Your Directors are pleased to present the 29th Annual Report along with the Standaloneand Consolidated Audited Financial Statements of your Company for the Financial Year endedon March 31 2017.
OVERVIEW OF THE ECONOMY
India being the single largest producer of castor seed in the world is likely towitness a decline in the crop output after the farmers shifted to other remunerative cropsduring the kharif of 2016. In Gujarat the largest producer of castor seed a drop of over27% was recorded in the quantity of production. Castor seed prices are largely dictated bythe export scenario of castor oil. According to The Solvent Extractors Association ofIndia (SEA) the export of castor oil decreased by 11% during April 2016 to March 2017.Further India had exported about 454445 tones of castor oil during the year 2016-17 asagainst 543274 tones in corresponding period of 2015-16.
The Company is focused on producing the basic castor oil grades. The Company is alsoengaged in trading of castor oil derivatives mainly HCO which the Company gets made on jobwork basis. The Company is also manufacturing other derivatives viz.12 HAS and ricionicacid etc The Company has a capacity to crush over 27000 MT of castor seed per month. Itis currently (Mar 2017) operating with crushing capacity of castor seed excess of 21000 MTper month.
(Note: The data mentioned herein above are provided as available from statisticsprovided in public domain on the website of The Solvent Extractors Association of India.)
The financial highlight is depicted below: (` In Lacs)
| ||Standalone ||Consolidated |
| ||Year Ended ||Year Ended ||Year Ended ||Year Ended |
|PARTICULARS || || || || |
| ||31.03.2017 ||31.03.2016 ||31.03.2017 ||31.03.2016 |
|Revenue from operations (Net) ||9058.86 ||8403.42 ||10805.72 ||10436.55 |
|Other Income ||181.24 ||67.18 ||188.85 ||84.68 |
|Total Income ||9240.1 ||8470.61 ||10994.57 ||10521.23 |
|Total Expenditure ||8656.20 ||7466.70 ||10365.14 ||9781.45 |
|Profit / (Loss) before Tax & Depreciation ||583.9 ||1003.91 ||629.43 ||739.79 |
|Less : Depreciation ||1192.25 ||1245.25 ||1260.92 ||1330.55 |
|Less: Provision for taxation ||- ||- ||- ||- |
|Profit/ (Loss) before interest & exceptional items ||(608.35) ||(241.34) ||(631.49) ||(590.77) |
|Finance Cost ||0.04 ||1.57 ||0.13 ||2.76 |
|Profit/(Loss) before Exceptional Items ||(608.39) ||(242.91) ||(631.62) ||593.53 |
|(Add)/ Less: Exceptional Items ||- ||- ||- ||- |
|Profit/(Loss) before prior period items and tax ||- ||- ||- ||- |
|Deduct : Prior Period Adjustment (Taxation) ||- ||- || ||- |
|Profit/(Loss) before tax for the year ||(608.39) ||(242.91) ||(631.62) ||(593.53) |
|Add/ (Less): Deferred Tax ||- ||- ||3.24 ||160.06 |
|Profit / (Loss) for the year ||(608.39) ||(242.91) ||(628.38) ||(433.47) |
SUBSIDIARY/ JOINT VENTURE COMPANIES
Your Company has two wholly owned subsidiaries as on 31st March 2017. The Board ofDirectors also reviewed the affairs of the Subsidiary Companies. In accordance with theprovisions of Section 129(3) of the Companies Act 2013 we have prepared ConsolidatedFinancial Statements of the Company and its Subsidiaries which forms part of this AnnualReport. The accounts of Joint Venture i.e. AWN Agro Private Limited has not beenconsolidated for the current year. The reason for non-consolidation is due todiscontinuation of control on the management and financial affairs of the Joint VentureCompany. Further a statement containing the salient features of the financial statementsof our Subsidiary Companies and a Joint Venture Company in the prescribed format AOC-1is appended as Annexure-Ato the Board's report.
The paid up Equity Share Capital of the Company as at March 31 2017 stood at `60099000. During the year under review the Company has not issued shares withdifferential voting rights nor has granted any stock options or sweat equity. As on March31 2017 none of the Directors of the Company hold any instruments convertible intoequity shares of the Company.
