Vedant Fashions Director Report

The Board of Directors of the Company hereby have pleasure in presenting the Twentieth Annual Report and the audited Annual Accounts on the business and operations of the Company for the year ended March 31, 2022 (year under review''TFY 21-22”).

Financial Highlights

Your Company''s financial performance for the year under review is summarized below:

(INR in Million)
	Standalone		Consolidated
	For the Year Ended March 31,2022	For the Year Ended March 31,2021	For the Year Ended March 31,2022	For the Year Ended March 31,2021
Income:
I. Revenue from operations	10,087.45	5,424.08	10408.41	5,648.16
II. Other income	485.42	575.62	499.26	602.03
III. Total income (I II)	10,572.87	5,999.70	10,907.67	6,250.19
IV. Expenses:
Cost of materials used
- Raw Materials	1,152.03	554.85	1,152.03	554.85
- Accessories & packing materials	175.73	100.81	175.73	100.81
Purchases of stock-in-trade	1,706.48	707.61	1,706.48	707.61
(Increase)/decrease in inventories of finished goods, work-in-progress and stock-in-trade	(368.85)	59.23	(365.98)	100.04
Employee benefit expense	561.28	365.91	575.28	381.07
Finance costs	270.70	250.69	284.25	258.22
Depreciation and amortisation expense	880.33	890.45	943.56	955.29
Other expenses	2,057.49	1,285.29	2,206.21	1,373.13
Total expenses	6,435.19	4,214.84	6,677.56	4,431.02
V. Profit before tax (III-IV)	4,137.68	1,784.86	4,230.11	1,819.17
VI. Tax expense:
- Current Tax	1,033.64	433.30	1,056.68	433.30
- Deferred tax charge (net)	20.50	44.13	24.32	56.84
Total Tax Expense	1,054.14	477.43	1,081.00	490.14
VII. Profit for the year (V-VI)	3,083.54	1,307.43	3,149.11	1,329.03
VIII. Other Comprehensive Income/(Loss)
(i) Item that will not be subsequently reclassified to profit or loss
(a) Re-measurement gains on defined benefit obligations	0.33	0.59	0.33	0.88
(b) Income tax effect on above	(0.08)	(0.15)	(0.08)	(0.22)
(ii) Item that will be subsequently reclassified to profit or loss
(a) Changes in fair value of invesments	(4.30)	-	(4.30)	-
(b) Income tax effect on above	1.08	-	1.08	-
Total other comprehensive income/(loss) for the year, net of tax	(2.97)	0.44	(2.97)	0.66
IX. Total comprehensive income for the year	3,080.57	1307.87	3,146.14	1,329.69
Paid up equity share capital [face value of INR 1 each (PY: INR 2 each)]	242.70	247.87	242.70	247.87
Other Equity	10,598.61	10,745.69	10,584.72	10,666.23
X. Earnings per equity share (EPS) (face value of share of INR 1 each)
Basic (in INR per share)	12.63	5.27	12.90	5.36
Diluted (in INR per share)	12.63	5.27	12.90	5.36

State of the Company''s Affairs

The Company has recorded strong financial revenue and return during FY 21-22 on a Standalone basis with the Turnover of INR 1,0087.45 Millions during FY 21-22, as against INR 5,424.08 Millions in the previous Financial Year 2020-21 (''FY 20-21''),

i.e. an increase of 85.98%. The profit before tax (PBT) of INR 4,137.68 millions in FY 21-22 as against INR 1,784.86 millions in FY 20-21, shows an increase of 131.82%. The Company reported best-in-class profit after tax (PAT) margin of 30.57% and the PAT stood at INR 3,083.54 Millions during FY 21-22 with a significant growth of 135.85% compared to FY 20-21.

