The Directors of your Company have pleasure in presenting their 33^rd Annual Report of the business and operations of the Company along with the Audited Financial Statements for the year ended 31^st March, 2023.

1. FINANCIAL RESULTS:

The financial performance of your Company for the year ended 31^st March, 2023 is as under:

2. MANAGEMENT DISCUSSIONS AND ANALYSIS REPORT:

Management Discussion and Analysis Report for the year under review as stipulated under Regulation 34(2) (e) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, is presented as under:

A. ACRYLIC FIBER INDUSTRY - GLOBAL AND INDIAN PERSPECTIVE:

Global consumption of Acrylic Fibre improved by more than 4% in CY 2022 over the previous year though consumption still remains more than 10% lower than pre-pandemic CY 2019. Russia Ukraine war led to an unprecedented increase in energy prices, inflationary pressures, not seen in the recent past, and a high level

of uncertainty about gas availability in Europe in the winter of CY 2022. It led to curtailment in discretionary expenditure by consumers affecting demand of a wide spectrum of goods including Acrylic Fibre products and consumer goods in general. In Europe, there was a brisk buying of winter clothing including Acrylic Fibre products in the earlier part of CY 2022 as a protective measure in anticipation of both high prices of natural gas and its short availability. However, once the uncertainty over gas availability abated and winter turned out to be relatively warmer than usual, buying of winter clothing dropped sharply. This phenomenon led to over supply of Acrylic Fibre globally and drop in its prices and margins. The

Acrylic Fibre producers had to start looking around for dumping their unsold production in later part of Q4 CY 2022 and Q1 of CY 2023.

In India, consumption of Acrylic Fibre witnessed an increase in FY 2023 over the previous year, though it still remains lower than the consumption in prepandemic FY 2020, supported by opening up of schools, colleges and social life and relatively better economic outlook compared to many other parts of the world. Consumption of Acrylic Fibre in India has sustained over last several years while a trend of consumption erosion has been observed globally. The over supply of Acrylic Fibre continues globally leading to Acrylic Fibre producers turning to Indian market to dump their surplus production at low prices.

Acrylonitrile, the major raw material of your Company, is a crude derivative. Acrylonitrile prices were very volatile during FY 2023 correcting by about 30% from April 2022 to December 2022 both on account of volatility in crude prices and factors specific to Acrylonitrile. Availability of Acrylonitrile is improving globally as regular capacity addition has been continuing in China over the last two years. Also investment in raw material chain of Acrylonitrile is continuing world over, especially in China, which is likely to support Acrylonitrile producers in maintaining high production rates and lower cost of production. This development augurs well for competitive position of Acrylic Fibre with respect to other competing man made fibres.

B. FINANCIAL ANALYSIS AND REVIEW OF OPERATIONS:

• PRODUCTION & SALES REVIEW:

Your Company has achieved a turnover of J 42,666.45 lakhs against a turnover of H 30,332.63 lakhs in the previous year. After providing for depreciation of H 548.58 lakhs (previous year H 541.51 lakhs) and provision for current tax of H 1,084.01 lakhs (previous year H 555.45 lakhs), deferred tax of H (59.99) lakhs (previous year H (268.37) lakhs), Profit after Tax after considering Other Comprehensive Income of the Company is H 3,303.51 lakhs as against H 1,485.44 lakhs in the previous year.

RESOURCE UTILIZATION:

(a) Fixed Assets:

The gross fixed assets (including work inprogress) as at March 31, 2023 were H 8,600.45 lakhs as compared to H 7,930.33 lakhs in the previous year.

(b) Current Assets:

The current assets as on March 31, 2023 were H 19,895.83 lakhs as against H 18,906.78 lakhs in the previous year. Inventory level was at H 8,328.31 lakhs as against H 7,684.89 lakhs in the previous year.