DIVIDEND AND RESERVES
Your Directors express their inability to recommend any dividend for the year 2016-17owing to accumulated losses of the Company. In view of this your Company was unable totransfer any funds to the Reserves and Surplus Account.
The Company has neither invited nor accepted any deposits within the meaning of Section73 of the Companies Act 2013 and the Companies (Acceptance of Deposits) Rules 2014 fromthe public during the year ended March 31 2017. There were no unclaimed or unpaiddeposits as on March 31 2017.
PARTICULARS OF CONTRACTS OR ARRANgEMENTS WITH RELATED PARTIES REFERRED TO INSUB-SECTION (1) OF SECTION 188.
All related party transactions entered into during FY 2016-17 were on an arm's lengthbasis and in the ordinary course of business and were in compliance with the applicableprovisions of the Companies Act 2013 (the Act') and the Securities and ExchangeBoard of India (Listing Obligations and Disclosure Requirements) Regulations 2015.
All related party transactions are placed before the Audit Committee for review andapproval of the Committee and also to the Board for approval. The policy on materiality ofrelated party transactions and dealing with related party transactions as approved by theBoard is available on the Company's website.
The details of related party transactions entered into by the Company are provided inForm AOC-2 given as Annexure B of Board's Report. There are nomaterially significant related party transactions made by the Company with Promoters KeyManagerial Personnel or other designated persons which may have potential conflict withinterest of the Company at large. The Company has developed a Related Party TransactionsPolicy through Standard Operating Procedures for the purpose of identification andmonitoring of such transactions.
MATERIAL CHANgES AND COMMITMENT IF ANY AFFECTINg THE FINANCIAL POSITION OF THE COMPANYOCCURRED BETWEEN THE END OF THE FINANCIAL YEAR TO WHICH THIS FINANCIAL STATEMENTS RELATEAND THE DATE OF THE REPORT
There are no material changes and commitment affecting the financial position of theCompany occurred between the end of the financial year and date of this report.
MANAgEMENT DISCUSSION AND ANALYSIS REPORTS
In terms of the Regulation 34(e) read with Schedule V of SEBI (Listing Obligations& Disclosure Requirements) Regulations 2015 Management Discussion and Analysisis set out in this Annual Report as Annexure C.
PARTICULARS OF EMPLOYEES
Disclosure pertaining to remuneration and other details as required under section197(12) of the Act read with Rule 5(1) of the companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 are annexed to this report Annexure D.Further no employee of the Company was employed during the year drawing remunerationexceeding the limits as prescribed under Rule 5(2) of the (Appointment and Remuneration ofManagerial Personnel) Rules 2014. Hence the information under Rule 5(2) is notapplicable.
The Company recognizes and embraces the benefits of having a diverse Board of Directorsand sees increasing diversity at Board level as an essential element in maintaining acompetitive advantage in the complex business that it operates. The Board of Directors hasalso adopted a policy on Board Diversity which sets out the approach to diversify theBoard of Directors. The Board Diversity Policy is available at our website:http://www.nkindustriesltd.com/Governance.html.
In accordance with the provisions of Section 152(6) of the Companies Act and Articlesof Association Mr. Nilesh K. Patel (DIN: 00244115) Managing Director of the Companyshall retire by rotation and being eligible offers himself for reappointment at theensuing Annual General Meeting of the Company.
Further during the year under review the following changes occurred in the compositionof Board of the Company:
1. Mrs. Neha Modi (DIN: 07171193) resigned w.e.f 11th August 2016 and Ms. Mridu Sharma(DIN: 07591599) was appointed as an Independent Woman Director w.e.f 11th August 2016 incasual vacancy caused by the resignation of Mrs. Neha Modi (DIN: 07171193).
2. Mr. Bhawani Singh Yadav (DIN: 00323601) has been appointed as an additional directorof the Company w.e.f. 12th November 2016. The Notice of the ensuing Annual GeneralMeeting comprises of an agenda for appointment of Mr. Bhawani Singh Yadav as anIndependent Director for a term of five consecutive years subject to the approval ofmembers.
NUMBER OF MEETINgS OF THE BOARD OF DIRECTORS
The details of the number of meetings of the Board held during the financial year areas follows:
Board Meetings held during the year 2016-17
|Sr. No. ||Date of Board Meeting |
|1 ||21-05-2016 |
|2 ||11-08-2016 |
|3 ||12-11-2016 |
|4 ||11-02-2017 |
The intervening gap between the Meetings was within the period prescribed under theCompanies Act 2013.