On a Consolidated basis, the Company recorded the Turnover of INR 10,408.41 Millions during FY 21-22, as against INR

5.648.16 Millions in FY 20-21, i.e. an increase of 84.28%; the PBT of INR 4,230.11 Millions in FY 21-22, as against INR

1.819.17 in FY 20-21, i.e. an increase of 132.53%; and the PAT of INR 3,149.11 Millions during FY 21-22 (PAT margin: 30.26%) with a significant growth of 136.95% compared to FY 20-21.

The financial performance for the year under review as reported above shows significant improvement over FY 20-21 when the performance was impacted due to the outbreak of COVID-19 pandemic and the nationwide lockdown announced by the Government for a significant period. A major highlight for the year under review was the successful initial public offer (IPO) by the Company. The equity shares of the Company were listed on BSE Limited and National Stock Exchange of India Limited on February 16, 2022. Your Directors are pleased to present to you this first Annual Report of Company post the successful IPO. This is surely a milestone in our corporate strategy, and the Directors hereby place on record gratitude to all the shareholders and other stakeholders for their overwhelming response to the Company''s IPO and for reiterating their faith in its long-term growth story. Vedant Fashions Limited being India''s leading celebration wear Company with Manyavar being the category creator and leader in the branded Indian wedding and celebration wear in markets for men''s, your Directors'' believes that the listing of the Company would provide the right platform to take its brand(s) to greater heights, enhance visibility and provide liquidity to the shareholders.

The Company operates primarily in the manufacturing and trading of readymade garments being Indian wedding and celebration wear for men, women and kids via its brands viz. ''Manyavar'', ''Mohey'', ''Mebaz'', ''Manthan'' and ''Twamev''. The Company has always been responsive towards the fashion needs by introducing timeless collections of products across all segments. The Company believes in the overall growth of its Indian wedding and celebration wear business across India and overseas through its iconic designs, superior product quality, ability to create a sustainable business model and the zeal towards the healthy creation of stakeholders'' value.

Amounts Transferred to Reserves

The Board of the Company has decided to retain the entire amount of its profit earned in FY 2021-22 in the Retained Earnings account only.

The Company has bought back 27,17,172 equity shares of INR 2/- each of the Company at a premium of INR 988/- per

share, aggregating INR 990/- per share, during the year under review. The total cash outflow on account of buyback was INR 3,313.31 Million (including tax of INR 621.93 Million and buyback related expense of INR 1.38 Million). Out of the said amount, nominal value of shares bought back i.e. INR 5.43 Million, has been reduced from share capital and Securities premium account has been utilised to the extent of the amount of INR 1,298.87 Million and retained earning has been utilised to the extent of the balance amount of INR 2,009.01 Million. A sum equal to the nominal value of the shares so bought back i.e. INR 5.43 Million has been transferred from Retained Earnings to the Capital Redemption Reserve as per requirement of Companies Act, 2013.

Dividend

Your Company has a dividend policy that balances the dual objectives of rewarding shareholders through dividends, whilst also ensuring availability of sufficient funds for growth of the Company. The Dividend Distribution Policy of the Company is available on the following weblink in the Company''s website: www. vedan tfashions. com/dividend-policy.

The Board of Directors of your Company, after considering the strong profitability for the year under review and returns for the Equity Shareholders for their ongoing credence, has decided to recommend a final dividend of INR 5/- (Indian Rupees Five only) per equity share of INR 1/- (Indian Rupee One only) each fully paid-up for the FY 2021-22. This dividend is subject to approval of the shareholders at the ensuing annual general meeting and shall be subject to deduction of tax at source.

Material Changes affecting the Financial Position of the Company

During the year under review, there were no material changes and commitments affecting the financial position of the Company which have occurred between the end of the financial year to which this financial statements relate and date of this report. As such, no specific details are required to be given or provided.

Change in nature of business, if any

There has been no change in the nature of business of the company during the year under review and the Company continues to carry on its existing business.

Voluntary Revision of Financial Statements or Board''s Report

There has not been any such revision during the year under report.

