Vedavaag Systems Ltd

DIRECTORS' REPORT

Dear Members

Your directors have pleasure in presenting the 26^th Directors' Report of your company together with the audited Standalone and Consolidated Financial Statements for the year ended, March 31, 2024.

Standalone:

2. Transfer to Reserves:

The Board of Directors of your Company, has decided not to transfer any amount to the reserves for the year under review.

3. Dividend:

The Board of Directors of your Company is pleased to recommend a dividend of Rs. 0.75/- per equity share of the face value of Rs. 10 each (@ 7.5%), payable to those Shareholders whose names appear in the Register of Members as on the Book Closure / Record date.

4. Unclaimed dividend and shares to the investor education and protection fund

Pursuant to the provisions of Section 124(5) of the Companies Act, 2013, the declared dividends which remained unpaid or unclaimed for a period of seven years, and to be transferred by the Company to the Investor Education and Protection Fund (IEPF) established by the Central Government pursuant to Section 125 of the said Act are disclosed in the notes to the ensuing Annual General Meeting notice of the Company.

5. State of the Company's Affairs:

As you are aware, your Company provides customised Financial Inclusion, Insurance service and other services at micro level. It delivers innovative solutions and in turn adds value to the business throughout all the segments. The company delivers high quality products and services which help leverage market opportunities and gain competitive advantage. There was no change in nature of business of the Company during the year.

On Standalone basis the revenue from operations for FY 2023-24 was Rs. 6154.88/- lakhs as compared to previous year revenue of Rs. 6542.91/- lakhs i.e., 2022-23 and net profit was Rs. 603.84/- lakhs as compared to Rs. 688.86/- lakhs for the FY 2022-23.

The consolidated revenue from operations was Rs. 8670.42/- lakhs as compared to previous year revenue of Rs. 8500.60/- lakhs i.e., for FY 2022-23 and net profit was Rs. 788.99/- lakhs as compared to Rs. 757.84/- lakhs for the FY 2022-23.

During the year under review there were no significant or material orders passed by regulators, courts or tribunals impacting the Company's operations in future.

6. Public Deposits:

Your company has not accepted any deposits falling within the meaning of section 73 of the Companies Act 2013, read with Companies (Acceptance of Deposits) rules 2014 during the Financial Year.

a) Equity:

During the year under review there was no change in the authorized or paid-up share capital of the Company.

The Authorized share capital of the Company as on March 31, 2024 is Rs. 30,00,00,000/- divided into 3,00,00,000 Equity Shares of Rs. 10/- each fully paid up. The paid-up share capital of the Company as on March 31, 2024 is Rs. 22,92,50,000/- divided into 2,29,25,000 Equity Shares of Rs. 10/- each fully paid- up.

8. Listing of Equity Shares

The Company's Equity Shares are listed on Stock Exchange i.e., on BSE Limited, Phiroze Jeejeebhoy Towers, Dalal Street, Mumbai - 400 001, Maharashtra, India.

The Company has paid Annual Listing Fees to the Stock Exchange for the FY 2024-25.

9. Subsidiary, Associate and Joint Venture Companies:

Your company has 4 wholly owned subsidiary Companies as on March 31, 2024 viz., VSL Datasystems Private Limited, Vedavaag Edutech Private Limited, Vedavag Common Service Centres Private Limited and Vedavaag Financial Services Private Limited.

The Company has initiated for closure of one of its subsidiaries i.e., Vedavaag Kiya Ecommerce Private Limited.

Pursuant to Provisions of Section 129 of the Companies Act 2013, read with rule 5 of the Companies (Accounts) Rules, 2014, a separate statement containing the salient features of financial statements of the Company's Subsidiaries in the form AOC -1 is annexed (Annexure-1) to this report.

The detailed policy for determining material subsidiaries as approved by the Board is uploaded on the Company's website http://vedavaae.com.

10. Details of the Companies which have become or ceased to be Subsidiaries, joint ventures or associates during the year

The Company had initiated closure proceeding for one its subsidiaries i.e., Vedavaag Kiya Ecommerce Private Limited due to non-receipt of subscription amount from one of its subscribers.

No Company have become or ceased to be Subsidiaries, joint ventures or associates during the year.

11. Consolidated Financial Statements

The Consolidated Financial Statements are prepared in accordance with Indian Accounting Standards (IND AS) as per the Companies (Indian Accounting Standards) Rules, 2015 notified under Section 133 of the Companies act, 2013. The Consolidated Financial Statements for the Financial Year ended March 31, 2024 forms part of the Annual Report.

As per the provisions of Section 136 of the Companies Act, 2013, the Company has placed separate Audited accounts of its Subsidiaries on its website http://vedavaae.com.