As per Schedule IV of the Companies Act 2013 a separate meeting of IndependentDirector was on 7th March 2017 at 11.30 A.M. at registered office of the company situatedat Ahmedabad to discuss the agenda items as required under the Companies Act 2013.
The names of member of the Board and their attendance at the Board Meetings are asunder:
|Name of directors ||Number of Meetings Attended / Total Meetings held during the year 2016-17 |
|1. Mr. Nimish K. Patel (Chairman and Managing Director) ||4/4 |
|2. Mr. Nilesh K. Patel (Managing Director) ||4/4 |
|3. Mr. Hasmukh K. Patel (Whole Time Director) ||4/4 |
|4. Dr. Bharat J. Patel (Independent Director) ||4/4 |
|5. Mr. Jaimin Modi (Independent Director) ||4/4 |
|6. Mrs. Neha Modi* (Independent Women Director) ||1/4 |
|7. Mr. Bhawani Singh Yadav** (Additional Director) ||2/4 |
|8. Ms. Mridu Sharma* (Independent Women Director) ||3/4 |
* Mrs. Neha Modi resigned as a Director w.e.f 11 August 2016 and Ms. MriduSharma was appointed as an Independent Woman Director in casual vacancy caused due to theresignation of Mrs. Neha Modi.
** Mr. Bhawani Singh Yadav had been appointed as an additional director w.e.f.12th November 2016.
APPOINTMENT AND RESIgNATION OF KEY MANAgERIAL PERSONNEL
During the year under review the following changes that occurred in the post ofCompany Secretary:
|. Name of the Person ||Designation ||Date of Appointment/Resignation |
|1 Ms. Akanksha Srivastava ||Company Secretary & Compliance Officer ||12th November 2016 (Appointment) |
|2 Ms. Heena P. Jain ||Company Secretary & Compliance Officer ||17th October 2016 (Resignation) |
NOMINATION AND REMUNERATION POLICY
The Policy of the Company on Director's appointment and remuneration including criteriafor determining qualifications positive attributes Independency of a Director and othermatters provided under sub-section (3) of section 178 of The Companies Act 2013 adoptedby the board is available on the website i.e.http://www.nkindustriesltd.com/Governance.html We affirm that the remuneration paid to theDirectors is as per the terms laid out in the Nomination and Remuneration Policy of theCompany.
PARTICULARS OF LOANS gUARANTEES OR INVESTMENTS
The Company has not given any loans or guarantees during the year under review withinthe purview of Section 186 of the Companies Act 2013. The details of the investments madeby Company are given in the notes to investments in the financial statements.
DECLARATION BY INDEPENDENT DIRECTORS
The Company has received declaration from each Independent Director of the Companyunder section 149 (7) of the Companies Act 2013 that he/she meets the criteria ofindependence laid down in section 149 (6) of the Companies Act 2013.
The Companies Act 2013 states that the formal annual evaluation needs to be made byBoard of its own performance and that of its Committees and individual Directors. ScheduleIV of the Companies Act 2013 states that performance evaluation of the IndependentDirectors shall be done by the entire Board of Directors excluding the director beingevaluated.
The evaluation of all the Directors and the entire Board was conducted based on thecriteria and framework adopted by the Board.
The Board approved the evaluation results as allotted by the Nomination andremuneration committee. The Companies Act 2013 states that the formal annual evaluationneeds to be made by board of its own performance.
COMMITTEES OF BOARD
Currently the Board has four committees i.e. Audit Committee Nomination andRemuneration Committee Stakeholders Relationship Committee and Corporate SocialResponsibility Committee. All committees constitute proper composition of IndependentDirectors as mentioned in relevant provisions of Companies Act 2013.
