BOARD'S REPORT

TO

THE MEMBERS OF VAIBHAV GLOBAL LIMITED,

The Directors have pleasure in presenting the 27th Annual Report together with the Audited Financial Statements for the financial year ended 31st March, 2016.

DIVIDEND

The Board of Directors has not recommended any dividend for the financial year 2015 -16 .

TRANSFER TO RESERVE

The Board of Directors doesn't propose to transfer any sum to the General Reserve.

BUSINESS REVIEW

Vaibhav Global Limited is an electronic retailer of fashion jewellery and lifestyle products in the US, UK and Canada markets sold on our proprietary TV shopping and web platforms with direct access to 110 million TV households. The Company delivers deep value proposition to discount seeking customers and has developed a robust B2C franchise in its focus markets organically. This is an achievement very few Indian Companies have been able to accomplish.

The Company has expanded its portfolio, focusing on adjacent product categories that target similar market segments. While fashion jewelry forms a large part of the portfolio, the Company also sells lifestyle accessories, home textiles and cosmetics, all of which are targeted at the same customer and enable access to a larger part of the customer's shopping value pie. For details please refer to Business Overview Section in Management Discussion and Analysis Report.

CONVERSION OF LOAN GIVEN TO GENOA JEWELERS LIMITED, A WHOLLY OWNED SUBSIDIARY OF THE COMPANY

During the year under review, the Company has converted entire outstanding loan amounting to Rs. 52.49 crore, given to M/s Genoa Jewelers Limited, a wholly owned subsidiary of the Company into equity of the said subsidiary and accordingly 79,45,000 equity shares of USD 1 have been issued.

CONSOLIDATED FINANCIAL STATEMENTS

The consolidated financial statements of the Company & Subsidiaries form part of this Annual Report and have been prepared in accordance with Section 129(3) of the Companies Act, 2013. Also, in accordance with Section 136 of the Companies

Act, 2013, the audited financial statements for the financial year ended 31st March, 2016 in respect of each subsidiary are available on the website of the Company i.e www.vaibhavglobal com. A copy of said audited accounts shall be provided to the shareholders upon request. A separate statement containing salient features of the financial statements in prescribed format AOC- 1 is annexed as Annexure —1 to this report. The statement also provides the details of performance and financial positions of each of the subsidiary Company.

PARTICULAR OF LOANS, GUARANTEES AND INVESTMENT

The details of loans, guarantees and investments covered under the provisions of Section 186 of the Companies Act, 2013 are given in the note no. 12, 26 & 9 respectively to the Standalone Financial Statements of the Company.

INCOME TAX

The Company received a demand notice of H3.25 crore pertaining to financial years from 2007-08 to 2010-11 on account of transfer pricing additions, against which an appeal was filed to CIT(A).

DETAILS OF SUBSIDIARIES

The Company has the following major operating Subsidiaries and Step Down Subsidiaries:

a) Genoa Jewelers Limited, British Virgin Islands, a 100 percent subsidiary of the Company, which in turn holds 100% in The Liquidation Channel USA, The Jewellery Channel, UK and Jewel Gems USA Inc.

b) STS Jewels Inc., USA, a 100 per cent subsidiary of the Company, engaged in selling jewelry to the departmental stores, TV channels and others in USA on wholesale basis.

c) STS Gems Limited, Hong Kong, a 100 per cent subsidiary of the Company, engaged in outsourcing jewelry and lifestyle products for the group from China and Hong Kong.

d) STS Gems Thai Limited- a 100 percent subsidiary of the Company, engaged in outsourcing products for the group from Thailand.

e) Jewel Gems USA Inc. a wholly owned step down subsidiary of the Company engaged in providing call center and other support services to the VGL Group Companies.

f) The Jewelery Channel Ltd. UK (TJC UK), a wholly owned step down subsidiary of the Company, engaged in sale and marketing of fashion jewelry and life style accessories through electronic media and operates a dedicated 24x7 hours TV shopping channel and Internet shopping website (www.tjc.co.uk) in UK.

g) The Liquidation Channel Inc, USA (TJC USA), a wholly owned step down subsidiary of the Company is engaged in marketing of fashion jewelry and life style accessories through electronic media and operates a dedicated 24x7 hours TV shopping channel and Internet shopping website (www.liquidationchannel.com) in USA.

h) PT STS BALI, a step down subsidiary of the Company, Hong Kong engaged in a outsourcing products for the group from Indonesia.

