The Company has implemented a V2R-Employee Stock Option Scheme 2016 (‘ESOP 2016’), which was approved by the members at the Annual General Meeting held on September 30, 2016. Your Directors have approved grant of options to the eligible employees of the Company under the scheme ‘V2R-Employee Stock Option Scheme 2016’ (‘ESOP 2016’).

The information required to be disclosed under SEBI (Share Based Employee Benefits) Regulations, 2014 as on March 31, 2018 are as follows:

Particulars

Details

Date of Shareholders Approval

September 30, 2016

Number of Options

12,44,380 (Twelve lakh forty four thousand three hundred eighty) options to be convertible into equal number of fully paid up Equity Shares of the Company of face value of RS.10 each.

Number of options outstanding at the

246,763

beginning of the year

Number of options granted during the year

25,596 (net of ESOP lapsed during the year)

Number of options forfeited / lapsed

44,650

Number of options vested during the year

-

Number of options exercised during the year

-

Number of shares arising as a result of

-

exercise of options

Money realized by exercise of options

-

Number of options outstanding at the end of

227,709

the year

Number of options exercisable at the end of

227,709

the year

Exercise Pricing Formula

Exercise price is Face Value of the Share of the company as on date on which the options are exercised by employee.

Person-wise details of options granted as on March 31, 2018:

Particulars

Details

Key Managerial Personnel

Vipin Kaushik, CFO, (2273 ESOP Option)

Umesh Kumar, Company Secretary & Compliance Officer (2810 ESOP Option)

Any other employee who receives a grant of options in any one year of option amounting to five percent or more of options granted during that year

Nil

Identified employees who were granted option, during any one year, equal to or exceeding one percent of the issued capital (excluding outstanding warrants and conversions) of the Company at the time of grant

Nil

9. Bonus issue

Company has not allotted/transferred or issued any bonus shares during the year.

10.Change in The nature of the Business, if any

There was no change in the nature of business of the Company during the financial year ended March 31, 2018 except alteration of MOA of the company as approved by member of the company through postal ballot during the year w.e.f. September 21, 2017.

Further Company is planning to broaden its operations by adding new retail stores for strengthening existence and to reach amongst the larger consumer base to enhance its turnover and operating revenue.

11. Internal Control systems and their adequacy

Your Company has in place, an adequate system of internal controls commensurate with its size, requirements and the nature of operations. These systems are designed keeping in view the nature of activities carried out at each location and various business operations.

Your Company’s in-house internal audit department carries out internal audits at all stores locations, offices and warehouse / distribution centre across all locations of the country. Their objective is to assess the existence, adequacy and operation of financial and operating controls set up by the Company and to ensure compliance with the Companies Act, 2013, SEBI (Listing Obligations & Disclosures Requirements) Regulations, 2015 (SEBI Listing Regulations, 2015) and corporate policies.

Board of Directors of the company has appointed M/s. Sharma G & Associates (FRN No. 027579N), Chartered Accountant, as the Internal Auditor of the Company to conduct the Internal Audit Functions for Financial Year 2017-18.

A summary of all significant findings by the audit department along with the follow-up actions undertaken thereafter is placed before the Audit Committee for review. The Audit Committee reviews the comprehensiveness and effectiveness of the report and provides valuable suggestions and keeps the Board of Directors informed about its major observations, from time to time.

12. Internal financial controls

The Company has in place adequate financial controls commensurate with its size, scale and complexity of its operations. The Company has in place policies and procedures required to properly and efficiently conduct its business, safeguard its assets, detect frauds and errors, maintain accuracy and completeness of accounting records and prepare financial records in a timely and reliable manner.

13. Segment Reporting

The Board wishes to inform you that Segment Reporting is not applicable to the Company.

14. Cash Flow Analysis

The Cash Flow Statement for the year, under reference in terms of Regulation 36 of SEBI (LODR) Regulations, 2015 is annexed with the Annual Accounts of the Company.

15. Subsidiary companies, joint ventures and associate companies

The Company had no subsidiary and joint venture during the financial year 2017-18. Further, there are no associate companies within the meaning of Section 2(6) of the Companies Act, 2013 (“Act”).

16. Consolidated financial statements

The Company is not having any Subsidiary Companies; therefore, applicable provisions of Companies Act, 2013 and the Accounting Standard AS-21 in relation to Consolidation of Financial Statements do not apply on the Company.

17. Deposits

The Company has not accepted any deposits covered under Chapter V of the Companies Act, 2013 read with The Companies (Acceptance of Deposits) Rules, 2014.

18. Secretarial Standards of ICSI

The Ministry of Corporate Affairs has mandated SS-1, SS-2 and SS-3 with respect to board meetings, general meetings and payment of dividend respectively. The Company is in compliance with the same.

19. Auditors and Auditors’ Report

Statutory audit

Your Company’s Auditors, M/s. Walker Chandiok & Co LLP, Chartered Accountants, Delhi (Firm Registration No. 001076N/N500013), were appointed as the Statutory Auditors of the Company from the conclusion of 16th Annual General Meeting till the conclusion of the 21st Annual General Meeting of the Company subject to ratification by members every year.

The Company has received a certificate from the Auditor under section 141 of the Companies Act 2013 to the effect that they are eligible to continue as Statutory Auditors of the Company.

The Auditor’s have put certain qualifications in their report to which the management has put forward the following below mentioned replies;

Qualification and response to Auditor’s Report

(i) As stated in Note 7 to the financial results, the Company’s other equity as at March 31, 2018 includes an amount of RS.365.36 lakhs in the nature of capital reserve arising out of business restructuring carried out in earlier years, for which the Company’s management has not been able to provide necessary reconciliation and information. In the absence of sufficient appropriate audit evidence, we are unable to comment upon the appropriateness and classification of the aforesaid balance, and the consequential impact, if any, on the financial results.

Management Response: The Company restructured its business in the financial year 2010-11 resulting in creation of capital reserve amounting to RS.60,523.24 lakhs. The aforementioned reserve has been reconciled except for RS.365.36 lakhs which the Company is in the process of reconciling. However, the management believes that there is no impact of the same on statement of profit and loss.

(ii) As stated in Note 8 to the financial results, the Company’s contingent liabilities as at 31 March 2018 include an amount of RS.2,542.65 lakhs relating to litigations pending with various authorities, for which the Company’s management has not been able to provide necessary details and information. In the absence of sufficient appropriate audit evidence, we are unable to comment upon the appropriateness and classification of the aforesaid amounts including management’s evaluation of likely outcome of such litigations in accordance with Ind AS 37, “Provisions, Contingent Liabilities and Contingent Assets” and the consequential impact, if any, on the financial results.

Management Response: Out of contingent liabilities existing as at 31 March 2018, certain liabilities aggregating to RS.2,542.65 lakhs are under appeal with different authorities at different levels. Whilst the impact of contingent liabilities on these results can only be ascertained on the settlement of such cases/ disputes, management has broadly assessed that based on the merits of such cases, the Company has reasonably good chances on succeeding and accordingly, no provision has been recognised in these financial results.

Secretarial audit

Pursuant to the provisions of Section 204 of the Companies Act 2013, and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed M/s Sunpreet Singh & Associates, Company Secretaries, New Delhi, as its secretarial auditor to undertake the secretarial audit for FY 2017-18. The secretarial audit report certified by the secretarial auditors, in the specified form MR-3 is annexed herewith and forms part of this report and enclosed as Annexure-I. The secretarial audit report does not contain any qualifications, reservations or adverse remarks.

20. Frauds Reported By Auditor Under Section 143 (12) Other Than Those Which Are Reportable To The Central Government

There are no such frauds reported by auditor, which are committed against the Company by officers or employees of the Company.

21. Conservation energy, technology and foreign exchange outgo

The particulars of conservation of energy, technology absorption and foreign exchange earnings and outgo in accordance with the provisions of Section 134(3) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts of Companies) Rules, 2014, is annexed herewith and forms part of this Report and enclosed as Annexure-II.

22. Extract of Annual Returns

In terms of provisions of Section 92, 134(3) (a) of the Companies Act, 2013, read with Rule 12 of the Companies (Management and Administration) Rules, 2014, the extracts of the annual return in form MGT 9 is annexed herewith and forms part of this Report as Annexure-III and same is displayed on the website of the company i.e. www.v2retail.com.

23. Corporate social responsibility

Corporate social responsibility forms an integral part of your Company’s business activities. Your Company is a responsible corporate citizen, supporting activities which benefit the society as a whole. In compliance with Section 135 of the Companies Act, 2013 read with Companies (Corporate social Responsibility Policy) Rules, 2014, the Company has adopted a CSR policy which is available at www.v2retail.com

The disclosures as per Rule 9 of Companies (Corporate Social Responsibility Policy) Rules, 2014 shall be made as Annexure - IV.

24. Directors and key managerial personnel

In accordance with provisions of Section 152 of the Act read with Rules made thereunder, Mrs. Uma Aggarwal (DIN 00495945), Whole Time Director is liable to retire by rotation at the 17th AGM and being eligible, offer herself for reappointment.

At the 16th Annual General Meeting held on Friday, 29th September 2017, the Shareholders have reappointed Mr. Ram Chandra Agarwal as chairman and Managing Director of the company for a period of 5 years w.e.f November 22, 2016 and Mr. Akash Agarwal as Whole time Director of the Company for a period of 5 years w.e.f. 29.09.2017.

Independent Directors namely, Mr. Siya Ram & Mr. Jitender were appointed as Independent Director of the Company for a consecutive term of five years at 16th Annual General Meeting of the Company.

Mr. Manshu Tandon has been appointed as Chief Executive Officer of the Company w.e.f. October 16, 2017 and Mr. Vipin Kaushik Appointed as Chief Financial Officer w.e.f. May 30, 2017.

Mr. Rohit Singh Rautela, Independent Director has resigned from the Board of Directors of the Company w.e.f. May 03, 2017 and Mr. Varun Kumar Singh has resigned from Chief Financial Officer of the company w.e.f. May 23, 2017.

All the Independent Directors have submitted their declaration to the Board confirming that they meet the criteria of independence as stipulated in Section 149(6) of the Companies Act, 2013 read with Regulation 16 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

None of the Directors of the Company is disqualified for being appointed as Director, as specified in Section 164(2) of the Companies Act, 2013 and Rule 14(1) of the Companies (Appointment and Qualification of Directors) Rules, 2014.

A brief resume of the Director proposed to be reappointed, is provided in the Notice of the Annual General Meeting forming part of the Annual report.

The Key Managerial Personnel (KMP) in the Company as per Section 2(51) and 203 of the Companies Act, 2013 are as follows:

1. Mr. Ram Chandra Agarwal: Chairman & Managing Director

2. Mrs. Uma Agarwal: Whole-time Director

3. Mr. Akash Agarwal : Whole-time Director

4. Mr. Manshu Tandon: Chief Executive Officer

5. Mr. Umesh Kumar: Company Secretary & Compliance Officer

6. Mr. Vipin Kaushik : Chief Financial Officer

25.Board induction, training and familiarization programme for Independent Directors

Prior to the appointment of an Independent Director, the Company sends a formal invitation along with a detailed note on the profile of the Company, the Board structure and other relevant information. At the time of appointment of the Director, a formal letter of appointment which inter alia explains the role, functions, and responsibilities expected of him/her as a Director of the Company is given. The Director is also explained in detail about the various compliances required from him/ her as a Director under the various provisions of the Companies Act 2013, SEBI Listing Regulations, 2015, SEBI (Prohibition of Insider Trading) Regulations, 2015, the Code of Conduct of the Company and other relevant regulations.

A Director, upon appointment, is formally inducted to the Board. In order to familiarise the Independent Directors about the various business drivers, they are updated through presentations at Board Meetings about the performance and Financials of the Company. They are also provided presentations/booklets about the business and operations of the Company.