|Name of the Committee ||Composition of the Committee ||Highlights of duties responsibilities and activities |
|Audit Committee (This disclosure is as ||Shri Jaimin Modi (Chairman) ||All recommendations made by the Audit Committee during the year were accepted by the Board. |
|per section 177 (8) of Companies Act 2013) ||Shri Nilesh K. Patel Dr. Bharat J. Patel ||The Company has adopted the Vigil mechanism for Directors and employees to report concerns about unethical behavior actual or suspected fraud or violation of the Company's Code of Conduct and Ethics. |
| || ||In accordance with the requirements of the Companies Act 2013 the Company has formulated policies on related party transactions. The policies including the Vigil Mechanism Policy are available on our website:- http://www.nkindustriesltd.com/Governance.html |
|Nomination and Remuneration Committee ||Shri Jaimin Modi (Chairman) ||The Committee oversees and administers executive compensation operating under a written charter adopted by our Board of |
| ||Shri Nimish K. Patel ||Directors. |
| ||Dr. Bharat Patel ||The Committee has designed and continuously reviews the compensation program for our Directors with business objectives and to link compensation with the achievement of measurable performance goals. |
| || ||The Nomination and Remuneration Committee has framed the nomination and remuneration policy. The said policy is available on the website of the Company http://www.nkindustriesltd.com/ Governance.html |
|Stakeholders ||Shri Jaimin Modi ||The Committee reviews and ensures to redress investor grievances. |
|Relationship ||(Chairman) ||The Committee noted that all the grievances of the shareholders during the year have been resolved. |
|Committee ||Shri Hasmukh K. Patel || |
| ||Mrs. Neha Modi || |
| ||(upto 11th August 2016) || |
| ||Ms. Mridu Sharma || |
| ||(w.e.f 11th August 2016) || |
|Corporate Social Responsibility Committee ||Dr. Bharat J. Patel (Chairman) ||The Board has laid out the Company's policy on Corporate Social Responsibility (CSR) but due to inadequate profit the Company was unable to carry out any activities. |
| ||Shri Nimish K. Patel || |
|(This disclosure is as per section 135 (2) of Companies Act 2013) ||Mrs. Neha Modi (upto 11th August 2016) Ms. Mridu Sharma (w.e.f 11th August 2016) ||The CSR policy is available on our Company's website http://www.nkindustriesltd.com/Governance.html |
DIRECTORS RESPONSIBILITY STATEMENT
Accordingly pursuant to Section 134 (5) of the Companies Act 2013 the Board ofDirectors to the best of their knowledge and ability confirm that: i) In the preparationof the annual accounts for the year ending March 31 2017 the applicable accountingstandards have been followed along with proper explanation relating to material departure;ii) The directors have selected such accounting policies and applied them consistently andmade judgements and estimates that were reasonable and prudent so as to give a true andfair view of the state of affairs of the Company at the end of the financial year and ofthe profit or loss of the Company for the year under review. iii) The Directors have takenproper and sufficient care for the maintenance of adequate accounting records inaccordance with the provisions of this Act for safeguarding the assets of the Company andfor preventing and detecting fraud and other irregularities. iv) The annual accounts havebeen prepared on going concern basis; v) The Directors have laid down internal financialcontrols which are adequate and are operating effectively. vi) The Directors have devisedproper system to ensure compliance with the provisions of all applicable laws and thatsuch system was adequate and operating effectively.
AUDITORS i. Statutory Auditors
M/s Parikh and Majmudar Chartered Accountants (Firm Registration No: 107525W) wereappointed as the Statutory Auditors of the Company for a consecutive period of 5 yearsfrom 26th AGM till the conclusion of 31st AGM subject to ratification at each AGM.
The Company has obtained written consent from them and a certificate to the effect thatratification of their appointment if made at the ensuing AGM will be in accordance withthe provisions of Section 139 of the Companies Act 2013 and such conditions as may beprescribed.
The members are requested to consider the matter of ratification of appointment ofAuditors and also to fix their remuneration.
There are certain qualifications made by the Auditors in their Standalone Report forwhich the Board of Directors hereby give its comments/explanation as under: i. NationalSpot Exchange Limited (NSEL) has served a notice to N K Proteins Private Limited (Formerlyknown as N K Proteins Limited') who was a Trading and Clearing member at NSEL and NK Industries Limited was only a client Company of Trading Member i.e. N K ProteinsLimited. As regards the balance of trade receivables and trade payables arising out of thetransactions through NSEL the same cannot be confirmed pursuant to the pendency oflitigations as the matter is still pending before the respective authorities.