Change of name of the Company

The Board of Directors at its meeting held on July 13, 2021 followed by approval of the shareholders of the Company in their Extraordinary General Meeting held on July 16, 2021 passed resolution for conversion of the Company from private limited company into public limited company and consequently, change in the name of the Company from

''Vedant Fashions Private Limited'' to ''Vedant Fashions Limited''. The said change in name was approved by the Ministry of Corporate Affairs w.e.f. August 25, 2021.

Capital Structure of the Company

Pursuant to the resolutions passed by the Board at its meeting held on June 25, 2021 and the shareholders in their Extraordinary General Meeting held on June 26, 2021, the Company has bought back 27,17,172 equity shares of INR 2/- each of the Company at a premium of INR 988/- per share, aggregating INR 990/- per share. The shares were extinguished as on July 20, 2021. The buyback size was less than 25% of aggregate of the Company''s paid up equity capital and free reserves based on the audited financial statement of the Company for the year ended March 31, 2021.

Pursuant to the resolutions passed by the Board at its meeting held on July 13, 2021 and the shareholders in their Extraordinary General Meeting held on July 16, 2021, the Company has split face value of its equity shares from INR 2 per equity share to INR 1 each per equity share. Accordingly, the authorised share capital of the Company was changed from INR 30,10,00,000/- comprising 15,05,00,000 equity shares of INR 2 each to INR 30,10,00,000/- comprising 30,10,00,000 equity shares of INR 1 each. Also, the 12,12,16,127 equity shares of INR 2 each (after buyback) in the paid-up share capital of the Company were changed to 24,24,32,254 equity shares of face value of INR 1 each.

The Company has allotted 2,62,520 equity shares of INR 1/- each on October 16, 2021 and 8,315 equity shares of INR 1/- each on March 24, 2022, against exercising of options by the Eligible Employees/Participants in accordance with the VFL Employee Stock Option Scheme 2018. The equity shares so allotted rank pari-passu with the existing equity shares of the Company.

The Company has not issued equity shares with differential voting rights or any sweat equity shares, during the year under review. The paid-up equity share capital of the Company as at 31st March, 2022 stood at INR 24,27,03,089/- consisting of 24,27,03,089 equity shares of INR 1/- each fully paid up.

Particulars of Employee Stock Option Scheme

Employees'' Stock Options represent a reward system based on overall performance of the individual employee and the Company. The Company has framed an Employees Stock Option Plan with a view to attracting and retaining the best talent, encouraging employees to align individual performance with Company''s objectives, and promoting increased participation by them in the growth of the Company. In accordance with the said Plan, the Company has introduced VFPL Employee Stock Option Scheme 2018 (the Scheme Pratham”), pursuant to the approval of the shareholders of the company at their extra-ordinary general meeting held on September 3, 2018 and the amendment made in the same at their general meeting held on September 4, 2021. The detail of Employees'' Stock Options forms part of the Notes to accounts of the Financial Statements for the year under review.

The disclosures as required under Regulation 14 of the Securities and Exchange Board of India (Share Based Employee

thereof, such Member may write to the Company Secretary, on [email protected], whereupon a copy would be sent.

Human Resources

The Company has a workforce of 704 employees with a mix of people from different social, economic and geographic backgrounds. The Company has maintained healthy, cordial and harmonious industrial relations at all levels through proactive ER, development initiatives, gender diversity and community development.

Performance of the Company is anchored on its capabilities and productivity, customer-centric culture through a strong service orientation; happiness through purposeful behaviour by high-quality talent; value-oriented through a deep commitment to the values of Vedant Fashions Limited.

Directors'' Responsibility Statement

In accordance with the provisions of Section 134(5) of the Companies Act 2013, your Directors confirm that:

a) in the preparation of the annual accounts for the financial year ended 31st March, 2022, the applicable INDAS have been followed and there are no notable material departures;

b) the directors have 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 March 31, 2022 and of the 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 directors have prepared the annual accounts on a going concern basis; and

e) the directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively. This has been done by identifying significant laws that are applicable to the Company.

Statement in Respect of Adequacy of Internal Financial Control with Reference to the Financial Statements

The Company has adequate internal financial control systems commensurate with its nature of business and size of the operations of the Company including adherence to Company''s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information and to monitor and ensure compliance with applicable laws, rules and regulations.

The Company has also appointed an Internal Auditor as per the provisions of the Companies Act, 2013. The Company''s internal audit process covers all significant operational areas and reviews the Process and Control. The Internal Auditor has authority to verify whether the policies and procedures, including financial transactions, are carried out in accordance with defined processes and variations and exceptions (if any) are justified and reported properly.

Details in respect of report by Auditors under subsection (12) of Section 143

During the year under review, there have been no frauds reported by the auditors under subsection (12) of Section 143 of the Companies Act, 2013.

Details of Subsidiary, Joint Venture or Associate

The Company has a wholly-owned Subsidiary Company, namely Manyavar Creations Private Limited. Further, there are no Associates or Joint Ventures as on March 31, 2022. A report containing the details required under Section 134 of the Companies Act, 2013 (''the Act'') read with Rule 8(1) of the Companies (Accounts) Rules, 2014 in respect of performance and financial position for the financial year ended March 31, 2022, of the Subsidiary in the Form AOC-1 is annexed to this Report and marked as Annexure II

Deposits

The Company did not accept any deposits covered under Chapter V of the Companies Act, 2013 during the financial year ended March 31, 2022.

Particulars of Loan, Guarantees and Investments under Section 186

Particulars of loans, guarantees and investments made by the Company pursuant to the Section 186 of the Act are furnished under the notes to financial statement. The Company has been informed that the said loan, guarantee and security are proposed to be utilised by each recipient for its general business/corporate purposes.

Particulars of Contracts or Arrangements with Related Parties

The particulars of contracts or arrangements entered into with related parties, referred to in Section 188(1) of the Companies Act 2013 during the FY 21-22 in the prescribed format (i.e. AOC 2) is attached with this report as Annexure III.

Corporate Social Responsibility (CSR) Policy

The Report as required under Section 135 of the Companies Act 2013 read with Companies (Corporate Social Responsibility Policy) Rules, 2014, as amended from time to time, is attached as Annexure IVto this Report.

i. Implementation of Data Resiliency Solution to enable near real-time backup of all the company''s vital data.

j. Implementation of Centralized Infrastructure Management Solution enabling continuous monitoring of all Servers / Switches / Applications and pushing timely alerts of any anomalies.

k. Upgradation of all In-house Application Development platforms to the latest versions to improve performance and overcome security vulnerabilities.

l. Strengthening technical capability of team members by encouraging a knowledge-sharing culture through internal workshops.

(ii) the benefits derived like product improvement, cost reduction, product development or import substitution :

a. Better inventory management with tech-enabled inventory allocation.

b. Improved system resilience achieved through proactive assessment of vulnerability and risk and continuous monitoring technology assets.

c. Increased customer satisfaction with focus on Customer engagement and seamless digital experiences.

(iii) in case of imported technology (imported during the last three years reckoned from the beginning of the financial year) : N.A.

(a) the details of technology imported : N.A.

(b) the year of import : N.A.

(c) whether the technology been fully absorbed: N.A.

(d) if not fully absorbed, areas where absorption has not taken place, and the reasons thereof : N.A.

(iv) the expenditure incurred on Research and Development : N.A.

• Foreign Exchange Earnings / Outgo:

Earnings INR 27,16,87,648

Outgo INR 1,98,05,554

(this includes expenses made on account of IPO which has been recovered from Selling Shareholders)

Risk Management Policy

A Risk Management Policy to ensure sustainable business growth with stability and to promote a pro-active approach in reporting, evaluating, and resolving risks associated with the Company''s business has been adopted, which has been placed in the website of the Company at: https:// www.vedantfashions.com/risk-management-policy. A Risk Management Committee has been constituted by the Board

on September 6, 2021, the terms of reference of which includes the review of risk management. The Company''s management systems, organizational structures, processes, standards, code of conduct and behaviors together form the Risk Management System that governs how the Company conducts its business and manages associated risks. The Company has adequate risk management infrastructure in place capable of addressing those risks.

