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Vardhman Polytex Ltd.

BSE: 514175 Sector: Industrials
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VOLUME 13872
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OPEN 30.65
CLOSE 29.20
VOLUME 13872
52-Week high 36.75
52-Week low 12.20
Mkt Cap.(Rs cr) 67
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Vardhman Polytex Ltd. (VARDMNPOLY) - Director Report

Company director report

Dear Shareholders

The Directors of your Company are presenting 40th AnnualReport on the affairs of the Company together with Audited Financial Statements of theCompany for the year ended 31st March 2020.

1. Financial Highlights

PARTICULARS 2019-20 2018-19
Revenue from operations (Net) 56066.23 81055.79
Other Income 318.35 287.33
Total Income (1) 56384.58 81343.12
Cost of material consumed 42421.66 58748.97
Purchase of traded goods 370.80 2185.47
Changes in inventories of finished goods 234.66 880.24
Excise duty on sale of goods - -
Employee benefit expense 4515.06 5706.95
Finance costs 5969.99 5974.75
Depreciation and amortization expense 1563.89 1831.17
Other expenses 8564.68 13441.90
Total Expenses (2) 63640.74 88769.45
Profit from operation before exceptional item and Tax (1-2) (7256.16) (7426.33)
Less: Exceptional Items 17435.13 -
Profit before Tax 10178.97 (7426.33)
Less: Tax Expenses:
Current Tax - -
Deferred Tax (Credit) - -
Profit after Tax 10178.97 (7426.33)
Other Comprehensive Income:
Remeasurement of defined benefit obligation (70.08) (63.05)
Total Comprehensive Income for the Period 10108.89 (7489.38)
Earning Per Share:
Basic 45.66 (33.32)
Diluted 45.66 (33.32)

Financial Performance & Review

This year was yet another challanging year with overall marketconditions remaining challanging due to global slowdown of 2019 coupled with the outbreakof the Covid-19 pandemic during last quarter of FY 2019-20.

During the year under review revenue from operations of the Companywere Rs 56066.23 lakhs as against Rs 81055.79 lakhs in F.Y. 2018-19 registering thedecrease of 30.83%. The FOB value of exports was NIL in FY 2019-20 as against Rs 262.21lakhs in FY 2018-19 due to crises in the international market. During the year underreview the Company has incurred operational loss of Rs 7256.16 lakhs as against Rs7426.33 lakhs during the previous year.

Exceptional items details: On Account of invocation of corporateguarantee towards the erstwhile subsidiary company i.e F.M. Hammerle Textile Limited theprovision was booked by the company amounting to Rs 1 7685.13 lacs during the Quarterended 31st March 2018. This provision has been reversed in the quarter ended31st March 2020 as the Corporate Guarantee of the company has been releasedby State Bank of India after depositing Rs 250 lakhs as one the settlement by bank.

In the wake of the outbreak of novel Coronavirus (COVID- 19) across theworld including lndia and in compliance with Central and State Governmentinstructions/notifications the company had suspended all its operations at manufacturingunits and offices since the last week of March 2020. Company resumed partial manufacturingoperations in compliance with requisite statutory guidelines from the last week of May2020 onwards.

Due to external macro-economic factors as well as internal financialstress faced by the company the bank accounts of the company were classified as NPA bythe consortium of bank as per RBI guidelines. Therefore no interest is being charged bythe lenders post the NPA classification. Keeping the accrual concept in consideration thecompany has provided for interest based upon terms of the CDR package. The lenders haveissued notices U/S 13(2) & 13(4) of Securitisation and Reconstruction of FinancialAssets and Enforcement of Security Interest (SARFESI) Act 2002 which were duly repliedand proceedings are pending before Debt Recovery Tribunal (DRT) Chandigarh. PunjabNational Bank and Jammu & Kashmir Bank and three operational creditors have filedapplications under Insolvency and Bankruptcy Code 2016 with National Company law Tribunal(NCLT) Chandigarh for initiating Corporate Insolvency Resolution Process (CIRP) which havenot been admitted in NCLT. There have been series of meetings between Lead Bank ofConsortium and other member banks with regard to the settlement of the dues of all theBanks wherein it was agreed by most of the member Banks that in view of the industrialscenario for the textile industry a negotiated OTS is in the best interest of all stakeholders. Lead Bank (Canara Bank) and other 5 member banks have issued letters for OTS. Ason date 80% of the total lenders are agreeable for OTS. During the year State Bank ofIndia (SBI) has assigned debts due and payable to SBI by the company together withunderlying rights title and interests in favour of Phoenix ARC Private Limited (Phoenix)vide Assignment Agreement. Accordingly Phoenix has acquired all the rights of State Bankof India as a lender in respect of credit facilities/financial assistance granted by it tothe Company.