C. BUSINESS OUTLOOK

High inflation in India is impacting purchase of nonessential consumer goods including textiles. High imports of Acrylic Fiber in India in early 2023 when exporters were finding it difficult to sell in Europe, is likely to impact sales of Indian Acrylic Fibre producers in FY 2024. As business and social activities are back to normal completely from restrictions of pandemic time in India, it is expected that consumer spending will increase as inflation cools down and RBI relaxes its monetary policy. A good monsoon, as forecasted by IMD will mean healthy agriculture based income in rural areas which will further push spending.

There have been regular additions to Acrylonitrile capacity in recent years, especially in China. More additions have been planned in 2023 and beyond. It is expected that raw material supply will not be a concern for Acrylic Fibre industry.

Rationalization of Acrylic Fiber capacity in 2021 and 2023 will improve capacity utilization at global level, if there is a large uptick in demand. Despite this, exports to India are likely to remain high as foreign producers with low domestic consumption or surplus production will keep looking for opportunities to dump acrylic fiber in India amid shrinking opportunities in their traditional markets. Infact, large volumes of imports at low prices have already started reaching India in Q4 of FY 2022-23. This will continue to put pressure on margins of domestic Acrylic Fiber industry as also your Company warranting certain protective measures to be taken by the Govt. of India to safeguard interests of domestic industry. A level playing field will continue to be denied to Indian Acrylic Fiber industry unless the recommended Anti-Dumping duties are made effective. Geo political tensions and war, crude oil production cut backed by OPEC block, inflation level going forward, monetary policy by Central Banks world over are some of the key macro level factors which may impact both the prices and consumption of Acrylic Fibre and Acrylonitrile and therefore, have to be watched carefully.

D. MAJOR RISK AND AREA OF CONCERN

Subdued demand in China and Europe are major risks to global Acrylic Fiber consumption. Geo-political tensions and trade flows that have been disrupted due to unilateral and multilateral trade sanctions and restrictions are

factors to be watched. Tightening of monetary policies by Central banks to curb inflation is already affecting consumption in general including Acrylic Fiber Industry. However, there are signs of gradual softening of global energy prices. Indian economy would be benefited as India remains a large importer of energy. Crude oil production adjustment by OPEC block and change in Ukraine Russia war situation, which may impact energy price, also have to be watched carefully.

E. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:

The Company reviews its Systems and Processes periodically to assess their robustness and sufficiency in view of business requirements, best industry practices, corporate governance, statutory compliances, controls and audit purpose. This is supplemented by a bi-annual Internal Audit to identify areas that might need further review and attention of Senior Management. Recommendations of Internal and Statutory Auditors are viewed as an opportunity to look at our system from an independent view. Senior Management of your Company is committed to make the operations process driven and transparent and strengthen informed decision making so as to minimize chances of deviations and taken timely corrective action.

F. INTERNAL FINANCIAL CONTROL:

The Company has in place requisite and adequate controls for financial matters to ensure all compliances - internal as well as statutory. The systems related to these matters are regularly reviewed and updated to keep them in sync with changing times and sound industry practices. Your Company makes extensive use of IT systems to monitor compliance to statutory requirements on monthly basis. Company or their auditors, including Statutory auditors, did not observe any material weakness or improvement areas in financial controls or internal controls during the year.

G. MATERIAL DEVELOPMENTS IN HUMAN RESOURCES/ INDUSTRIAL RELATIONS:

Your Company has always accorded high level of importance to developing and retaining a team of committed and trained personnel at all levels. Health and safety of people working inside factory has always been of utmost importance to the management of your Company. Senior management of Company also

takes keen interest in HR matters. It is a matter of satisfaction that the Company and employees enjoy a congenial work environment. Special emphasis is placed on functional training as well as on workplace health and safety.

During the year, the Company has employed 324 (approx.) employees on permanent rolls.

1. The decrease is due to higher revenue from operations in the current year as compared to previous year.

2. The decrease is mainly on account of increase in Shareholders Equity.

3. The increased is due to higher earnings in the current year as compared to previous year.

3. DIVIDEND:

The Board of Directors in its meeting held on 28^th April, 2023 has recommended dividend of H 2.50/- per share on the fully paid-up Equity Shares of the Company.

