SUBSIDIARIES, JOINT VENTURES AND ASSOCIATE COMPANIES

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

COMPANY'S POLICY ON DIRECTOR'S APPOINTMENT AND REMUNERATION (SECTION 178)

The Board has, on the recommendation of the Nomination and Remuneration Committee, framed a policy for selection and appointment of Directors, Key Managerial Personnel and Senior Management Personnel and their remuneration.

The Company has in place the Nomination and Remuneration Committee. The Company has further formulated the Nomination and Remuneration Policy on directors' appointment and remuneration including the criteria for determining qualifications, positive attributes and independence of directors. Further, the changes pertaining to the Nomination and Remuneration Policy during the financial year ended March 31,2018 forms part of the Corporate Governance Report.

EMPLOYEES REMUNERATION

In terms of the provisions of Section 197(12) of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended from time to time, the Boards' Report shall include a statement showing the names of top ten employees as prescribed under the said Rules. The information as per Rule 5(2), forms part of this Report. However, as per first proviso to section 136(1) of the Act and second proviso of Rule 5 of the Rules, the Report and Financial Statements are being sent to the Members of the Company excluding the statement of particulars of employees under Rule 5 (1) and 5(2) of the Rules. Any Member interested in obtaining a copy of the said statement may write to the Company at the Registered Office of the Company.

CONSERVATION OF ENERGY

The Company continues to strive for sustainable consumption of natural resources. As you are aware, novel concept nomenclature as "Resource Productivity" was coined by the management of your Company as a golden means to attain optimum utilization of available resources, especially renewable resources. Implementation of the said concept has led to improvement in over-all efficiency. Accordingly, the Company continued its implementation in the year under review as well. The same was implemented at all the manufacturing facilities. The manufacturing facilities of the Company are equipped with hi-tech energy monitoring and conservation systems to monitor usage, minimize wastage and increase overall efficiency at every stage of power consumption. Some of the measures being undertaken by the Company in its endeavor to conserve energy are listed hereunder:

• Improving system power factor by various means inter-alia including installation of capacitors;

• Reduction of maximum demand and restricting the maximum demand to billing demand;

• Monitoring of energy consumption and further requisite follow-up;

• Use of unconventional energy sources like solar energy in the form of solar water heater plant;

• Timely maintenance of machinery and equipments;

• Optimum utilization of high energy consuming electrical equipments like winding machines;

• Air-compressor pressure is maintained at reduced pressure with fixed timing and air leakages arrested;

• Installation ofcapacitorpanels;

• Energy audits at the manufacturing facility;

• Display of Notice Boards and Information Boards at all work stations for information and awareness of the employees;

• Awareness programmes towards optimum utilization of natural resources; and

• Plantation oftrees at all the manufacturing units.

Adhering to aforesaid initiatives have assisted Company to reduce its total energy consumption and thus reduce its carbon footprint. Your Company endeavors to continue on the path of Energy Conservation and contribute towards building of a Greener Environment.

RESEARCH & DEVELOPMENT; TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

Technology and Research & Development (R&D) go hand in hand. Your Company firmly believes that a sound R&D program is a key to success of any organization and a well-planned R&D acts as a catalyst to foster innovation and enhance the interfaces in both, conventional and emerging technological arenas. Accordingly, an in-house R&D team comprising of skilled engineers/experts in diversified fields has been formed to keep pace with the rapid technological changes in the industry.

Your Company is determined to develop its own technologies in select areas besides being an efficient user and innovator of available technologies. R&D and technology development are integral to your Company's innovation agenda for achieving growth, business profitability, sustainability and rural transformation.

The main thrust of the Company's R&D activities is upon strengthening of the current portfolio of products, looking for new concepts and product platforms, development of new technological platforms to support the consumer needs more effectively and introduction of a number of novel technologies in Consumer Electronics & Home Appliances. R&D work is in progress in the areas of basic technology, manufacturing skills, performance, quality, design and standardization.

