DIRECTORS' REPORT

The Members,

VISAGAR FINANCIAL SERVICES LIMITED

Your Directors are pleased to present their 22nd Annual Report together with the Balance Sheet and the Profit and Loss Accounts for the financial year ended March 31, 2015 and the Auditors Report thereon.

BUSINESS PERFORMANCE:

• STATEMENT OF COMPANY AFFAIRS

Your Company posted good financial results during the year under review. Total Revenue of the Company has increased from a negative of Rs. (49.27) Lakhs to a affirmative Rs. 61.52 Lakhs and the net profit of the Company increased from (75.68) Lakhs to Rs. 5.45 Lakhs.

Your Directors are expecting to increase the volume of business in the coming years and are all the efforts in this direction.

• DIVIDEND:

The Board of Directors has not recommended any dividend on the Share Capital of the Company for the period ended 31st March, 2015 considering the current cash flow position of the company.

I SHARE CAPITAL:

The Issued, Subscribed & Paid up Capital of the Company as on 31st March 2015 stands at Rs. 65,018,000/-divided into 32,509,000 Equity Shares of Rs. 2/- each. During the period under review, the Company has not issued shares with differential voting rights nor granted any stocks options or sweat equity.

• FIXED DEPOSITS:

The Company has not accepted any deposit from the general public within the meaning of section 73 of the Companies Act, 2013 and the rules made there under.

• INSURANCE:

The fixed assets of the Company have been adequately insured.

• DIRECTORS:

In accordance with the provisions of section 152[6] of the Act and in terms of Articles of Association of the Company, Mr. Pramod Goenka [DIN: 00869599] and Mr. Tilokchand Kothari [DIN: 00413627] will retire by rotation at the ensuing Annual General Meeting and being eligible, offer themselves for reappointment. The Board recommends their reappointment.

In terms of Section 149 and other applicable provisions of the Companies Act, 2013, Mr. Suranjan Upadhyay (DIN 05287812) being eligible and offering himself for appointment is proposed to be appointed as an Independent (Non-Executive) Director for five consecutive years from the date of Annual General Meeting to be held on September 30, 2015 upto September 29, 2020 or upto the date of Annual General Meeting to be held in the calendar year 2020, whichever is earlier. Mrs. Asha Kothari who has been appointed as an Additional Director (Non-Executive) w.e.f. 28th March, 2015 and holds office till the ensuing Annual General Meeting of the Company is proposed to be re-appointed as Non-Executive Director liable to retire by rotation. Notices have been received from members proposing Mr. Upadhyay as a candidate for the office of Independent Director and Mrs. Asha Kothari as a candidate for the office of Non-Executive Director of the Company.

In the opinion of the Board, Mr. Upadhyay fulfils the conditions specified in the Companies Act, 2013 and rules made thereunder for his appointment as an Independent Director of the Company. The Board considers that having Mr. Upadhyay and Mrs. Kothari on the Board would be of immense benefit to the Company.

• DECLARATION FROM INDEPENDENT DIRECTORS:

The Company has received declarations from all the Independent Directors confirming that they meet with the criteria of independence as prescribed both under Section 149 (6) of the Companies Act, 2013 and under Clause 49 of the Listing Agreement with the BSE.

• DIRECTORS AND KEY MANAGERIAL PERSONNEL APPOINTED OR RESIGNED:

The Board of Directors have appointed Mrs. Asha Kothari as an Additional Director (Non-Executive) of the Company who holds office till the ensuing Annual General Meeting of the Company. The Board passed a resolution by circulation pursuant to the provisions of section 175 of the Companies Act, 2013 and considered the appointment of Mrs. Asha Kothari as an Additional Director (Non-Executive) w.e.f. 28th

March, 2015. Accordingly a resolution seeking approval of shareholders for her appointment is included at Item No.6 of the Notice convening the Annual General Meeting. The Board recommends your approval towards re-appointment of Mrs. Kothari.

•MEETINGS OF THE BOARD:

During the year ended 31st March 2015, Eight (8) Board Meetings were held by the Company on 29th May 2014; 9th June 2014; 25th July 2014, 13th August 2014; 27th August 2014; 14th October 2014; 14th November 2014 and 14th February 2015.

The intervening gap between the meetings was as prescribed under the Companies Act, 2013 and Clause 49 of the Listing Agreement entered with the BSE..