4. INVESTOR EDUCATION AND PROTECTION FUND (IEPF):

Pursuant to the provisions of Section 124 and 125 of the Companies Act, 2013, read with IEPF Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 (‘the Rules'), all unpaid or unclaimed dividends are required to be transferred by the Company to the IEPF established by the Central Government after the completion of seven years from the date of transfer to the Unpaid Dividend Account of the Company. The shareholders whose dividends have been transferred to the IEPF Authority can claim their dividend from the Authority. The unclaimed or unpaid dividend relating to the Financial Year 2015-16 was remitted to the Investor Education and Protection Fund established by the Central Government in the month of April, 2023.

Further, according to the Rules, the shares in respect of which dividend has not been paid or claimed by shareholders for seven consecutive years or more shall

also be transferred to the IEPF Authority. The Company has sent notice to all shareholders whose shares are due to be transferred to the IEPF Authority and has also published requisite advertisement in the newspapers in this regard.

The detail of these shares are also provided on the website of the Company at www.vardhman.com

5. CONSOLIDATED FINANCIAL STATEMENT:

As your Company does not have any subsidiary, associate or joint venture Company, therefore, the provisions of Companies Act, 2013 and Indian Accounting Standards (Ind AS) 110, 111, 112 in relation to consolidation of accounts do not apply.

6. SUBSIDIARIES, JOINT VENTURES AND ASSOCIATE COMPANIES:

The Company does not have any subsidiary/ material subsidiary, associate or joint venture Company.

7. DIRECTORS:

Liable to retire by rotation: In accordance with the provisions of the Articles of Association of the Company, Mrs. Suchita Jain, Director of the Company, retires by

rotation at the conclusion of the forthcoming Annual General Meeting and being eligible, offers herself for reappointment. The Board recommended her appointment for the consideration of the Members of the Company at the ensuing Annual General Meeting.

Cessation from Directorship: During the year under review, Mr. Surinder Kumar Bansal, Mr. Munish Chandra Gupta and Mr. Sanjit Paul Singh, Independent Directors, ceased to be Directors of the Company w.e.f. 30^th September, 2022 on completion of their second term of appointment.

Appointment of Independent Directors: During the year under review:

- Mr. Anil Kumar and Mr. Bhooshan Lal Uppal were appointed as Independent Directors of the Company for a term of three (3) consecutive years each w.e.f. 19^th July, 2022; and

- Ms. Parakh Oswal was appointed as an Independent Director of the Company for a term of five (5) consecutive years w.e.f. 19^th July, 2022.

Their appointments were further approved by the Members of the Company in the Annual General Meeting held on 30^th September, 2022.

Declaration by Independent Directors:

The Independent Directors have submitted their disclosures to the Board that they fulfil all the requirements as stipulated in Section 149(6) of the Companies Act, 2013 so as to qualify themselves to be appointed as Independent Directors under the provisions of the Companies Act, 2013 and the relevant rules thereof.

Your Board confirms that in its opinion the Independent Directors possess the requisite integrity, experience, expertise, proficiency and qualifications. All the Independent Directors on the Board of the Company are registered with the Indian Institute of Corporate Affairs, Manesar, Gurgaon (IICA) as notified by the Central Government under Section 150(1) of the Companies Act, 2013 and shall undergo online proficiency selfassessment test, if applicable, within the time prescribed by the IICA.

Familiarization Programmes for Board Members:

Your Company has formulated Familiarization Programme for all the Board members in accordance

a) Identifying persons who are qualified to become Directors and who may be appointed in Senior Management in accordance with the criteria laid down and recommending to the Board their appointment and removal.

b) Formulating the criteria for determining qualifications, positive attributes and independence of a Director and evaluating the balance of skills, knowledge and experience on the Board and on the basis of such evaluation, prepare a description of the role and capabilities required of an independent director.

c) Recommending to the Board, policy relating to remuneration of Directors (Whole time Directors, Executive Directors etc.), Key Managerial Personnel and other employees while ensuring the following:

i. That the level and composition of remuneration is reasonable and sufficient to attract, retain and motivate directors of the quality required to run the company successfully.

ii. That relationship of remuneration to performance is clear and meets appropriate performance benchmarks.

iii. That remuneration to directors, key managerial personnel and senior management involves a balance between fixed and incentive pay reflecting short and long term performance objectives appropriate of the working of the Company and its goals.

d) Formulating the criteria for evaluating performance of Board and all the Directors.

e) Devising a policy on diversification of Board.

f) Determining whether to extend or continue the term of appointment of the independent director on the basis of the report of performance evaluation of independent directors.

g) Recommending to the Board remuneration payable to senior management.