The Directors are also updated on the changes in relevant corporate laws relating to their roles and responsibilities as Directors. The details of the Board familiarization programme for the Independent Directors can be accessed at www.v2reatil.com

26. Performance evaluation

Pursuant to the provisions of Section 178 of the Companies Act, 2013 read with rules made thereunder, Regulation 17(10) of and the SEBI Listing Regulations and the Guidance note on Board evaluation issued by SEBI vide its circular dated January 5, 2017, the Company has framed a policy for evaluating the annual performance of its Directors, Chairman, the Board as a whole, and the various Board Committees. The Nomination and Remuneration Committee of the Company has laid down parameters for performance evaluation in the policy, they include:

- Attendance

- Preparedness for the meeting

- Staying updated on developments

- Active participation in meetings

- Constructive contributions/positive attributes

- Engaging with and challenging management team without being confrontational or obstructive

- Protection of stakeholder interests

- Contribution to strategic planning

- Carrying out responsibilities as per the code of conduct

The Board also evaluated the performance of each of the Directors, the Chairman, the Board as whole and all committees of the Board. The process of evaluation is carried out in accordance with the Board Evaluation Policy of the Company and as per criteria suggested by SEBI.

27.Number of meetings of the Board

The Board of Directors held Twelve meetings during the year on April 17, 2017; May 05, 2017; May 30, 2017; July 31, 2017; August 21, 2017; September 12, 2017; October 07, 2017; October 16, 2017; December 11, 2017; January 09, 2018; February 03, 2018; March 30, 2018 The maximum time gap between any two meetings was less than 120 days as stipulated under SEBI’s Listing Requirements, 2015. The details of Board Meetings held and attendance of Directors are provided in the Report on Corporate Governance forming part of this report.

28. Separate meeting of Independent Directors

Details of the separate meeting of the Independent Directors held and attendance of Independent Directors therein are provided in the Report on Corporate Governance forming part of this report.

29. Committees of the Board

The Company has constituted/reconstituted various Board level committees in accordance with the requirements of Companies Act 2013. The Board has the following committees as under:

I. Audit Committee

II. Nomination and Remuneration Committee

III. Stakeholders Relationship Committee

IV. Corporate Social Responsibility Committee

Details of all the above Committees along with composition and meetings held during the year under review are provided in the Report on Corporate Governance forming part of this report.

30. Whistleblower policy

The Company has established an effective whistle blower policy (vigil mechanism) and procedures for its Directors and employees; details of which are provided in the Report on Corporate Governance which forms part of this report. The policy on vigil mechanism may be accessed on the Company’s website at: www.v2retail.com

31. Remuneration policy

The remuneration policy of the Company aims to attract, retain and motivate qualified people at the executive and at the board levels. The remuneration policy seeks to employ people who not only fulfil the eligibility criteria but also have the attributes needed to fit into the corporate culture of the Company. The remuneration policy also seeks to provide well-balanced and performance related compensation packages, taking into account shareholder interests, industry standards and relevant regulations.

The remuneration policy ensures that the remuneration to the directors, key managerial personnel and the senior management involves a balance between fixed and incentive pay reflecting short and long-term performance objectives appropriate to the working of the company and its goals. The remuneration policy is consistent with the ‘pay-for-performance’ principle. The Company’s policy on remuneration and appointment of Board members as mentioned in the Remuneration Policy has been disclosed at the company’s website www.v2retail.com. and annexed with the Directors’ Report which forms part of the Annual Report as Annexure-VI.

32. Related party transactions

All related party transactions entered into by the Company during the financial year were at arm’s length. During the year the Audit Committee had granted an omnibus approval for transactions which were repetitive in nature for one financial year and all such omnibus approvals were reviewed by the Audit Committee on a quarterly basis. No material contracts or arrangements with related parties were entered into during the year under review. All related party transactions were placed in the meetings of Audit Committee and the Board of Directors for the necessary review and approval. Your Company’s policy on related party transactions, as approved by the Board, can be accessed at: www.v2retail.com

33. Particulars of loans, guarantees and investments

During the financial year ended March 31, 2018 the Company has made an investment of RS.8965.30 lakhs in accordance with section 186 of the Companies Act 2013 are given in the notes to financial statements. During the year, the company has not granted loans, guarantee and or provided any security.

34. Particulars of employees and managerial remuneration

The information of employees and managerial remuneration, as required under Section 197(2) read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014, and other details are annexed herewith and forms part of this report as Annexure-V.

35. Management discussion and analysis and Corporate Governance Report

As per Regulation 34(3) read with schedule V of the SEBI Listing Regulations 2015, Management Discussion Analysis, Corporate Governance Practices followed by your Company, together with a certificate from the Company’s auditors confirming compliance of conditions of Corporate Governance are an integral part of this report.

36. Risk Management system

The Company has developed and implemented a risk management policy which is periodically reviewed by the management. In accordance with Regulation 21 of SEBI Listing Regulations, 2015, the enterprise risk management policy of the Company, which has been duly approved by the Board, is reviewed by the Audit Committee and the Board on a periodic basis. The risk management process encompasses practices relating to identification, assessment, monitoring and mitigation of various risks to key business objectives. Besides exploiting the business opportunities, the risk management process seeks to minimise adverse impacts of risk to key business objectives.

37. Prevention of sexual harassment at workplace

Your Company is committed to provide a work environment which ensures that every woman employee is treated with dignity, respect and equality. There is zero-tolerance towards sexual harassment and any act of sexual harassment invites serious disciplinary action.

The Company has established a policy against sexual harassment for its employees. The policy allows every employee to freely report any such act and prompt action will be taken thereon. The policy lays down severe punishment for any such act. Further, your Directors state that during the year under review, there were no cases of sexual harassment reported to the Company pursuant to the sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

38. Depository Systems

Company’s shares are compulsorily tradable in electronic form. As on March 31, 2018, 2,93,13,533 Equity Shares stand with the NSDL Account and 44,50,512 Equity Shares stand with the CDSL and 1,58,639 Equity Shares stands in physical form.

The Company has entered into agreements with both National securities Depository Limited (NSDL) and Central Depository services (India) Limited (CDSL) whereby shareholders holding Shares in physical mode are requested to avail of the dematerialization facility with either of the depositories.

Your Company has appointed M/s Link Intime India Private Limited, a Category-I SEBI registered R&T Agent as its Registrar and Share Transfer Agent.

39. Listing Of Shares

The Company’s shares are listed and actively traded on the below mentioned Stock Exchanges:-

I. National Stock Exchange of India Limited (NSE)

“Exchange Plaza” C-1, Block G,

Bandra-Kurla Complex,

Bandra (East), Mumbai - 400051

II. BSE Limited (BSE)

Phiroze Jeejeebhoy Towers,

25th Floor, Dalal Street,

Mumbai - 400001

40. Details of significant and material orders passed by regulators/courts/ tribunals

There was no instance of any material order passed by any regulators/courts/tribunals impacting the going concern status of the Company.

41. Dividend Distribution Policy

The Company has formulated a dividend distribution policy which is enclosed as Annexure-VII and the same is also displayed on the website of the company i.e. www. v2retail.com.

42. Industrial Relations

The Company maintained healthy, cordial and harmonious industrial relations at all levels. The enthusiasm and unstinting efforts of Employees have enabled the Company to remain at the leadership position in the industry. It has taken various steps to improve productivity across organization.

The Board also takes this opportunity to express its deep gratitude for the continued co-operation and support received from its valued shareholders

43. 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:-

a) Issue of the equity shares with differential rights as to dividend, voting or otherwise.

b) Issue of shares (including sweat equity shares) to Directors or employees of the Company.

c) Purchase of or subscription for shares in the Company by the employees of the Company except ESOP.

d) There is no subsidiary of the Company, so no policy on material subsidiary is required to be adopted.

e) As there is no subsidiary or holding Company of your Company, so Managing Director and Whole Time Directors of the Company does not receive any remuneration or commission from any of such Companies.

44. Directors’ Responsibility Statement

Pursuant to the requirement under Section 134(5) of the Companies Act, 2013 with respect to Directors’ Responsibility statement, the Directors confirm that:

1) In the preparation of the annual accounts for the year ended March 31, 2018, the applicable accounting standards have been followed and no material departures have been made there from. The Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2018 and of the profit of the Company for the year ended on that date.

2) 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.

3) The annual accounts were prepared on a going concern basis.

4) The Directors have laid down effective internal financial controls to consistently monitor the affairs of the company and that such internal financial controls were adequate and operating effectively.

5) The Directors have devised a proper system to ensure compliance with the provisions of all applicable laws and the same are adequate and operating effectively.

45. Disclosure with Respect to DMAT suspense account /unclaimed suspense account;

No DMAT suspense account /unclaimed suspense account reported by RTA, NSDL and CDSL to the company.

46. Acknowledgements

Your Directors would like to acknowledge and place on record their sincere appreciation of all stakeholders - shareholders, bankers, dealers, vendors and other business partners for the excellent support received from them during the year under review. Your Directors recognise and appreciate the efforts and hard work of all the employees of the Company and their continued contribution to its progress.

For and on behalf of the Board

Ram Chandra Agarwal

Chairman and Managing Director

DIN 00491885

Place: Delhi

Date: 01-09- 2018


Mar 31, 2017

DIRECTORS’ REPORT

To

The Members,

V2 Retail Limited

The Directors are delighted to present their Report on Company’s Business Operations along with the Audited Statement of Accounts for the Financial Year ended March 31,2017.

FINANCIAL HIGHLIGHTS

Your Company’s financial performance for the year under review has been encouraging. Key aspects of Financial Performance for V2 Retail Limited for the current financial year 2016 -17:

__(Rs. In Lakhs)

Year Ended

S.

No.

Particulars

31st March, 2017

31st March, 2016

PART-I

Audited

Audited

Income from Operations

1

a.

Revenue from operations

47,142.17

31,994.12

b.

Other Income

198.37

252.49

Total Revenue (a b)

47,340.54

32,246.61

Expenses

a

Purchase of traded goods

33,902.19

25,393.38

b

Changes in inventories of stock in trade

(573.88)

(2,955.82)

2

c

Employee benefits expense

3,333.40

2,296.61

d

Finance Costs

861.39

1,324.74

e

Depreciation and amortization expense

671.77

440.70

f

Other expenses

6,581.57

4,123.53

Total Expenses (a) (b) (c) (d) (e) (f)

44,776.44

30,623.14

3

Profit (loss) from Operations before Exceptional Items and Tax (1-2)

2,564.10

1,623.47

4

Exceptional Items

2,331.44

392.09

5

Profit (loss) before tax (3 4)

4,895.54

2,015.56

Tax expense:

6

a

Current tax

-

-

b

Deferred tax charge

1,170.02

798.68

Total

1,170.02

798.68

7

Net Profit (loss) for the period (5-6)

3,725.52

1,216.88

8

Paid-up equity share capital (Face Value of Rs. 10/per share)

3,092.27

2,488.76

9

Reserve excluding Revaluation Reserves

34,454.05

26,264.18

10

Earnings Per Share (EPS) of Face Value of Rs. 10/- each (not annualized):

a.

Basic EPS before Extraordinary items for the period, for the year to date and for the previous year (not annualized)

5.21

3.34

a(i).

Diluted EPS before Extraordinary items for the period, for the year to date and for the previous year (not annualized)

4.98

2.40

b.

Basic EPS after Extraordinary items for the period, for the year to date and for the previous year (not annualized)

13.91

4.93

b(i).

Diluted EPS after Extraordinary items for the period, for the year to date and for the previous year (not annualized)

13.30

3.54

STATE OF COMPANY’S AFFAIRS

Your Company has earned total revenue of Rs. 47,340.54 Lakhs as against Rs 32,246.61 Lakhs achieved during the previous years. The Company has made significant changes in its business strategy and result thereof are visible as seen in the business growth in the year.

Your Directors expect that there will be further improvement in overall performance in the coming years.