The Company's customer-oriented performance is backed by R&D activities. The Company has reinforced activities in advanced digital technology to deliver smart products which simplify life.

R&D activities carried out in various Consumer Electronics and benefits derived from these activities:

i. In Direct Cool refrigerators, the BEE energy norms were upgraded further.

ii. Various cost innovation projects are taken up to reduce cost and improve profitability in all categories of products

iii. Upgraded various electrical parts from safety and add-on features point of view for entire range of refrigerators.

iv. Revamped range of Digi Pearl series washing machines with additional features such as lesser water consumption, high performance, multiple wash selection option, vibrant colours etc.,

v. Further Improved Digi Garcia series of Fully Automatic Washing Machines with aesthetically superior looks, water saver function, multiple wash selection option, lesser water consumption and higher performance.

vi. Changes in the Product cooling system and upgraded Electrical parts from safety point of view for the Entire range of Direct cool refrigerators.

vii. Introduction of New range of PCM/VCM in the direct cool refrigerators with up-gradation of looks in line the current market trend.

Future plan of action:

The Company continues to focus on environmental and customer friendly products. The Company has following plans through Research and Development:

• Upgradation of existing technology.

• Introduction of new range of front loading, top loading, fully automatic and semi-automatic and semi-automatic washing machines which are convenient for use.

• Cost Innovation projects through new design and ideas.

• Applying research and value engineering.

During the period under review, the Company has incurred Rs. 2.50 Million representing 0.10% of the turn over towards recurring R&D expenses.

FOREIGN EXCHANGE EARNINGS AND OUTGO

The particulars of Foreign Exchange Earnings and Outgo during the financial period ended on 31^st March, 2018 are set out hereunder:

RISK MANAGEMENT POLICY OF THE COMPANY

Taking risks is an inherent part of entrepreneurial behavior and well-structured risk management allows management to take risks in a controlled manner and the Company has developed and implemented a Risk Management Policy Risk Management Committee which has been entrusted with the responsibility to assist the Board in (a) Overseeing and approving the Company's enterprise wide risk management framework; and (b) Overseeing that all the risks that the organization faces such as strategic, financial, credit, market, liquidity, security, property, IT, legal, regulatory, reputational and other risks have been identified and assessed and there is an adequate risk management infrastructure in place capable of addressing those risks. The Risk Management Policy was reviewed and approved by the Committee constituted by the Board of Directors of the Company.

The Company manages, monitors and reports on the principal risks and uncertainties that can impact its ability to achieve its strategic objectives.

The Company has introduced several improvements to Integrated Enterprise Risk Management, Internal Controls Management and Assurance Frameworks and processes to drive a common integrated view of risks, optimal risk mitigation responses and efficient management of internal control and assurance activities.

CORPORATE SOCIAL RESPONSIBILITYPOLICY

As per Section 135 of the Companies Act, 2013 read with the Companies (Corporate Social Responsibility Policy) Rules, 2014, every company having net worth of Rs. 500 Crore or more or turnover of Rs. 1,000 Crore or more or net profit of Rs. 5 Crore or more during any financial year shall ensure that it spends, in every financial year, atleast 2 (Two) percent of the average net profits made during three immediately preceding financial years, in pursuance of its Corporate Social Responsibility Policy.

The Company has formed a Corporate Social Responsibility Committee in terms of provisions of Section 135 of the Companies Act, 2013 and rules made there under. The scope and composition of the Committee forms part of Corporate Governance Report.

However, the Company is not required to provide spend any amount under its Corporate Social Responsibility policy as it has incurred losses in its three immediately preceding financial years.

HEALTH, SAFETY AND ENVIRONMENT MEASURES

The management of your Company believes that the employees are the heart and soul of the organization and hence, considers health and safety of its employees as its prime responsibility. The health and safety platform of your Company is well supported by the safety management team which comprises of employee and management representatives. The management believes in the motto "Safety of persons overrides all Production targets".