Consolidated Financial Statements

Further pursuant to Ind AS-11 0 Consolidated Financial Statementspresented in this Annual Report include financial information of the subsidiary companyi.e F.M. Hammerle Verwaltungs GmbH Austria.

2. Change in Nature of Business

During the year under review there was no change in the nature ofBusiness.

3. Associate Joint Venture and Subsidiaries

Associate and loint Venture

There is no Associate Company and Joint Venture of the Company.


F.M. Hammerle Verwaltungs GmbH Austria a wholly

owned foreign subsidiary of the Company and deals in trading ofshirting fabrics.

The Annual Report does not contain the financial statements of oursubsidiary as the same is available on the website of the company incompliance of the SEBI (Listing Obligation and Disclosure Requirement) Regulation 2015.The statement containing the salient feature of the financial statement of a Company'ssubsidiaries as per first proviso to sub-section (3) of section 129 in Form AOC-1 isattached as Annexure-A and forms part of Annual Report.

4. Material Subsidiaries -The Board of Directors of the Company inits meeting had approved the policy for determining Material Subsidiaries. At present theCompany does not have any Material Subsidiary. The Policy on Material Subsidiary has beenposted on the website of the Company at the following link: httD:// Policv2019.pdf

5. Transfer to Reserves

The Company has not transferred any amount to the General Reservesduring the year under review.

6. Dividend

Board of directors of the Company do not recommend any dividend for theyear ended 31st March 2020.

7. Directors & Key Managerial Personnel

During the financial year under review there are no changes inDirectors and Key Managerial Personnel of the company except Mr. Apjit Arora was appointedas Chief Financial Officer of the Company from 01.04.2019 in place of Mr. Kuldeep Singlawho continued as Chief Financial Officer of the company till 31.03.2019.

Mr. Adish Oswal retires by rotation at this Annual General Meeting andbeing eligible offers himself for reappointment. The board recommends his re-appointmentin the forthcoming Annual General Meeting.

The detailed section on 'Board of Directors Rs is given in the separatesection titled 'Corporate Governance Report Rs forming part of this Annual Report.

8. Declaration of Independence

The Board has received declarations from all the Independent Directorsof the Company confirming that they meet the criteria of independence as prescribed undersub-section (6) of Section 149 of the Companies Act 2013 and regulation 16 of Securities& Exchange Board of India (Listing Obligations and Disclosure Requirement)Regulations 2015.

In the opinion of the Board they fulfill the conditions specified inthe Act and the Rules made thereunder and are Independent of the management.

9. Number of Board Meetings

During the year ended 31st March 2020 six meetings of the Board wereheld on the following mentioned dates:

1 01-04-2019
2 24-05-2019
3 10-08-2019
4 25-09-2019
5 13-11-2019
6 12-02-2020

10. Mechanism for evaluation of board committees and individualdirectors

Pursuant to the provisions of the Companies Act 2013 and regulation17(10) of SEBI (LODR) regulations 2015 a structured procedure was adopted after takinginto consideration the various aspects of the Board's functioning composition of theBoard and its various Committees execution and performance of specific dutiesobligations and governance.

The performance evaluation of the Independent Directors was completedin time. The performance evaluation of the Chairman and the Non-Independent Directors wascarried out by the Independent Directors. The Board of Directors expresses itssatisfaction with the evaluation process.

The Nomination and Remuneration ("NR") Committee has laiddown proper criteria and procedure to evaluate and scrutinize performance of theChairperson each Executive Non-Executive and Independent director Board as a whole andits Committees.

The independent directors in their meeting held on 12.02.2020 throughdiscussion evaluated the performance of non independent directors Board ManagingDirector and Executive Directors except the director being evaluated. The minutes of thesaid meeting were submitted to Chairman of the Company and also placed before the Boardfor their consideration. The Board has carried out annual performance evaluation of itsown performance the directors individually as well the evaluation of the working of itsAudit Nomination & Remuneration and Stakeholders Rs Relationship Committee.

While evaluating the performance the following points were considered:

i. Participation in Board Meetings and Board Committee Meetings.

ii. Managing relationship with other directors and management.

iii. Knowledge and Skill i.e. understanding of dutiesresponsibilities refreshment of knowledge knowledge of industry ability to listens andto present their views.

iv. Personal attributes like maintain high standard of ethics andintegrity.

v. Strategic perspectives or inputs regarding future growth of Companyand its performance.

11. Familiarisation programme for Independent Directors

During FY 2019-20 the Board including all Independent Directors wereexplained about their roles rights and responsibilities in the Company through detailedpresentations as per the Companies Act 2013 and SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015.

The Board including all Independent Directors was provided withrelevant documents reports and internal policies to enable them to familiarise with theCompany's procedures and practices from time to time besides regular briefing by themembers of the Senior Leadership Team. The Familiarisation programme for IndependentDirectors is posted on the website can be viewed at the followingweblink: Independent-Directors.pdf

12. Remuneration Policy

Your Company has set up a Nomination and Remuneration ('NR') Committeepursuant to Section 178 of the Act which has formulated a policy for Directors RsAppointment and remuneration for Directors KMP and other employees. They have alsodeveloped the criteria for determining qualifications positive attributes andindependence of a Director including making payments to Non-Executive Directors.

NR Committee takes into consideration the best remuneration practicesbeing followed in the industry while fixing appropriate remuneration packages. Further thecompensation package for Directors Key Managerial Personnel Senior Management and otheremployees are designed based on the following set of principles:

• Aligning key executive and Board remuneration with the long terminterests of the Company and its shareholders;

• Minimise complexity and ensure transparency;

• Link to long term strategy as well as annual businessperformance of the Company;

• Promotes a culture of meritocracy and is linked to keyperformance and business drivers; and

• Reflective of line expertise market competitiveness so as toattract the best talent.

Your directors affirm that the remuneration paid to employees KMP andDirectors is as per the Remuneration Policy of the Company. The Remuneration Policy of theCompany is enclosed as Annexure-B.

13. Directors Rs Responsibility Statement

Pursuant to Section 134 of the Act the Directors state that:

a) in the preparation of the annual accounts for the Financial Yearended 31st March 2020 the applicable accounting standards have been followedalong with proper explanation relating to material departures if any;

b) appropriate accounting policies have been selected and appliedconsistently by and have made judgments and estimates that are reasonable and prudent soas to give a true and fair view of the state of affairs of the Company as at 31stMarch 2020 and of the profit and loss of the Company for the year ended 31stMarch 2020;

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

d) the annual accounts for the financial year ended 31st March2020 have been prepared on a going concern basis;

e) proper internal financial controls were followed by the Company andsuch internal financial controls are adequate and were operating effectively; and

f) proper systems are devised to ensure compliance with the provisionsof all applicable laws and that such systems were adequate and operating effectively.

14. Management Discussions and Analysis Report

Management Discussions and Analysis Report as required pursuant toSchedule V of Securities & Exchange Board of India (Listing Obligations and DisclosureRequirement) Regulations 2015 is annexed and forms part of this Report.

15. Frauds reported by statutory auditors

During the financial year under review the statutory auditors have notreported any fraud under sub section (12) of Section 143 of the Companies Act 2013 otherthan those which were reportable to the Central Government.