9. KEY MANAGERIAL PERSONNEL (KMP):

In compliance with the provisions of Section 203 of the Companies Act, 2013, following are the KMPs of the Company as on 31^st March, 2023:

10. NUMBER OF BOARD MEETINGS:

During the year under review, the Board met four (4) times and the intervening gap between any two meetings was within the period prescribed under the Companies Act, 2013. The details of Board Meeting are set out in Corporate Governance Report which forms part of this Annual Report.

11. AUDITORS AND AUDITORS’ REPORT:

Statutory Auditors:

At the 32^nd Annual General Meeting held on 30^th September, 2022, M/s. SCV & CO. LLP (Formerly S.C. Vasudeva & Co.), Chartered Accountants (Firm Registration no. 000235N/ N500089) were reappointed as Statutory Auditors of the Company for a second term of five (5) consecutive years starting from the conclusion of 32^nd Annual General Meeting till the conclusion of 37^th Annual General Meeting.

Further, the Statutory Auditors of the Company have submitted Auditors' Report on the accounts of the Company for the accounting year ended 31^st March, 2023.

This Auditors' Report is self-explanatory and requires no comments.

Secretarial Auditor:

M/s Ashok K. Singla & Associates, Company Secretaries, were appointed as Secretarial Auditors of the Company by the Board of Directors of the Company in its meeting held on 16^th May, 2022 for the Financial Year 2022-23.

The Secretarial Auditors of the Company have submitted their Report in Form No. MR-3 as required under Section 204 of the Companies Act, 2013 for the Financial Year ended 31^st March, 2023. This Report is self-explanatory and requires no comments. The Report forms part of Directors' Report as Annexure I.

Cost Auditor:

The Company is maintaining the Cost Records, as specified by the Central Government under section 148(1) of the Companies Act, 2013.

The Board of Directors has appointed Mr. R.A. Mehta, Practising Cost Accountant, as the Cost Auditor of the Company to conduct Cost Audit of the Accounts for the financial year 2023-24. However, as per provisions of Section 148 of the Companies Act, 2013 read with Companies (Cost Records and Audit) Rules, 2014, the remuneration to be paid to the Cost Auditor is subject to ratification by Members at the Annual General Meeting. Accordingly, the remuneration to be paid to Mr. R.A. Mehta, Practising Cost Accountant, for financial year 2023-24 is placed for ratification by the Members.

12. AUDIT COMMITTEE:

Composition of Audit Committee:

The Audit Committee consists of three Independent directors i.e. Mr. Anil Kumar, Ms. Parakh Oswal and Mrs. Apinder Sodhi, Independent Directors. Mr. Anil Kumar is the Chairman of the Committee and Company Secretary of the Company is the Secretary of the Committee. All the recommendations made by the Audit Committee were accepted by the Board.

13. VIGIL MECHANISM & SEXUAL HARASSMENT OF WOMEN AT WORKPLACE:

Vigil Mechanism:

Pursuant to the provisions of Section 177(9) of the Companies Act, 2013, the Company has established a “Vigil Mechanism" incorporating Whistle Blower Policy in terms of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, for employees and Directors of the Company, for expressing the genuine concerns of unethical behavior, actual or suspected fraud or violation of the codes of conduct by way of direct access to the Chairman/ Chairman of the Audit Committee.

The Company has also provided adequate safeguards against victimization of employees and Directors who express their concerns.

