BOARD'S REPORT

TO THE MEMBERS OF VALSON INDUSTRIES LIMITED

1. The Directors take pleasure in presenting the Thirty First Annual Report together with the audited financial statements for the year ended 31st March, 2015.

The Management Discussion and Analysis has also been incorporated into this report. 

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

2. HIGHLIGHTS OF PERFORMANCE

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

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

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

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

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

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

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

3. BUSINESS OPERATIONS

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

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

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

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

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

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

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

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

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

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

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

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

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

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

4. DIVIDEND

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

5. SHARE CAPITAL

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

6. FINANCE

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

6.1 DEPOSITS

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

6.2 PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

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

7. CORPORATE SOCIAL RESPONSIBILITY INITIATIVES

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

8. BUSINESS RISK MANAGEMENT

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

a) Foreign Exchange Risk

b) Yarn Price Risk

c) Stiff Global Competition

d) Government Policy on incentives for exports

e) Risk elements in business transactions

f) Success of Cotton Crop

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

9. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

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

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

10. VIGIL MECHANISM / WHISTLE BLOWER POLICY

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

11. SUBSIDIARY COMPANIES

The Company has no Subsidiary Company.

12. DIRECTORS

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

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

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

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

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

12.1 Board Evaluation

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

12.2 Remuneration Policy

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

12.3 Meetings

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

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

13. DIRECTORS' RESPONSIBILITY STATEMENT

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

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

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

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

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

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

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

14. RELATED PARTY TRANSACTIONS

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

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

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

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

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

16. AUDITORS

16.1 Statutory Auditors

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

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

16.2 Secretarial Audit

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

16.3 Qualifications in Secretarial Audit Report

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

Management Response:

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

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

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

17. ENHANCING SHAREHOLDERSVALUE

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

18. CORPORATE GOVERNANCE

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

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

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

20. EXTRACT OF ANNUAL RETURN

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

21. PARTICULARS OF EMPLOYEES

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

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

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

23. ACKNOWLEDGEMENTS

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

24. CAUTIONARY STATEMENT

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

For and on behalf of the Board of Directors

 (Mr. Suresh N. Mutreja) Chairman & Managing Director 

(Mr. Varun S. Mutreja) Chief Financial Officer

(Mr. Kunal S. Mutreja) Chief Executive Officer 

Mumbai

Date: 22nd May, 2015