12. Directors' Responsibility Statement

Pursuant to the requirement under Section 134 of the Companies Act, 2013, with respect to the Director's Responsibility Statement, the Board of Directors of the Company hereby confirm that:

> in the preparation of the Annual Accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures.

> 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 at the end of the financial year ended March 31, 2024 and the Profit of the Company for the year under review.

> 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.

> the Directors had prepared the annual accounts on a 'going concern' basis.

> the Directors have laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively.

> 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.

13. Management Discussion and Analysis

Pursuant to the provisions of Regulation 34 read with Schedule 5 of the SEBI (Listing Obligation and Disclosure Requirement) regulation 2015, a report on Management Discussion and Analysis is enclosed as Annexure- 5.

14. Key Managerial Personnel:

KMP's of the Company as per Section 203 of Companies Act, 2013

1) Mr. Jonnavittula Murali Krishna Managing Director

2) Mr. Tirumalabukkapatnam Krishna Mohan Chief Financial Officer

3) Mr. Saiteja Ivaturi Company Secretary Compliance Officer

15. Director

During the under review the composition of the Board is as stated below:

Mr. Jonnavittula Murali Krishna Managing Director - DIN: 00016054

Mr. Pannala Srinivas

Independent Director - DIN: 00018295

Mr. Narsupalli Pradeep Kumar Independent Director - DIN: 03498381

Mr. Duggi Ramesh Sinha Independent Director - DIN: 08841202

Mrs. Jonnavittula Sujata - Non-Executive NonIndependent Woman Director - DIN: 07014640

Mr. Jonnavittula Ananth - Non-Executive NonIndependent Director - DIN: 09300935

None of the Directors are disqualified under the provisions of Companies Act, 2013.

16. Number of Board Meetings:

The Board met 6 (Six) times during the financial year and the details of Board Meetings were given in the Corporate Governance Report that forms part of this Annual Report. The intervening gap between any two meetings was well within the period prescribed under the provisions of the Companies Act, 2013.

17. Statement on declaration given by Independent Directors under Section 149

The Independent Directors have submitted declaration of independence, as required pursuant to Section 149 (7) of the Companies Act, 2013 stating that they meet the criteria of independence as provided in Section 149 (6) and Regulation 25 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

18. Meeting of Independent Directors

A separate meeting of the Independent Directors was held on February 14, 2024, to discuss and evaluate the performance of Non-Independent Directors of the Board as a whole.

The Independent Directors expressed satisfaction with the performance of the Directors and the Board as a whole.

19. Board Evaluation and Assessment:

Pursuant to the provisions of the Companies Act, 2013 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Board had carried out an annual evaluation of its own performance and that of its committees as well as performance of the Directors individually. Feedback was sought by way of structured questionnaire covering various aspects of the Board's functioning such as adequacy of the composition of the Board and its committees, Board culture, execution and performance of specific duties, obligations and governance and the evaluation was carried out based on the response received from Directors.

The evaluation is performed by the Board, Nomination and Remuneration Committee and Independent Directors with specific focus on the performance and effective functioning of the Board and Individual Directors. The criteria for evaluation are broadly based on the Guidance Note on Board Evaluation issued by Securities Exchange Board of India.

The Board and Nomination and remuneration Committee reviewed the performance of individual directors on the basis of criteria such as the contribution of the individual directors to the board and committee meetings like preparedness on the issues to be discussed, meaningful and constructive contribution and inputs in meetings etc.,

At the board meeting that followed the meeting of the independent directors and meeting of Nomination and Remuneration Committee, the performance of the Board, its committees and individual directors was also discussed. Performance evaluation of independent directors was done by entire board excluding the independent director being evaluated.

20. Familiarization Programmes

The Members of the Board of the Company have been provided with all the documents to enable them to familiarize themselves with the Company, its management and its operations. The Directors are provided with all the documents to enable them to have a better understanding of the Company, its operations and the industry in which it operates.

All the Independent Directors of the Company are made aware of their roles and responsibilities at the time of their appointment through a formal letter of appointment, which also stipulates various terms and conditions of their engagement and also on regulatory changes from time to time by the senior management personnel.

The detailed policy on the familiarisation programme is available on the website at www.vedavaae.com.

21. Code of Conduct:

The Company has laid down a Code of Conduct which has been effectively adopted by the Board Members and Senior Management Personnel of the Company.

The detailed policy on the Code of Conduct is available on the website at www.vedavaag.com

22. Policy on Directors appointment and remuneration:

The Policy of the Company on Directors appointment and remuneration including the criteria for determining qualifications, positive attributes, Independence of Directors and other matters are adopted as per the provisions of the Companies act 2013.