FINANCIAL PERFORMANCE REVIEW

The Indian retail industry has experienced high growth over the last decade with a noticeable shift towards organized retailing formats. During the year the Company has increased its turnover from Rs. 3,22,46,60,782 to 4,73,40,53,740 compared to previous year. The Company has significantly generated profits for its stakeholders. The overall retail market continues to grow and consumer aspiration for a better service environment still remains intact. Your Company continues to endeavor to reinstate its growth pattern in the retail industry with a chain of stores under the ''V2'' brand in the Retail Industry.

DIVIDEND

Keeping in view of the expansion of the existing business, your Directors intend to retain internal accrual which will generate a good return for shareholders both for today and tomorrow. Thus the Board of Directors does not propose to declare any dividend for this year.

DETAILS OF SUBSIDIARY COMPANIES. JOINT VENTURES AND ASSOCIATE COMPANIES. AND HIGHLIGHTS OF THETR

PERFORMANCE_AND_THEIR

CONTRIBUTION TO THE OVERALL PERFORMANCE OF THE COMPANY

The Company had no subsidiary and joint venture during the financial year 2016-17.

Further, there are no associate companies within the meaning of Section 2(6) of the Companies Act, 2013 (“Act”).

During the previous years, the process of closure of Subsidiary Companies, which were not in operation, has been initiated and the same were applied to the Registrar of Companies to strike-off their names from its Register where VRL Infrastructure Limited is under the process of being strike-off.

Pursuant to the provisions of section 136 of the Act, the financial statements of the Company along with relevant documents are available on the website of the Company.

TRANSFER TO RESERVES

In view of the previous losses incurred in the Company no amount has been transferred to the Reserves of the Company.

SHARE CAPITAL

The paid up Equity Share Capital of the Company as on March 31, 2017 was Rs. 30.92 Crores. Further, an allotment of 60,35,065 Equity Shares amounting to Rs. 4 2,18,74,955 has been made during the year pursuant to preferential allotment to promoter and non promoter group and on conversion of warrants to M/s Bennett Coleman and Co. Ltd. being the non promoter.

WARRANTS

10, 00,000 Convertible warrant for a value of Rs. 7,50,00,000/- (Rupees Seven Croreand Fifty Lakhs only) were issued to promoter Group being M/s. Ricon Commodities Private Limited on preferential basis and allotment of the same was made in the Board meeting held on 22nd November, 2016 and 25% upfront amount of Rs 1,87,50,000 has been received from M/s Ricon Commodities Private Limited in lieu of allotment of aforesaid warrants.

TRANSFER TO INVESTOR EDUCATION & PROTECTION FUND

Pursuant to the provisions of Section 205C of the Companies Act, 1956 (Section 125 of the Companies Act, 2013), your Company has not transferred any amount during the year 2016-17 to the Investor Education and Protection Fund.

EMPLOYEE STOCK OPTION SCHEME

In the Annual General Meeting held on 30th September, 2016, your Directors have approved the V2R-Employee Stock Option Scheme 2016 (‘ESOP 2016’) and grant of options to the eligible employees of the Company under the scheme.

Details of the V2R-Employee Stock Option Scheme 2016 are as follows:-

(a) Options granted; The maximum number of options to be granted under V2R - Employee Stock Option Scheme 2016 (“ESOP 2016”) is 1244380 (Twelve lakh forty four thousand three hundred eighty) options to be convertible into equal number of fully paid up Equity Shares of the Company of face value of Rs. 10 each.

(b) Options vested; Nil

(c) Options exercised; Nil

(d)Total number of shares arising as a result of exercise of option; Nil

(e) Options lapsed; 30,317

(f) Exercise price; Face Value of Share or any other price not exceeding market price at the time of grant of options

(g) Variation of terms of options; NA

(h) Money realized by exercise of options; NA

(i) Total number of options in force; 2,26,261

(j) Employee wise details of options granted; -

(i) Key Managerial Personnel; CS (Umesh Kumar) (2810 ESOP Option)

(ii) Any other employee who receives a grant of options in any one year of option amounting to five percent or more of options granted during that year: Nil

(iii) Identified employees who were granted option, during any one year, equal to or exceeding one percent of the issued capital (excluding outstanding warrants and conversions) of the Company at the time of grant; Nil

MATERIAL CHANGES AND COMMITMENTS, IF ANY, AFFECTING THE FINANCIAL POSITION OF THE COMPANY WHICH HAVE OCCURRED BETWEEN THE END OF THE FINANCIAL YEAR OF THE COMPANY TO WHICH THE FINANCIAL STATEMENTS RELATE AND THE DATE OF THE REPORT

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

CHANGE IN THE NATURE OF BUSINESS, IF ANY

There was no change in the nature of business of the Company during the financial year ended March 31, 2017.

However, the Company is planning to broaden its operations by adding new retail stores for strengthening existence and to reach amongst the larger consumer base to enhance its turnover and operating revenue.

SEGMENT REPORTING

The Board wishes to inform you that Segment Reporting is not applicable to the Company.

CASH FLOW ANALYSIS

The Cash Flow Statement for the year, under reference in terms of Regulation 36 of SEBI (LODR) Regulations, 2015 (Clause 32 of the Listing Agreement entered by the Company with the Stock Exchanges), is annexed with the Annual Accounts of the Company.

SUBSIDIARY COMPANY

Pursuant to Section 129(3) of the Companies Act, 2013 and Accounting Standard AS-21 issued by the Institute of Chartered Accountants of India, Financial Statements presented by the Company does not includes the Financial Statements of its Subsidiaries as there is no subsidiary of Company as on 31st March 2017.

CONSOLIDATED FINANCIAL STATEMENTS

The Company does not have any Subsidiary Companies; hence, applicable provisions of Companies Act, 2013 and the Accounting Standard AS-21 on Consolidated Financial Statements do not apply on the Company.

BOARD OF DIRECTORS AND KEY MANAGERIAL PERSONNEL (KMP)

- Retirement by Rotation

The Members of the Company at the 15th Annual General Meeting held on 30th September, 2016, had approved the re-appointment of Mrs. Uma Aggarwal, who was liable to retire by rotation.

In accordance with the provisions of Section 152 of the Companies Act, 2013 and Articles of Association of the Company, Smt. Uma Aggarwal, Whole Time Director, is liable to retire by rotation at the ensuing Annual General Meeting, who being eligible, has offer herself for re-appointment.

The brief resume of the Directors being reappointed, the nature of their expertise in specific functional areas, names of companies in which they have held Directorships, Committee Memberships/ Chairmanships, their shareholding etc., are furnished in the explanatory statement to the notice of the ensuing AGM.

The Board recommends her re-appointment at the ensuing Annual General Meeting.

- Appointment / Re-appointment & Cessation of Directors

During the period under review, members approved the appointment of Mr. Lalan Yadav as Independent Director of the Company for a period of five consecutive years.

During the year under review, Mr. Sourabh Kumar, Independent Director has resigned from the Board of Directors of the Company w.e.f. 17 09-2016.

Further, Mr. Rohit Singh,Independent Director has resigned from the Board of Directors the Company w.e.f. 03rd May, 2017.

The Boardrecommends the re-appointment of Mr. Ram Chandra Agarwal as chairman and Managing Director of the company for a period 5 years and appointment of Mr. Akash Agarwal as Whole time Director of the Company for a period 5 years and Mr. Siya Ram and Mr. Jitender as Independent Director of the Company for a consecutive period of five years at the ensuing Annual General Meeting of the Company.

KEY MANAGERIAL PERSONNEL

The Key Managerial Personnel (KMP) in the Company as per Section 2(51) and 203 of the Companies Act, 2013 are as follows:

1.Mr. Ram Chandra Agarwal: Managing Director

2. Smt. Uma Agarwal: Whole-time Director

3. Mr. Manshu Tandon: Chief Executive Officer*

4. Mr. Umesh Kumar Company Secretary & Compliance Officer

5. Mr. Varan Kumar Singh (Chief Financial Officer)**

6. Mr. Vipin Kaushik : Chief Financial Officer**

*Mr. Manshu Tandon: Chief Executive Officer of the Company has resigned as Chief Executive Officer w.e.f 31-12-2016.

** Mr. Varan Kumar Singh: Chief Financial Officer of the Company has resigned as Chief Financial Officer of the Company w.e.f. 23-05-2017 and Mr. Vipin Kaushik has been appointed as Chief Financial Officer of the Company w.e.f. 30-05-2017.

POLICY ON DIRECTORS’ APPOINTMENT AND REMUNERATION

Pursuant to the requirement under Section 134(3) (e) and Section 178(3) of the Companies Act, 2013, the Nomination and Remuneration Policy of the Company which includes criteria for Appointment and Re-Appointment of Director, the Remuneration payable to Managing and Whole Time Director, the Remuneration payable to Non-Executive Directors and the evaluation of Directors is attached as ‘ Annexure 1 ’ which forms part of this report.

NUMBER OF MEETINGS OF THE BOARD

The Board duly met at regular intervals to discuss and decide on business strategies/policies and review the financial performance of the Company. The notice along with Agenda and notes on agenda of each Board Meeting was given in writing to each Director.

During the Financial Year 2016-17, 11 (Eleven) number of Board meetings were held. The interval between two meetings was well within the maximum period mentioned under Section 173 of Companies Act, 2013 and Regulation 17(2) of SEBI (Listing Obligation and Disclosure Requirement) Regulation, 2015.

For details thereof kindly refer to the Corporate Governance Report of this Annual Report.

AUDIT COMMITTEE

As on 31st March, 2017, the Audit Committee comprises of four directors with majority of Independent Directors namely Mr. Rohit Singh Rautela (Chairman), Mr. Lalan Yadav, Mr. Ram Chandra Agarwal and Mr. Ravinder Kumar Sharma as other members.

All the recommendations made by the Audit Committee were accepted by the Board.

Further, the Roles and Responsibility and other related matters of Audit Committee forms an integral part of Corporate Governance Report as part of Annual Report.

FRAUDS REPORTED BY AUDITOR UNDER SECTION 143 (12) OTHER THAN THOSE WHICH ARE REPORTABLE TO THE CENTRAL GOVERNMENT

There are no such frauds reported by auditor, which are committed against the Company by officers or employees of the Company.

PERFORMANCE EVALUATION OF THE BOARD, ITS COMMITTEES AND INDIVIDUAL DIRECTORS

As the ultimate responsibility for sound governance and prudential management of a Company lies with its Board, it is imperative that the Board remains continually energized, proactive and effective. An important way to achieve this is through an objective stock taking by the Board of its own performance.

The Companies Act, 2013 notified on April 1, 2014, not only mandates Board’s and Directors’ evaluation, but also requires the evaluation to be formal, regular and transparent. Subsequently, SEBI has brought into force Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 to bring the requirements on this subject in line with the Act.

The Independent Directors had met separately without the presence of Non-Independent Directors and discussed, inter-alia, the performance of non independent Directors and the Board as a whole and the performance of the Chairman of the Company after taking into consideration the views of executive and Non-Executive Directors.

The Nomination and Remuneration Committee has also carried out evaluation of every Director''s performance.

The performance evaluation criteria of the Board include growth in business volumes and profitability, compared to earlier periods, growth over the previous years through and fairness in Board’s decision making processes. The performance evaluation criteria of individual Directors and Committees include awareness to responsibilities, duties as director, attendance record and intensity of participation at meetings, quality of interventions, special contributions and inter-personal relationships with other Directors and management. The Board evaluated the performance of Independent Directors based on their attendance record, contributions, their interventions and inter- personal relationships.

The performance evaluation of Committees and Board as a whole was done on the basis of questionnaire which was circulated among the board members and committee members and on receiving the inputs from them, their performance was assessed by the Board.

Lastly, performance evaluation of individual Directors was done on the basis of self-evaluation forms which were circulated among the Directors and on receiving the duly filled forms, their performance was assessed.