The team studies a plethora of health, safety and environment related issues at manufacturing plants and reports the observations along with requisite correctives measures, if any, to the management for necessary action.

The Company continues to adopt the following health and safety initiatives:

• Accessibility of health and medical services to all employees through well equipped health centers at all manufacturing facilities.

• Medical camps, at regular intervals, to ensure fitness of its employees.

• Availability of ambulance, in case of emergency.

• On-the-job and off-the-job training programs at regular intervals for upgradation of employees on awareness front.

• Display of evacuation plans at various locations to reach assembly point.

• Display of cautionary boards, notice boards and information boards at work stations for information and awareness of the employees.

• Close monitoring of health and safety activities to ensure maintenance of adequate standards.

• Conduct of safety audits.

For your Company, economic, social and environmental responsibilities form an integral part of its business. The eco-friendly initiatives adopted by the Company include:

• Setting new targets for energy efficiency.

• Promoting the use of alternative fuels and materials.

• Re-engineering the processes and products to reduce energy consumption.

• Tree-plantation campaigns.

• Awareness programs for employees at all levels.

The Company adopt clean technologies and processes that combine both economic progress and sustainable environment.

INFORMATION TECHNOLOGY

Your Company has in place IT Systems which has enabled us to leverage the benefits of integration in business operations, optimization of enterprise resources, standardized business processes thereby enabling standard operating practices with well established controls. This has enabled the Company to adopt best and standardized business processes across the functions. It has also benefited the management at all levels with business information which is on-line and reliable to control the business operations in a well- informed manner.

LISTING

The equity shares of your Company are listed on the BSE Limited (Formerly: the Bombay Stock Exchange Limited) and The National Stock Exchange of India Limited (NSE).

CORPORATE GOVERNANCE

The Company has substantially complied with the corporate governance requirements under the Companies Act, 2013 and as stipulated under the Listing Regulations. A separate section on Corporate Governance under the Listing Regulations, along with a certificate from the auditors confirming the compliance, is annexed and forms part of this report.

CASH FLOW STATEMENT

The Cash Flow Statement for the period ended 31^st March, 2018, in conformity with the provisions of Companies Act, 2013 and Listing Regulations, is annexed hereto.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

In accordance with the Listing Regulations, the Management Discussion and Analysis Reportforms part of this report.

1. STATUTORY AUDITORS AND AUDIT REPORT:

In terms of the provisions of Section 139 of the Companies Act, 2013 read with the Rules made there under, the Company had, on 29^th September, 2017, appointed M/s. S. Z. Deshmukh & Co., Chartered Accountants, Mumbai (Firm Registration No. 102380W) as the Statutory Auditors of the Company for a period of 5 years from the conclusion of 29^th Annual General Meeting until the conclusion of34^thAnnual General Meeting.

The first proviso to Section 139 of the Companies Act, 2013 regarding placing the matter relating to appointment for ratification of Auditors by members at every annual general meeting and the provisions of Rule 3(7) of the Companies (Audit and Auditors) Rules, 2014, have been omitted by the Companies (Amendment) Act, 2017 and the Companies (audit and Auditors) Second Amendment Rules, 2018, respectively w.e.f. 7^thMay, 2018. As such the Company is not required to ratify the appointment of Auditors at the ensuing Annual General Meeting.

M/s. S. Z. Deshmukh & Co., Chartered Accountants, Mumbai (Firm Registration No. 102380W), have confirmed their eligibility in terms of the provisions of Section 141 of the Companies Act, 2013 and Rule 4 of Companies (Audit and Auditors) Rules, 2014.

AUDIT REPORT:

The Statutory Auditor of the Company have submitted Auditors' Report, which has a qualification in respect of going concern. The Auditors raised doubts on the ability of the Company to continue as "Going Concern".