16. Amounts due to micro small and medium enterprises

Based on the information available with the company regarding thestatus of the suppliers under the MSME there are no dues outstanding to Micro and SmallEnterprises as at 31st March 2020.

17. Corporate Governance

The Company has complied with the Corporate Governance requirements asstipulated in Securities & Exchange Board of India (Listing Obligations and DisclosureRequirement) Regulations 2015. A separate section on Corporate Governance along with acertificate from the Auditors of the Company confirming the compliance is annexed andforms part of this Report.

The Board has also evolved and adopted a Code of Conduct based on theprinciples of Good Corporate Governance and best management practices being followedglobally. The Code of Conduct is available on the website of the Company

18. Material Changes and commitments

Save as mentioned elsewhere in this Report no material changes andcommitments affecting the financial position of the Company have occurred between the endof the financial year of the Company - 31st March 2020 and the date of thisReport.

19. Changes in Capital Structure

During the year under review there was no change in the paid upcapital of the company.

20. Particulars of loans guarantees and investments u/s 186

The particulars of loans guarantees and investments covered u/s 186 ofthe Companies Act 2013 are given in the financial statements which forms the part ofAnnual Report.

21. Related Party Transactions

During FY 2019-20 all contracts/arrangements/transactions entered intoby your Company with related parties under Section 188(1) of the Act were in the ordinarycourse of business and on an arm's length basis. During FY 2019-20 your Company has notentered into any transactions with related parties which could be considered 'material Rsas per Regulation 23 of the Securities Exchange Board of India (Listing Obligations &Disclosure Requirements) Regulations 2015 so here is no need to report any transaction inAOC-2.

Further during FY 2019-20 there were no materially significantrelated party transactions made by your Company with the Promoters Directors KeyManagerial Personnel or other designated persons which might have potential conflict withthe interest of the Company at large.

All related party transactions are placed before the Audit Committeefor its approval. There was no matter requiring approval of the Board. During the yearunder review the Audit Committee has approved transactions through the Omnibus mode inaccordance with the provisions of the Act and Listing Regulations. Related partytransactions were disclosed to the Board on regular basis as per IND AS 24. Details ofrelated party transactions as per IND AS 24 may be referred to in Note 45 of theStandalone Financial Statements.

The policy on Related Party Transactions is available on the Company'swebsite at and can be viewed at the following link: Transactions2019.pdf

None of the Directors has any pecuniary relationships or transactionsvis-a-vis the Company except the remuneration received by respective directors.

22. Risk Management System

Your Company follows a comprehensive system of Risk Management and hasadopted a procedure for risk assessment and its minimisation. It ensures that all therisks are timely defined and mitigated in accordance with the Risk Management Processincluding identification of elements of risk which might threaten the existence of theCompany. Your Company monitors the Risk Management Process in the Company and the same isperiodically reviewed by the Board. The risk management policy of the company is placed atthe website of the company at the below mentioned link:

23. Vigil Mechanism/ Whistle Blower Policy: The Company

promotes ethical behavior in all its business activities and has put inplace a mechanism of reporting illegal or unethical behavior. The Company has a vigilmechanism/ whistle blower policy wherein the employees are free to report violation oflaws rules regulations or unethical conduct to their immediate supervisor or such otherperson as may be notified by the management to the workgroups. The confidentiality ofperson reporting violation is maintained and he is not subjected to any discriminatorypractice. No person has been denied access to the chairman of Audit Committee. The vigilmechanism policy is available at Company's website at the following link: Mechanism-Policy.pdf

24. Internal financial controls & their adequacy

The Company has a proper and adequate system of internal controls. Thisensures that all assets are safeguarded and protected against loss from unauthorized useor disposition and those transactions are authorised recorded and reported correctly. Anextensive programme of internal audits and management reviews supplements the process ofinternal control. Properly documented policies guidelines and procedures are laid downfor this purpose. The internal control system has been designed to ensure that thefinancial and other records are reliable for preparing financial and other statements andfor maintaining accountability of assets. The Company has in place adequate internalfinancial controls with reference to financial statements. During the year such controlswere tested and no reportable material weakness in the design or operation was observed.

