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Velan Hotels Ltd.

BSE: 526755 Sector: Services
NSE: N.A. ISIN Code: INE548D01014
BSE 00:00 | 19 May 7.56 -0.06






NSE 05:30 | 01 Jan Velan Hotels Ltd
OPEN 7.50
52-Week high 12.15
52-Week low 2.93
Mkt Cap.(Rs cr) 24
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 7.50
CLOSE 7.62
52-Week high 12.15
52-Week low 2.93
Mkt Cap.(Rs cr) 24
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Velan Hotels Ltd. (VELANHOTELS) - Director Report

Company director report


Your Directors are in presenting their 31st Annual Report together with theAudited Accounts of the Company for the year ended 31st March 2021.


(Rs. in lakhs)

PARTICULARS 2020 - 21 2019 - 20
Profit / (Loss) Before Interest Depreciation and Tax (111.99) (126.64)
Add : Finance Cost 0.08 13.19
Profit / (Loss) Before Depreciation & Tax (112.07) (139.83)
Add : Depreciation 167.78 177.20
Less : Exceptional Item 164.37 -
Profit / (Loss) Before Tax [PBT] (115.49) (317.55)
Less : Tax Expenses
- Current Tax - -
- Tax relating to prior years - -
- Deferred Tax 122.63 -
Profit / (Loss) After Tax 7.13 (317.55)
Balance b/f from previous years (5394.02) (5076.47)
Balance to be carried over to the Balance sheet (5386.88) (5394.02)


The year started with a huge challenge before humanity with the onset of COVID-19 whichled to lockdown throughout the Country. Due to the same the company's hotel operationsalso came to a standstill since March 24 2020 resulting in; the entire year wascompletely washed out. The pandemic has materially impacted the revenues of the Companyfor the year ended March 312021.

During the year under consideration the gross receipts of your company decreased toRs.12.39 Lacs from Rs.339.22 Lacs registered in the previous year. Profit/(Loss) beforeInterest Depreciation and Taxation was Rs.(111.99) lacs against Rs. (126.64) Lacsrecorded in the previous year. Similarly the Profit after Tax for the year ended March312021 stood at Rs.7.13 lacs as against a Loss of Rs. 317.54 lacs registered in theprevious year.


Novel Corona Virus or Covid-19 wreaked havoc across the world in 2020 as the outbreakIndia first started feeling the ripple effects of the global COVID-19 turmoil towards theend of February 2020 with the situation worsening thereafter as India like most othercountries went into a lockdown towards the end of March 2020.

The pandemic's impact on the hospitality industry has been extremely disruptive. Atpresent 30 percent of hotels and restaurants in the country have shut down permanentlydue to financial loss. Over 20 percent of such facilities haven't opened fully after thelockdown eased. The rest continues to run with losses and revenues below 50 percent of thepre-Covid level. Hit hard by the repercussions of the COVID-19 pandemic the Company'soperation also was totally shut down throughout the year. Even after lifting of thepartial lockdown and restrictions the Company could not start the operation due touncertainty over economic conditions and experience of muted growth in the GarmentIndustry at Tirupur Region where the hotel's operation is carried at besides insufficientcash reserve to resume the hotel operation. The pandemic situation is once again resurgingin the entire country and the state of Tamilnadu has been worst affected. At thisjuncture it is not known how the situation will develop into and when the businessoperations of the company will be resumed again due to lockdown and restriction that maybe imposed by the government. All the forgoing factors are expected to have a seriousimpact on the business of the company during the current financial year & beyond andat this point it is not possible to quantify or gauge the impact as again it cannot beforecasted when the complete normalcy will be restored. The Company will continue toclosely monitor any material changes to future economic conditions. The shareholders ofthe Company have approved the amendments to the Main Objects clause of the Memorandum ofAssociation by means of a special resolution passed at 30th Annual GeneralMeeting held on 26th December 2020 for leasing the hotel property for whichthe management is scouting for a business partner to re-commence the operation of thehotel once COVID-19 situation is normalized. This is expected to secure a better return oncapital employed & enhance the long-term interests of the shareholders.

