VLS Finance Ltd

2. Management Discussion and Analysis industry Structure and Development

The trend in the Indian Stock Market had largely been upbeat during the year under review. The global economy continued to face challenges with fear of recession looming large in several countries. The continuing war between Ukraine and Russia and between Israel and Hamas with visible unrest in some parts of the world continues to be a cause of concern. Health Safety and Pandemic Risk

The Company and its subsidiaries have been proactive enough in adopting the digital mode since the Covid-19 outbreak has ensured best health safety measures for employees and uninterrupted service to the stakeholders in the Post COVID-19 era. The Company's continuing focus on liquidity, near zero debt supported by a strong balance sheet and acceleration in cost optimization initiatives, have been of great help in navigating any near-term challenge.

Outlook, Risks and Concerns

The underlying strength of Indian demand and consumption, continues to remain healthy. The performance of your Company is closely linked to those of the stock markets.

The Company is exposed to normal industry risks such as credit, interest rate, economic, currency, political, market and operational risks. The Company views risk management as integral to its business for creating and maintaining best practices in business operations and administration. Opportunities and Threats

Adequacy of internal Financial Control Systems

The management in consultation with Internal Auditors on an ongoing basis monitors and evaluates the efficacy and adequacy of internal financial control systems in the Company, its compliance with operating systems, accounting procedures and policies at all levels of the Company and its subsidiaries. The audit observations and the corrective actions thereon are presented to the Audit Committee of the Board. The control framework is established and maintained by the Company. The observations by the internal and statutory auditors are perused by the Management, the Audit Committee as well as the Board for proper implementation. The Company's internal financial controls have been found to be adequate and effective.

Financial Review

During the year under review, your Company generated total income of Rs. 41,009.15 lakhs as against Rs. 7,725.11 lakhs in the previous year. The other income included in the aforesaid total income was Rs. 1,019.72 lakhs for the year under review as against Rs. 153.77 lakhs in the previous year. The Company has earned a net profit before tax of Rs. 38,114.40 lakhs for the year under review as compared to the profit of Rs. 5,358.15 lakhs in previous year. The other comprehensive income for the period stood at Rs. 20,799.45 lakhs as compared to the corresponding other comprehensive income of (Rs. 20,108.07) lakhs for the previous year.

Please refer Note no. 49 of Standalone Financial Results for Key ratios and related information thereon.

Segment wise Performance

Ind-AS 108 on Operating Segments has been complied with. Please refer Note no. 54 of Standalone Financial Statements. Hence a separate disclosure has not been made. Cautionary Statement

3. Dividend & Reserve

28/09/2024. No amount was proposed to be transferred to the reserve during the year under review.

Further as per SEBI directive, members holding shares in physical form, who have not updated all of the following information viz. PAN, Choice of Nomination, Contact Details, phone/mobile number, email address, postal address, bank account details and specimen signature on their respective folios in the records of Company, the dividend, if any in respect of such folios shall be withheld and be paid only through electronic mode upon furnishing all the aforesaid information in entirety. Hence, members holding shares in physical form who have not updated all of the abovementioned information are requested to provide/update all your KYC details mentioned above in prescribed KYC Forms i.e. ISR-1, ISR-2, SH-13 or ISR-3 to the RTA viz. RCMC Share Registry Private Limited, B-25/1, First Floor, Okhla Industrial Area- Phase II, New Delhi-110 020 or to the Company at its registered office address at the earliest. Format of KYC Forms are available at website of the Company at https://www.vlsfinance.com/kyc/.

4. Buy-back

During the previous Financial year 2022-2023, the Board of Directors of the Company in its meeting held on 05-Jan-2023 had approved buy-back of its own shares by the Company from open market through Stock Exchange route in terms of proviso to clause (b) of sub section 2 of section 68 of the Companies Act, 2013 read with SEBI (Buy-back of Securities) Regulations, 2018 and other applicable regulations. The Buyback was offered to all eligible shareholders of the Company (other than the Promoters/ Promoter Group of the Company). The buyback so approved had commenced from 16/01/2023 and concluded on 29/05/2023. During the entire Buy-back period, the Company bought back 38,66,025 equity shares of Rs. 10/- each at an average price of Rs. 179.22 per share. A total sum of Rs. 69,28,58,736.35 (Rupees Sixty Nine Crores Twenty Eight Lacs Fifty Eight Thousand Seven Hundred Thirty Six and Paise Thirty Five only) (excluding transaction costs) was utilised for the said buyback. Post buyback the paid up share capital of the Company stood at 3,47,95,992 equity shares of Rs. 10/- each amounting to Rs. 34,91,82,170 (including an amount of Rs. 12,22,250/- received on 4,67,500 forfeited equity shares). Further, requisite compliances under applicable regulations have been made in respect of aforesaid buyback including for extinguishment of said shares so bought back. Further details in this regard may be accessed from the website of the Company i.e. www.vlsfinance.com or Stock Exchange's website viz. www.bseindia.com or www.nseindia.com.