The Directors expressed their satisfaction with the evaluation process. It was further acknowledged that every individual Member and Committee of the Board contribute its best in the overall growth of the organization.

DIRECTORS’ RESPONSIBILITY STATEMENT

Pursuant to the provisions under Section 134(5) of the Companies Act, 2013, with respect to Directors’ Responsibility Statement, the Directors confirm:

1. That in the preparation of the Annual Accounts for the year ended March 31,2017, the applicable Accounting Standards have been followed and there are no material departures;

2. That appropriate Accounting Policies have been selected and applied consistently and judgments and estimates that are reasonable and prudent have been made so as to give a true and fair view of the state of affairs as at March 31, 2017 and of the profit of the Company for the Financial year ended March 31,2017;

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

4. That the annual accounts for the year ended March 31, 2017 has been prepared on a going concern basis.

5. That they had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and

6. That they had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

DECLARATION BY INDEPENDENT DIRECTOR(S)

All the Independent Directors have submitted their declaration to the Board confirming that they meet the criteria of independence as stipulated in Section 149(6) of the Companies Act, 2013 read with Regulation 16 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015

OPERATIONS, PERFORMANCE AND FUTURE OUTLOOK OF THE COMPANY

A detailed review of operations, performance and future outlook of the Company is given separately under the head “Management Discussion & Analysis” pursuant to Regulation 17 to 27 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 is annexed and forms part of this Annual Report as annexure 6.

ENERGY CONSERVATION,RESEARCH AND DEVELOPMENT TECHNOLOGY

ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

Pursuant to provisions of Section 134(3)(m) of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014 the details of activities in the nature of Energy Conservation, Research and Development, Technology Absorption and Foreign Exchange Earnings and Outgo is attached as‘ Annexure 2 which forms part of this report.

PARTICULARS OF REMUNERATION OF DIRECTORS AND KMP’S

The details of top employees in terms of Remuneration Drawn as per 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 and Disclosure pertaining to remuneration and other details as required under section 197(12) of the Companies Act, 2013, read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is annexed herewith as Annexure - 3 to this Report.

Further, 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, there is no employee in the Company, which draws the remuneration in excess of the limits set out in the said rules.

EXTRACT OF ANNUAL RETURN

Pursuant to the provisions of Section 134 (3) (a) of the Companies Act, 2013, an extract of the Annual Return in Form MGT-9 is attached as ‘Annexure 4’ which forms part of this Report.

AUDITOR AND AUDITOR’S REPORT

Pursuant to the provisions of Section 139 of the Companies Act, 2013 read with the Companies (Audit and Auditors) Rules, 2014, M/s AKGVG & Associates, Chartered Accountants, the Auditor of the Company shall hold office till the conclusion of the ensuing (16th AGM) Annual General Meeting. Your Board places on record its deep appreciation for the valuable contributions of the Auditor during their association and wishes them success in the future. Based on the recommended of the Audit Committee, the Board has appointed in Board of Directors meeting dated August 21, 2017 M/s. Walker Chandiok & Co LLP, Chartered Accountants, Delhi (Firm Registration No. 001076N/N500013), as the Statutory Auditor of the Company, in place of retiring auditor M/s. AKGVG & Associates, Chartered Accountants, Delhi (Firm Registration No. 018598N), to hold office for a term of five consecutive years, from the conclusion of the ensuing 16th Annual General Meeting till the conclusion of 21st Annual General Meeting of the Company to be held in the Calendar year 2022, subject to an yearly ratification by the members of the Company at every Annual General Meeting, on such remuneration including out of pocket expenses and other expenses as may be mutually agreed by and between the Board of Directors and the Auditor, and recommended to the shareholders of the Company for their approval.

Pursuant to Section 139 and 141 of the Companies Act, 2013 and Rules framed there under, the Company has received a certificate from the auditor confirming their eligibility to be appointed as Auditor of the Company. They have also confirmed that they have hold a valid certificate issued by the Peer Review Board of the Institute of Chartered Accountants of India (ICAI) as required under the provisions of Regulation 33 of the Listing Regulation.

The Auditor’s have put certain qualifications their report to which the management has put forward the following below mentioned replies;

Qualification and response to Auditor’s Report

1. The Capital Reserve amounting to Rs.60, 523.24 Lakhs, is Rs. 42,942.24 Lakhs arising out of transfer of asset and liabilities to the acquiring companies in earlier years for which necessary reconciliation/ information to the tune of Rs 372.24 Lakhs is not available with the Company . Accordingly in the absence of the same, we are unable to comment on the appropriateness of capital reserve including consequential impact, if any, arising out of the same on these financial statements.

Management Response The Company restructured its business in F.Y 2010-11, resulting a Capital Reserve of Rs. 60,523 Lakhs. The amount of Capital Reserve has been reconciled except Rs. 372.24.akhs for which the Company is in process to reconcile and there is no impact on Profit & Loss account.

2. As stated in these quarterly results, the Company has recognized Rs. 24,273.18/Lakhs as deferred tax assets at the quarter-end for which it does not have virtual certainty supported by convincing evidence that sufficient future taxable income will be available against which such deferred tax assets can be realized in accordance with principles of Accounting Standard 22 “Accounting for Taxes on Income” issued by the Institute of Chartered Accountants of India. Had the company not recognized deferred tax, impact on profit and loss account would have been decrease in profit during the quarter by Rs.24,273.18/-Lakhs and decrease in accumulated balances of Reserves and Surplus by Rs. 24,273.18/Lakhs.

Management Response: During previous financial yearsthe Company has started to earn profits and it has earned profits after tax of Rs. 3,725.52 Lakhs during F.Y. 2016-17Rs and Rs 1,216.86 Lakhs during F.Y. 2015 16 and Rs. 975.1iakhs during F.Y. 2014-15 resulting in reversal of Deferred Tax Assets by a sum of Rs 1157Lakhs during FY 16-17, Rs. 798.68Lakhs during F.Y. 2015 16 and Rs. 869.18 Lakhs during F.Y. 2014-15. The rest amount will be reversed in due course of business.

3. The Company has disclosed contingent liabilities on account of appeals with various statutory authorities at different levels amounting to Rs. 4,556.99/- Lakhs, of which necessary information is not available with the Company to reliably ascertain estimated amount (f such liabilities and consequential impact thereof on these quarterly financial results in accordance with Accounting Standard-29, “Provisions, Contingent Liabilities and contingent assets ’’issued by the Institute of Chartered Accountants of India. Hence, we are unable to comment on the same

Management Response The Contingent Liabilities of Rs.4,556.99 /- Lakhs are under appeal with different authorities at different levels. The chances of these obligations are very remote even recently the Company has been awarded the Order in its favour by Hon’ble CIT (Appeal), Kolkata dropping the Income Tax Demand of Rs. ll,880.71Lakhs . During the quarter and year ended March 31, 2017 some of the matters have been adjudged in favour of the company, resulting a reduction of Rs 232.84 Lakhs in contingent Liabilities. Impact of contingent liabilities on Profit & Loss account cannot be ascertained till the matter is pending with different government authorities.

SECRETARIAL AUDITORS

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed M/s Sunpreet Singh & Associates, Company Secretaries, New Delhi to undertake the Secretarial Audit of the Company for the FY 2016-17.

The Secretarial Audit Report submitted by them in the prescribed form MR- 3 is attached as ‘Annexure 5’ which forms part of this report.

The Secretarial Audit Report does not contain any qualification, reservation or adverse remark.

CORPORATE GOVERNANCE

V2 Retail Limited is ‘Your Company’ because it belongs to you- the stakeholders. The Chairman and Directors are ‘Your’ fiduciaries and trustees. Their objective is to take the business forward in such a way that it maximizes ‘Your’ long-term value.

The new Companies Act, 2013 and SEBI (LODR) Regulations, 2015 have strengthened the governance regime in the country. Your Company is in compliance with the governance requirements provided under the new law and had proactively adopted many provisions of the new law, ahead of time. Your Company is committed to embrace the new law in letter and spirit. In line with the requirements of new law, your Company has constituted new Board Committees. Your Company has in place all the statutory Committees required under the law. Details of Board Committees along with their terms of reference, composition and meetings of the Board and Board Committees held during the year, are provided in the Corporate Governance Report.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

As on 31st March 2017, the Corporate Social Responsibility Committee comprises of majority Independent Directors namely Mr. Rohit Singh Rautela (Chairman), Mr. Ravinder Kumar Sharma, Mr. Lalan Yadav and Mr. Ram Chandra Agarwal* (Managing Director) as other members.

* Mr. Ram Chandra Agarwal, Managing Director (DIN 00491885) appointed as member of Corporate Social Responsibility Committee w.e.f. 31-07-2017

During the year, the Company has not spent any amount against CSR due to previous debt restructuring, net worth and deferred tax assets. However Company is committed towards its social responsibility and CSR committee is in process of identifying the proposed CSR projects which will be implemented in following years.

The CSR Policy may be accessed on the Company’s website at the link: http://v2retail.com/wp-content/uploads/2016/12/CSR_POLICY.pdf

The disclosures as per Rule 9 of Companies (Corporate Social Responsibility Policy) Rules, 2014 shall be made as Annexure - 7

INTERNAL FINANCIAL CONTROL SYSTEM

According to Section 134(5) (e) of the Companies Act, 2013 the term Internal Financial Control (IFC) means the policies and procedures adopted by the Company for ensuring the orderly and efficient conduct of its business, including adherence to Company’s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information.

The Company has a well placed, proper and adequate internal financial control system which ensures that all assets are safeguarded and protected and that the transactions are authorized, recorded and reported correctly. Your Company has appointed M/s. Sharma G & Associates (FRN No. 027579N), Chartered Accountant, as the Internal Auditor of the Company to conduct the Internal Audit Function for Financial Year 2016-17. The Internal Auditor independently evaluates the adequacy of internal controls and concurrently audit the majority of the transactions in value terms.

ADEQUACY OF INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO THE FINANCIAL STATEMENTS

The Companies Act, 2013 re-emphasizes the need for an effective Internal Financial Control system in the Company. The system should be designed and operated effectively. Rule 8(5) (viii) of Companies (Accounts) Rules, 2014 requires the information regarding adequacy of Internal Financial Controls with reference to the financial statements to be disclosed in the Board''s report.

Your Company’s Internal Control Systems are commensurate with the nature, size and complexity of its business and ensure proper safeguarding of assets, maintaining proper accounting records and providing reliable financial information.

An external independent firm carries out the internal audit of the Company operations and reports its findings to the Audit Committee on a regular basis. Internal Audit also evaluates the functioning and quality of internal controls and provides assurance of its adequacy and effectiveness through periodic reporting. During the year, no reportable material weaknesses in the design or operation were observed. Your company has adequate internal financial control with reference to its financial statements.

The Audit Committee also reviews the risk management framework periodically and ensures it is updated and relevant.

DEVELOPMENT AND IMPLEMENTATION OF RISK MANAGEMENT

The Board of the Company has formed a risk management policy to frame, implement and monitor the risk management plan for the Company. The Board is responsible for reviewing the risk management plan and ensuring its effectiveness. The audit committee has additional oversight in the area of financial risks and controls. Major risks identified by the businesses and functions are systematically addressed through mitigating actions on a continuing basis.

Further, there are no risks, which, in the opinion of the Board, threaten the very existence of your Company.

The development and implementation of risk management policy has been covered in the management discussion and analysis, which forms part of this report.

PERSONNEL

During the year under review, no employees, whether employed for the whole or part of the year, was drawing remuneration exceeding the limits as laid down u/s Section 197(12) of the Companies Act, 2013 read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.

Hence the details required under Section 197(12) are not required to be given.

PREVENTION OF SEXUAL HARASSMENT AT WORKPLACE

The Company is committed to provide a protective environment at workplace for all its women employees. To ensure that every woman employee is treated with dignity and respect and as mandated under “The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013” the Company has in place a formal framework for prevention of sexual harassment of its women employees.

During the year, no allegations of sexual harassment were filed with the Company.

DEPOSITORY SYSTEMS

As the members are aware, the Company’s shares are compulsorily tradable in electronic form. As on March 31, 2017, 2,69,49,066 Equity Shares stand with the NSDL Account and38,14,892 Equity Shares with the CDSL and 1,58,726 Equity Shares stands in physical form.

Your Company has established connectivity with both depositories - National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL). In view of the numerous advantages offered by the depository system, member holding Shares in physical mode are requested to avail of the dematerialization facility with either of the depositories.

Your Company has appointed M/s Link In time India Private Limited, a Category-I SEBI registered R&T Agent as its Registrar and Share Transfer Agent across physical and electronic alternative.

CHANGE IN CAPITAL STRUCTURE AND LISTING OF SHARES

The Company’s shares are listed and actively traded on the below mentioned Stock Exchanges

I. National Stock Exchange of India Limited (NSE)

“Exchange Plaza” C-l, Block G,

Bandra-Kurla Complex,

Bandra (East), Mumbai - 400051

II. BSE Limited (BSE)

Phiroze Jeejeebhoy Towers,

25th Floor, Dalai Street,

Mumbai - 400001

Further, there was change in the capital structure in the Company as an allotment of 60, 35,065 Equity Shares amounting to Rs. 42,18,74,955 have been made during the year.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS UNDER SECTION 186 OF THE COMPANIES ACT, 2013

During the financial year ended March 31, 2017 the Company has neither made any investments nor given any loans or guarantees or provided any security.

CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES UNDER SECTION 188(1) OF THE COMPANIES ACT, 2013

The Company has formulated a policy on dealing with Related Party Transactions. The policy is disclosed on the website of the Company.

Weblink:

http://www.v2retail.com/admins/pic/2015 05 18 10

_38_52_Related%20Party%20Transaction%20Policy.

pdf

All Related Party Transactions that were entered into during the financial year were on an arm’s length basis, in the ordinary course of business and were in compliance with the applicable provisions of the Companies Act, 2013 (‘the Act’) and the Listing Regulations. There were no materially significant Related Party Transactions made by the Company during the year that would have required Shareholder approval under the Listing Regulations. Accordingly the disclosure of related party transactions as required under Section 134(3) (h) of the Companies Act, 2013 read with rules made there under, in Form AOC-2 is not applicable

Details of Related Party Transactions have been disclosed in notes to the financial statements.

DISCLOSURE ON VIGIL MECHANISM (Whistle Blower Policy)

Your Company has established a mechanism called ‘Vigil Mechanism (Whistle Blower Policy)’ for Directors and employees to report to the appropriate authorities of unethical behavior, actual or suspected, fraud or violation of the Company’s code of conduct or ethics policy and provides safeguards against victimization of employees who avail the mechanism. The policy permits all the Directors and employees to report their concerns directly to the Chairman of the Audit Committee of the Company.

The Vigil Mechanism’, as approved by the Board, is uploaded on the Company’s website at the web link: http://www.v2retail.com/admins/pic/2015 05 18 10 _39_12_WHISTLE%20_BLOWER%20_POLICY.pdf

DISCLOSURE ON DEPOSIT UNDER CHAPTER V

The Company has neither accepted nor renewed any deposits during the Financial Year 2016-17 in terms of Chapter V of the Companies Act, 2013.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERNS STATUS AND COMPANY''S OPERATIONS IN FUTURE

The Company has not received any significant or material orders passed by any Regulatory Authority, Court or Tribunal which shall impact the going concern status and Company''s operations in future.

INDUSTRIAL RELATIONS

The Company maintained healthy, cordial and harmonious industrial relations at all levels. The enthusiasm and unstinting efforts of Employees have enabled the Company to remain at the leadership position in the industry. It has taken various steps to improve productivity across organization.

The Board also takes this opportunity to express its deep gratitude for the continued co-operation and support received from its valued shareholders

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:-

a) Issue of the equity shares with differential rights as to dividend, voting or otherwise.

b) Issue of shares (including sweat equity shares) to Directors or employees of the Company.

c) Purchase of or subscription for shares in the Company by the employees of the Company.

d) There is no subsidiary ofihe Company , so no policy on material subsidiary is required to be adopted.

e) As there is no subsidiary or holding Company of your Company, so Managing Director and Whole Time Directors of the Company does not receive any remuneration or commission from any of such Companies.

ACKNOWLEDGEMENTS

Your Directors would like to express their appreciation for assistance and co-operation received from the Bankers, Venders, Government Authorities, Customers and Member during the year under review. Your Directors also wish to place on record their deep sense of appreciation for committed services by the executive staffs & employees of the Company and gratitude to the members for their continued support and confidence.

On behalf of the Board of Directors V2 Retail Limited

Ram Chandra Agarwal

Date : 21-08-2017 (Chairman and Managing Director)

Place : New Delhi DIN:-00491885


Mar 31, 2014

The Members of V2 Retail Limited

The Directors have great pleasure in presenting the Thirteen Directors'' Report on the business and operations of the Company together with the Audited Statements of Accounts of the Company for the year ended March 31, 2014.

FINANCIAL HIGHLIGHTS: (Rs. in Million)

PARTICULARS Year ended Year ended 31.03.2014 31.03.2013

Income from Operations (1) 2288.92 1056.71

Other Income (2) 22.07 20.99

Total Income (3) 2310.99 1077.70

Total Expenditure except interest cost (4) 2281.31 1072.07

Interest (5) 80.54 65.21

Profit( ) & Loss(-) before tax (6)=(3)-(4 5) (50.86) (59.58)

Provision for Taxation (7) Ni] Nil

Tax Adjustments (8) 7.52 18.84

Net Profit ( ) & Loss (-) after tax (6-(7 8)) (43.34) (40.74)

Brought forward from Previous year (5321.27) (5268.52)

Extra Ordinary Item & Prior Period (1.73) (12.02)

Adjustment

Amount available for appropriation Nil Nil

Less: Provision for Preference Dividend Nil Nil

Less: Provision for Dividend Distribution Tax Nil Nil

Balance carried to Balance Sheet (5366.35) (5321.27)

EPS (In Rs for Equity Shares of par value of Rs.10/- each) _

Basic (before extraordinary & (1.94) (1.82) prior period items)

Basic (after extraordinary & prior period (2.01) (235) items)_

Diluted (before extraordinary & (1.94) (182) prior period items)

Diluted (after extraordinary & (2.01) (235) prior period items)

PERFORMANCE REVIEW

The Indian retail industry has experienced high growth over the last decade with a noticeable shift towards organized retailing formats. During the year the company has increased its turnover from 1056.71 Million to 2288.92 Million by 2.1 times compared to previous year. The Company has significantly reduced its accumulated loss as compared to its last year. It is expected in future the company will generate Profits for its stakeholders. The overall retail market continues to grow and consumer aspiration for a better service environment still remains intact. Your company continues to endeavor to reinstate its growth pattern in the retail industry with a chain of stores under the ''V2'' brand in the Retail Industry.

OPERATIONS REVIEW

During the year, Company had 15 stores. 1 New Store was opened under the brand "V2" at AARA (Bihar) and 1 was closed during the year.

One more Store of the Company at Guwahati (Assam) becomes operational in the month of April 2014.

The Company''s strategy of investing in growth of its own retail business is being pursued steadfastly.

INDUSTRIAL RELATIONS

The relations between the Company and its employees continued to be cordial and harmonious throughout the year under review.

MATERIAL CHANGES AFTER BALANCE SHEET DATE

((a) Mr. Rohit Singh Rautela has joined as Non Executive Additional Independent Director on April 14, 2014.

(b) Mr. Ravinder Kumar Sharma has joined as Non Executive Additional Independent Director on April 14, 2014.

(c) Mr. Varun Kumar Singh has joined as a Chief Financial officer on April 01, 2014.

(d) Mr. Dinesh Kumar Malpani has joined as Chief Executive officer on April 26, 2014 and he has resigned on August 04, 2014.

(e) One more Store of the Company at Guwahati (Assam) becomes operational in the month of April 2014.

MANAGEMENT DISCUSSION AND ANALYSIS

Management''s Discussion and Analysis Report for the year under review, as stipulated under Clause 49 of the Listing Agreement with the Stock Exchanges in India, is presented in the Annexure I forming separate section of the Annual Report.

DIVIDEND

Keeping in view of the non Profitability of the previous year, your directors do not propose to declare any dividend for this year.

PUBLIC DEPOSIT

During the year under review, the Company has not accepted any deposit under Section 58A and section 58AA of the Companies Act, 1956 read with Companies (Acceptance of Deposits) rules, 1975 and other applicable provisions of the Companies Act, 2013 to the extent as applicable, if any.

DIRECTORS

Mr. Yatish Bhardwaj who has joined the company as an Additional Director on August 27, 2012 has resigned on March 12, 2014.

The Board of Directors appointed Mr. Rohit Singh Rautela and Mr. Ravinder Kumar Sharma as Independent Directors at its board meeting held on April 14, 2014. They hold office until the ensuing Annual General Meeting. Notice has been received from a Member under Section 257 of the Companies Act, 1956 offering their names for appointment as directors of the Company liable to retire by rotation.

Mrs. Uma Agarwal, Director of the company liable to retire by rotation, and being eligible, offers herself for re-appointment as Whole -time director.

APPOINTMENT OF COMPANY SECRETARY

During the year under review, Mr. Dheeraj Kumar Mishra, Company Secretary has resigned on March 12, 2014 and Mr. Yatish Bhardwaj has joined the Company on March 12, 2014.

As required under section 383A of the Companies Act, 1956 read with the provisions of the listing agreement with stock exchanges, Mr. Yatish Bhardwaj an associate member of the Institute of Company Secretaries of India, New Delhi, has been appointed as the Company Secretary on March 12, 2014 pursuant to the resignation of Mr. Dheeraj Kumar Mishra.

SUBSIDIARY COMPANIES

The Company has 3 subsidiary Companies as on date namely, VRL Movers Limited, VRL Infrastructure Limited, VRL Retail Ventures Limited.

VRL Movers Limited, VRL Infrastructure Limited, VRL Retail Ventures Limited are subsidiaries by virtue of control over composition of the Board of Directors. None of the companies have commenced business operations during the year.

As per General Circular No: 2/2011 issued by the Ministry of Corporate Affairs, Government of India, a general exemption has been provided to Companies for attaching the Directors'' Report, Balance Sheet and Profit and Loss Account of all subsidiaries to its balance sheet, subject to fulfilling certain conditions as stipulated in the circular. Your Company complies with those conditions and, therefore, has been generally exempted by the Central Government from attaching detailed accounts of the subsidiaries, and accordingly, the financial statements of the subsidiaries are not attached in the Annual Report. For providing information to Shareholders, the annual accounts of these subsidiary Companies along with other related details are available for inspection during business hours at the Company''s registered office and at the registered office of the subsidiary companies concerned.

STATUTORY AUDITORS AND THEIR REPORT:

M/s. AKGVG & Associates, Chartered Accountants, Statutory Auditors of the Company, retire at the conclusion of the ensuing Annual General Meeting and being eligible, offer themselves for re-appointment. They have expressed their willingness to act as Auditors of the Company, if appointed, and have further confirmed that the said appointment would be in conformity with the provisions of Section 139(2) and 142(1) of the Companies Act, 2013. The Board recommends their appointment.

The Auditor''s have put certain Qualifications to which the management has put forward the following below mentioned replies;

Qualification and response to Auditor''s Report

a) Attention is invited to note 4 of these financial statements, included in capital reserve amounting to Rs.6,05,23,24,263/-, is Rs. 4,29,42,24,263/- arising out of transfer of asset and liabilities to the acquiring companies in earlier years for which necessary reconciliation/information to the tune ofRs 3,72,24,324/- is not available with the company. Accordingly in the absence of the same, we are unable to comment on the appropriateness of capital reserve including consequential impact, if any, arising out of the same on these financial statements.

Management Response:

The Company had restructured its business during the Financial Year 2010-11 by way of sale of its Wholesale and Retail Business to TPG Wholesale Private Limited and Airplaza Retail Holdings Private Limited (referred to as Acquiring Companies) respectively. The Master Restructuring Agreement and other settlement agreements were entered into the Company with Acquiring Companies and its Lenders to effect the said restructuring and CDR proposal of the Company. The Company had trifurcated its Assets and Liabilities as on appointed date between the Acquiring Companies and selling Company as per agreement entered into between them and the difference between Assets and Liabilities transferred has been shown as Capital Reserve. As a result of the said agreement the liabilities to the extent of Rs. 823.20 Crores and assets of Rs. 393.78 Crores were taken over by the Acquiring Companies against a consideration of Rs. 70 Crores. This transaction resulted in a Capital Reserve of Rs. 499.42 Crores. As a part of the said restructuring process some unsecured lenders of the company also waived off their claims to the extent of Rs. 105.81 Crores which has also been transferred to Capital Reserve Account. While in relation to reconciliation necessary reconciliation to the tune of Rs. 3,72,24,324/-, company is in process to reconcile the same.

b) Attention is invited to note 5 and 10 of these financial statements the Company has outstanding short-term borrowings at the year-end due to a lender including overdue principal and interest for which necessary supporting documents for balance confirmation at the year end and relevant information with relation to rate of interest is not available with the Company. In the absence of the same, we are unable to comment on the same.

Management Response:

The interest expense has been recognised in the Books of Account on the basis of the fgure provided by the concern lender in May 2012, in relation to balances as on 31st March 2012 which is disputed by the Company, as interest rate has been charged in excess of the prescribed rate under Master Restructuring Agreement dated 11.11.2010. The company is in the process of obtaining relevant documents and information from lender for basis of such charge and trying to resolve the dispute.

c) Attention is invited to note 14 of these financial statements the company has recognized Rs. 2,71,11,06,418/- as deferred tax assets at the year- end for which it does not have virtual certainty supported by convincing evidence that suffcient future taxable income will be available against which such deferred tax assets can be realized in accordance with principles of Accounting Standard 22 "Accounting for Taxes on Income" issued by the Institute of Chartered Accountants of India . Had the company not recognized deferred tax, impact on Profit and loss account would have been increase in loss during the year by Rs. 16,70,481/- and decrease in Reserves and Surplus by Rs. 2,71,11,06,418/-.

Management Response:

The Company has started its new retail venture under the brand & style "V2". The Company is successfully running 16 new stores, and one warehouse. Considering the above, management do not see any event which may lead to a reason wherein company should not be considered as Profitable. Further the company has earned increase in turnover in year 2013-14 of Rs 1,23,22,11,031/- in comparison to financial year 2012-13 and further we made Profit in frst quarter of financial year 2014-2015. The Board is confdent that because of such positive signs and growth in the business and industry there is virtual certainty that company will be able to make suffcient Profits and accordingly deferred tax assets will be recognized.

d) Attention is invited to note 38 of these financial statements, the Company has disclosed contingent liabilities on account of appeals with various statutory authorities at different levels amounting to Rs. 1,69,57,11,396/- for which necessary information is not available with the Company to reliably ascertain estimated amount of such liabilities and consequential impact thereof on these financial statements in accordance with Accounting Standard-29 issued by the Institute of Chartered Accountants of India. Hence, we are unable to comment on the same.

Management Response:

The Contingent Liabilities to the tune of Rs. 1,69,57,11,396/- are under appeal with different authorities at different levels. The provision of these liabilities could not be made due to various reasons such as no possible obligation on the Company; outflow for the Company is very remote as according to past trends of assessments under sales tax and the estimate for the contingent liabilities could not be ascertained. In such position, the company is not in a position to provide for certain fixed amount as liabilities in the books of accounts, which will be done as and when the management will be in a position to estimate the same. The company has made provision in the books of account in the current year with respect to amount payable to labour welfare fund. The liability on account of same was not provided for in the earlier year as the same cannot be ascertained.

e) Matter of Empasis: Attention is invited to note 4 of of these financial statements, wherein the Company has accumulated losses amounting to Rs. 5,36,63,49,094/- at the year end and has incurred loss of Rs. 4,50,76,168/- during the year which raises concern regarding going concern status of the Company. However, having regard to improvement in the business conditions, increase in revenue from operations, cost rationalization measures adopted and opening of new stores by the Company, these consolidated financial statements have been prepared on a going concern basis and that no adjustments are required to the carrying value of assets and liabilities.

Management Response:

The Company has started its new retail venture under the brand & style "V2". The Company is successfully running 16 new stores, and two warehouses. From the above, management do not see any event which may lead to a reason wherein company should not be considered as going concern. Based on the same assessment, accounts have been drawn on going concern assumption. Further the company has earned huge increase in turnover in frst quarter of financial year 2014-2015 and expecting same in the financial year 2014-15. The Board is confdent that because of such positive signs and growth in the business and industry, the company will improve its performance and net worth will not be eroded further.

f) The Company has maintained proper records showing full particulars, and situation of fixed assets except quantitative details.

Management Response:

The Company was in the process of updating its records regarding the quantity of the fixed assets and the same has been updated in the register of fixed assets now

g) In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business, for the sale of goods and services and for the purchase of fixed assets. However, the internal control system for purchases of inventory is inadequate since the inventory items are entered into incorrect item codes at the time of recording in the system.

Management Response:

After restructuring of the Business, the business of the Company has been substantially reduced, and accordingly Purchase and Inventory also go down. Any purchase involving substantial amount is directly supervised by the Management and accordingly accounting transactions are made. The management is committed to bring strong internal system in the company with the increase in operations for the benefit of all stakeholders.

h) The company is irregular in depositing with appropriate authorities Undisputed statutory dues including provident fund, investor education and protection fund, employees'' state insurance, income-tax, sales- tax, wealth-tax, service tax, customs duty, excise duty cess and other material statutory dues have not generally been regularly deposited with the appropriate authorities though the delays in deposit have not been serious.

Management Response:

The Company has always tried to regularly deposit the applicable statutory dues with the appropriate authorities, however due to high attrition rate and lot of structural changes in the company; sometimes it is not deposited on time but has been paid with the Interest and Penalty as applicable. The Board by implementing strong internal control and internal audit system in the company will improve the system of depositing the statutory dues with statutory authorities. Further with the growth in business, the board is expecting that there will be improvement in the liquidity position of company.

i) According to the records of the company, the dues outstanding of income-tax, sales-tax, wealth-tax, service tax, customs duty, excise duty and cess on account of any dispute which, are as Rs. 1,509,287,158.

Management Response:

The total due of Rs. 1,509,287,158 is under dispute at various forums, the final due will be settled on account of final decision by the respective authorities. The Board has initiated appropriate representations before such forums to settle the dues and issue the final orders.

j) The company has accumulated losses at the end of the financial year which exceed fifty percent of its net worth. Further, company incurred cash losses in the current and immediately preceding financial year.

Management Response:

Excess of accumulated losses over net worth of the Company will have no negative impact on the operations and running of the Company as the loss pertains to the earlier venture, which the Company has already restructured through Slump Sale, further the Company has reduced its indebtedness considerably and started its new retail venture and in the process of bringing financial stability within the Company.

k) Based on our audit procedures and as per the information and explanations given by the management, we are of the opinion that the company has defaulted in repayment of dues to a financial institution.

Management Response:

Pursuant to Master Restructuring Agreement, the payment to the Financial Institution was to be made by sale of property currently shown in Investments. The Financial Institution did not take effective steps to sell the Land and Building of the Company, therefore the payment could not be made. The Board is continuously doing efforts to sell the land & building of company and will pay off the requisite dues of financial institution/bank after realization of consideration.

DIRECTORS'' RESPONSIBILITY STATEMENT

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

Subject to and except to the extent of the Auditor''s Qualification in the Auditor''s Report which have been adequately responded to above, in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;

That the Directors had selected such accounting policies and applied them consistently and made judgments and estimated that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the Profit or loss of the company for the period under review;

That the Directors had taken precautionary steps for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act for safeguarding the assets of the company and avoiding fraud and other malpractices.

That the Directors had prepared the annual accounts for the year ended March 31, 2014 on a ''going concern'' basis.

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

A Statement giving details of Conservation of energy, technology absorption and foreign exchange earnings and outgo as required u/s 217(1)(e) of the Companies Act 1956 read with the Companies (Disclosure of particulars in the Report of Directors) Rules 1988, has been enclosed as Annexure- II to this report

OTHER INFORMATION

None of the Director or Employee of the Company was in receipt of remuneration exceeding the limits prescribed under Section 217(2A) of the Companies Act 1956.

REPORT ON CORPORATE GOVERNANCE

The report on corporate governance along with auditor certificate on the same has been enclosed as an Annexure III to this report

IMPORTANT INTIMATION TO THE MEMBERS

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

ACKNOWLEDGEMENT

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

On behalf of the Board of Directors

Sd/- Ram Chandra Agarwal Date 25.08.2014 Chairman and Managing Director Place New Delhi Din:-00491885


Mar 31, 2013

The Directors have great pleasure in presenting the Twelfth Directors'' Report of the company with the audited statements of accounts for the year ended March 31, 2013.

Financial Highlights

(Rs. in Million)

PARTICULARS Year ended Year ended 31.03.2013 31.03.2012

Income from Operations (1) 1056.71 401.64

Other Income (2) 20.99 37.40

Total Income (3) 1077.70 439.05

Total Expenditure except interest cost (4) 1072.07 510.35

Interest (5) 65.21 81.50

Proft( ) & Loss(-) before tax (3)-(4 5) (6) (59.57) (152.81)

Provision for Taxation (7) Nil Nil

Tax Adjustments (8) 18.84 (155.31)

Net Proft ( ) & Loss (-) after tax(6-(7 8)) (40.73) (308.12)

Brought forward from Previous year (5268.52) (4920.72)

Extra Ordinary Item & Prior Period (12.02) (39.69)

Adjustment

Amount available for appropriation Nil Nil

Less: Provision for Preference Dividend Nil Nil

Less: Provision for Dividend Distribution Tax Nil Nil

Balance carried to Balance Sheet (5321.27) (5268.52)

EPS

(In Rs for Equity Shares of par value of Rs.10/- each)

Basic (before extraordinary & prior (1.82) (13.76) period items)

Basic (after extraordinary & prior period (2.35) (15.53) items)

Diluted (before extraordinary & prior (1.82) (13.76) period items)

Diluted (after extraordinary & prior period (2.35) (15.53) items)

PERFORMANCE REVIEW

The Indian retail industry has experienced high growth over the last decade with a noticeable shift towards organized retailing formats. During the year the company has increased its turnover from 401.64 Million to 1056.71 Million by 2.5 times compared to previous year. The Company has signifcantly reduced its accumulated loss as compared to its last year. It is expected in future the company will generate profts for its stakeholders. The overall retail market continues to grow and consumer aspiration for a better service environment still remains intact. Your company continues to endeavor to reinstate its growth pattern in the retail industry with a chain of stores under the ''V2'' brand in the Retail Industry.

OPERATIONS REVIEW

During the year, Company opened in its 8 new stores under the brand "V2" at different places across nation and added approx 2 Lac square feet.

Relocation of Warehouse from Delhi to Manesar, Gurgaon.

INDUSTRIAL RELATIONS

The relations between the Company and its employees continued to be cordial, and harmonious throughout the year under review.

MATERIAL CHANGES AFTER BALANCE SHEET DATE

The Company opened new store admeasuring approx 20000 sq. ft. at Hubli, Karnataka.

Four Stores of the Company become operational in the month of April and May 2013

MANAGEMENT DISCUSSION AND ANALYSIS

The Management Discussion and Analysis has been dealt extensively in the Annexure I to this Report.