Members may be aware that the Company's account was categorized as NPA by AllahabadBank and Andhra Bank during the year 2014. In April 2017 the said Banks assigned theentire debts of the Company along-with all underlying security interest all rights title& benefits to M/s.RARE Asset Reconstruction Limited (previously known as RaytheonAsset Reconstruction Private Limited) (RARE ARC) under the applicable provisions of theSARFAESI Act. The Company was in prolonged discussion with RARE ARC for the settlement ofits debt through One-Time Settlement offer (OTS) and as a result in March 2021 theCompany received and accepted a letter of In-Principle approval dated 15thMarch 2021 with the said RARE ARC for payment of Rs.96.80 crores towards full & finalpayment of the amount due & payable to the said ARC subject to the Company complyingwith 'Schedule of Payments' referred to in the In-principle approval. As per the scheduleof payment Rs.30 Crores was ought to be paid on or before 31st March 2021 asinitial / upfront payment and further payment Rs.66.80 crores is ought to be paid inseveral tranches not later than 31st March 2023 together with interest @12% onoutstanding amount. The Company has paid the initial payment from the sale proceeds ofShopping Mall and part of Multiplex properties and is confident of meeting all paymentschedules specified in the In-principle approval. Upon payment of the initial payment ofRs.30 crores within the stipulated time the Company sought relaxation in period ofinstallments and reduction in rate of interest in the proposed final approval of RARE ARCon account of prevailing COVID-19 situation. In opinion of the management the settledamounts with RARE ARC are new borrowing / liability since the lender (ARC) is differentfrom earlier lenders (Banks) and the new borrowings / liability are on substantiallydifferent terms viz as amount of settlement schedule of payment etc. Hence thismodification is treated as derecognition of the original liability (Rs.13147 lakhs) andthe recognition of a new liability. Accordingly the Company has written back Rs.3443.81/-lakhs as difference between secured borrowings / loans outstanding in the Balance Sheet asat 31 March 2020 and the settlement amount between the Company & ARC.

Towards the settlement of debts in November 2020 a Memorandum of Understanding (MoU)was entered into between the Company and M/s.Avenue Supermarts Limited the purchaser (Non-related party) for sale of Company's Shopping Mall and part of Multiplex propertiesfor total consideration of Rs.35.4375 Crores subject to obtaining the consent of M/s.RAREAsset Reconstruction Limited (RARE ARC) which has the symbolic possession of the entireproperties of the Company under the provisions of SARFAESI Act and rules framedthere-under. Pursuant to No-Objection given by RARE ARC vide their letter dated 23rdMarch 2021 the Company sold / disposed of the above said properties to M/s.AvenueSupermarts Limited on 30th March 2021. As per the terms of In-principleapproval in respect of OTS offer out of sale consideration of Rs.35.4375 crores Rs.30.00crores from the disposal of the above properties was utilized as an initial / upfrontamount to settle a part of outstanding debts to RARE ARC and balance consideration of theabove said properties is ought to be paid within the period 6 months subject to dueperformance committed by the Company for completion of sale process.

Upon fulfilling the requisite conditions stipulated in the in-principle approval RAREARC vide their letter dated May 20 2021 accorded its final approval in respect ofcompany's OTS offer granting the grace period for payment of installment of duesconsidering the current situation on account COVID-19 along with NOC for sale of remainingproperties of the Company. The salient features of final approval granted by RARE ARC arereferred in Note.36 to Notes to the financial statements. In view of terms of approval ofOne-Time Settlement (OTS) and payment of initial / up-front amount the long term securedborrowings have reduced to Rs. 67.03 crores in the year under review against Rs.131.47 ason 31st March 2020. In coming year the Company will continue to prune thedebts by disposing off the assets of the Company to repay the debt part or fully.

Even after the Company has shut the operation due COVID-19 the Company is liable tofunction just to comply with the statutory obligations with the Registrar of CompaniesGST Authorities Stock Exchange and also safe guarding the assets of the Company. TheCompany has engaged a few causal staffs on temporary basis to carry out the above works.The Company shall hire more personnel as soon as the company's operation is resumed.


In view of operating losses incurred during the year your Directors do not recommendpayment of any dividend.


The Authorised Share Capital of the Company is Rs.5000 lakhs and the paid up equitycapital as on March 31 2021 was Rs. 3196.41 Lakhs.

During the year under review the Company has not issued shares with differentialvoting rights nor granted stock options nor sweat equity.

The Company has not made any purchase or provision of its own shares by employees or bytrustees for the benefit of employees during the financial year 2020 - 21.


As the Company reported inadquate Profit the Company does not propose to transfer anyamount to Reserves.


During the year under review your Company did not accept any deposits in terms ofSection 73 of the Companies Act 2013 read with the Companies (Acceptance of Deposit)Rules 2014.

The details of the unsecured loan received from the Directors of the Company arereported elsewhere in the Annual Report and declarations are furnished by them as perrequirement of proviso of Rule 2(1)(c)(viii) of Companies (Acceptance of Deposits) Rules2014.


During the under review the Company has not given any loans or guarantees coveredunder the provisions of Section 186 of the Companies Act 2013 and has not made anyinvestments. Hence the details of loans and advances which are required to be disclosedin the Annual Report pursuant to Regulation 34(3) read with Schedule V of the SEBI ListingRegulations are not furnished.