Further the Home Department Government of Maharashtra has issued a notification underthe MPID Act
1999 securing the attachment of Land & Building and Plant & Machinery of theCompany. The Company had challenged the notification issued by the Home DepartmentGovernment of Maharashtra before the Hon'ble High Court of Gujarat. The Hon'ble GujaratHigh Court had disposed off the application of the Company vide its order dated 29th March2017. Against this the Company had preferred a Special Leave Petition before theHon'ble Supreme Court of India. The Hon'ble Supreme Court of India had disposed off theSpecial Leave Petition on 17/04/2017 with an observation to file an application beforethe Hon'ble Bombay High Court. The Company is in the process of filing the applicationbefore the Bombay High Court. The matter is subjudice. ii. With respect to point no.2 ofqualified opinion of Auditors Report it is hereby clarified that the Company haspreferred an appeal before the Hon'ble Appellate Tribunal under the Prevention of MoneyLaundering Act 2002. The matter is sub-judice.
In addition to the above the Auditors have made observations under the headEmphasis of Matter reply to the said observations is as under:-
1. Though the net worth of the Company is negative the Company is making sincereefforts for the revival of the business of the Company whereby it is making continuesefforts to increase the volumes as well as to generate comprehensive margins from thebusiness and thereby revive the business.
2. During the year under review the Income Tax Department has raised a demand of `7.97crores on the Company for the Assessment Year 2013-14 making the demand of ` 132 crores inaggregate. The said matter being disputed is still pending before the Income TaxAuthorities. In this regard the Income Tax Authorities have also attached the propertiesof the Company against the said demand as mentioned in the Auditors in their Report.
3. With respect to the survey carried out u/s 133 of the Income Tax Act in 1999 and inresponse to the orders passed by 1st Appellate authority and 2nd Appellate Authoritysubsequently with respect to survey proceedings the Company preferred Application to theHon'ble High Court of Gujarat which was disposed off by the Hon'ble Court vide its orderdated 20/06/2016 after giving relief on certain ground and dismissing certain ground. TheSaid order was challenged on before the Hon'ble Supreme Court which was rejected by theHon'ble Supreme Court. The Company has already provided for interest and tax in earlieryears towards the said demand. It is further stated that the effect order giving effect toOrder of Hon'ble Gujarat High Court is pending to be received from the department. Oncethe order is passed the net effect will be a refund to the Company and hence there is noneed to make any further provision in the books of accounts.
4. The demand raised by the Sales Tax Authorities is disputed in view of the fact thatthe Company has preferred an appeal before the Appellate Authority and the Company hasshown the said liability as Contingent Liability under Note No. 36 of the notes formingpart of the Accounts. In this view the Company has not made any provision for the saiddisputed liability.
5. The Company was registered as a Sick Unit by the Hon'ble Board for Industrial &Financial Reconstruction (BIFR) under the SICA Act. Further as the SICA Act had beenrepealed with effect from 01/12/2016 the Company is required to submit its application toNational Company Law Tribunal (NCLT) as per the provisions of the SICA Repeal Act.Howevertill date the Company has not submitted its Scheme to the Hon'ble NCLT.
6. As explained by the Auditors in their report at point no. 5 the Company has sentletters obtaining confirmation of balances to various parties but replies thereto arestill awaited.
There are no additional qualifications made by the Auditors in their ConsolidatedReport other than as qualified in the Standalone Report.
Further the Auditors of the Company has emphasized on some additional points in theirConsolidated Auditors Report on which the management has to reply as under:
1. As explained earlier at point no. i above N K Proteins Private Limited (N KProteins Limited) was a trading cum clearing member of National Spot Exchange (NSEL). Inthe said matter NSEL has filed a recovery suit in Bombay High Court against N K ProteinsPrivate Limited and others. N K Oil Mills Private Limited was neither a trading member nora client of N K Proteins Private Limited. In this regard a Notice of Motion is filedbefore the Hon'ble Bombay High Court on behalf of N K Oil Mills Private Limited and thematter is sub-judice
2. The Home Department Maharashtra has through notification under the MaharashtraProtection of Interest of Depositors Act 1999 attached the properties of Banpal OilchemPrivate Limited as mentioned by the Auditors. The Company is in the process of filingobjections before the Hon'ble High Court of Gujarat.
3. The Directorate of Enforcement had through a provisional attachment order dated27/08/2014 attached the assets of the Company however the Company has challenged thesaid attachment order before the PMLA Appellate Tribunal New Delhi and the matter issub-judice.