DIVIDEND

In view of the loss for the current fnancial year, your directors do not propose to declare any dividend for this year.

PUBLIC DEPOSIT

During the year, the Company has not accepted any deposit under Section 58A of the Companies Act, 1956.

DIRECTORS

Mr. Sourabh Kumar, Non Executive Independent Director of the Company retires by rotation and being eligible offer himself for reappointment at the ensuing Annual General Meeting.

SUBSIDIARY COMPANIES

The Company has 3 subsidiary Companies as on date namely, VRL Movers Limited, VRL Infrastructure Limited, VRL Retail Ventures Limited.

VRL Movers Limited, VRL Infrastructure Limited, VRL Retail Ventures Limited are subsidiaries by virtue of control over composition of the Board of Directors. None of the companies have commenced business operations during the year.

As per General Circular No: 2 /2011 issued by the Ministry of Corporate Affairs, Government of India, a general exemption has been provided to Companies for attaching the Directors'' Report, Balance Sheet and Proft and Loss Account of all subsidiaries to its balance sheet, subject to fulflling certain conditions as stipulated in the circular. Your Company complies with those conditions and, therefore, has been generally exempted by the Central Government from attaching detailed accounts of the subsidiaries, and accordingly, the fnancial statements of the subsidiaries are not attached in the Annual Report. For providing information to Shareholders, the annual accounts of these subsidiary Companies along with related information are available for inspection during business hours at the Company''s registered offce and at the registered offce of the subsidiary companies concerned.

AUDITORS

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

The Auditor''s have put certain qualifcations to which the management has put forward the following below mentioned replies;

Qualifcation and response to Auditor''s Report

a) Attention is invited to note 4 of fnancial statements explaining the reserves and surplus in the head capital reserve amounting to Rs. 60,523.24/-Lacs., necessary supporting documents and relevant information is not available with the Company and provided to us, so In the absence of the same, we are unable to comment on the appropriateness of the same including consequential impact, if any, arising out of the same on these fnancial statements. This was also the subject matter of qualifcation by us in previous year as well.

The Company has restructured its business during Financial Year 2010- 11 by way of sale of its Wholesale and Retail Business to TPG Wholesale Private Limited and Airplaza Retail Holdings Private Limited (referred to as Acquiring Companies) respectively. The Master Restructuring Agreement and other settlement agreements were entered into the

Company with Acquiring Companies and its Lenders to effect the said restructuring and CDR proposal of the Company. The Company had trifurcated its Assets and Liabilities as on appointed date between the

Acquiring Companies and selling Company as per agreement entered into between them and the difference between Assets and Liabilities transferred has been shown as Capital Reserve. As a result of the said agreement the liabilities to the extent of Rs. 823.20 Crores and assets of Rs. 393.78 Crores were taken over by the Acquiring Companies against a consideration of Rs. 70 Crores. This transaction resulted in a Capital Reserve of Rs. 499.42 Crores. As a part of the said restructuring process some unsecured lenders of the company also waived off their claims to the extent of Rs. 105.81 Crores which has also been transferred to Capital Reserve Account.

b) Attention is invited to note 4 of fnancial statements explaining the reserves and surplus, company has accumulated losses more than 50% of its net worth. However, having regard to improvement in the economic sentiment, rationalization measures adopted by the Company, opening of new stores, these fnancial statements have been prepared on the basis that the company is a going concern and that no adjustments are required to the carrying value of assets and liabilities. The accumulated losses is Rs. 5,32,12,72,927 (Rupees Five hundred Thirty twocrores twelve lacs seventy twothousand nine hundred twenty seven only) as at 31st March, 2013 which exceed the net worth of the company.

The Company has started its new retail venture under the brand & style "V2". The Company is successfully running 15 stores, and one warehouse. From the above, management do not see any event which may lead to a reason wherein company should not be considered as going concern. Based on the same assessment, accounts have been drawn on going concern assumption. Further the company has earned huge increase in turnover in frst quarter of fnancial year 2013-2014. The Board is confdent that because of such positive signs and growth in the business and industry, the company will improve its performance and net worth will not be eroded further.

c) As stated in Note 29 to the fnancial statement, the Company has debited Rs 5,99,80,407/- on account of interest expense in the statement of Proft and Loss , however, necessary supporting documents and relevant information in relation to rate of interest is not available with the Company. In the absence of the same, we are unable to comment whether such charge to the statement of proft and loss is appropriate in accordance with Accounting Standard 16 on "Borrowing Costs" issued by the Institute of Chartered Accountants of India

The interested expense of Rs. 5,99,80,407/- has been recognised in the Books of Account on the basis of the fgure provided by the concern lender, which is disputed by the Company, as interest rate has been charged in excess of the prescribed under Master Restructuring Agreement dated 11.11.2010.The company is in the process of obtaining relevant documents and information from lender for basis of such charge and trying to resolve the dispute.

d) As stated in Note 38 to the fnancial statement, the Company has contingent liability on account of appeal with different authorities at different levels amounting to Rs. 64,13,54,011/- , however, At the moment Company is not able to reliably ascertain estimated amount of such liability so the provision as required in accordance to the Accounting Standard-29 has not been made in books of accounts.

The Contingent Liabilities to the tune of Rs. 64,13,54,011/- are under appeal with different authorities at different levels. The provision of these liabilities could not be made due to various reasons such as no possible obligation on the Company, outfow for the Company is very remote and the estimate for the contingent liabilities could not be ascertained. In such position, the company is not in a position to provide for certain fxed amount as liabilities in the books of accounts, which will be done as and when the management will be in a position to estimate the same. The company has made provision in the books of account in the current year with respect to amount payable to labour welfare fund. The liability on account of same was not provided for in the earlier year as the same cannot be ascertained.

e) The company has maintained proper records showing full particulars, including situation of fxed Assets except quantitative details.

The Company was in the process of updating its records regarding the quantity of the fxed assets and the same has been updated in the register of fxed assets now.

f) Fixed assets have not been physically verifed by the management during the year. As explained by the management company has a policy of physical verifcation once in a period of three year, in our opinion, is unreasonable having regard to the size of the company and the nature of its assets.

The Company has policy for physical verifcation of its Fixed Assets over a period of Three years. All fxed assets except Land, Building and Computer Software are acquired during the year and its previous year. The verifcation is in process and all assets will be verifed in FY 2013- 14. The Management is also considering to review the policy of physical verifcation of fxed assets from once in 3 years to every year, which will be implemented very soon.

g) In our opinion and according to the information and explanations given to us, there is inadequate internal control system commensurate with the size of the company and the nature of its business, for the recording of accounting transactions of purchase of inventory and expenses, which need to be strengthen. During the course of our audit, however we observed that management is in process of improvising the Internal Control.

After restructuring of the Business, the business of the Company has been substantially reduced, and accordingly Purchase and Inventory also go down. Any purchase involving substantial amount is directly supervised by the Management and accordingly accounting transactions are made. The management is committed to bring strong internal system in the company with the increase in operations for the beneft of all stakeholders.

h) In our opinion and according to the information and explanations given to us, the company does not have internal audit system commensurate with its size and nature of business.

After restructuring of the Business, the turnover of the Company falls substantially. Therefore in order to save the cost, internal audit system is performed by the employees independent of Finance & Accounts Department. The management is committed to bring strong internal audit system in the company with the increase in operations for the beneft of all stakeholders. The management is also considering appointing independent frm of professionals to carry on the internal audit work in the company.

i) The company is irregular in depositing with appropriate authorities undisputed statutory dues including provident fund, investor education and protection fund, employees'' state insurance, income-tax, sales- tax, wealth-tax, service tax, customs duty, excise duty, cess and other material statutory dues applicable to it, however such dues have been paid with interest and penalties as applicable.

The Company has always tried to regularly deposit the applicable statutory dues with the appropriate authorities, however due to high attrition rate and lot of structural changes in the company; sometimes it is not deposited on time but has been paid with the Interest and Penalty as applicable. The Board by implementing strong internal control and internal audit system in the company will improve the system of depositing the statutory dues with statutory authorities. Further with the growth in business, the board is expecting that there will be improvement in the liquidity position of company.

j) According to the records of the company, the dues outstanding of income-tax, sales-tax, wealth-tax, service tax, customs duty, excise duty and cess on account of any dispute which are Rs. 43,51,44,514 .

The total due of Rs. 43,51,44,514 (Rupees Forty Three Crore Fifty One Lacs Forty Four Thousand Five Hundred Fourteen) is under dispute at various forums, the fnal due will be settled on account of fnal decision by the respective authorities. The Board has initiated appropriate representations before such forums to settle the dues and issue the fnal orders.

k) The company has accumulated losses at the end of the fnancial year which exceed ffty percent of its net worth. Further, company incurred cash losses in the current and immediately preceding fnancial year.

Excess of accumulated losses over net worth of the Company will have no negative impact on the operations and running of the Company as the loss pertains to the earlier venture, which the Company has already restructured through Slump Sale, further the Company has reduced its indebtedness considerably and started its new retail venture and in the process of bringing fnancial stability within the Company.

l) Based on our audit procedures and as per the information and explanations given by the management, we are of the opinion that the company has defaulted in repayment of dues to a fnancial institution/ bank.

Pursuant to Master Restructuring Agreement, the payment to the Financial Institution was to be made by sale of Land and Building. The Financial Institution did not take effective steps to sell the Land and Building of the Company, therefore the payment could not be made. The Board is continuously doing efforts to sell the land & building of company and will pay off the requisite dues of fnancial institution/bank after realization of consideration.

AUDIT COMMITTEE

The Constitution of the Audit Committee as on 31st March 2013 was as follows:

Mr. Yatish Bhardwaj NEID^ Chairman

Mr. Ram Chandra Agarwal Promoter & Member

Executive Director

Mr. Saurabh Kumar NEID^ Member

^ NEID- Non Executive Independent Director

Mr. Sourabh Kumar has been designated as Chairman w.e.f 10 April 2013.

DIRECTORS'' RESPONSIBILITY STATEMENT

Pursuant to the requirements of Section 217(2AA) of the Companies Act, 1956, the Directors of the Company hereby confrm:

Subject to and except to the extent of the Auditor''s qualifcation in the Auditor''s Report which have been adequately responded to above, in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;

That the Directors had selected such accounting policies and applied them consistently and made judgments and estimated 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 fnancial year and of the proft or loss of the company for the period under review;

That the Directors had taken proper and suffcient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

That the Directors had prepared the annual accounts for the year ended 31st March 2013 on a ''going concern'' basis.

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

A Statement giving details of Conservation of energy, technology absorption and foreign exchange earnings and outgo as required u/s 217(1)(e) of the Companies Act 1956 read with the Companies (Disclosure of particulars in the Report of Directors) Rules 1988, has been enclosed as Annexure- II to this report

OTHER INFORMATION

None of the Director or Employee of the Company was in receipt of remuneration exceeding the limits prescribed under Section 217(2A) of the Companies Act 1956.

REPORT ON CORPORATE GOVERNANCE

The Report on Corporate Governance along with Auditors Certifcate on the same has been enclosed as an Annexure III to this Report.

ACKNOWLEDGEMENT

The Directors wish to thank and deeply acknowledge the co-operation, assistance and support extended by the Central Government, the State Governments, the Company''s Bankers, the Shareholders, the dealers, vendors of the company in the success and growth of the Company. The Directors also wish to place on record appreciation for the co-operation and contribution made by the employees at all levels.

By the Order of the Board of Directors

Sd/-

Ram Chandra Agarwal

Date : 04.09.2013 Chairman

Place : New Delhi DIN 00491885


Mar 31, 2010

The Directors have great pleasure in presenting the Ninth Directors Report of the company with the audited statements of accounts for the year ended March 31,2010.