The Company has an Internal Control System commensurate with the size scale andcomplexity of its operations. The scope and authority of the Internal Audit function aredefined in the Internal Audit Manual. To maintain its objectivity and independence theInternal Audit function reports to the Chairman of the Audit Committee of the Board &to the Managing Director.

The Internal Auditor monitors and evaluates the efficacy and adequacy of internalcontrol system in the Company its compliance with operating systems accountingprocedures and policies at all locations of the Company.


Under Section 135 of the Companies Act 2013 every company having net worth of atleast Rs 500 crore turnover of Rs 1000 crore or more or a minimum net profit of Rs. 5crores during the immediately preceding financial year has to make CSR expenditure.

Since the Company is continuously incurring losses no CSR policy has been devised.


Pursuant to Regulation 43A of the SEBI (Listing Obligations and Disclosures)Regulations 2015 as amended only top 1000 listed companies (based on marketcapitalization of every financial year) shall formulate a Dividend Distribution Policywhich shall be disclosed in their annual reports and on their website as well.

Since your company does not fall under top 1000 listed companies no such report isprovided in the Annual Report.


Regulation 34(2) of SEBI Listing Regulations as amended inter alia providesthat the Annual Report of the top 1000 listed entities based on market capitalization(calculated as on March 31 of every financial year) shall include a BusinessResponsibility Report (''BRR'').

Your Company not being one of such top 1000 listed entities has not included BRR aspart of the Annual Report.


The disclosures relating to the details of

(i) Conservation of Energy

(ii) Research & Development and Technology Absorption and

(iii) Foreign Exchange Earning and Outgo to be made under sub-section (3) (m) ofSection 134 of the Companies Act 2013 read with Rule (8)(3) of the Companies (Accounts)Rules 2014 is not furnished in view of the closure of the Hotel Operations during theperiod under review.


a. Retirement by rotation :

In accordance with the provisions of Section 152 of the Companies Act 2013 read withSection 149 of the said Act at least 2/3rd of the total number of Directors excludingIndependent Directors shall be liable to retire by rotation and out of the Directorsliable to retire by rotation at least 1/3rd of the Directors shall retire by rotation atevery Annual General Meeting.

In view of the above Mrs.Sasikala retire by rotation and being eligible offer herselffor re-appointment a resolution seeking shareholders' approval for her re-appointmentwill be included in the Notice ofAGM.

b. Status of KMP:

During the year under review Sri.E.V.Muthukumara Ramalingam Managing DirectorSri.M.R.Gautham Executive Director Smt.R.Lalitha Chief Financial Officer andSri.M.Srinivasan Company Secretary are other KMPs as per the provisions of the Act andwere already in the office. None of the KMPs resigned during the year.

c. Appointment / Cessation:

During the year under review Mr.B.A.Madhusudhan Non-Executive -Non-IndependentDirector resigned from the Board with effect from 18th August 2020 due topersonal reasons. The Board wishes to place on record its appreciation for the invaluableservices rendered by Mr.B.A.Madhusudhan during his tenure as Director of the Company.

A Special Resolution seeking shareholders' approval for re-appointment ofMr.E.V.Muthukumara Ramalingam as Managing Director who was re-appointed by the Board on21-5-2021 will be included in the Notice of AGM.

Mr.Nagaraj Saveethkumar (DIN:09130676) was appointed by the Board of Directors of theCompany at their meeting held on March 31 2021 as an Additional Director in the capacityof a Non-Executive- Independent Director in accordance with the Articles of Associationand Sections 149(6) 161 and Schedule IV to the Companies Act 2013 and Regulation16(1)(b) and other applicable provisions of SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015. A resolution seeking shareholders' approval for hisappointment will be included in the notice of AGM.

d. Declaration by Independent Director:

The Company has received necessary declaration from each of the Independent Directorsunder Section 149(7) of the Companies Act 2013 that he meets the criteria ofIndependence laid down in Section 149(6) of the Companies Act 2013 and Regulation 16 ofSEBI (Listing Obligations and Disclosure Requirement) Regulations 2015. IndependentDirectors have also confirmed that they are not aware of any circumstance or situationwhich exists or may be reasonably anticipated that could impair or impact their ability todischarge their duties. In the opinion of the Board all the independent directors arepersons of integrity possesses relevant expertise and experience.

e. Disqualification of Directors:

None of the directors of the Company are disqualified pursuant to the provisions ofSection 164 of Companies Act 2013 or debarred or disqualified from being appointed orcontinuing as directors of companies by the Securities and Exchange Board of India orMinistry of Corporate Affairs or any such statutory authority. A certificate from aPracticing Company Secretary in this regard is attached to this report.

f. Woman Director :

In terms of the provisions of Section 149 of the Companies Act 2013 and Regulation 17of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 your Companyhas complied with the requirement of having at least one Woman Director on the Board ofthe Company. Mrs.M.Sasikala is a Non Independent and Women Director of the Company.