The explanation of the management is as under:

During the year, the Company has incurred a net loss of Rs. 6,314.79 Million and as of that date the Company's accumulated losses amounts to Rs. 5,951.94 Million and it has negative net worth of Rs. 2,555.44 Million. Further, the Company has been referred to National Company Law Tribunal under the Insolvency and Bankruptcy Code, 2016 as amended, and there are persistent severe strains on the working capital and there is considerable decline in level of operations of the Company. These factors raise significant doubts on the ability of the Company to continue as a "Going Concern". The management has assumed that the going concern concept stands vitiated and is in the process of ascertaining the liquidation value of the assets. The necessary adjustments required on the carrying amount of assets and liabilities have not been ascertained and the impact thereof on the financial statements is not ascertainable at this stage.

Emphasis of Matter in Financial Statements

The Auditors of the Company has given emphasis of the matter in the Ind AS Standard Financial Statements as follows:

The balance confirmations and reconciliation have not been received in respect of certain secured and unsecured loans, balances with banks, trade receivables, trade and other payables and loans and advances. In the opinion of the management, there will not be any material impact on the financial statements. Our opinion is not modified in respect of above matters

The confirmations and reconciliation of balances of certain secured and unsecured loans, balances with banks, trade receivables, trade and other payables and loans and advances are pending. The management is in the process of obtaining confirmations and reconciliation of balances. In the opinion of the management, there will not be any material impact on the standalone Ind AS financial statements.

2. COST AUDITOR AND COST AUDIT REPORT:

In terms of the provisions of Section 148 of the Companies Act, 2013 read with the Companies (Audit & Auditors) Rules, 2014 and amendments made thereto; from time to time, the Board of Directors of the Company are required to appoint Cost Auditor, to conduct audit of Cost Accounting Records maintained by the Company for the financial year commencing on 1^st April, 2018 and ending on 31^st March, 2019 in respect of products covered under ‘Other Machinery'. The Board of Directors are in process of appointment of Cost Auditor the same shall be complied with in due course.

In compliance with the provisions of the Companies (Cost Audit Report) Rules, 2011 and General Circular No. 15/2011 issued by Government of India, Ministry of Corporate Affairs, Cost Audit Branch, the Cost Audit Report for the financial year ended on 31^st March, 2017 was required to be submitted within 30 days from 27^th September, 2017. However, the said report was submitted on 9^th November, 2017. The delay was on account of technical difficulties.

In compliance with the provisions of the Companies (Cost Audit Report) Rules, 2011 and General Circular No. 15/2011 issued by Government of India, Ministry of Corporate Affairs, Cost Audit Branch, we hereby submit that, the due date for filing the Cost Audit Report for the financial year ended on 31^st March, 2018 is 27^th September 2018 and the Company is hopeful of filing the same on or before due date.

3. SECRETARIAL AUDITOR AND SECRETARIAL AUDIT REPORT:

The Board had appointed Mr. Soumitra B. Mujumdar, Company Secretary in Whole-time Practice, to carry out Secretarial Audit under the provisions of Section 204 of the Companies Act, 2013 for the financial period ended on 31^st March, 2018. The report of the Secretarial Auditor is annexed to this report as Annexure 1. In connection, with the auditor's observation in the report, it is clarified that the Company is in process of identifying the suitable candidate for the post of KMPs viz., Chief Executive Officer, Chief Financial Officer and Company Secretary. Further, the Company is in process of filing the Return of Foreign Assets and Liabilities for the Financial Period ended 31^st March, 2018 with the Reserve Bank of India. The delay in filing and non-filing of some of the e-Forms with the Registrar of Companies during the Audit Period was on account of technical difficulties/accidental omission and the same in respect to the delay in compliance with the SEBI LODR was on account of operational difficulties. Furthermore, the Company is also in process of appointment of a Women Director on the Board.

DETAILS OF FRAUDS REPORTED BY AUDITORS (OTHER THAN REPORTABLE TO CENTRAL GOVERNMENT)

There is no fraud/misconduct detected at the time of statutory audit by Auditors of the Companyforthe financial period ended on 31^st March, 2018.

ANNUAL RETURN: