TO THE MEMBERS OF VALSON INDUSTRIES LIMITED

The Directors take pleasure in presenting the Thirty Nineth Annual Report together with the Audited Annual Financial Statements for the financial year ended 31^st March, 2023. The Management Discussion and Analysis has also been incorporated into this report.

Key highlights of Financial Results for Valson Industries Limited for the financial year 2022 - 2023 are tabulated below:

There was no revision in the Financial Statements.

There is no dividend in financial year 2022 - 23. (Nil in financial year 2021 - 22)

Your Company is a leading manufacturer of polyester texturised dyed yarn and processor of cotton and other fancy yarns with customers having diverse uses. Quality Products and Services has been the top most priority and after continuous research and efforts, your Company has ventured into the dyeing of various qualities of yarns. Your Company today has wide range of polyester dyed yarn with a strong market acceptance and niche position for exclusive shades and grades.

During the year 2022-2023 the company has procured the need base machinery and ancillaries of Rs. 215.90 Lakhs including Capital WIP The said CAPEX has been partly financed way of term loan from by HDFC Bank (i.e. Rs. 100.00 Lakhs).; the details are as under:

There was no change in nature of business of your Company, during the year under review.

During the year 2022-2023, the company has performed very well the topline was increase almost 14.05%. The company has done a well and it comes in the profit lots of fluctuation in the crude prices which affected the POY, Dyes & Chemicals price and steep rise in price of coal and also due to shortage of container the freight prices has increase very sharply, in last two quarters company has done reasonably well and try to control the cost and other expenses.

The highlights financial performances of your Company during the financial year 2022-2023:

1) There is a growth of 3.24% in Texturising production (6126 MT) compared to last year (5928 MT).

2) There is a growth of 13.40% in Twisting production (2620 MT) compared to last year (2310 MT).

3) There is a growth of 4% in Sales (6594 MT) compared to last year (6342 MT).

4) There is a growth of 19.42% in Dyeing production (4531 MT) compared to last year (3794 MT).

5) There is a growth of 14.06% in terms of Revenue from operations (Rs. 13044.66 Lakhs) compared to last year (Rs. 11435.13 Lakhs).

6) During the year there is marginally increase in finance cost to Rs. 128.82 Lakhs and 114.02 Lakhs.

7) The staff cost to has marginally increased 3.41% to Rs. 1195.82 lakhs compare to last year Rs. 1156.36 Lakhs.

8) The company's power cost has increased substantially to Rs. 1465.94 Lakhs compared to Rs. 1058.63 Lakhs due to increase in rates at UT Dadra & Nagar Haveli and Diu & Daman.

9) Depreciation is Rs. 272.61 Lakhs and Rs. 282.38 Lakhs.

10) The Operating Profit/(Loss) (P/(L)BOIDT) before other income and Interest and Depreciation and Tax has increased by 98.37% Rs. 385.68 Lakhs as compared to last year amount of Rs. 194.42 Lakhs.

11) Earnings before Interest, Tax, Depreciation (EBITDA) has increased by 67.16% Rs. 437.24 Lakhs as compared to last year amount of profit Rs. 261.58 Lakhs.

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

No material changes and commitments which could affect your Company's financial position have occurred between the end of the financial year of your Company i.e. March 31,2023 and date of this report i.e. May 26, 2023.

The paid up Equity Share Capital as on 31^st March, 2023 is Rs. 766.08 Lakhs. During the year under review, your Company has not issued shares with differential voting rights nor granted stock options nor sweat equity. There was no change in your Company's share capital during the year under review. The Promoter and Promoter Group are holding 51,89,834 shares equivalent to 67.75% of the total Issued and Paid-up Share Capital.