The Company has complied with Secretarial Standard issued by the Institute of CompanySecretaries of India on Board Meetings and General Meetings.


To familiarize new Independent Directors with the strategy operations and functions ofour Company the Company's presentation inter alia on strategy operationsservice offerings markets organization structure finance human resources andtechnology is given at the time of their induction and thereafter during the Boardmeetings and/or committees thereof. The details of the familiarization program can beviewed at


There is no change in the nature of business of the Company.


There are no significant and material orders passed by the Regulators / Courts /Tribunal which would impact the going concern status of the Company except pending Appeal/ Petitions / Application filed by the Company with DRT Coimbatore and DRAT Chennai.


The Board of Directors has carried out an annual evaluation of its own performanceBoard committees and individual directors pursuant to the provisions of the Companies Act2013 and corporate governance requirements as prescribed by SEBI LODR Regulations throughstructured questionnaire. The performance of the Board was evaluated by the Board based onthe criteria such as the Board composition and structure effectiveness of Board processinformation and functioning etc.

The performance of the committees was evaluated by the Board based on the criteria suchas the composition of the committee's effectiveness of committee meetings etc. The Boardand Nomination and Remuneration Committee reviewed the performance of the individualdirectors based on the criteria such as the contribution of individual director to theBoard and committee meetings like preparedness on the issue to be discussed meaningfuland constructive contribution and inputs in meetings etc.

The performance assessment of Non-Independent Directors Board as a whole and theChairman were evaluated in a separate meeting of Independent Directors. The same was alsodiscussed in the meetings of NRC and the Board.

The NRC and Board in their meetings held on 31st March 2021 have discussedtheir overall performance on the parameters as laid down in the Nomination andRemuneration Policy and concluded that the Board and its Committees have been performingefficiently.

In compliance with Schedule IV of the Companies Act 2013 and Rules there-under theIndependent Directors met on 31st March 2021 and discussed issues as prescribedunder the Schedule IV of the Companies Act 2013 and also discussed various other issues.


During the year eight Board Meetings and five Audit Committee Meetings were convenedand held. The details of which are given in the Corporate Governance Report. Theintervening gap between the Meetings was within the period prescribed under the CompaniesAct 2013 as amended.


In terms of Section 134 (5) of the Companies Act 2013 the Directors would like tostate that :

i) In the preparation of the annual accounts all the applicable Accounting Standardshave been followed along with proper explanation relating to material departures;

ii) The Directors have selected such accounting policies and applied them consistentlyand made judgments and estimates that were reasonable and prudent so as to give a true andfair view of the state of affairs of the Company at the end of the financial year and ofthe profit of the Company for the year under review.

iii) The Directors have taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of this Act for safeguardingthe assets of the Company and for preventing and detecting fraud and other irregularities.

iv) The Directors have prepared the annual accounts on the going concern basis. TheDirectors are hopeful of fulfillment of terms of One-time settlement of dues as approvedby ARC and revival of operations. Therefore the company's accounts are prepared on goingconcern basis.

v) The Directors had laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and were operatingeffectively.

vi) The Directors had devised a proper system to ensure compliance with the provisionsof all applicable laws and that such system was adequate and operating effectively.


i) Not all transactions with related parties are construed as related partytransactions. Provisions regarding Related Party Transaction are encapsulated under 188 ofthe Companies Act 2013 ("the Act") read with rule 15 of the Companies (Meetingsof Board and its Powers) Rules 2014. All related party transactions that were enteredinto during the financial year were on an arm's length basis and were in the ordinarycourse of business.

ii) Further in the financial year 2020-21 in scope of Section 188(1) of the Actthere were no material transactions with any of its related parties. Therefore thedisclosure of Related Party Transactions as required under Section 134(3(h) of the Act inForm AOC-2 is not applicable to the Company for the financial year 2020-21 and hence thesame is not provided.

iii) Pursuant to the provisions of Regulation 2(1)(zc) and 23 of SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 the Company has entered thetransactions with related parties i.e the aggregate value of material transactionexceeded 10% of the annual consolidated turnover of the Company as per the last auditedfinancial statements of the Company the details of which reported here-under:

Name of the Related Party Relationship with the Company Nature of Transaction Amount of transaction
Mr. E.V. Muthukumara Ramalingam Managing Director Provided un-secured loan to the Company Rs.200000/-
Mr.M.R.Gautham Executive Director Provided un-secured loan to the Company Rs.2786994/-

Except the above related party transactions there were no materially significantrelated party transactions made by the Company with the Promoters Directors KeyManagerial Personnel or other designated persons which may have a potential conflict withthe interest of the Company at large.

iv) In line with the requirements of the Companies Act 2013 and Regulation 23 of SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 your Company hasformulated a Policy on Related Party Transactions which is also available on the followingweblink at :

The Policy intends to ensure that proper reporting; approval and disclosure processesare in place for all transactions if any between the Company and Related Parties.

v) All related party transactions if any are placed before the Audit Committee fortheir approval in line with the requirements of the Companies Act 2013 and Regulation 23of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015.