Financial Highlights (Rs. in million)

PARTICULARS Year ended Year ended 31.03.2010 31.03.2009

Income from Operations 11054.59 13232.34

Other Income 130.28 94.84

Total Income 11184.87 13327.18

Total Expenditure except interest cost 16139.32 13778.09

Interest 894.43 925.03

Profit(+) & Loss(-) before tax (3)-(4+5+6) (5848.88) (1375.94)

Provision for Taxation Nil Nil

Tax Adjustments 2238.89 458.81

Net Profit (+) & Loss (-) after tax(7-8) (3609.99) (917.13)

Brought forward from Previous year (121.83) 823.02

Extra Ordinary Item & Prior Period Adjustment (537.18) (27.73)

Amount available for appropriation Nil Nil

Less: Provision for Preference Dividend Nil Nil

Less: Provision for Dividend Distribution Tax Nil Nil

Balance carried to Balance Sheet (4269.00) (121.84) EPS(ln Rs for Equity Shares of par value of Rs.10/- each)

Basic (before extraordinary items) (162.47) (42.18)

Basic (after extraordinary items) (185.15) (42.18)

Diluted (before extraordinary items) (162.47) (42.18)

Diluted (after extraordinary items) (185.15) (42.18)

PERFORMANCE REVIEW

Retail industry has faced various challenges due to economic melt down. Most of the companies in the organized retail sector have seen a decline. Similarly it has not been a year of growth for the company. The Company has seen decline in turnover by 16.46%. Due to reduction in sales and consequential rise in expense burden your company has seen increased losses during the year 2009-10 which reached to Rs. 4269 Million.

The Company has attempted to recover from the situation during the current year and several corrective measures have been taken in operational restructuring, cost reduction to sustain in the current situation of the Company.

Continuing the cost control exercise, 15 unviable stores of the Company have been closed and the Company has adopted centralized warehousing system, 22 regional warehouses have been closed down. The operations have been rationalized based on the current size of operations of the company.

The Company has also closed down all manufacturing set-ups.

The company is under process of restructuring its debts through corporate debt restructuring mechanism. During the financial year 2009-2010 company has submitted its proposal under corporate debt restructuring mechanism to CDR cell for restructuring its secured as well as unsecured debts. SBI, HDFC, HSBC, ING Vyasa, UCO bank and BOI are participating banks under the CDR mechanism. CDR empowered group has approved the proposal of the Company

As per market analysis the retail industry in India is expected to grow during the time to come with many retailers maturing in the trade and with new entrants joining the business. The customer base of organized retail is growing rapidly.

The company has made several efforts during the year and will be continuing its efforts to minimize losses and improve profitability during the ensuing year.

OPERATIONS REVIEW

- During the year, the Company closes down 15 unviable stores and 11 new stores have added across various locations. The company has 171 stores and has reduced 0.78 Lakh Sq. Ft. of Retail Space during the financial year ended March 31,2010.

- The Company has now adopted the centralized warehousing system. The number of warehouses have been reduced to 4 only from the previous 26 warehouses, 22 of the regional warehouses have been closed down during the year.

- Considering all the restructuring measures taken during the year by the company and based on those actions which will follow as per the planned action mechanism instituted, the company is expected to witness the changes/ benefits of all those actions during the following year.

INDUSTRIAL RELATIONS

The relations between the Company and its employees continued to be cordial and harmonious throughout the year under review.

However, due to economic meltdown several employees left the Company during the financial year.

MATERIAL CHANGES AFTER BALANCE SHEET DATE

Memorandum of Understanding with strategic Investor

The Company has entered into Memorandum of Understanding (MOU) with Texas Pacific Group (TPG) in accordance with Corporate Debt Restructuring scheme approved by the lenders of the Company.

MANAGEMENT DISCUSSION AND ANALYSIS

The Management Discussion and Analysis has been dealt extensively in the Annexure I to this Report.

DIVIDEND

In view of the loss for the current financial year, your directors do not propose to declare any dividend for this year.

PUBLIC DEPOSIT

During the year, the Company has not accepted any deposit under Section 58Aof the Companies Act, 1956.

DIRECTORS

Ms. Uma Agarwal Whole time Director of the Company retires by rotation and being eligible offers herself for reappointment at the ensuing Annual General Meeting.

Mr. Jai Prakash Shukla, Director of the company liable to retire by rotation, whose term as additional director lapse at the ensuing Annual General Meeting, is proposed to be reappointed in the ensuing Annual General Meeting, pursuant to the receipt of Notice u/s 257 in his favor. Mr. Jai Prakash Shukla was appointed as Additional Director on September 30, 2009 and on the same date appointed as the Whole time Director of the Company for a term of 5 years.

Mr. Surendra Kumar Agarwal, Director, resigned from the company on 30th September 2009.

Mr. Rakesh Agarwal, Director, resigned from the company on 30th October,2009.

Mr. Bharat Jain, Director, resigned from the company on 2nd August 2010.

Mr. Sandeep Kumar, Director, resigned from the company on 1st September, 2010.

SUSIDIARY COMPANIES

The Company has 7 subsidiary Companies namely, VRL Foods Limited, VRL Movers Limited, VRL Consumer Goods Limited, VRL Fashions Limited, VRL Infrastructure Limited, VRL Retail Ventures Limited and VRL Knowledge Process Limited. Out of the same 4 Companies viz. VRL Movers Limited; VRL Infrastructure Limited, VRL Retail Ventures Limited and VRL Knowledge Process Limited are subsidiaries by virtue of control over composition of the Board of Directors. None of the subsidiariescompanies have commenced business operations during the year.

AUDITORS

The existing auditors M/s Haribhakti & Co., Chartered Accountants, retires at the conclusion of the ensuing Annual General Meeting and being eligible, offer themselves for reappointment.

The Auditors have put certain qualifications to which the management has put forward the following below mentioned replies;

Qualification and response to Auditors Report

Para 4 (a) (i) The accumulated losses ofRs.4269 Mn as at March 31, 2010 exceed the net worth of the Company. Para 4 (a) (ii) Certain lenders have filed winding up petition against the Company in High Court. However the accounts have been drawn on going concern assumption as the company has made a proposal under corporate debt restructuring scheme to CDR cell for restructuring of its secured as well as unsecured debts and expects turnaround.

Companys business is supported by lenders/ creditors and working capital is positive. Further company has become EBITDA positive in the first quarter. Considering the above, excess of accumulated losses over net worth of the company will have no negative impact on the operations and running of the company.

Winding up petitions have been filed by certain lenders, but Honorable Courts have not given decision which has any negative impact on running of business. Further we are seeking legal opinions to vacate those orders. We are also approaching our lenders for amicable solution.

From the above, management do not see any event which may lead to a reason wherein company should not be considered as going concern. Based on the same assessment, accounts have been drawn on going concern assumption.

Para 5 (i) (a) Basis and supporting for write off of inventory amounting to Rs.3,41,71,59,919 on account of pilferage, shrinkage, slow moving, non moving, obsolete and damaged goods.

The company started the process of identification of inventory which were slow-moving, non-moving, dead, obsolete and damaged during the year. The company has substantially completed this exercise during the financial year. Now the perpetual controls have been put in place to continuously monitor the inventory.

Para 5 (i) (b) Adequate documentary evidence for display charges included in other Income amounting to Rs. 2,86,02,715 recognized in the Profit & loss Account.

The arrangements of display where company allows vendors/ companies to display their products are seasonal and not regular in nature, though we have adequate control on the collections from all the vendors. The above amounts are not material and significant in size in each arrangement. Though company obtains/ keeps contracts in cases where each arrangement is regular and material in nature.

Para 5 (i) (d) Basis for write off of sundry balances amounting to Rs. 1,40,33,201 included in other expenses in schedule 16.

The company made an assessment and has written off deposits/ advances which were not expected to realize in future.

Para 5 (iv) (a) Accounting Standard 2-"Valuation of Inventories" The cost of valuation of inventories does not include Octroi, mandi tax, entry tax, input VAT, freight inwards and discount received on the purchase. The impact of such valuation from AS2 is currently unascertainable.

Considering the complexity of transaction, movement of stock and number of SKUs, current system is not supportive to charge expenses like octroi, mandi tax, entry tax, input VAT etc on specifically identified inventory, hence we have not taken them in account Jor valuation of inventory but same have been charged to profit and loss account. Further the quantum of amount involved in not too high.

Para 5 (iv) (b) Accounting Standard 28-"lmpairment of Assets": whereby no assessment for impairment of assets if any was carried out during the year by the management.

The company has valued assets at cost less accumulated depreciation and is following the same policy consistently and due to scattered stores, huge asset base and the nature of assets the company has not accounted for loss on account of impairment.

Para 5 (iv)(c) Accounting Standard-22 "Accounting for taxes on income" The company has recognized Deferred Tax Asset amounting to Rs. 2,62,64,99,840 as at 31st March 2010 even though the company has incurred operating loses in the current year and in earlier years and there is no convincing evidence as to virtual certainty of future income.

We have seen economic slowdown in past years due to which company operating profit margins went under pressure and there was some financial imbalance. Now, the company has been witnessing growth in sales and EBITDA margins gradually. All required mark down in the value of slow moving, non moving and obsolete stock has already been provide for. From all these indicator we found that there is virtual certainty that company will be able to make sufficient profits and accordingly Deferred Tax Asset has been recognized.

Para 5 (vi) (a) The balances of unsecured loans amounting to Rs. 1,60,45,87,755 from various banks and financial institutions are subject to confirmation and reconciliation.

We have made full efforts for getting confirmation from unsecured lenders but due to CDR process going on, some of the lenders were unable to given confirmations.

Para 5 (vi) (b) The balance of sundry debtors Rs. 2,91,57,235 and Sundry creditors Rs. 1,23,51,04,887 are subject to confirmation and reconciliation.

The company has taken note of the same and will act upon the same for getting reconciliation/ confirmation. The creditors as at 31 st March 2010 have been paid in the months of April, May and June in majority and hence major portion is reconciled. As the numbers of suppliers are more and reconciliation is expected to take time, the company will complete the exercise of reconciliation in due course of time- Para 5 (i) (c) Adequate documentary evidence to support write off of capital work in progress amounting to Rs. 78,69,388 included in prior period expenses.

The company has identified certain capital assets under progress which were not to be installed due to closing down of respective projects. The identified assets were written off accordingly from the books of accounts.

DIRECTORSRESPONSIBILITY STATEMENT

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

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

That the Directors had selected such accounting policies and applied them consistently and made judgments and estimated that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit or loss of the company forthe period under review;

That the Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

That the Directors had prepared the annual accounts for the year ended 31 st March 2010 on a going concern basis.

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

A Statement giving details of Conservation of energy, technology absorption and foreign exchange earnings and outgo as required u/s 217(1)(e) of the Companies Act 1956 read with the Companies (Disclosure of particulars in the Report of Directors) Rules 1988, has been enclosed asAnnexure- II to this report

REPORT ON CORPORATE GOVERNANCE

The Report on Corporate Governance along with Auditors Certificate on the same has been enclosed as an Annexure III to this Report.

OTHER INFORMATION

Information as per section 217 (2A) of Companies Act, 1956, read with companies (particular of employees) Rules, 1975 forms part of this report. However, as per the provisions of section 219 (b) (iv) of Companies Act, 1956, the reports and the accounts are being sent to all members of the Company, excluding the information required under sec 217 (2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, as amended. Any member interested in obtaining such information may write to the Company Secretary at the registered office. The said information is also available for inspection at the corporate office during working hours up to the date of Annual General Meeting.

ACKNOWLEDGEMENT

The Directors wish to thank and deeply acknowledge the co- operation, assistance and support extended by the Central Government, the State Governments, the Companys Bankers, the Shareholders, the dealers, vendors of the company in the success and growth of the Company. The Directors also wish to place on record appreciation forthe co-operation and contribution made by the employees atall levels.

On behalf of the Board of Directors

sd/- Date: 30.09.10 Ram Chandra Agarwal

Place :NewDelhi Chairman

Din:-00491885

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