• AMALGAMATION/MERGER:

During the year under review, the Board in its Meeting held on October 14, 2014, had decided to amalgamate M/s. Sagar Portfolio Services Limited (SPSL), an Investment Company with our Company. A draft scheme of amalgamation was also approved by the Board. But later on due to the fallout between the Company with Sagar Portfolio Services Limited, it was decided to put on hold the proposed amalgamation.

• DIRECTORS' RESPONSIBILITY STATEMENT

As required under Section 134(5) of the Companies Act, 2013, the Directors state that:

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

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

c) 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;

d) the directors had prepared the annual accounts on a going concern basis;

e) the directors 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

f) the directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

•EXTRACT OF ANNUAL RETURN:

The details forming part of the extract of Annual Return in Form MGT-9 as required under Section 92 of the Companies Act, 2013 (herein after referred to as "the Act") forms an integral part of this Report as "Annexure A".

• AUDIT COMMITTEE:

The Audit Committee of the Board of Directors of the Company, comprises of three (3) Members, namely Mr. Suranjan Upadhyay, Mr. Pramod Kumar Goenka and Mr. Arvind Desai The aforesaid Members of the Committee operates in the capacity of Independent, Non-Executive & Executive Director respectively. The Chairman of the Committee is Mr. Suranjan Upadhyay who is an Independent Director. The terms of reference of this Committee are quite comprehensive and are in conformity with the provisions of Clause 49 (III) of the Listing Agreement as well as Section 177 of the Companies Act, 2013. During the period ended 31st March, 2015, five (5) Meetings of Audit Committee were held on May 29, 2014; August 13, 2014; August 27, 2014; November 14, 2014 and February 14, 2015. The Board accepted the recommendations of the Audit Committee whenever made by the Committee during the year.

• STAKEHOLDERS' RELATIONSHIP COMMITTEE

The Committee oversees all the matters relating to Shareholders'/Investors' grievances/complaints. The Committee consists of three members, namely Mr. Suranjan Upadhyay, Mr. Pramod Kumar Goenka and Mr. Arvind Desai. The aforesaid Members of the Committee operates in the capacity of Independent, Non-Executive & Executive Director respectively. The Committee is chaired by a Non-Executive Independent Director. During the year ended March 31, 2015, Four (4) Committee Meetings were held on May 29, 2014; August 13, 2014; November 14, 2014 and February 14, 2015.

• NOMINATION & REMUNERATION COMMITTEE

The Committee consists of three (3) Members, namely Mr. Pramod Kumar Goenka (Non-Executive Director), Mr. Suranjan Upadhyay (Independent, Non-Executive Director) and Mr. Arvind Desai (Executive Director). During the year ended March 31, 2015, One (1) Committee Meeting was held on May 29, 2014.

•INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:

The Company has in place an established internal control system designed to ensure proper recording of financial and operational information, compliance of various internal controls and other regulatory and statutory compliances. Internal Audit is conducted throughout the organization by qualified independent Internal Auditors. Findings of the Internal Audit Report are reviewed by the Management and by the Audit Committee of the Board and proper follow up action are ensured wherever required.

• CHANGE IN THE NATURE OF BUSINESS:

During the period under review, there is no change in the nature of business of the Company. The

• NOMINATION AND REMUNERATION COMMITTEE 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 appended as "Annexure B" to this Report .

• INDEPENDENT DIRECTORS MEETING

During the year, no separate Meeting of the Independent Directors was held as there was only one Director throughout the year. However, a Meeting of Mr. Suranjan Upadhyay and Mr. Pramod Goenka was held on February 14, 2015 reviewing the performance the Executive Directors and working of the Company.

• 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 various Committees.

A separate exercise was carried out to evaluate the performance of individual Directors including the Chairman of the Board, who were evaluated on parameters such as level of engagement and contribution, independence of judgement, safeguarding the interest of the Company and its minority shareholders etc. The performance evaluation of the Independent Directors was carried out by the entire Board excluding the Directors being evaluated. The performance evaluation of the Chairman and Non-Independent Directors was carried out by the Independent Directors at their separate meeting.

• AUDITORS & AUDITORS REPORT:

M/s. Sudhir M. Desai & Co., the Auditors retire at the ensuing Annual General Meeting and being eligible offer themselves for reappointment. The Company has received a letter from Auditors to the effect that their appointment if made it would be within the prescribed limits under Section 139 of the Companies Act, 2013.

The Statutory Auditors M/s. Sudhir M. Desai & Co., Chartered Accountants have issued their reports on Standalone Financial Statements for the year ended 31st March 2015. There are no adverse remarks or qualifications in the said report. The Notes on Accounts referred to in the Auditors' Report are self-explanatory and do not call for any further comments.

Your Directors recommend reappointment of M/s. Sudhir M. Desai & Co. as the Auditors of the Company.

• SECRETARIAL AUDIT REPORT:

In compliance with the provisions of Sec 204 and other applicable provisions of Companies Act 2013, a secretarial audit was conducted during the year by Secretarial Auditors M/s. Rituraj & Associates. The Secretarial Auditor's Report is attached as annexure and form part of this report. The following observations are made by the Secretarial Auditors in their Audit Report to which we are giving our clarification.

i. The Company has not appointed Company Secretary under Section 203 of the Companies Act, 2013 read with Rule 8 of the Companies (Appointment of and Remuneration of Managerial Personnel) Rules, 2014

In this regard, your Directors wish to state that the Company had made an honest attempt to appoint a Company Secretary. However, due to its inability to give remuneration at par with the market standards, the same could not be appointed. In spite of this, your Company is determined to appoint a Company Secretary as soon as possible and comply with the provisions under Section 203 of the companies Act, 2013 read with Rule 8 of the Companies (Appointment of and Remuneration of Managerial Personnel) Rules, 2014.

ii. Composition of Board of Directors is not as per Section 149 of the Companies Act, 2013 read with Rules 3 to 5 of the Companies (Appointment and Qualification of Directors) Rules, 2014 and Clause 49 of the Listing Agreement

Your Directors have been trying to fill up the vacancy for two Independent Directors on the Board of the Company. Since our Company, being a NBFC, it is highly desirable to appoint someone from financial background. During the year, Company had approached some individuals regarding the same but nothing has been worked out. We are in continuous search of qualified and experienced Individuals who can with their expertise turn around the fortunes of the Company. Your Director further affirms they are determined appoint such number of Independent Directors as soon as possible on the Board to make it consonant with the Listing Agreement as well as Companies Act, 2013.

iii. The Company has not constituted Committees under Section 177 & 178 of the Companies Act, 2013 read with Rules 6 & 7 of the Companies (Meetings of Board and its Powers) Rules, 2014 and Clause 49 of the Listing Agreement

The constitution of Committees is improper as the numbers of Independent Directors on the Board of the Company are deficient. As soon as new Independent Directors are appointed on the Board, the Committees will be reconstituted with appropriate mix of Independent, Non-Executive & Independent Directors.

The Secretarial Audit Report forms part of this Notice as "Annexure C".

• INTERNAL AUDITOR:

The Company has appointed M/s. RNA & Associates, Chartered Accountants, (Firm Registration No. 136734W) as Internal Auditor of the Company as per Section 138 of the Act for the purpose of reporting for the financial year 2014-15.

• RISK MANAGEMENT:

Risk Management is the process of identification, assessment, and prioritization of risks followed by coordinated efforts to minimize, monitor and mitigate/control the probability and/or impact of unfortunate events or to maximize the realization of opportunities. The Company has laid a comprehensive Risk Assessment and Minimization Procedure, which is reviewed by the Audit committee and approved by the Board from time to time. These procedures are reviewed to ensure that executive management controls risk through means of a properly defined framework.

• RELATED PARTY TRANSACTIONS:

All contracts/arrangements/transactions entered by the Company during the year ended 31st March 2015 with related parties were in the ordinary course of business and on an arm's length basis. There were 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 Company at large. Since no related party transactions have been entered into by the during the year, hence Form AOC-2 is not applicable to the Company.

The policy on materiality of related party transactions and dealing with related party transactions as approved by the Board may be accessed on the Company's website at the link: <http://vfsl.visagar.com/attachments/policyrtp.pdf>. The Disclosures on related party transactions are set out in Notes to the Financial Statement.

• PARTICULARS OF LOANS. GUARANTEES OR INVESTMENTS BY THE COMPANY UNDER SECTION 186: Details of Loan, Guarantees and Investments covered under the provisions of the Act, are disclosed in the notes to the Financial Statements.

•MATERIAL CHANGES AFFECTING THE FINANCIAL POSITION OF THE COMPANY:

During the year ended 31st March 2015, there were no material changes and commitments affecting the financial position of the Company have occurred between the period ended 31st March 2015 to which financial results relate and the date of the Report.

• CORPORATE SOCIAL RESPONSIBILITY COMMITTEE:

Since the provisions as laid down in the Section 135 of the Companies Act, 2013 are not applicable to the Company, hence no such Committee has been formed. However, Company had always tried in its best possible ways to involve itself in social development activities.