The following are the material changes affecting the financial position of the Companyhaving occurred since the end of the year and till the date of the Report:

M/s. Rare Asset Reconstruction Ltd (RARE ARC) vide their letter dated May 20 2021has considered the Company's proposal of One-Time Settlement offer and accorded theirapproval for payment of Rs.95.80 crores towards full and final settlement of dues subjectto fulfillment of terms and conditions. Further the Company shall pay additionally anamount of Rs.1.00 Crore plus GST to RARE ARC towards Restructuring and Consultancy Fee forthe purpose of arranging and identifying suitable investor / buyer for the secured assetsthus the total amount of OTS payable is Rs.96.80 crores. In view of approval of RARE ARCafter payment of initial / upfront amount of OTS the long term secured borrowings havereduced to Rs. 67.03 crores in the year under review against Rs.131.47 crores as on 31stMarch 2020.

Moreover your Company has stopped its hotel operations completely due to COVID-19pandemic which has in turn impacted the re-opening schedule of the Hotel. Hence yourCompany was unable to generate any revenue during the financial year 2020-2021.


Your Company has no subsidiary as on date of this balance sheet. Hence a statementcontaining the salient features of financial statements of the Company's subsidiaries inForm AOC-1 is not applicable.


The Board of Directors has approved a Code of Conduct which is applicable to theMembers of the Board and senior management in terms of Regulation 17 and Schedule V ofRegulation 34(3) of the Listing Regulations. The full text of the Code is displayed atCompany's website:

The Code lays down the standard procedure of business conduct which is expected to befollowed by the Directors and the designated employees in their business dealings and inparticular on matters relating to integrity in the work place in business practices andin dealing with stakeholders.

All the Board Members and the Senior Management personnel have confirmed compliancewith the Code. In compliance with Schedule V of Regulation 34(3) of the ListingRegulations a declaration signed by the Managing Director is attached and forms part ofthe Annual Report of the Company.


In accordance with the applicable provisions of the Companies Act 2013 SEBI-LODRRegulations and Regulation 9A(6) SEBI (PIT) Regulations 2015 as amended the Company hasa vigil mechanism named "Vigil Mechanism / Whistle Blower Policy" to deal withinstances of fraud and mismanagement if any. The VM/WB Policy ensures that strictconfidentiality is maintained whilst dealing with concerns and also that no discriminationwill be met out to any person for a genuinely raised concern.

The Company has revised the said Whistle-Blower policy to insert "reporting ofincidents of leak or suspected leak of Unpublished Price Sensitive Information(UPSI)" in terms of SEBI (Prohibition of Insider Trading) Regulations 2015 asamended from time to time. The said policy is available on the Company's website at Mechanism_Whistle-blowerPolicy.pdf

A high level Committee has been constituted which looks into the complaints raised. TheCommittee reports to the Audit Committee and the Board.


A revised Code of Conduct to regulate monitor and report Trading by Insiders("the Code")in accordance with the SEBI (Prohibition of Insider Trading)Regulations 2015 (The PIT Regulations). The Code can be viewed at Trading.pdf.

The revised Code is applicable to Promoters Member of Promoter's Group all Directorsand such Designated Employees who are expected to have access to unpublished pricesensitive information relating to the Company. The Company Secretary is the ComplianceOfficer for monitoring adherence to the said PIT Regulations.

The Company has also formulated 'The Code of Practices and Procedures for FairDisclosure of Unpublished Price Sensitive Information (UPSI)' in compliance with the PITRegulations. The Company has also formulated policies for procedure of inquiry in case ofleak of Unpublished Price Sensitive Information in case of leak of UPSI and Policy forDetermination of Legitimate Purposes as well as a part of the Code of Practices andProcedures for Fair Disclosure. This Code is displayed on the Company's website viz.

All Board Directors and the designated employees have confirmed compliance with theCode.


Pursuant to the applicable provisions of the Companies Act 2013 read with the IEPFAuthority (Accounting Audit Transfer and Refund) Rules 2016 (the Rules) as amendedfrom time to time all unpaid or unclaimed dividends are required to be transferred byevery Company to the IEPF established by the Government of India after completion ofseven years. Further according to the Rules the shares on which dividend had remainedunpaid or unclaimed by the shareholders for seven consecutive years or more are also to betransferred to the demat account of the IEPF Authority.