4. Income tax department has attached the properties mentioned in the Emphasis ofMatter against the outstanding tax demands pertaining to FY 2007-08 to FY 2012-13. Withrespect to the said outstanding demands it is stated that all the demands are disputeddemands and has been challenged by the Company at various appellate forums. The subsidiaryCompany is hopeful of obtaining favourable order from the Appellate Authorities. Onreceipt of the favorable order the demand would be deleted and attachment shall vacate.
5. In view of the fact that the Management of our Company do not have any control inthe Joint Venture viz. AWN Agro Pvt. Ltd and as per the exemption provided under theprovisions of the Companies Act 2013 and the Accounting Standards 21 & 27consolidation of the accounts of AWN Agro Pvt. Ltd. is not required by our Company.
Clarification with regard to the remark in point no. (i)(c) of the CARO (Report)annexed with the Auditors Report on standalone financial statements. i. With reference tothe said remark it is to be clarified that the Company is in process of transferring theproperties as mentioned by the Auditors in their report in its name. ii. SecretarialAuditor
In terms of Section 204 of the Companies Act 2013 and (Appointment and Remuneration ofManagerial Personnel) Rules 2014 M/s Riddhi Khaneja & Associates Practicing CompanySecretary has been appointed as Secretarial Auditor of the Company. The report of theSecretarial Auditor is enclosed as Annexure-E to this report. Thereport is self-explanatory and does not call for any further comments.
During the year under review there was a change in the Secretarial Auditor of theCompany. iii. Cost Audit
As per the requirement of Central Government and pursuant to Section 148 of theCompanies Act 2013 read with the Companies (Cost Records and Audit) Rules 2014 asamended from time to time Cost Audit has been duly carried out of the Cost Recordsrelating to oil manufacturing unit every year.
The Board of Directors on recommendation of the Audit Committee has appointed M/s. ND Birla & Co. as Cost Auditors of the Company for the Financial Year 2017-18. Asrequired under the Companies Act 2013 a resolution seeking member's approval for theremuneration payable to the Cost Auditor forms part of the Notice convening Annual GeneralMeeting.
SIgNIFICANT AND MATERIAL ORDERS PASSED BY THE REgULATORS OR COURTS OR TRIBUNALS
1. The Hon'ble Gujarat High Court had disposed off the application of the Company filedagainst the attachment notification issued by the Home Department Government ofMaharashtra dated 29/03/2017. Against this the Company preferred a Special Leave Petitionbefore the Hon'ble Supreme Court of India. The Hon'ble Supreme Court had disposed off thesaid SLP on 17/04/2017 with a observation to file an application before Hon'bleBombay High Court.
2. The Income Tax Department passed an order treating the holding Company i.e. N.K.Industries Limited as assessee in default under section 220 (6) (x) with respect to thedemand of Banpal Oilchem Pvt. Limited (i.e. Wholly Owned Subsidiary). The Company filed aspecial civil application before the Hon'ble Gujarat High Court challending the saidorder. The said special civil application of the Company was admitted by the Hon'bleGujarat High Court and the order of the Income Tax Department dated 10/06/2016 is setaside.
3. On an application regarding withdrawal of suit filed by N K Industries Limited inearlier years against Banpl Oilchem Private Limited the Commercial Court by disosing theCommercial suit No. 183/2016 as ordered to maintain status-quo with respect to amount ofRs. 2.31 Crores deposited with City Civil Court Palanpur on the direction of Hon'bleGujarat High Court. The said amount as per the order of the Commercial Court Shall bereleased subject to the outcome of the appeal filed against the order of the Income TaxDepartment.
ExTRACTS OF ANNUAL RETURN
The details forming part of the extracts of Annual return in form MGT-9 as requiredunder Section 92 of the Companies Act 2013 is included in this Report as Annexure-Fand forms integral part of this report.
CORPORATE SOCIAL RESPONSIBILITY INITIATIVES
As part of its initiatives under Corporate Social Responsibility (CSR) theCompany was unable to contribute the funds due to huge losses in the previous years aswell as in the current year. The Company is striving to make good profit in the comingyears and the Board of Directors of the Company assures to contribute funds in future.