5. Directors/ Key Managerial Personnel (KMP)

During the year under review and till the date of this report, following changes took place in the composition of the Board of Directors/ Key Managerial Personnel of your Company. Appointment:

> Shri Adesh Kumar Jain (DIN: 00512969) aged about 70 years, was appointed as an Additional Director in the category of Non-Executive, Independent Director by the Board in its meeting held on 10/08/2023. His appointment was approved by members in the 36th Annual General Meeting held on 29/09/2023.

> Shri Anoop Mishra (DIN: 02849054) aged about 68 years, was appointed as an Additional Director in the category of Non-Executive, Independent Director by the Board in its meeting held on 10/08/2023. His appointment was approved

by members in the 36th Annual General Meeting held on 29/09/2023.

> Shri Najeeb Hamid Jung (DIN: 02941412) aged about 73 years, was appointed as an Additional Director in the category of Non-Executive, Independent Director by the Board in its meeting held on 13/02/2024. His appointment was approved by members through Postal ballot on 09/05/2024.

> Shri Shivesh Ram Mehrotra (DIN: 10259068) aged about 23 years, was appointed as an Additional Director in the category of Non-Executive, Non-Independent Director by the Board in its meeting held on 13/02/2024. His appointment was approved by members through Postal ballot on 09/05/2024.

> Shri Gaurav Goel (DIN: 00076111) aged about 50 years, was appointed as an Additional Director in the category of Non-Executive, Non-Independent Director by the Board in its meeting held on 13/02/2024. His appointment was approved by members through Postal ballot on 09/05/2024.

> Mrs. Neeraj Vinay Bansal (DIN: 10499620) aged about 71 years, was appointed as an Additional Director in the category of Non-Executive, Non-Independent Director by the Board in its meeting held on 29/03/2024. Her appointment was approved by members through Postal ballot on 09/05/2024.

> Shri Keshav Tandan (DIN: 10450801) aged about 44 years, was appointed as an Additional Director in the category of Non-Executive, Non-Independent Director by the Board in its meeting held on 29/03/2024 and in the same meeting he was appointed as a Wholetime Director designated as Executive Director for a period of 3 years and 6 months. His appointment both as Director and Wholetime Director was approved by members through Postal ballot on 09/05/2024. Cessation:

> Shri Vikas Mehrotra (DIN: 06476150) Managing Director - International Operations and constituent of Promoter group left for his heavenly abode on 13/07/2023 and ceased to hold all positions in the Company from the same date.

> Shri Ajit Kumar (DIN: 00106597) Chairman and Independent Director left for his heavenly abode on 26/08/2023 and ceased to hold all positions in the Company from the same date.

> Ms. Divya Mehrotra (DIN: 00006494) Non- Executive, Non-Independent Director and constituent of Promoter group left for her heavenly abode on 04/01/2024 and ceased to hold all positions in the Company from the same date.

> Shri M. P. Mehrotra (DIN: 00016768) Executive Vice-Chairman and Promoter of the Company left for his heavenly abode on 05/04/2024 and ceased to hold all positions in the Company from the same date.

The Board places on record its sincere appreciation for the invaluable contribution made by Late Shri Ajit Kumar, Late Shri M. P. Mehrotra, Late Shri Vikas Mehrotra and Late Ms. Divya Mehrotra to the Company during their tenure with the Company. The Company will continue to be guided by their vision.

The opinion of the Board on expertise and other attributes of all Directors including Independent Directors has been charted in the Report on Corporate Governance enclosed as Annexure-I to this report.

Directors retiring by rotation:

In accordance with the provisions of Article 89 of the Articles of Association of the Company,

Shri Kishan Kumar Soni (DIN:00106037) and Shri Suresh Kumar Agarwal (DIN: 00106763) will be retiring by rotation at the ensuing AGM of your Company and being eligible, have offered themselves for re-appointment. Concurring to recommendation of Nomination and Remuneration Committee of the Company, your directors recommend their re-appointment.