During the financial year 2022 - 23, unclaimed Dividend of Rs. 84,755/- was transferred to the Investor Education and Protection Fund established by the Central Government, in compliance with Section 125 of the Companies Act, 2013 read with the Investor Education and Protection Fund (Accounting, Audit, Transfer and Refund) Rules, 2016. The said amount represents Final Dividend for the financial year 2014 - 15 which remained unclaimed for a period of 7 years from its due date for payment.

In line with the statutory requirements, your Company has transferred to the credit of the Investor Education and Protection Fund set up by the Government of India, equity shares in respect of which dividend had remained unpaid / unclaimed for a period of seven (7) consecutive years within the time lines laid down by the Ministry of Corporate Affairs. Unpaid / unclaimed dividend for seven (7) years or more has also been transferred to the IEPF pursuant to the requirements under the Act.

During the financial year, there is no change in the composition of the Board of Directors.

Pursuant to Section 161 (1) of the Companies Act, 2013 and Articles of Association of your Company, Mr. Amit Singh (DIN: 09497573) was appointed as an Additional Director (Independent and Non-Executive) of your Company at the Board Meeting held on 11^th February, 2022. In terms of provisions of Section 161 (1) of the Companies Act, 2013, Mr. Amit Singh held office up to the date of the 38^th Annual General Meeting (AGM) held on 3^rd September, 2022. The members of the Company at its 38^th AGM held on 3^rd September, 2022 has appointed Mr. Amit Singh as an Independent Director under Section 149 of the Companies Act, 2013 for a period of 5 years.

Pursuant to Section 152 (6) of the Companies Act, 2013 and in terms of the Articles of Association of your Company, Mr. Varun Mutreja, Director, retires by rotation at the forthcoming Annual General Meeting and being eligible, offers himself for re-appointment.

Your Company has received declarations from all the Independent Directors of your Company confirming that they meet with the criteria of independence as prescribed both, under Sub-Section 6 of Section 149 of the Companies Act, 2013 and under Regulation 16 (1) (b) of the SEBI (LODR) Regulations, 2015 and pursuant to Regulation 25 of the said Regulations that they are not aware of any circumstance or situation, which exist or may be reasonably anticipated, that could impair or impact their ability to discharge their duties with an objective independent judgment and without any external influence.

The Board is of the opinion that the Independent Directors of the Company possess requisite qualifications, experience and expertise in the fields of finance, people management, strategy, auditing, tax advisory services and they hold highest standards of integrity.

Regarding proficiency, the Company has adopted requisite steps towards the inclusion of the names of all Independent Directors in the data bank maintained with the Indian Institute of Corporate Affairs, Manesar (‘IICA'). Accordingly, the Independent Directors of the Company have registered themselves with the IICA for the said purpose. In terms of Section 150 of the Act read with Rule 6 (4) of the Companies (Appointment & Qualification of Directors) Rules, 2014, certain Independent Directors are required to undertake online proficiency self-assessment test conducted by the IICA within a period of two (2) years from the date of inclusion of their names in the data bank. Those Independent Directors who have to undertake online proficiency self-assessment test will appear for the same.

The Program intends to provide insights into your Company so that the Independent Directors can understand your Company's business in depth and the roles, rights, responsibility that they are expected to perform / enjoy in your Company to keep them updated on the operations and business of your Company thereby facilitating their active participation in managing the affairs of your Company. In addition to the above, Directors are periodically advised about the changes effected in the Corporate Law, SEBI (LODR) Regulations, 2015 with regards to their roles, rights and responsibilities as Directors of your Company.

The annual performance evaluation of the Independent Directors and Board Committees i.e. Audit, Stakeholders Relationship and Nomination & Remuneration Committees was carried by the entire Board and the annual performance evaluation of the Chairman, Board as a whole, Non - Independent Directors was carried out by the Independent Directors.

The annual performance evaluation was carried out in accordance with the criteria laid down by the Nomination and Remuneration Committee of your Company and as mandated under the Companies Act, 2013 and the SEBI (LODR) Regulations, 2015, as amended from time to time.