The Company has a Vigil Mechanism to report genuine concerns or grievances. The VigilMechanism has been posted on the Website of the Companyhttp://www.nkindustriesltd.com/vigilmechanism.html.
INTERNAL FINANCIAL CONTROL SYSTEM AND ITS ADEQUACY
The Company has an Internal Control System commensurate with the size scale andcomplexity of its operations. To maintain its objectivity and independence the Companyhas appointed Independent Internal Auditor M/s. ADPRDP & Associates CharteredAccountants to submit Internal Audit reports to the Audit Committee of the Board.
The Internal Auditor monitors and evaluates the efficacy and adequacy of internalcontrol system in the Company its compliance with operating systems accountingprocedures and policies at all locations of the Company. Based on the report of InternalAuditor Audit Committee undertakes corrective action if any in their respective areasand thereby strengthens the controls. Significant audit observations and recommendationsalong with corrective actions if any thereon are presented to the Audit Committee of theBoard.
ENVIRONMENT AND SAFETY
The Company is conscious of the importance of environmentally clean and safeoperations. The Company is conducting operations in such a manner so as to ensure safetyof all concerned compliances of environmental regulations and preservation of naturalresources.
As required by the Sexual Harassment of Woman at Workplace (Prevention Prohibition andRedressal) Act 2013 the Company has formulated and implemented guidelines on preventionof sexual harassment at workplace with a mechanism of lodging and redressal of complaints.During the year under review no complaints were reported to the Committee.
The Company is committed to nurturing enhancing and retaining top talent throughsuperior Learning and Organizational Management. During the year under review yourCompany enjoyed cordial relationship with workers and employees at all levels.
STATUTORY INFORMATION i. Conservation of Energy: a) Company ensures that themanufacturing operations are conducted in the manner whereby optimum utilization andmaximum possible savings of energy is achieved. b) No specific investment has been made inreduction in energy consumption. c) As the impact of measures taken for conservation andoptimum utilization of energy are not quantitative its impact on cost cannot be statedaccurately. d) Since the Company does not fall under the list of industries which shouldfurnish this information in Form-A as annexed to the aforesaid Rules the question offurnishing the same does not arise. ii. Technology Absorption:
Company's products are manufactured by using in-house know how and no outsidetechnology is being used for manufacturing activities. Therefore no technology absorptionis required.
iii. Foreign Exchange Earning and Outgo:
During the period under review the foreign exchange earnings and outflow was asfollows:
|Year 2016-17 ||Amount in ` |
|Foreign Earnings ||- |
|Foreign Outflow ||- |
PREVENTION OF INSIDER TRADINg
The Company has adopted a Code of Conduct for Prevention of Insider Trading with a viewto regulate trading in securities by the Directors and designated employees of theCompany. The Code requires pre-clearance for dealing in the Company's shares and prohibitsthe purchase or sale of Company shares by the Directors and the designated employees whilein possession of unpublished price sensitive information in relation to the Company andduring the period when the Trading Window is closed. The Board is responsible forimplementation of the Code.
The Company has considered the proposal for purchasing and setting up a refining unitat the factory premises for refining of edible as well as non-edible oil with capacity of400 TPD. The said consideration of proposal by the Board has also been intimated to thestock exchanges.
RISK MANAgEMENT POLICY
Pursuant to Section 134(3)(n) of the Companies Act 2013 and Regulation 21 of LODRRegulations 2015 the Company has framed Risk Management Policy to review Business Risk.
The Company has devised and implemented a mechanism for risk management and hasdeveloped a Risk Management Policy. The Policy provides for constitution of riskcommittee which will work towards creating a risk register identifying internal andexternal risk and implementing mitigation steps. The Committee will on quarterly basisprovide status updates to the Board of Directors of the Company.