Kev Managerial Personnel (KMP):

Pursuant to the provisions of sub-section (51) of Section 2 and Section 203 of the Act read with the Rules framed thereunder, the following persons were Key Managerial Personnel of the Company as on March 31,2024:

1. Shri M. P. Mehrotra- Executive Vice-Chairman (Died on 05/04/2024 and ceased to hold all positions in Company from the same date)

2. Shri S. K. Agarwal- Managing Director

3. Shri K. K. Soni- Director- Finance & Chief Financial Officer

4. Shri Keshav Tandan- Executive Director (Appointed as a whole time Director designated as Executive Director w.e.f. 29/03/2024)

5. Shri H. Consul- Company Secretary 6. independent Directors

The Independent Directors of your Company have complied with the relevant provisions of the law relating to their appointment and they continue to comply with the provisions of the Companies Act, 2013 and the listing regulations.

In terms of the provisions of sub-section (6) of Section 149 of the Act and Regulation 16 of the Listing Regulations, the Company has received declarations from all the Independent Directors of the Company that they continue to meet with the criteria of independence as provided in the Act and the Listing Regulations. Further, all the Non-Executive Directors of the Company had no pecuniary relationship or transactions with the Company, other than sitting fees, and reimbursement of expenses, if any, incurred by them for the purpose of attending meetings of the Company.

*Since Independent Directors meeting was scheduled to be held prior to the meeting of the Board in which Mrs. Neeraj Vinay Bansal was appointed as an Additional Director in the category of Non-Executive, Independent Director on 29/03/2024, she was not eligible to attend the meeting of Independent Directors held on even date.

In the meeting of Independent Directors, held on 29/03/2024 pursuant to Schedule IV of the Act and the Listing Regulations,

the Independent Directors reviewed the performance of the Chairman and Non-Independent Directors of the Company. The Directors also discussed the quality, quantity and timeliness of flow of information between the Company management and the Board, which is necessary for the Board to effectively and reasonably perform their duties. Their conclusion on all the issues discussed was satisfactory.

7. Number of Board and Committee Meetings

Relevant details have been provided in the Report on Corporate Governance enclosed as Annexure-I of this Annual Report.

8. Corporate Governance and Compliance Certificate

We have reported in Annexure-I to this report, the extent of compliance of Corporate Governance practices in accordance with Regulation 34(3) of the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015.

The requisite certificate from A. Aggarwal and Associates- Company Secretaries, through Shri Ashutosh Aggarwal, Practicing Company Secretary (COP: 7467 and Peer Review Certificate No. 1097 / 2021) confirming that as on 31/03/2024, none of the Directors of the Company has been debarred or disqualified from being appointed or continuing as Director of Company by the SEBI / Ministry of Corporate Affairs or any such statutory authority is appended at the end of aforesaid report.

Pursuant to the provisions of Section 134(3) of the Companies Act, 2013, the Directors hereby confirm:

a. that in the preparation of the annual accounts for the financial year ended 31st March, 2024, the applicable accounting standards have been followed, along with proper explanation relating to material departures;

b. that they 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 at the end of the financial year and of the profit of the Company for that period;

c. that they 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;

e. that they have laid down Internal Financial controls to be followed by the Company and that such Internal Financial Controls are adequate and effective; and

f. that the Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating.

10. Evaluation of Board/Committees/individual Directors

The Board carried out the annual performance evaluation of its own performance and its Committees in its meeting

held on 28/05/2024. The said exercise was led by the independent directors who are also constituents of Nomination and Remuneration Committee. The evaluation process focused on different aspects of the Board and Committees functioning such as composition of the Board and Committees, experience and competence, performance of specific duties and obligations, governance issues etc. The aim was to assess the effectiveness of the Board's/ Committees' processes, and to identify any actions required to improve effectiveness. The review thus focused on the following associated areas viz. structure, leadership, strategy, risks, decision making and development.

The evaluation process inter-alia comprised the following:

• Review of Board, Committees and management information and other relevant documentation.

• Discussions with all directors on the Board, Committee members focusing on aspects of the Board's and Committees' composition; strategy, risk and controls; decision-making, roles and performance of the Chairman, independent directors, executive directors and other non-executive directors.

Given the experience and qualifications of the Board members, it was not considered necessary to engage external persons to facilitate the evaluation process.

As per the provisions of Section 178(2) of Companies Act, 2013, the Board of Directors also carried out annual evaluation of each Director's performance in its meeting held on 28/05/2024 on the parameters including attendance, contribution and independent judgment by individual directors. Since all Directors have rich experience of corporate environment, so they are accustomed to having their performance regularly evaluated.

11. Proper systems to ensure that compliances were adequate and effective

The professional conduct sets expectations that all employees shall comply with all laws and regulations governing Company's conduct. Information is reported upwards internally within the organization to senior management and if appropriate, also shared with the Board of Directors and/ or the external auditors. Information is reported externally in public filings, if it meets the criteria for requiring public disclosure.