The following persons have been designated as Key Managerial Personnel of your Company pursuant to Section 2 (51) and Section 203 of the Act, read with Rule 8 (5) (iii) of the Companies (Accounts) Rules, 2014 framed there under:

1. Mr. Suresh N. Mutreja, Chairman - Managing Director

2. Mrs. Asha S. Mutreja, Whole - Time Director

3. Mr. Varun S. Mutreja, Director - CFO

4. Mr. Kunal S. Mutreja, Director - CEO

5. Mrs. Neeti Alwani, Company Secretary and Compliance Officer

None of the Key Managerial Personnel have resigned during the year under review.

None of the Directors have attained the age of 75 years except Mr. Surendra Kumar Suri. In terms of Regulation 17 (1) (c) of SEBI (LODR) Regulations, 2015, the approval of the members for his re-appointment by way of special resolution has been taken at the 35^th Annual General Meeting of the Company held on 30^th September, 2019.

The Board has in accordance with the provisions of Sub-Section (3) of Section 178 of the Companies Act, 2013, formulated the policy setting out the criteria for determining qualifications, positive attributes, independence of a Director and policy relating to remuneration for Directors, Key Managerial Personnel and Senior Management Employees. The detail of the same has been disclosed in the Corporate Governance Report.

During the financial year, your Company has held 4 (Four) Board Meetings which were held on 30^th May, 2022; 12^th August, 2022; 12^th November, 2022 and 14^th February, 2023. The maximum interval between any two meetings did not exceed 120 days. As per Section 167 (1) (b), all the directors have attended atleast one Board Meeting held during the financial year.

During the year, there was no employee in receipt of remuneration as prescribed in the Rule 5 (2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014. The prescribed particulars of Employees as required under Section 197 (12) of the Act read with Rule 5 (1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is attached as "Annexure A" and form part of this Report.

To the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors make the following statements in terms of Section 134(3)(c) of the Companies Act, 2013:

a) that in the preparation of the Annual Financial Statements for the year ended 31^st March, 2023, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;

b) that such accounting policies as mentioned in Note 2 of the Notes to the Financial Statements have been selected and applied consistently and judgment and estimates have been made that are reasonable and prudent so as to give a true and fair view of the state of affairs of your Company as at 31^st March, 2023 and of the profit of your Company for the year ended on that date;

c) that 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 your Company and for preventing and detecting fraud and other irregularities;

d) that the Annual Financial Statements have been prepared on a going concern basis;

e) that proper internal financial controls were in place and that the financial controls were adequate and were operating effectively;

f) that systems to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively.

Your Company maintains an adequate and effective Internal Control System commensurate with its size and complexity. We believe that these internal control systems provide, among other things, a reasonable assurance that transactions are executed with Management authorization and that they are recorded in all material respects to permit preparation of financial statements in conformity with established accounting principles and that the assets of your Company are adequately safeguarded against significant misuse or loss.

There are no companies, which have become or ceased to be its Subsidiaries, Joint Venture or Associate Companies during the financial year 2022 - 23.

Your Company has not accepted deposits from the public. Your Company has accepted deposit from the members and relatives of directors falling within the ambit of Section 73 of the Companies Act, 2013 and the Companies (Acceptance of Deposits) Rules, 2014. The details relating to Deposits, covered under Chapter V of the Companies Act, 2013 are tabled below:

Your Company has also accepted exempted deposits. The closing balance as on 31^st March, 2023 are given below:

Your Company has filed form DPT-3 being Return of Deposits for the financial year ended 31^st March, 2023.

The details of loans given and investments made which are covered under the provisions of Section 186 of the Companies Act, 2013 read with the Companies (Meetings of Board and its Powers) Rules, 2014 are given in the Notes to the Audited Standalone Annual Financial Statements. The Company has not given any guarantees or security against loan given to any person under the provisions of Section 186 of the Companies Act, 2013.