CHANGE IN CAPITAL STRUCTURE

a Conversion of Global Depository Receipts (GDRs)

During the year under review, Sonymike's Holdings Limited, a Promoter Group Company and GDR holder has converted 3,00,000 (Three Lac) GDRs, convertible into 30,00,000(Thirty Lac) Equity Shares of Rs. 10 each. Pursuant to conversion of GDRs, the aggregate shareholding of Promoter & Promoter Group increased to 1,82,76,983 (One Crore Eighty Two Lac Seventy Six Thousand Nine Hundred Eighty Three) Equity Shares.

b) Allotment of Equity Shares

During the year, the Company has allotted 1,12,748 Equity Shares of H10 each to eligible employees under Vaibhav Global Employee Stock Option Welfare Trust, pursuant to exercise of Stock Options and consequently, the Paid Up Equity Share Capital of the Company increased from Rs. 32,40,23,830 (Thirty Two Crores Forty Lac Twenty Three Thousand Eight Hundred Thirty ) to Rs. 32,51,51,310 (Thirty Two Crores Fifty One Lac Fifty One Thousand Three Hundred Ten). Further, the Company has not issued shares with differential voting rights.

EMPLOYEE STOCK OPTIONS UNDER VGL ESOP (AS AMENDED) — 2006

During the year, 76,570 (Seventy Six thousand Five Hundred Seventy) stock options convertible into 76,570 (Seventy Six thousand Five Hundred Seventy) Equity Share of H10 each have been granted to the eligible employees of the Company and its Subsidiaries. The ESOP Scheme is in compliance with SEBI (Share Based Employee Benefits) Regulations, 2014. The detail is available on the Company's website: <http://www.vaibhavglobal>. com/sites/default/files/report-management/ESOP%20 annexure%2003-07-16 1.pdf

CREDIT RATING

Credit rating of the Company has been upgraded by one notch from CARE A3+ (A Three Plus) to CARE A2 (A Two) for the short term bank facilities and from CARE BBB to CARE BBB+ rating for long term facilities.

DIRECTORS AND KEY MANAGERIAL PERSONNEL (KMP)

During the year, Mr. Peter Duncan Whitford, Independent Director resigned w.e.f 20th July, 2015. The Board of Directors at its meeting held on 28th July, 2015 appointed Mr. Santiago Roces Moran as a Director in casual vacancy. It is proposed to appoint him as an Independent Director for a period of two years w.e.f 28th July, 2015 to 27th July, 2017 under the category of Independent Director. The Shareholders of the Company at their 26th Annual General Meeting (AGM) held on 28th July, 2015 appointed Mr. Hemant Sultania as Director whose office was liable to retire by rotation and resigned w.e.f 12th May, 2016. The Board of Directors also appointed Mr. Harsh Bahadur as an Additional Director in the category of Independent Director on 26th September, 2015 by a resolution passed by circulation. It is proposed to appoint him as an Independent Director for a period of two years w.e.f 26th September, 2015 to 25th September, 2017. Mr. Vikram Kaushik, Independent Director resigned w.e.f 19th May, 2016.

Mr. Puru Aggarwal was appointed as Group CFO under the category of Key Managerial Personnel (KMP) w.e.f 26th August, 2015. In accordance with the provisions of the Companies Act, 2013 and in terms of the Memorandum and Articles of Association of the Company, Mr. Rahimullah, Whole Time Director is liable to retire by rotation at ensuing Annual General Meeting and being eligible, offers himself for re-appointment.

a. Board Evaluation

Pursuant to the provisions of the Companies Act, 2013, the Board has carried out an annual performance evaluation of its own performance, that of its Committees and individual Directors.

b. Remuneration Policy

The Remuneration Policy is given in the Corporate Governance Report.

c. Board Meetings

The Board of Directors met six times during the financial year 2015-16 on 21st May, 2015, 28th July, 2015, 8th August, 2015, 4th November, 2015, 9th December, 2015 and 25th January, 2016. The intervening gap between the meetings was within the period prescribed under the Companies Act, 2013, clause 49 of the Listing Agreement and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015

d. Declaration by Independent Directors

All Independent Directors of the Company have given declarations that they meet the criteria of independence as laid down under Section 149 (6) of the Companies Act, 2013 and regulation 16(1)(b) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The terms & conditions for the appointment of Independent Directors are given on the website of the Company and separately disclosed in the Corporate Governance Report.

COMMITTEES OF THE BOARD

There are currently four Committee of the Board which are as follows :

a) Audit Committee

b) Nomination, Remuneration & Compensation Committee

c) Corporate Social Responsibility (CSR) Committee

d) Stakeholders' Relationship Committee

Details of all the Committees along with their composition, charters and meetings held during the year, are provided in the "Report on Corporate Governance", a part of this Annual Report.

DIRECTORS' RESPONSIBILITY STATEMENT

The Board of Directors acknowledge the responsibility for ensuring compliances with the provisions of Section 134(3) (c) read with Section 134(5) of the Companies Act, 2013 in preparation of annual accounts for the year ended 31st March, 2016 and state that :

(a) in the preparation of the annual accounts for the financial year ended 31st March, 2016, the applicable accounting standards have 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 as at 31st March, 2016 and profit of the Company for that period;

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

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

(e) proper internal financial controls have been laid down which are adequate and are operating effectively.

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

RELATED PARTY TRANSACTIONS

All related party transactions entered into during the financial year were on an arm's length basis and in the ordinary course of business. There are no material significant related party transactions made by the Company with Promoters, Directors, Key Managerial Personnel or other designated persons and their relatives which may have a potential conflict with the interest of the Company at large. Particulars of contracts or arrangements with related parties referred to Section 188(1) of the Companies

Act, 2013 in the form AOC 2 is annexed herewith as Annexure 2.

A list of all related party transactions is placed before the Audit Committee as well as the Board of Directors. The Board has also framed a policy on related party transactions and the same is available on Company's website i.e. <http://www.vaibhavglobal>. com/sites/default/files/articles/Policy-on-Related-Party-Transactions.pdf.

Pursuant to the provision of SEBI ( Listing Obligations and Disclosure Requirements) Regualtions, 2015, the Board has framed a Policy on Material Subsidiaries and the same is available on Company's website i.e. <http://www.vaibhavglobal>. com/sites/default/files/articles/Policy%20on%20Material%20 Subsidiaries.pdf.

VIGIL MECHANISM / WHISTLE BLOWER POLICY

The Company has established a Vigil Mechanism / Whistle Blower Policy to deal with instances of fraud and mismanagement, if any. The Policy has a systematic mechanism for directors and employees to report concerns about unethical behavior, actual or suspected fraud or violation of the Company's Code of Conduct or policy. The policy is available on the website of the Company i.e. <http://www.vaibhavglobal.com/sites/default/files/articles/> Policy%20of%20Whistle%20Blower%20or%20Vigil%20 Mechanism.pdf

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The internal control framework is designed to ensure proper safeguarding of assets, maintaining proper accounting records and providing reliable financial information and other data. This system is supplemented by internal audit, reviews by the management and documented policies, guidelines and procedures. The Company has a well-defined organization structure, authority levels, internal rules and guidelines for conducting the business transactions. The Company intends to undertake further measures as necessary in line with its intent to adhere to procedures, guidelines and regulations as applicable in a transparent manner.

M/s S.S. Surana & Co., Chartered Accountants , an external independent firm carries out the internal audit of the Company operations and reports its findings to the Audit Committee.

Internal Audit also evaluates the functioning and quality of internal controls and provides assurance of its adequacy and effectiveness through periodic reporting. Internal Audit is carried out as per risk based internal audit plan which is reviewed by the Audit Committee of the Company. The Committee periodically reviews the findings and suggestions for improvement and is apprised on the implementation status in respect of the actionable items.

LISTING OF SHARES

The shares of the Company are listed at BSE Limited & National Stock Exchange of India Ltd. and the listing fee for the year 2016-17 has been duly paid. Global Depository Receipts (GDRs) of the Company are listed at Luxembourg Stock Exchange as on 31st March, 2016.

DEPOSITS

During the year under review, your Company has not accepted any deposit within the meaning of Section 73 and 74 of the Companies Act, 2013 read with the Companies (Acceptance of Deposits) Rule, 2014.

AWARDS AND CERTIFICATIONS, 2015-16

During the year under review, your Company has received the following awards and certifications :

a) Award for ranking first in the silver jewellery category for 2014-15 at the India Gem and Jewellery Awards, 2016

b) Certificate of Excellence in October 2015 for the 'Best EOU (other than SME) in the gems and jewellery category for outstanding export performance in 2012-13' from the Export Promotion Council for EOUs and SEZs

c) Award for ranking first in the 'Most Socially Responsible Company' category for 2014-15 at the India Gem and Jewellery Awards, 2016

d) Recognized as the third highest wealth creator company on the basis of a three-year market capitalization CAGR, fourth highest wealth creator company on the basis of five-year market capitalization CAGR and ranked 234th on the basis of revenues by Fortune India (The Next 500)

EXTRACT OF ANNUAL RETURN Pursuant to the provisions of Section 92(3) of the Companies Act, 2013 read with Companies (Management & Administration) Rules, 2014, an extract of the Annual Return in form MGT 9 is annexed herewith as Annexure 3.

AUDITORS AND AUDITORS' REPORT

A. Statutory Auditors

Pursuant to the provisions of Section 139, 142 of the Companies Act, 2013 read with the Companies (Audit and Auditors) Rules, 2014, M/s Haribhakti & Co. LLP, Chartered Accountants, Mumbai and M/s B. Khosla & Co., Chartered Accountants, Jaipur were appointed as Joint Statutory Auditors of the Company to hold office till the conclusion of 27th Annual General Meeting and are eligible for re­appointment. The Company received a certificate from M/s Haribhakti & Co. LLP, Chartered Accountants, Mumbai and M/s B. Khosla & Co., Chartered Accountants, Jaipur, Joint Statutory Auditors to the effect that their re-appointment, if made, would be in accordance with the provisions of Section 141 of the Companies Act, 2013.

B. Secretarial Auditor

Pursuant to the provisions of Section 204 of Companies Act, 2013 and rules made thereunder, your Company has appointed M/s JAKS & Associates, Practicing Company Secretary, Jaipur as Secretarial Auditor to conduct the Secretarial Audit of the Company for the financial year 2016-17. The Secretarial Audit Report for the financial year 2015-16 is attached herewith as Annexure 4. The report doesn't contain any reservation, qualification or adverse remark. Information referred in Secretarial Auditor Report are self-explanatory and don't call for any further comments.

C. Cost Auditor

Pursuant to Cost Record & Audit Rules, 2014 notified on 31st December, 2014, the products manufactured by the Company are not covered in Cost Audit w.e.f financial year 2014-15. Hence, the requirement of cost audit is not applicable to the Company.

INVESTOR RELATIONS

Your Company interacted with numerous Indian and overseas investors and analyst in many ways, including one on one meetings, attendance at investor conferences, regular quarterly meetings and annual analyst meet during the year. Earning call transcript thereof are posted on the website of the Company.

PARTICULAR OF EMPLOYEES

The information required pursuant to Section 197(12) of the Companies Act, 2013 read with rules made there under, as amended from time to time, has been given in the annexure appended as 6.

PREVENTION OF INSIDER TRADING

In compliance with the provisions of Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015, the Board has adopted a code of conduct and code of practices and procedures for fair disclosure of unpublished price sensitive information on 14th May, 2015 to preserve the confidentiality of price sensitive information, prevent misuse thereof and regulate the trading by Insiders. The code of practice and procedures for fair disclosure of unpublished price sensitive information is also available on the Company's website i.e. www. vaibhavglobal.com

CORPORATE SOCIAL RESPONSIBILITY  (CSR)

As required under Section 135 of the Companies Act, 2013, the Board of Directors has constituted a Corporate Social Responsibility (CSR) Committee to formulate and recommend to the Board, a Corporate Social Responsibility (CSR) Policy which shall indicate the activities to be undertaken by the Company as specified in Schedule VII of the Companies Act, 2013, to recommend the amount of expenditure to be incurred on the activities and to monitor the Corporate Social Responsibility Policy of the Company from time to time. The composition of CSR Committee has been given in Annual Report on CSR activities.

Your Company has contributed a sum of H1.38 crore to various social institutions in the field mid-day meal, education, health and scholarship. The Annual Report on CSR activities is annexed herewith as Annexure 5.

RISK MANAGEMENT

The Company has framed and implemented a Risk Management Policy to identify the various business risks. This framework seeks to create transparency, minimize adverse impact on the business objectives and enhance the Company's competitive advantage.

The risk management policy defines the risk management approach across the enterprise at various levels including documentation and reporting.

DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013.

Your Company is fully committed to uphold and maintain the dignity of women, working in the Company. Pursuant to the provisions of Section 21 of the Sexual Harassment of Women at the workplace (Prevention, Prohibition, Redressal) Act, 2013, the Company formulated an Anti-Sexual Harassment Policy. All employees (permanent, contractual, temporary, trainees) are covered under this policy. An Internal Complaints Committee (ICC) was set up which is responsible for redressal of complaints related to sexual harassment at workplace. During the year under review, the Company has not received any complaint.

TRADE RELATIONS

The Company maintained healthy, cordial and harmonious Industrial relations at all levels. The Directors wish to place on record their appreciation for the valuable contribution by the employees of the Company.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

The Management Discussion and Analysis Report of the financial condition and results of operations of the Company for the year under review as required under regulation 34(2) (e) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 is being given separately and forms part of this Annual Report.

CORPORATE GOVERNANCE

A report on corporate governance and certificate from Statuary Auditors of the Company confirming compliance of conditions as stipulated under SEBI (Listing Obligations and Disclosure Requirements) Regulation, 2015 forms an integral part of this Annual Report. The Chairman & Managing Director has confirmed and declared that all the members of the board and the senior management have affirmed compliance with the code of conduct.

ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

The disclosures to be made under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014 are as under :

A. Conservation of Energy

The operations of the Company are not energy intensive. The Company has taken significant measures to reduce the energy consumption by the following means :

1. The installation of Solar Power System of 300 KW which generates 16% of the energy needed by the Company.

2. The installation of efficient transformers and automatic stabilizers to reduce the electric fluctuation and consumption.

3. To reduce process cycle of burnout furnaces by 40%.

4. More efficient use of investment of flask and casting machines by synchronizing the production process.

5. Normal tube light replaced with 100% LEDs so voltage reduced and Lux Level increases.

6. Pneumatic tools are used for filing and setting purposes and this also reduces the noise pollution.

7. Sun tubes for natural lighting in day time.

8. Green building's certification.

9. Thermal Storage cooling system.

10. Used VFD (Variable frequency drive) for all heavy motor result in less electricity consumption.

11. Big size window which makes more provisions of natural lights in building so it will reduce energy consumption.

12. Cavity in outer wall of building which reduce AC loads.

B. Technology Absorption

Your Company possesses an in-house research and development wing, which is continuously working towards more efficient jewellery production, improved processes and better designs. Your Company constantly strive for latest technology for its manufacturing processes.

The Company has taken the following initiatives :

a) In house caming work (3D print) with latest technology.

b) Long lasting plating technology through Ion Plating Method.

c) Automatic wax injector for better productivity.

d) Investment in casting machines with maximum capacity of 10 flask per cycle.

e) Installation of plasma machine for electronic polishing and furnacing work.

f) Manufacturing of Stainless Steel Products with studded gems

g) CNC machine for gems production.

C. Foreign Exchange Earnings and Outgo

The information on foreign exchange earnings and outgo is furnished in the notes to accounts of the Standalone Financial Results of the Company.

ACKNOWLEDGEMENT

Your Directors acknowledge with gratitude and wish to place on record its appreciation for the dedication and commitment of Company's employees at all levels which has continued to be our major strength.

We also take this opportunity to express our deep sense of gratitude to all government and non-government agencies, bankers and vendors for their continued support and look forward to have the same in future too. We also express gratitude to the shareholders for reposing unstinted trust and confidence in the management of the Company.

For and on behalf of the Board of Directors

Sunil Agrawal

Chairman & Managing Director

DIN: 00061142

Place: Jaipur

Date: 19th May, 2016