23. Internal Controls:

The company's internal control system has been established on the values of integrity and operational excellence. The company's internal control system is periodically tested and supplemented by extensive program.

> Financial propriety of business transactions.

> Safeguarding the assets of the Company.

> Compliance with prevalent statues, regulations, management authorization, policies and procedures.

The Audit Committee of the Board periodically reviews audit plans, observations and recommendations of the internal and external auditors, with reference to the significant risk areas and adequacy of internal controls and keeps the Board of Directors informed of its observations, if any, from time to time.

24. Composition of Committee: Audit Committee

Nomination and Remuneration Committee:

Stakeholders Relationship Committee

Corporate Social Responsibility (CSR) Committee

Further details with respect to the aforesaid Committees are provided in the Corporate Governance Report attached herewith.

25. Auditors:

M/S PARY & Co., Chartered Accountants, Hyderabad were appointed as Statutory Auditors of the Company at the 25th Annual General Meeting of the Company held on September 29, 2023 for a term of Five (5) years.

Observation:

1. There were no undisputed amounts payable in respect of GST, Provident Fund, Employee State Insurance and Income tax dues in arrears as at 31.03.2024 for a period of more than six months from the date they became payable except Income tax of Rs. 123.86 lakhs on account of TDS mismatch and TDS of Rs. 15.02 lakhs pertaining to earlier years, TDS of Rs. 61.16 lakhs and GST of Rs. 214.52 lakhs for the current year aggregating to Rs. 414.57 lakhs are also payable as on date of Audit Report.

2. The unsecured loan of Rs. 0.51 crores with Axis Bank Limited is overdue.

Managements Reply:

1. The GST liability for the year is totally paid as of date of directors' report and TDS for the year is being paid.

As regards income tax of earlier years, the company is in the process of reconciliation of TDS receivables from customers year- wise. Based on the outcome, appropriate action will be taken.

2. The company availed the said loan for execution of Abhayam Project, which was delayed due to Covid Pandemic. During the year, the company has repaid Rs. 3.10 crores of the principal amount in total and Rs. 0.20 crores of the interest amount outstanding as per the company records, thereby reduced the liability from Rs. 3.81 crores to Rs. 0.51 crores. Further, the company has paid amount Rs. 0.10 crores in June 2024 and reduced the liability to Rs. 0.41 crores. Company has requested the bank to finalize balance amount payable to close the account which is pending till date.

3. Secretarial Auditors report:

Pursuant to the provisions of Section 204 of the Companies Act, 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 and Regulation 24 A of SEBI (LODR) regulations, 2015 M/s VCSR & Associates, Practicing Company Secretaries has been appointed as Secretarial Auditors of the Company for the FY 2023-24. The Secretarial audit report in the prescribed form MR-3 is annexed to this report as Annexure-4

Auditors' qualifications:

1) The promoters of the company have to comply the Regulation 3(1) and Regulation 3(2) of SEBI (SAST) Regulations, 2011

Management Comments on the above qualification:

1) The promoters of the Company i.e., the acquirer(s) assures to comply with the Regulation of SEBI (SAST) Regulations, 2011 in the near future.

27. Vigil Mechanism / Whistle Blower Policy

The Vigil Mechanism as envisaged in the Companies Act, 2013, the rules prescribed thereunder and the SEBI (LODR) Regulations, 2015 is implemented through the Company's Whistle Blower Policy.

The Company has adopted a Whistle Blower Policy establishing a formal vigil mechanism for the Directors and employees to report concerns about unethical behaviour, actual or suspected fraud or violation of Code of Conduct and Ethics. It also provides for adequate safeguards against the victimization of employees who avails the mechanism and provides direct access to the Chairperson of the Audit Committee in exceptional cases. It is affirmed that no personnel of the Company have been denied access to the Audit Committee. The policy of vigil mechanism is available on the Company's website.

The Whistle Blower Policy aims for conducting the affairs in a fair and transparent manner by adopting highest standards of professionalism, honesty, integrity and ethical behaviour. All employees of the Company are covered under the Whistle Blower Policy. The policy is available on the website of the Company www.vedvaag.com.

28. Maintenance of cost records specified by the Central Government under Section 148 of the Companies Act, 2013

The provisions relating to maintenance of Cost Records as specified by the Central Government under Section 148 of the Companies Act, 2013 is not applicable to the Company

29. Corporate Social Responsibility (CSR):

The brief outline of the CSR policy of the Company and the CSR activities taken up by the Company during the year is appended to this report as Annexure-3 in the format prescribed in the Companies (Corporate Social Responsibility Policy), 2014. The Constitution of CSR Committee forms integral part of the report. The detailed CSR policy is available on the website of the Company.