A Related Party Transaction (RPT) Policy has been adopted by the Board of Directors for determining the materiality of transactions with related parties and dealings with them. The said policy may be referred to, at your Company's website at the web link, https://valsonindia.com/wp-content/uploads/2016/08/Related-Party-Transactions-Policy.pdf. All transactions with related parties are placed before the Audit Committee for approval. Prior omnibus approval of the Audit Committee is obtained for the RPTs, which are foreseeable and repetitive. A statement giving details of all RPTs are placed before the Audit Committee and the Board of Directors on a quarterly basis.

Further the members may note that your Company has not entered into the following kinds of related party transactions:

- Contracts/arrangement/transactions, which are not at arm's length basis or in the ordinary course of business.

- Any Material contracts/arrangement/transactions [as per Regulation 23 of the SEBI (LODR) Regulations, 2015]

The criteria prescribed for the applicability of Corporate Social Responsibility under Section 135 of the Companies Act, 2013 is not applicable to your Company.

The information on conservation of energy, technology absorption and foreign exchange earnings and outgo stipulated under Section 134 (3) (m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014, is annexed herewith as "Annexure B".

In line with the regulatory requirements, your Company has framed a Risk Management Policy to identify and access the key business risk areas and a risk mitigation process. A detailed exercise is being carried out at regular intervals to identify, evaluate, manage and monitor all business risks. The Board periodically reviews the risks and suggests steps to be taken to control and mitigate the same through a properly defined framework.

The inherent risks to the business of your Company are as follows:

a) Foreign Exchange Risk

b) Yarn Price Risk

c) Stiff Global Competition

d) Government Policy on incentives for exports

e) Risk elements in business transactions

f) Success of Cotton Crop

All the above risk has been discussed in the Management Discussion and Analysis Report. The Chairman and Managing Director, CEO & CFO mitigate the risk with the help of their depth of knowledge of market, assistance of senior management and forecast based on various data available with your Company. Your Company has developed the analysis of market data which helps in decision making and to ensure the mitigation of the risk.

Your Company has not formed Risk Management Committee as it is not applicable as per Regulation 21 of the SEBI (LODR) Regulations, 2015.

Over the years, your Company has established a reputation for doing business with integrity and displays zero tolerance for any form of unethical behaviour. Whistle Blower Policy is the vigil mechanism instituted by your Company to report concerns about unethical behaviour in compliance with the requirements of the Companies Act, 2013 and the SEBI (LODR) Regulations, 2015. The Board's Audit Committee oversees the functioning of this policy. Protected disclosures can be made by a whistle blower through several channels to report actual or suspected frauds and violation of your Company's Code of Conduct and / or Whistle Blower Policy. Details of the Whistle Blower Policy have been disclosed on your Company's website at https://valsonindia.com/wp-content/uploads/2016/08/whistle-blower-Policy-Valson.pdf.

There are no significant material orders passed by the Regulators / Courts which would impact the going concern status of your Company and its future operations.

M/s. Bastawala & Associates, Chartered Accountants were the statutory auditors of the Company since 34^th Annual General Meeting (AGM) held on 29^th September, 2018 and have completed a period of 5 years since their appointment. Pursuant to Section 139 of the Companies Act, 2013, they shall retire at the conclusion of 39^th AGM of the Company.

In terms of the provisions of Section 139 of the Companies Act, 2013, the Companies (Audit and Auditors) Rules, 2014, and other applicable provisions, the Company can appoint or reappoint an audit firm as statutory auditors for not more than two (2) terms of five (5) consecutive years. M/s. Bastawala & Associates are eligible for re-appointment for a further period of 5 years.

The Board of Directors of the Company have re-appointed M/s. Bastawala & Associates, Chartered Accountants (FRN: 121789W) as the Statutory Auditors of the Company for a term of 5 years to hold the office from the conclusion of 39^th AGM till the conclusion of 44^th AGM based on the recommendation of the Audit Committee and subject to approval of the members of the Company. Necessary resolution has been proposed for approval of the members at item no. 3 of the notice of AGM.