25. Insider Trading Code

In compliance with the SEBI regulations on prevention of insidertrading the Company has instituted a comprehensive Code of Conduct for regulatingmonitoring and reporting of trading by Insiders. The said Code laid down guidelines whichadvised them on procedures to be followed and disclosures to be made while dealing withshares of the Company and cautioned them on consequences of noncompliances.

Further the Company has put in place a Code of practices andprocedures of fair disclosures of unpublished price sensitive information. Both theaforesaid Codes are in lines with the Securities and Exchange Board of India (Prohibitionof Insider Trading) Regulations 2015. The code of conduct of the company for preventionof insider trading is placed at the website of the company under the following link: prevention-of-Insider-Trading.pdf

26. Corporate Social Responsibility

In accordance with the requirements of Section 135 of Companies Act2013 your Company has a Corporate Social Responsibility (CSR) Committee which comprisesfollowing directors as on 31st March 2020:

Name of Director Designation in the Committee
1. Mr. Adish Oswal Chairman
2. Mrs. Manju Oswal Member
3. Mr. Harpal Singh Member

The Company considers Corporate Social Responsibility (CSR) as socialobligation sustainable development regulatory environment human resource managementsafety health & environment and a part of Corporate Governance and accordingly yourCompany has formulated a Corporate Social Responsibility Policy (CSR Policy) which isavailable on the website of the Company at under the section CorporateGovernance.

The company undertake to do the following activities:

• eradicating hunger poverty and malnutrition promoting healthcare includes preventive health care and sanitation and making available safe drinkingwater:

• promoting education including special education and employmentenhancing vocation skills especially among children women elderly and the differentlyabled and livelihood enhancement projects;

• promoting gender equality empowering women setting up homesand hostels for women and orphans; setting up old age homes day care centres and suchother facilities for senior citizens and measures for reducing inequalities faced bysocially and economically backward groups;

• ensuring environmental sustainability ecological balanceprotection of flora and fauna animal welfare agroforestry conservation of naturalresources and maintaining quality of soil air and water;

• protection of national heritage art and culture includingrestoration of buildings and sites of historical importance and works of art; setting uppublic libraries; promotion and development of traditional art and handicrafts:

• measures for the benefit of armed forces veterans war widowsand their dependents;

• training to promote rural sports nationally recognised sportsparalympic sports and Olympic sports;

• contribution to the Prime Minister's National Relief Fund or anyother fund set up by the Central Government for socio-economic development and relief andwelfare of the Schedulcd Caste the Scheduled Tribes other backward classes minoritiesand women;

• contributions or funds provided to technology incubators locatedwithin academic institutions which are approved by the Central Government

• rural development projects.

• Any other activities as prescribed or recommended

The Annual Report on Corporate Social Responsibility Activities isannexed herewith as Annexure-C and forms an integral part of this report.

27. Audit Committee

The Audit Committee of the Company comprises of the followingNon-Executive and Independent Directors as on

31st March 2020:

1. Mr. Harpal Singh - Chairperson

2. Mrs. Manju Oswal - Member

3. Mrs. Aarti Sharma - Member

The details about Audit Committee and its terms of reference etc. havebeen given in Corporate Governance Report. During the Year under review there was no suchrecommendation of the Audit Committee which was not accepted by the Board.

28. Auditors

i) Statuto ry Audito rs

M/s. Romesh K. Aggarwal and Associates Chartered Accountants Ludhiana(Firm Registration No. 000711 N) Chartered Accountants have been appointed as statutoryauditors of the Company at 37th Annual General Meeting held on 09.09.2017 for aperiod of three years i.e. till the conclusion of 40th AGM of the Company.

The Audit Firm can be appointed as auditor for consecutive two terms ofnot more than 10 years collectively in the Listed Company and other categories of companyas specified in section 139(2) of the Companies Act 2013.