30. Conservation of Energy, research and Development, Technology Absorption, Foreign exchange Earnings and Outgo:

Information on conservation of Energy, Technology absorption, Foreign Exchange earnings and outgo required to be disclosed under Section 134 of the Companies Act, 2013 read with Companies (Accounts) Rules, 2014 are provided hereunder:

1. Conservation of Energy: The operations of the company involve low energy consumption; adequate measures have been taken to conserve energy.

2. Technology Absorption:

Since Business and technologies are changing constantly, investment in Research and development activities are of paramount importance. Your Company continues its focus on quality up gradation of product and service development.

3. Foreign Exchange:

Foreign Exchange earnings for the year ended March 31, 2024: Rs. 50,00,730/-

Foreign Exchange Outgo for the year ended March 31, 2024: Rs. 7,28,735/-

31. Particulars of Loans, Guarantees and Investments under Section 186:

Loans, guarantees and investments covered under Section 186 of the Companies Act, 2013 forms part of notes to the financial statements provided in this Annual Report.

32. Particulars of Contracts or Arrangements with Related Parties:

During the year on review, the Board confirms that:

a) The Company didn't enter into any contracts or arrangements or transactions that are not at arms lengths with the related parties during the financial year 2023-24.

b) Details of material contracts or arrangement or transactions at arm's length basis: Annexure - 7

Therefore, as prescribed under Section 134(3) of the Companies Act 2013 read with Rule 8 (2) of the Companies (Accounts) Rules, 2014 the disclosures under Form AOC-2 for the Company for the year ended March 31, 2024 is appended to this report as Annexure-7.

33. Extract of Annual Return:

In accordance with Section 134 (3) (a) of the Companies Act, 2013, the Annual return in the prescribed format is available on the website of the Company www.vedavaae.com.

34. Particulars of Employees:

The information required under Section 197 of the Companies Act 2013, read with rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is appended as Annexure-2 to the Board Report.

35. Particulars Relating to the sexual harassment of women at workplace (Prevention, Prohibition and redressal) Act 2013

Your company has always provided a safe, harassment free workplace for every individual through its various policies and practices. The company always endeavours to create and provide an environment that is free from discrimination and harassment. The Company has not received any complaints during the year. The Company regularly conducts awareness programme for its employees.

Summary of Sexual harassment complaints received and disposed of during the year:

36. Details of material subsidiary and date of appointment of Statutory Auditor of such subsidiary

VSL Datasystems Private Limited is material subsidiary of the Company, it is incorporated on January 05, 2001 and M/s P Murali & Co., Chartered Accountants, Hyderabad was re-appointed as Statutory Auditor of the Company for a term of 5 years i.e., from April 01, 2022 to March 31, 2027.

During the year, part of Outstanding advances of Rs. 11.00. 00.000/- in VSL Datasystems Private Limited has been converted as Equity. Upon Conversion the Investment of Vedavaag Systems Limited in VSL Datasystems Private Limited has been Rs. 14.00. 00.000/- (i.e., 14,00,000 Equity Shares of Rs. 100/- each) and Rs. 4,00,00,000/- (i.e., 40,00,000 Preference shares of Rs. 10/- each).

37. Corporate Governance

Your Company is committed to implement the sound corporate governance practices with a view to bring transparency and in its operations and maximize shareholders value.

The Report on Corporate Governance as stipulated under Regulation 34 read with Schedule V of the SEBI (Listing Obligations & Disclosure Requirement) Regulations, 2015 forms part of the Annual Report as Annexure-6.

38. The details of significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and company's operations in future

There have been no significant material orders passed by the Regulators or Courts or Tribunals which would impact the going concern status of the Company and its future operations.

During the year under review, no application was made or any proceedings pending against the Company under the Insolvency and Bankruptcy Code, 2016.

39. Material changes and commitments

There are no material changes and commitments affecting the financial position of the Company which occurred between the Financial Year ended March 31, 2024 to which the Financial Statements relates and the date of signing of this report.

40. Compliance with Secretarial Standards

The Company has complied with applicable provisions of the Secretarial Standards issued by the Institute of Company Secretaries of India and approved by the Government of India under Section 118(10) of the Companies Act, 2013.

41. MD and CFO certification:

As required under the listing regulations, the Managing Director and the Chief Financial Officer Certification is attached to this Report.

42. Acknowledgements:

The Directors thank the Company's Bankers, Employees, Customers, Vendors, CSPs and Investors for their continuous support.

Your directors wish to place on record their deep sense of appreciation for the committed services of the associates of the company at all levels.