M/s. Bastawala & Associates., Chartered Accountants have confirmed their eligibility under Section 141 of the Companies Act, 2013 and the Rules framed thereunder for re-appointment as statutory auditors of your Company. Further, as required under Regulation 33 of SEBI (LODR) Regulations, 2015, M/s. Bastawala & Associates., Chartered Accountants have also confirmed that they hold a valid certificate issued by the Peer Review Board of the Institute of Chartered Accountants of India. In accordance with regulation 36 (5) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations,

2015, the disclosures in respect of appointment / re-appointment of statutory auditors have been made at Explanatory Statement to item no. 3 of the notice of AGM.

The Report given by the Auditors on the financial statements of your Company is part of the Annual Report. There are no qualification, reservation or adverse remark made by the statutory auditors in their Audit Report.

In terms of the provisions of Section 204 of the Act read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board has appointed Mr. Punit Shah, Practicing Company Secretary as Secretarial Auditors for conducting Secretarial Audit of your Company for the financial year ended March 31, 2023.

The report of the Secretarial Auditor is attached as "Annexure C". The Secretarial Audit Report does not contain any qualification, observation or adverse remark.

In terms of the provisions of Section 148 of the Act read with the Companies (Cost Records and Audit) Amendment Rules, 2014, your Company is required to maintain cost records and accordingly, such accounts are made and records have been maintained for the year 2022 - 2023.

The Company is required to audit its cost records for the financial year ending March 31, 2024. The Board of Directors, on the recommendation of the Audit Committee, has appointed M/s. ABK & Associates Cost Accountants (FRN: 000036) as the Cost Auditors of the Company, for the financial year ending March 31,2024, at a remuneration as mentioned in the Notice convening the 39^th Annual General Meeting of the Company.

A resolution seeking ratification by the members for the remuneration payable to Cost Auditor for the financial year ending March 31, 2024 has been proposed at item no. 4 of the Notice of the 39^th Annual General Meeting of the Company and same is recommended for your consideration and approval.

During the year under review, neither the statutory auditors nor the secretarial auditors have reported to the Audit Committee of the Board, under Section 143 (12) of the Act, any instances of fraud committed against your Company by its officers or employees, the details of which would need to be mentioned in this Report.

The Board of Directors affirms that your Company has complied with the applicable Secretarial Standards (SS) issued by the Institute of Companies Secretaries of India (SS1 and SS2), respectively relating to Meetings of the Board, its Committees and General Meeting, which have mandatory application during the year under review.

In view of COVID-19 pandemic, the Ministry of Corporate Affairs vide its circular no. 17 / 2020 dated 13^th April, 2020, circular no. 20 / 2020 dated 5^th May, 2020 and circular No. 02/2022 dated 5^th May, 2022 and SEBI vide its circular bearing reference no. SEBI/HO/CFD/CMD1/ CIR/ P/ 2020/79 dated 12^th May, 2020 and SEBI/HO/CFD/PoD-2/P/CIR/2023/4 dated 5^th January, 2023 has dispensed with the requirement of sending hard copy of full annual report to the shareholders.

Electronic copies of the annual report for the financial year 2022 - 2023 and notice of the 39^th Annual General Meeting (AGM) are sent to all members whose email addresses are registered with your Company / Depository Participant(s).

Members who have not registered their email address can do so by following the steps as mentioned in the notes of notice of 39^th AGM. Alternatively, if they need the soft copy of the annual report, they are requested to download the same from the website of the Company i.e. www.valsonindia.com or from the website of BSE Limited i.e. www.bseindia.com or write to the Company at pritesh@valsonindia.com or cs@valsonindia.com.