For the financial year 2020-2021 the Company was not liable to transfer any unpaid /unclaimed dividend and/or the shares.

The Shareholders are entitled to claim their shares including all the corporatebenefits accruing on such shares if any from the IEPF Authority by submitting an onlineapplication in Form IEPF-5 and sending a physical copy of the Form IEPF-5 duly signed byall the joint shareholders if any along with requisite documents enumerated in the FormIEPF-5 to the Company's RTA. The Rules and Form IEPF-5 as prescribed for claiming backthe shares are available on the website of the IEPF It may please benoted that no claim shall lie against the Company in respect of share(s) transferred toIEPF pursuant to the said Rules.


A. Response to Qualifications / reservations / adverse remarks / observations on AuditReport :

Sl. Qualification Reservation No. or Adverse Remarks Board's explanation
1. Ability of the Company continuing as 'a going concern' Your Company would like to state that your Company is undergoing substantial financial stress for last five years. Your Company's ability to raise funds has been substantially impaired and the hotel business has been brought to a standstill for the entire period of the financial year 2020-21 due to COVID-19. These developments may raise a significant doubt on the ability of your Company to continue as a going concern.
As a result of concerted and constant efforts of the promoters to revive and rehabilitate the Company the Company has been able to settle of its secured creditors viz. Allahabad Bank and Andhra Bank who have assigned their debts to RARE Asset Reconstruction Limited (RARE ARC). The Company concluded the One Time Settlement (OTS) of debts with M/s.RARE ARC by fulfilling the requisite conditions of In-Principle approval and thus the settled amount is ought to be paid in a phased manner before March 312023.
The Promoters-Directors have infused funds amounting to Rs.29.87 lakhs in the financial year 2020-2021 to meet fixed expenses to keep the Company's assets in good.
There have been discussions for stake sale by the promoters to a business partner to invest funds in the Company for modernization and strengthening the financial position of the Company. Further the management is exploring possibilities of leasing of its Hotel property situate at Tirupur in order to generate revenue. Further your Company is taking active steps to monetize its Hotel property situate at Coonoor Tamilnadu part of Multiplex property and
Power Plant property alongwith Plant & Machinery situate at Tirupur Tamilnadu per terms of OTS offer approved by RARE ARC.
All the aforesaid has resulted in substantial reduction in financial commitments of the Company to a considerable extent and the remaining debt / financial commitment are within manageable level of the Company. Keeping in view the aforesaid settlement and the current position of the Company the management expects a turnaround in the operations of the Company. The ability of your Company to continue as a going concern is predicated upon its ability to monetize its aforesaid assets identifying a business partner restructure its sundry liabilities and recommence its operations. In view of all the actions that are currently underway the financial statements to financial year ended to 2020-21 have been prepared on the basis that your Company is a going concern.
2 Confirmation of balance of outstanding debt With the in-principle and final approval of OTS offer provided by the RARE ARC and accepted by the Company such communication has been considered for the confirmation of the Outstanding Debt.
3 Impairment ofAssets : The test for the impairment of the assets tied to the borrowings has not been carried out as only a portion of the assets have been sold as at the year end. With the other assets still in the possession of the Company impairment if any shall be quantifiable only on completion of the sale of the assets of the Company and extinguishment of the Debt. The Management is confident that the Company will be able to sell these assets to prospective buyers in future at net selling prices which would exceed their carrying amounts and accordingly believe that no provision is required for impairment as at 31 March 2021. Therefore no loss is recognized on account of potential impairment.
4 Delays in remittance of Statutory Dues The Company is passing through severe financial hardships and as a result there were instances of irregularity in the payment of certain statutory dues. The Company is mobilizing necessary resources to meet the overdue payments in coming months by means of monetizing the assets of the Company.
6 Gratuity and Earned Leave accounted on estimated basis The Auditors have also made comment on not following the Accounting Standard with respect to the provisions of Gratuity and Earned Leave on actuarial basis. All the eligible / permanent employees of the Company except KMPs have voluntarily left the service during the month of March 2020 and therefore the
Company does not have any staff except KMP on its payrolls as on 31st March 2021. The gratuity and earned leave provisions made for the left staff is sufficient to take care of their dues. Hence the provision of gratuity / earned leave is not done on the actuarial basis.

B. Response to comments on Secretarial Audit Report :

Sl. No. Qualification Reservation or Adverse Remarks Board's explanation
1 Non-compliance of Minimum Public Shareholding The Company and the promoters are in the process taking action to comply with the regulations of Securities and Exchange Board of India relating to Minimum public Shareholding (MPS) to increase the public shareholding to 25% in terms of Regulation 38 of SEBI (LODR) Regulations 2015.


Your Company has not revised its financial statement or the Report in respect of any ofthe three preceding financial years either voluntarily or pursuant to the order of ajudicial authority.

AUDITORS & SECRETARIAL AUDITOR 0 Statutory Auditors and Auditors' Report

M/s.Krishaan & Co Statutory Auditors of the Company who shall hold office for aterm of five consecutive years from the conclusion of the 27th Annual GeneralMeeting till the conclusion of 32ndAnnual General Meeting of the Company.

The Statutory Auditors have given a confirmation to the effect that they are eligibleto continue with their appointment and that they have not been disqualified in any mannerfrom continuing as Statutory Auditors.

During the period under review there are audit qualifications or adverse remarks inthe Auditors' Report. Management response against each of the qualification reservationor adverse remark or observation made in the Auditors' Report has been furnished elsewherein the Directors' Report.

- Internal Auditors

The Internal Auditor has been conducting half yearly audits of all operations of theCompany and their findings have been reviewed regularly by the Audit Committee. YourDirectors note with satisfaction that no material deviations from the prescribed policyand procedures have been observed.

- Secretarial Auditor and Secretarial Auditor's Report

The Board has appointed Mr.S.Ganesh Viswanathan Company Secretary in Practice toconduct the Secretarial Audit of the Company pursuant to the provisions of Section 204 ofthe Companies Act 2013 the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 and the SEBI (LODR) Regulations 2015 as amended. The Report ofSecretarial Auditor is appended to this Report as "Annexure B". The management'sresponse against the qualification or observation made in the Secretarial Audit Report hasbeen furnished elsewhere in the Directors' Report.

- Cost Auditor and Cost Records

Pursuant to the provisions of Section 148 of the Companies Act 2013 read with theCompanies (Cost records and Audit) Rules 2014 as amended from time to time the Companyis not required to maintain Cost Records under the said rules.

- Reporting of Frauds by Auditors

During the year under review the Statutory Auditors or Secretarial Auditor of theCompany have not reported any frauds to the Audit Committee or to the Board of Directorsunder Section 143(12) of the Act including rules made there-under.


During the year under review the Company not issued any debt instruments or any fixeddeposit program or any scheme or proposal obtaining of credit ratings is not applicableto the Company.


Your Company's Equity shares are listed on the BSE Limited. Listing fees have been paidto this Stock Exchange for the financial year 2020-2021. The Listing fees pertaining tothe financial year 2021-22 shall be paid soon.


No application under the Insolvency and Bankruptcy Code 2016 (IBC) was made on theCompany during the year. Further no proceeding under the IBC was initiated or is pendingas at 31st March 2021.


As on date of this report Audit Committee consists of the Directors namelySri.P.Ganesan Mrs.M.Sasikala Sri.S.P.Sivanandam and Sri.Nagaraj Saveethkumar.Sri.P.Ganesan is the Chairman of the Committee. The Company Secretary acts as theSecretary to the Committee.

There is no such incidence where Board has not accepted the recommendation of the AuditCommittee during the year under review.


The Board has in accordance with the provisions of sub-section (3) of Section 178 ofthe Companies Act 2013 formulated the policy setting out the criteria for determiningqualifications positive attributes independence of a Director and policy relating toremuneration for Directors Key Managerial Personnel and other employees. The compositionof members and a details function of the same are reported elsewhere in the Annual Report.The Nomination and Remuneration Policy as revised in 2019 based on recommendation ofNomination and Remuneration Committee and the salient features of the Remuneration Policyalong with the major gist and changes therein are attached as 'Annexure -A' and theRemuneration Policy is available on Company's website and can be accessed in the linkprovided herein below:


The Board has in accordance with Section 178(5) of the Companies Act 2013 constitutedStakeholder Relationship Committee to resolve the grievances of the Stakeholders of theCompany. The composition of members and a details function of the same are reportedelsewhere in the Annual Report.


The Company has in place an Anti-Sexual Harassment Policy in line with the requirementsof The Sexual Harassment of Women at the Workplace (Prevention Prohibition &Redressal) Act 2013 and Rules framed thereunder. All employees permanent and contractualare covered under this policy.

During the financial year 2020-2021 the Company has shut all the operations due torepercussions of the COVID- 19 and the Company has engaged a few causal staffs only ontemporary / need basis to carry out the statutory obligation and safeguarding the assetsbelow 10 in numbers. There were no female staffs employed in the company either regularor contractual.

The Sexual Harassment of Women at Workplace (Prevention Prohibition and Redressal)Act 2013 mandates all the workplace to constitute Internal Complaints Committee (ICC) forreceiving complaints of sexual harassment of women in all Ministries/Departments of Unionas well as State Governments and in the private sector too.

As the Company has less than ten employees the Company is not required to constituteInternal Complaints Committee (ICC) as per the requirement of prevention of sexualharassment Policy. Further the Company management also has not received any complaintsregarding sexual harassment during the year under review.


The Company complies with all applicable Secretarial Standards issued by The Instituteof Company Secretaries of India and approved by the Central Government under Section118(10) of the Companies Act 2013 for the financial year ended 31st March 2021.


As provided under Section 92(3) and 134(3)(a) of the Act read with Rule 12 of ChapterVII Rules of the Companies (Management and Administration) Amendment Rules 2020 thedraft Annual Return in Form MGT-7 is uploaded on the website of the under the Head 'Annual Returns' in the Investor page.


Pursuant to Section 134 (3) (n) of the Companies Act 2013 the Board is responsiblefor ensuring that risks and also opportunities are identified on a timely basis and thatthe Company's objectives and activities are aligned with the risks and opportunitiesidentified by the Board. The full Board of the Company formally reviews such risks atleast annually. All proposals reviewed by the Board include a consideration of the issuesand risks of the proposal. The Board adopts practices designed to identify significantareas of business risk and to effectively manage those risks in accordance with theCompany's risk profile. Risk Management is an integral part of the Company's businessprocess. In your Company risks are carefully mapped and a risk management framework isinvolved.

The salient features of the Risk Management Policy along with the major gist andchanges therein is available onCompany's website and can be accessed in the link providedherein below:


Pursuant to the Regulation 21 of SEBI Listing Regulations the provisions of thisregulation shall be applicable to top 1000 listed entities vide SEBI (Listing Obligationsand Disclosure Requirements) (Second Amendment) Regulations 2021 effective from May 052021 determined on the basis of Market capitalization as at the end of the immediateprevious financial year.

As the Company does not fall under the top 1000 listed entities the Risk ManagementCommittee has not been established.


A. The information required pursuant to Section 197 (12) of the Companies Act 2013read with Rule 5(1) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 in respect of employees of the Company as follows :

i) The ratio of the remuneration of each Director to the median remuneration of theemployees of the Company for the financial year 2020-21:

As the Company has incurred operating losses none of the Directors was paid anyremuneration.

ii) The percentage increase in remuneration of each Director Chief Financial OfficerChief Executive Officer Company Secretary or Manager in the financial year :

None of the Directors were paid any remuneration. There was no increase in remunerationof CFO and Company Secretary during the financial year.

iii) The percentage increase in the median remuneration of employees in the financialyear :

As there were no permanent employees during the period under review not applicable.

iv) The number of permanent employees on the roles of the Company:

As on 31st March 2021 there were no eligible / permanent employees in theCompany's payroll except Managing Director Executive Director Company Secretary andChief Financial Officer

v) Average percentile increase already made in the salaries of employees other than themanagerial personnel in the past financial year and its comparison with the percentileincrease in the managerial remuneration and justification thereof and point out if thereare any exceptional circumstances for increase in the managerial remuneration:

Not applicable.

vi) It is affirmed that the Remuneration in as per Remuneration policy for DirectorsKey Managerial Personnel and other employees adopted by the Company.

B. During the year under review there are no employees drawing remuneration of morethan Rs.102 lacs per annum or drawing remuneration of Rs.8.50 lacs per month if employedpart of the year. Hence the statement required under Rule 5(2) and 5(3) of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 is not appended to thereport.


The Corporate Governance and Management Discussion & Analysis Report which form anintegral part of this Report are set out as separate Annexure together with theCertificate from the Company Secretary in Practice regarding compliance with therequirements of Corporate Governance as stipulated under various regulations of the SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015.


Risks uncertainties or future actions could differ materially from those expressed inthe Directors' Report and the Management Discussion and Analysis Report. These statementsare relevant on the date of this Report. We have no obligation to update or revise anystatements whether as a result of new information future developments or otherwise.Therefore undue reliance should not be placed on these statements.


Your Company and its Directors wish to extend their sincere thanks to Bankers M/s.RAREAsset Reconstruction Ltd Central /State Governments Local Bodies Customers employeesat all levels of their continuous co-operation and assistance.

The Directors regret the loss of life due to COVID-19 pandemic and are deeply gratefuland have immense respect for every person who risked their life and safety to fight thispandemic.

The Directors appreciate and value the contribution made by every member of the VHLFamily.

For and on behalf of the Board

E. V. Muthukumara Ramalingam

Managing Director (DIN :00046166)
Place : TIRUPUR M. R. Gautham
Date : 29.06.2021 Executive Director (DIN : 00046187)