Disclosure on Establishment of a Vigil Mechanism

The Company has framed a Policy on Reporting Concerns so that Directors and employees can report their genuine concerns or grievance as and when they think fit. The Policy assures adequate safeguard against victimization of employees and directors who avail of the vigil mechanism policy. It also provides for action against frivolous complaints. This policy was communicated to all staff members of the Company for their knowledge and information and was made available on Company''s website in the name and style of Vigil Mechanism Policy (or Whistle Blower Policy)” - www.vedantfashions.com/ our-organisation/vigilmechanism

Details of Significant & Material Orders passed by the regulators or Courts or Tribunal

During the year, no significant and material orders were passed against the Company by any regulators, courts or tribunal which impact Company''s going concern status.

Secretarial Standards

During the year under review, the Company has complied with Secretarial Standards on Meetings of the Board of Directors (SS-1”) and on General Meetings (SS-2”) as amended and issued from time to time by the Institute of Company Secretaries of India in terms of Section 118(10) of the Companies Act, 2013.

Statutory Auditors & Auditor''s Report

M/s S.R. Batliboi & Co. LLP, Chartered Accountants, (FRN 301003E/E300005) were appointed as the Auditors of the Company, for a term of 5 (five) consecutive years, at the Annual General Meeting held on September 29, 2017. They were appointed as Statutory Auditors of the Company from the Fifteenth Annual General Meeting (AGM) until the conclusion of the Twentieth Annual General Meeting to be held in the year 2022. As per provisions of the Companies Act, 2013, M/s S.R. Batliboi & Co. LLP, Chartered Accountants, shall not be eligible for re-appointment as auditor in the company for five years from the completion of such term.

Pursuant to the recommendation of the Audit Committee, the Board has recommended the appointment of B S R & Co. LLP, Chartered Accountants, as the Statutory Auditors of the Company for the term of five years to hold office from the conclusion of the 20th AGM until the conclusion of the 25th AGM. They have given their consent for the proposed appointment as Statutory Auditors of the Company. They have further confirmed that the said appointment, if made, would

Internal Auditors

In terms of the provisions of the Companies Act, 2013 and Rules made therender, M/s Deloitte Touche & Tohmatsu

India LLP, Kolkata were appointed as the Internal Auditors of the Company. During the year under consideration, the Company continued to implement their suggestions and recommendations to improve the control environment.

Cost Records

Maintenance of cost records, as specified by the Central Government under section 148(1) of the Companies Act, 2013 is not applicable to the Company.

Secretarial Auditor

Secretarial Audit has been conducted by M/s Vivek Mishra & Co., a Firm of Company Secretaries, appointed by the Board and their report is annexed hereto and marked as Annexure V. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark.

Listing

The Company has completed its Initial Public Offer (IPO) of

3.63.64.838 equity shares of face value of INR 1 each at an issue price of INR 866 per share (including a share premium of INR 865 per share) that were listed on The National Stock Exchange of India Limited (NSE) and BSE Limited (BSE) on February 16, 2022. Entire IPO comprised of offer to sale of

3.63.64.838 equity shares by selling shareholders and hence details related to utilisation of IPO proceeds is not applicable to the Company. The listing fees for the financial year ending on March 31, 2023 have been duly paid.

Acknowledgment

The Board of Directors expresses their sincere appreciation for the assistance and co-operation received from the stakeholders viz. financial institutions, bankers, Government and semi-Government authorities, clients and shareholders during the year under review. The Board of Directors also wish to place on record its deep sense of appreciation for the committed services by the Company''s executives, staffs and workers.