Your Company provides e-voting facility to all its members to enable them to cast their votes electronically on all resolutions set forth in the Notice. This is pursuant to the Section 108 of the Companies Act, 2013 and Rule 20 of the Companies (Management and Administration) Amendment Rules, 2015.

Pursuant to the provisions of Section 92 (3) of the Companies Act, 2013 read with Rule 12 of the Companies (Management and Administration) Rules, 2014, the extract of the Annual Return in Form MGT - 9 of your Company for the financial year ended 31^st March, 2023 is annexed herewith as "Annexure D".

The Board of Directors affirm their continued commitment to good corporate governance practices. During the year under review, your Company has complied with the provisions relating to corporate governance as provided under the SEBI (LODR) Regulations, 2015. The compliance report together with a certificate from the Company's Secretarial Auditor, Mr. Punit Shah, Practicing Company Secretary confirming the compliance is provided in the Report on Corporate Governance, which forms part of the Annual Report.

Your Company firmly believes in providing a safe, supportive and friendly workplace environment - a workplace where our values come to life through the supporting behaviours. Positive workplace environment and a great employee experience are integral part of our culture. Your Company believes in providing and ensuring a work place free from discrimination and harassment based on gender.

Your Company educates its employees as to what may constitute sexual harassment and in the event of any occurrence of an incident constituting sexual harassment, your Company provides the mechanism to seek recourse and redressal to the concerned individual subjected to sexual harassment.

Your Company has a Sexual Harassment Prevention and Grievance Handling Policy in place to provide clarity around the process to raise such a grievance and how the grievance will be investigated and resolved. An Internal Complaints Committee has been constituted in line with the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

No complaint was raised and pending as on 01^st April, 2022 and no complaint has been raised during the financial year ended 31^st March, 2023.

Certificate from Mr. Kunal S. Mutreja, Director & CEO and Mr. Varun S. Mutreja, Director & CFO, pursuant to provisions of SEBI (LODR) Regulations, 2015, for the year under review was placed before the Board of Directors of your Company at its meeting held on May 26, 2023. The certificate is attached and forms part of this Report.

Mr. Punit Shah, Practicing Company Secretary, has issued a certificate as required under the SEBI (LODR) Regulations, 2015, confirming that none of the Directors on the Board of your Company have been debarred or disqualified from being appointed or continuing as Director of companies by the SEBI / Ministry of Corporate Affairs or any such statutory Authority. The certificate is attached and form part of this Report.

Mr. Punit Shah, Practicing Company Secretary, has issued Annual Secretarial Compliance Report for the financial year ended March 31, 2023 pursuant to Regulation 24A of the SEBI (LODR) Regulations, 2015 which covers a broad check on compliance with the applicable SEBI Regulations and circulars / guidelines issued thereunder on an annual basis. The said Report has been filed with BSE Limited on May 27, 2023.

No application has ever been filed against the Company under the Insolvency and Bankruptcy Code, 2016.

The Company has not made one-time settlement with the banks or financial institutions.

During the year 2022-2023 the company has procured the need base machinery and ancillaries of Rs. 215.90 Lakhs including Capital WIP; the details are as under:

As required under the Schedule V (B) of SEBI (LODR) Regulations, 2015, report on "Management Discussion and Analysis" is attached and form part of this Annual Report.

Your Company is listed with one Stock Exchange i.e. BSE Limited and your Company has duly paid the listing fees to the Exchange.

Your Directors thank the various Central and State Government Departments, Organizations and Agencies for the continued help and co-operation extended by them. The Directors also gratefully acknowledge all stakeholders of your Company viz. customers, members, dealers, vendors, banks and other business partners for the excellent support received from them during the year. The Directors place on record their sincere appreciation to all employees of your Company for their unstinted commitment and continued contribution to your Company.

Statements in the Board's Report and the Management Discussion & Analysis describing your Company's objectives, expectations or forecasts may be forward-looking within the meaning of applicable securities laws and regulations. Actual results may differ materially from those expressed in the statement.