• DEMATERIALISATION OF SHARES:

Your Company has connectivity with the National Securities Depository Limited (NSDL) & Central Depository Services (India) Limited (CDSL) for dematerialization of its Equity Shares. The ISIN No. INE309H01020 has been allotted for the Company Shares. Therefore, the members and/or investors may keep their shareholdings in the electronic mode with their Depository Participant.

• LISTING OF SHARES:

Equity Shares of the Company are listed with the Bombay Stock Exchange Limited. The Annual Listing Fees to the Stock Exchange has been duly paid by the Company.

• VIGIL MECHANISM/WHISTLE BLOWER POLICY:

The Company has a vigil mechanism policy in place to enable the Directors and employees to report their genuine concerns or grievances by having a direct access to the Chairman of the Audit Committee and the Chief Financial Officer of the Company.

The Vigil Mechanism provides a channel to the employees to report to the management concerns about unethical behaviour, actual or suspected fraud or violation of the Codes of Conduct or policy and also provides for adequate safeguards against victimization of employees by giving them direct access to the Chairman of the Audit Committee in exceptional cases.

The Policy covers malpractices and events which have taken place / suspected to have taken place, misuse or abuse of authority, fraud or suspected fraud, violation of Company rules, manipulations, negligence causing danger to public health and safety, misappropriation of monies, and other matters or activity on account of which the interest of the Company is affected and formally reported by whistle blowers concerning its employees.

The Whistle Blower Policy is of the Company is also posted on the website of the Company -<http://vfsl.visagar.com/attachments/whistleblowerpolicy> Vigilmechanism.pdf.

• CORPORATE GOVERNANCE:

As per the annexure to SEBI circular CIR/CFD/Policy CELL/2014 dated September 15,2014 the compliance with the provisions of clause 49 shall not be mandatory in respect of companies having paid up equity share capital not exceeding Rs.10 crore and Net worth not exceeding Rs.25 crore as on the last day of the previous financial year.

As on 31st March 2015, the Equity Share Capital is Rs. 65,018,000 and Net worth is Rs. 122,970,575. Therefore, the revised Clause 49 is not mandatory for your Company with effect from 1st October 2014. Hence, the company is not providing a separate report on corporate governance, management discussion and analysis and also a certificate from the Company's Auditors confirming the compliance of Corporate Governance.

• SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS:

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

• MANAGEMENT DISCUSSION AND ANALYSIS:

Management Discussion and Analysis Report is appended as "Annexure D" to this Annual Report.

• PARTICULARS OF EMPLOYEES:

There was no such person employed during the year, who was in receipt of Rs.60 lacs per annum or more and none of the employee employed for part of the financial year was in receipt of remuneration of Rs.5 lacs per month or more.

The information required pursuant to Section 197 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of employees of the Company, will be provided upon request. In terms of Section 136 of the Act, the Report and Accounts are being sent to the Members and others entitled thereto, excluding the information on employees' particulars which is available for inspection by the Members at the Registered Office of the Company during business hours on working days of the Company up to the date of the ensuing AGM. If any Member is interested in obtaining a copy thereof, such Member may write to the Compliance Officer in this regard.

• SEXUAL HARASSMENT POLICY:

The Company has in place an Anti Sexual Harassment Policy in line with the requirements of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. An Internal Committee has been set up to redress the complaints received regarding sexual harassment at workplace. All employees including trainees are covered under this policy.

The following is the summary of sexual harassment complaints received and disposed off during the current financial year.

Number of Complaints received: Nil Number of Complaints disposed off: Nil

• ENERGY, TECHNOLOGY AND FOREIGN EXCHANGE:

There was no technology absorption and no foreign exchange earnings or outgo, during the year under review. Hence, the information as required under Section 134(3)(m) of the Companies Act, 2013 read with the Companies (Accounts) Rules, 2014 is to be regarded as Nil. The Company has not entered into any technology transfer agreement

• ACKNOWLEDGEMENT:

Your Directors take the opportunity to express their grateful appreciation for the excellent assistance and co-operation received from their Bankers, Customers etc. Your Directors also thank all the shareholders for their continued support and all the employees of the Company for their valuable services during the year.

By Order of the Board of Directors

For Visagar Financial Services Limited

Sd/- Arvind Desai

Whole-time Director

(DIN: 00353903)

Place: Mumbai

Date: 30.05.2015