Therefore it is proposed to reappoint the above mentioned audit firmfor the five (5) consecutive years starting from the conclusion of this ensuing 40thAGM till the conclusion of the 45th AGM.

The observations of Auditor in their Report (both Standalone andConsolidated) read with the relevant notes to accounts are self explanatory and thereforedo not require further explanation pursuant to Section 134(3)(f)(i) except for thefollowing:

Note No. 50 of the Standalone Ind AS financial statements regardingcrediting a profit of Rs 396.44 lakhs due on payment of FCCB liability to the statement ofprofit & loss during the year ended March 312017 which should have been credited inthe statement of profit & loss on payment of FCCB liability which is still outstandingto the tune of 554160 USD as on March 312020 is not in compliance with the requirementsof para 27 of the Ind AS 1- Presentation of Financial Statements w.r.t. preparation offinancial statements on accrual basis. Consequently the profit and loss has beenoverstated by the above mentioned amount.

We further report that had the impact of our observations made in paraabove been considered the net loss and net worth for the period ended would haveincreased and decreased respectively by Rs 396.44 lakhs.

The Management would hereby state that the company had credited theamount on the basis of settlement of FCCB liability and out of the settled amount a majorpart has already been paid till year ended on 31st March 2017.

The company is undergoing debt resolution plan with the entire of itslenders including Axis Bank Ltd which is holder of FCCB and the issue will be addressed indebt resolution plan.

ii) Secretarial Auditors

Pursuant to the provisions of Section 204 of the Companies Act 2013and the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 theCompany has appointed M/s Khanna Ashwani & Associates Practicing Company SecretaryLudhiana to conduct the secretarial audit of the Company for the financial year 2019-20and reappointed the same for FY 2020-21 also.

Report of the secretarial auditor is annexed herewith as 'AnnexureD' which forms part of this report. The observations/remarks made by the SecretarialAuditors Rs in their report are self explanatory and require no comments.

iii) Cost Auditors

M/s Ramanath Iyer & Company Cost Accountants New Delhi wereappointed as the Cost Auditors of the Company for FY 2019-20 to audit the cost accounts ofthe Company. The Board of Directors has re-appointed M/s Ramanath Iyer & Company CostAccountants New Delhi as the Cost Auditors of the Company to conduct cost audit for thefinancial year ended 31st March 2021. As per the requirement of Section 148 ofthe Companies Act 2013 read with rules made there under the remuneration to be paid tothem is placed for the ratification by the members at this Annual General Meeting. Thecompany has maintained cost records as prescribed under the Companies Act.

29. Compliance to Secretarial Standards

The company has duly complied with the applicable Secretarial Standardsduring the financial year 2019-20.

30. Deposits from Public

The Company has not accepted any deposits from public during the yearand as such no amount on account of principal or interest on public deposits wasoutstanding as on the date of balance sheet.

31. Listing of securities

The shares of the Company are listed on National Stock Exchange ofIndia Ltd. (NSE) and BSE Limited. The Company has paid annual listing fee to exchanges forthe year 201920.

32. Human Resources Management

Your Company gives utmost importance to human resource. It considers"Human Resource as Human Capital" and believes in the development of HumanResource. The Company strongly believes in the Performance Management System and alwaystries to explore and tap high potential at the Group level to meet new challenges andcompetition. Our main tool is training and developing talent at various levels. Internaland external trainings are regularly organized for the development of themembers/employees.

The information required under Section 197(12) of the Companies Act2013 read with Rule 5 of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 is annexed herewith as 'Annexure E'.

33. Safety Health & Environment

The Company's top priority is safety with regard to employment. Itencourages safety measures at all operational levels especially at floor level. Regulartraining programs are conducted to create awareness about the importance of safety atwork. Medical Camps are organized periodically for welfare of the members. Additionallyregular medical facilities are also provided to them.

34. Prevention of Sexual Harassment at workplace

The Company has in place a Prevention of Sexual Harassment policy inline with the requirements of the Sexual Harassment of Women at the Workplace (PreventionProhibition and Redressal) Act 2013. All employees (permanent contractual temporarytrainees) are covered under this policy. Internal Complaints Committees have been framedat various locations to redress complaints of sexual harassment. The Company has notreceived any compliant related to sexual harassment during the year.