The Policy on Vigil Mechanism and Whistle Blower Policy as approved by the Board may be accessed on the Company's website at the link: https://www. vardhman.com/Document/ReDort/Companv%20 Information/Policies/Vardhman%20Acrvlics%20Ltd/ Vigil Mechanism Policy.pdf

Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013:

The Company has complied with the provisions relating to the constitution of Internal Complaints Committee under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

Your Directors further state that during the year under review, there were no complaints filed pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

14. CORPORATE GOVERNANCE:

The Company has in place a system of Corporate Governance. Corporate Governance is about maximizing shareholder value legally, ethically and sustainably. A separate report on Corporate Governance forming part of the Annual Report of the Company is annexed hereto. A certificate from the Practising Company Secretary regarding compliance of conditions of Corporate Governance as stipulated under Corporate Governance Clauses of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 is annexed to the report on Corporate Governance.

15. CORPORATE SOCIAL RESPONSIBILITY (CSR):

Vision & core areas of CSR: Your Company is committed to and fully aware of its Corporate Social Responsibility (CSR), the guidelines in respect of which were more clearly laid down in the Companies Act, 2013. The Company's vision on CSR is that the Company

being a responsible Corporate Citizen would continue to make a serious endeavor for a quality value addition and constructive contribution in building a healthy and better society through its CSR related initiatives and focus on education, environment, health care and other social causes.

CSR Policy: The Corporate Social Responsibility (CSR) Policy of the Company indicating the activities to be undertaken by the Company, as approved by the Board, may be accessed on the Company's website at the link: : https://www.vardhman.com/Document/Report/ Companv%20Information/Policies/Vardhman%20 Acrylics%20Ltd/Corporate Social Responsibility Policy.pdf

During the year, the Company has spent H 147.41 lakhs on CSR activities.

The disclosures related to CSR activities pursuant to Section 134(3) of the Companies Act, 2013 read with Rule 9 of Companies (Accounts) Rules, 2014 and Companies (Corporate Social Responsibility) Rules,

2014 are annexed hereto and forms part of this report as Annexure II.

16. RISK MANAGEMENT:

The Risk Management Policy required to be formulated under the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations,

2015 has been duly formulated and approved by the Board of Directors of the Company. The aim of risk management policy is to maximize opportunities in all activities and to minimize adversity. The policy includes identifying types of risks and its assessment, risk handling, monitoring and reporting, which in the opinion of the Board may threaten the existence of the Company.

The Risk Management Policy may be accessed on the Company's website at the link: https://www.vardhman. com/Document/ReDort/ComDany%20Information/ Policies/Vardhman%20Acrvlics%20ltd/Risk Management policy.pdf

17. BUSINESS RESPONSIBILTY AND SUSTAINABILITY REPORT (BRSR):

In compliance with the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, we have integrated BRSR disclosure into our Annual Report.

18. INTERNAL FINANCIAL CONTROLS & ITS ADEQUACY:

The Company has in place adequate internal financial controls with reference to financial statements. During the year, such controls were tested and no reportable material weakness in the design or operation was observed.

A report on the Internal Financial Controls under clause (i) of sub-section 3 of section 143 of the Companies Act, 2013 as given by the Statutory Auditors of the Company forms part of Independent Auditor's Report on Financial Statements as Annexure B.

19. PARTICULARS OF CONTRACTS OR ARRANGEMENTS MADE WITH RELATED PARTIES:

All contracts/arrangements/transactions entered by the Company during the financial year with related parties were in the ordinary course of business and on an arm's length basis. The particulars of contracts or arrangements made with related parties as required under Section 134(3) (h) of the Companies Act, 2013 in specified form AOC-2 forms part of Directors' Report as Annexure III.

The Policy on dealing with related party transactions as approved by the Board may be accessed on the Company's website at the link: https://www.vardhman. com/Document/Report/Company%70Information/ Policies/Vardhman%20Acrylics%20Ltd/Related Party Transactions Policy.pdf

20. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS MADE UNDER SECTION 186 OF THE COMPANIES ACT, 2013:

Particulars of loans given, investments made, guarantees given and securities provided along with the purpose for which the loan or guarantee or security is proposed to be utilized by the recipient are provided in the financial statement (Please refer to Note 4, 5, 9 and 12 to the financial statement).

21. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO:

Energy conservation continues to be an area of major emphasis in our Company. Efforts are made to optimize the energy cost while carrying out the manufacturing operations. Particulars with respect to conservation of energy and other areas as per Section 134(3)(m) of the Companies Act, 2013 read with the Companies (Accounts) Rules, 2014, are annexed hereto and forms part of this report as Annexure IV.

22. ANNUAL RETURN:

In terms of Section 92(3) and 134(3)(a) of the Companies Act, 2013 the Annual Return of the Company is available on the website of the Company at the link: www.vardhman.com

23. HUMAN RESOURCES /INDUSTRIAL RELATIONS:

Human resource is considered as the most valuable of all resources available to the Company. The Company continues to lay emphasis on building and sustaining an excellent organization climate based on human performance. The Management has been continuously endeavoring to build high performance culture on one hand and amiable work environment on the other hand.

During the year, the Company employed 324 employees on permanent rolls.

24. PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES:

The disclosures in respect of managerial remuneration as required under section 197(12) read with Rule 5(1) of the Companies (Appointment & Remuneration of Managerial Personnel) Rules, 2014, are annexed hereto and forms part of this report.

A statement showing the names and other particulars of the employees drawing remuneration in excess of the limits set out in Rule 5 (2) and 5 (3) of Companies (Appointment & Remuneration of Managerial Personnel) Rules, 2014, is annexed hereto and forms part of this report.

In terms of section 197(14) of the Companies Act, 2013, the details regarding remuneration or commission received from any holding or subsidiary Company by any Managing or Whole Time Director are annexed hereto and forms part of this report.

All the above details are provided in Annexure V.

25. MATERIAL CHANGES AND COMMITMENT, IF ANY, AFFECTING THE FINANCIAL POSITION OF THE COMPANY OCCURRED BETWEEN THE END OF THE FINANCIAL YEAR TO WHICH THE FINANCIAL STATEMENTS RELATE AND THE DATE OF THE REPORT:

No material changes and commitments affecting the financial position of the Company occurred between the end of the financial year to which these financial statements relate and the date of this report.

26. DIRECTORS RESPONSIBILITY STATEMENT:

Pursuant to the provisions of Section 134 (5) of the Companies Act, 2013, the Board, hereby submits its responsibility Statement:

a. In the preparation of the annual accounts, the applicable Accounting Standards have been followed along with the proper explanation relating to material departures;

b. Appropriate accounting policies have been selected and applied consistently, and have madejudgments 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 31^st March, 2023 and of the profit of the Company for the year ended on 31^st March, 2023;

c. Proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d. The annual accounts have been prepared on a going concern basis;

e. The Internal financial controls have been laid down to be followed by the Company and that such internal financial controls are adequate and are operating effectively; and

f. Proper systems have been devised to ensure compliance with the provisions of all applicable laws and such systems are adequate and operating effectively.

27. GENERAL DISCLOSURES:

Your Directors state that no disclosure or reporting is required in respect of the following items as there were no transactions on these items during the year under review:

1. Details relating to deposits covered under Chapter V of the Act.

2. Issue of equity shares with differential rights as to dividend, voting or otherwise.

3. Significant or material orders passed by the Regulators or Courts or Tribunals which impact the going concern status and Company's operations in future.

4. Change in nature of Business of Company.

5. No fraud has been reported by the Auditors to the Audit Committee or the Board.

6. There is no proceeding pending under the Insolvency and Bankruptcy Code, 2016.

7. There was no instance of one time settlement with any Bank or Financial Institution.

28. ACKNOWLEDGEMENT:

Your Directors are pleased to place on record their sincere gratitude to the Government, Bankers, Business Constituents and Shareholders for their continued and valuable co-operation and support to the Company and look forward to their continued support and co-operation in future too.

They also take this opportunity to express their deep appreciation for the devoted and sincere services rendered by the employees at all levels of the operations of the Company during the year.