12. Corporate Social Responsibility (CSR)

2014. Cumulatively an amount of Rs. 1,44,63,999/- was transferred to the UCSR account.

The report of CSR Committee in terms of Section 135 of the Companies Act, 2013 is enclosed as Annexure -II to this report.

13. Annual Return Extract (MGT-9)

Pursuant to Section 92(3) read with Section 134(3)(a) of the Companies Act, 2013, the Annual Return of the Company as on March 31,2024 is available on the website of the Company at www.vlsfinance.com.

14. Policies

Your Company has formulated the following policies to optimize its performance and functions.

A. Corporate Social Responsibility Policy

B. Related Party Transaction

Relations'.

This Policy applies to transactions between the Company and one or more of its Related Parties. It provides a framework for governance and reporting of Related Party Transactions including material transactions.

This Policy is intended to ensure due and timely identification, approval, disclosure and reporting of transactions between the Company and any of its Related Parties in compliance with the applicable laws and regulations as may be amended from time to time.

C. Board diversity

Relations'.

VLS Finance Ltd. recognises and embraces the benefits of having a diverse Board and sees increasing diversity at Board level as an essential element in maintaining a

competitive advantage. A truly diverse Board will include and make good use of differences in the skills, regional and industry knowledge and experience, background, race, gender and other distinctions between Directors. These differences will be considered in determining the optimum composition of the Board and when possible would be balanced appropriately. All Board appointments shall be made on merit, in the context of the skills, experience, independence and knowledge which the Board as a whole requires to be effective.

D. Risk Management

The Company has formed Risk Management Policy to ensure appropriate risk management within its systems and culture. The Company operates in a competitive environment and is generally exposed to various risks at different times such as technological risks, business risks, operational risks, financial risks etc. The Board of Directors and the Audit Committee of the Company shall periodically review the Risk Management Policy of the Company so that the Management controls the risk through properly defined network.

The Company has a system-based approach to business risk management backed by strong internal control systems. A strong independent Internal Audit Function at the corporate level carries out risk focused audits across all businesses, enabling identification of areas where risk managements processes may need to be improved. The Board reviews internal audit findings, and provides strategic guidance on internal controls, monitors the internal control environment within the Company and ensures that Internal Audit recommendations are effectively implemented.

The combination of policies and procedures adequately addresses the various risks associated with your Company's businesses.

E. Anti-sexual harassment mechanism

Relations'.

The Company has in place an Anti-Sexual Harassment Policy in line with the requirements of The Sexual Harassment of Women at the Workplace (Prevention, Prohibition & Redressal) Act, 2013. All women employees inter-alia permanent, contractual, temporary, trainees are covered under this policy.

The Internal Complaints Committee is headed by the Woman Director on the Board. There were no complaints received from any employee or otherwise during the year under review and no complaints were pending as on 31/03/2024.

F. Nomination and Remuneration Policy

G. Vigil Mechanism /Whistle Blower

Relations'.

15. Contracts with Related Party

The disclosure in prescribed form AOC-2 is enclosed as Annexure - III.

16. Auditors Statutory Auditors

In terms of Section 139 read with Companies (Audit and Auditors) Rules, 2014 M/s. Agiwal & Associates, Chartered Accountants (FRN: 000181N) had been appointed for a period of 5 years i.e. from the conclusion of 35th Annual General Meeting till the conclusion of 40th Annual General Meeting of the Company subject to applicable regulations. The members in the 35th AGM of the Company had authorised the Board to fix the remuneration of the Auditors. The Statutory Auditors have consented to continue as Statutory Auditors and have given confirmation that they are eligible to continue with their appointment and have not been disqualified in any manner for continuing as Statutory Auditors.

Cost Auditor

The provisions relating to cost records and audit are not applicable to your Company.

Secretarial Auditors

The Board in its meeting held on 28/05/2024 had reappointed M/s. A. Aggarwal & Associates-Company Secretaries (COP: 7467) as Secretarial Auditors for the financial year 2024-25 who were also the Secretarial Auditors of the Company for the financial year 2023-24 in compliance with Section 204 of the Companies Act, 2013 read with regulation 24A of the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015.

The observations made by the Statutory Auditors, with reference to notes on accounts for the year under report, have been adequately dealt with in the relevant Notes forming part of Financial Statements and need no further comments from Directors. Further, the Auditors have not reported any fraud in terms of Section 143(12) of the Companies Act, 2013 to the Board for the year under review.

18. Secretarial Audit Report

The Secretarial Audit Report for the year 2023-24 submitted by Secretarial Auditor in terms of Section 204 of the Companies Act, 2013 read with Rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is enclosed as Annexure-IV. The said report does not contain any adverse remarks or observation by the Secretarial Auditor.