35. Energy conservation technology absorption and foreign exchangeearnings and outgo

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

36. Extract of Annual Return

The details forming part of the extract of the Annual Return in FormMGT-9 for 2019-20 as required under Section 92 of the Act read with rules is annexed asAnnexure 'G Rs which forms an integral part of this Report and Annual Return is availableon the Company's website viz. http://

37. Company Petition

Vardhman Polytex Ltd (VPL) being holding company of erstwhile FMHammerle Textiles Limited had filed a petition u/s 397 398 of the erstwhile CompaniesAct1956 in the Hon'ble Company Law Board Principal Bench New Delhi against minorityshareholder of FMH-Maschinen Umwelttechnik Transportanlagen Gesellschaft mbH Austria[(MUT)- another shareholder] IRIS Textile GmbH (erstwhile foreign Collaborator) Mr.JosefHahnl Director and Mr.Ishwinder Maddh (erstwhile Alternate director to Mr.Josef Hahnl)alleging that the activities and acts of Mr.Josef Hahnl and Mr.Ishwinder Maddh are in themanner oppressive to VPL. VPL also filed petition before the CLB to declare that allotmentof 19015920 shares to IRIS (presently held by MUT) as void ab initio for want ofconsideration and rectify the register by cancelling the allotment made to IRIS. Infurtherance of the petition filed by the Company the MUT filed an application againstOFMHT for oppression and mismanagement. The Company Law Board (CLB) vide its consolidatedorder dated 13.08.2015 has dismissed all the petitions. The matter pertaining torectification of register of members was disposed off against VPL. The same was challengedbefore the Punjab & Haryana High Court at Chandigarh and a stay has been granted inthe matter by the Hon'ble High Court. In response to the order of CLB dated 13.08.2015Hahnl Group filed two applications at CLB for execution of above CLB order and foramendment/ rectification in the order.

Also MUT had got an order dated 13.10.201 7 from Supreme Court of Indiafor adding Vardhman Polytex limited as a party to purchase the shares pursuant to CLBOrder dated 13.08.2015. VPL has filed Civil Appeal under section 10 F of the companiesAct 1956 (now corresponding section 59 of the companies Act 2013) against the judgmentdated 13.08.2015 passed by the Hon'ble Company law board as modified by order 13.10.2017passed by the Hon'ble Supreme Court of India. Punjab & Haryana High Court Chandigarhvide its interim order dated 04-12-2019 has directed to determine the market value ofshares held by minority shareholders of FM Hammerle Textiles Ltd. State Bank of India asCoC of FM Hammerle has filed Special Leave Petition (SLP) in the Hon'ble Supreme Court ofIndia assailing the validity of the impugned interim order dated 04.12.2019 passed byHon'ble High Court of Punjab & Haryana. Hon'ble Supreme Court of India vide its orderdated 1 7.01.2020 was pleased to grant stay of operation of the impugned interim order ofthe High Court. On 10th February 2020 Supreme Court has issued Notice to VPL to submitits reply. After that the matter was not taken up in the Supreme Court. The matter issub-judice in the Hon'ble Supreme Court and Punjab & Haryana High Court Chandigarhand stay is continuing.

38. Significant and material orders passed by the regulators or courtsor tribunals

Except as stated in the report there are no significant and materialorders passed by the Regulators or Courts or Tribunals which would impact the goingconcern status of the Company.

39. Acknowledgements

Your directors are pleased to place on record their sincere gratitudeto the Government Financial Institutions Bankers and Business Constituents for theircontinued and valuable co-operation and support to the Company. They also take thisopportunity to record their appreciation of the valuable contribution made by theemployees in the successful operations of the Company during the year.

For and on behalf of the Board
(Adish Oswal)
Date: 14th August 2020 Chairman and Managing Director
Place: Ludhiana (DIN-00009710)