19. Statutory Information.

• The Company has paid the annual listing fees for the year 2024-25 to BSE Ltd. and The National Stock Exchange of India Ltd. and the custodian fees to National Securities Depository Ltd. and Central Securities Depository Ltd.

• The shares of the Company are presently listed at BSE Ltd., The National Stock Exchange of India Ltd., Mumbai and The Calcutta Stock Exchange Ltd., Kolkata (pending delisting).

• There had been no change in the nature of business and name of Company during the year under review. Further, no proceedings/ application under Insolvency and Bankruptcy Code, 2016 had been made/pending against the Company.

• During the year under review, the Company did not absorb any new technology or carry out any R&D related activity for this purpose except mandated as member of Stock Exchange. However, use of energy efficient devices, wherever possible, in conducting business of Company is part of its administration policies. The detailed disclosure is enclosed as Annexure-V to this report.

• Your Company's principal business is acquisition of securities; hence Section 186 of the Act is not applicable.

• Your Company has not issued equity shares with differential voting rights, sweat equity or ESOP in terms of Section 43 and Section 62 of the Companies Act, 2013, during the year under review.

• No revision of financial statements or Board's Report has been made in terms of Section 131 of the Companies Act, 2013, during the year under review. Further, there was no one time settlement with Bank/ Financial Institutions during the year under review.

• Disclosure relating to ratio of the remuneration of each director to the median employee's remuneration in terms of Section 197(12) of the Companies Act, 2013 is enclosed as Annexure -VI to this report.

• During the year under review, Executive Vice-Chairman, Managing Director and Director- Finance & CFO of your company were not in receipt of any remuneration or commission from any subsidiary company in terms of Section 197(14) of the Companies Act, 2013 and had been appointed by passing special resolution for 3 years.

• There had been no significant and material orders passed by regulatory authorities/ court that would impact the going concern status of the Company and its future operations. Further, there were no material changes or commitments affecting the financial position of the Company occurred between the year under review and date of this report.

• In the annual financial statements for the year under review, the disclosures of those items, where amount for the year under review and corresponding previous year was Nil, had been dispensed with, though required to be disclosed under applicable regulations.

20. Fixed Deposits

The Company has not accepted any fixed deposit during the year under review. The Company has no plans to accept any deposits from the public in the current year.

21. Human Resources

Employee relations continued to be cordial during the year. The number of employees stood at 35 (Thirty Five) at the end of the year under review. The Directors place on record their appreciation of the devoted service of the employees at all levels. In terms of the provisions of Section 197 of the Companies Act 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, there was no employee during the year drawing remuneration more than the stipulated amount in the said rules. Your Company has not approved any scheme relating to the provision of money to be held in a trust for the benefit of the employees in terms of Section 67(3)(b) of the Companies Act, 2013 during the year under review.

22. Green initiative in Corporate Governance

As a continuing endeavor towards the Go Green Initiative, the Company has been sending documents like the notice calling the general meeting, audited financial statements, directors' report, auditors' report etc. in electronic form, to the email addresses provided by the members directly or made available to us by the depositories, besides regular

correspondence. The electronic mode is both economical and speedier compared to physical documents. Members who hold shares in physical form are, therefore, requested to register their e-mail addresses and intimate any change in e-mail id, with the Company or with the Registrar & Share Transfer Agents, RCMC Share Registry Pvt. Ltd. In respect of electronic holdings, members are requested to register their e-mail addresses with the depository through their concerned depository participants. You may kindly note that even after registration of e-mail ID, you are entitled to be furnished, free of cost, a printed copy of the annual report of the Company, upon receipt of a requisition from you, at any time. In case you desire to receive Company's communication and documents in physical form, you are requested to intimate us through email at hconsul@vlsfinance.com.

23. Subsidiary/Associate Companies

Statement pursuant to Section 129(3) of the Companies Act, 2013 for the financial year ended 31/03/2024 in respect of the subsidiary/associate companies, is enclosed with Annual Accounts of the Company. Please refer to Note no. 52 of Notes forming part of consolidated financial statement in the Annual Report for the year under review.

24. Consolidated Financial Statements

In compliance of Section 129(3) of the Companies Act, 2013, the consolidated financial statements in accordance with the prescribed accounting standards are annexed to the audited annual accounts for the year under review.

25. Acknowledgements

The Directors thank the Company's business associates, Bankers, the Securities & Exchange Board of India and Stock Exchanges, employees, vendors, investors and academic partners for their continuous support. The Directors also thank the Government of India and Governments of various states in India.