Your Directors express their sincere thanks and appreciation to the PromotersShareholders and Customers for their constant support and cooperation. Your Directorsalso place on record their gratitude towards the Banks Institutions and GovernmentDepartments for their confidence reposed in the Company.
|For and on behalf of the Board |
|Nimish K. Patel |
|Chairman & Managing Director |
|DIN: 00240621 |
|Date : 8th May 2017 |
|Place : Ahmedabad |
Statement containing salient features of the financial statements ofsubsidiaries/associate/joint ventures:
PART A: Subsidiaries
|1. Subsidiary No. : ||1 |
|2. Name of the Subsidiary: ||N K Oil Mills Private Limited |
|3. Reporting period for the subsidiary concerned if different from the holding ||N.A |
|Company's reporting period: || |
|4. Reporting currency and Exchange rate as on the last date of the relevant financial year in the case of foreign subsidiaries: ||N.A |
|5. Share Capital: ||561680 |
|6. Reserves & Surplus: ||(149664070) |
|7. Total Assets: ||25494480 |
|8. Total Liabilities: ||174596869 |
|9. Investments: ||764609 |
|10. Turnover: ||172048288 |
|11. Profit before Taxation: ||(217914) |
|12. Provision for Taxation: ||(121882) |
|13. Profit (Loss) after taxation: ||(96 032) |
|14. Proposed Dividend: ||Nil |
|15. % of shareholding: ||100% |
|1. Subsidiary No. : ||2 |
|2. Name of the Subsidiary: ||Banpal Oilchem Private Limited |
|3. Reporting period for the subsidiary concerned if different from the holding ||N.A |
|Company's reporting period. || |
|4. Reporting currency and Exchange rate as on the last date of the relevant financial year in the case of foreign subsidiaries. ||N.A |
|5. Share Capital: ||20270000 |
|6. Reserves & Surplus: ||(104383265) |
|7. Total Assets: ||45898296 |
|8. Total Liabilities: ||130011560 |
|9. Investments: ||Nil |
|10. Turnover: ||2638258 |
|11. Profit before taxation: ||(2696284) |
|12. Provision for taxation: ||Nil |
|13. Profit after taxation: ||(1903127) |
|14. Proposed Dividend: ||Nil |
|15. % of shareholding: ||100% |
PART B: Associates and Joint Venture
Statement pursuant to Section 129(3) of the Companies Act 2013 related to AssociateCompanies and Joint Ventures
|Name of Associates ||Latest audited || |
Shares of Associate/ Joint Ventures held by the Company on the year
|Description of how ||Reason why the ||Networth attributable ||Profit/ (Loss) |
|/ Joint Ventures ||Balance Sheet Date ||No. ||end Amount of investment in Associates/ Joint Ventures ||Extent of holding % ||there is significant influence ||Associate / Joint Venture is not conso- lidated ||to share- holding as per latest audited balance sheet ||for the year |
|1 AWN Agro Private Limited ||March 31 2017 ||25005000 ||250050000 ||50% ||N.A ||* Refer note below ||N.A ||N.A |
*Note: The reason for non consolidation is due to discontinuation of control of themanagement and financial affairs of the
JV Company AWN Agro Private Limited. The exemption for such discontinuationfrom consolidation of accounts is provided under the Accounting Standards 21 & 27.
|For and on behalf of the Board || || || |
|Mr. Nimish K. Patel ||Mr. Nilesh K. Patel ||Mr. Ashwin P. Patel ||Ms. Akanksha Srivastava |
|Chairman & Managing Director ||Managing Director ||Chief Financial Officer ||Company Secretary |
|DIN: 00240621 ||DIN: 00244115 || || |
Form No. AOC-2
(Pursuant to clause (h) of subsection (3) of section 134 of the Act and Rule 8(2) ofthe Companies (Accounts) Rules 2014) Form for disclosure of particulars ofcontracts/arrangements enter into by the company with related parties referred to insubsection (1) of section 188 of the companies Act 2013 including certain arm's lengthtransactions under third proviso thereto.
1. Details of contracts or arrangement or transactions not at arm's length basis: N.A.
2. Details of material contracts or arrangement or transactions at arm's length basis:a) Name(s) of related party and nature of relationship: N K Proteins Private Limited(Formerly Known as N K Proteins Limited)-Group Company b) Nature ofcontracts/arrangement/transactions: Job work Agreement c) Duration ofcontract/arrangement/transactions: Thirty-six months (From 1st April 2016 upto 31stMarch 2019) d) Salient terms of the contracts or arrangements or transactions includingthe value if any:
- N. K. Industries has offered to undertake the crushing of castor seeds and conversioninto Oil and Hydrogenated Castor Oil (HCO) for and behalf of N.K. Proteins Private Limitedat its Kadi factory on job work basis.
- This Agreement is effective from 1st April 2016 to 31st March 2019. e) Date(s) ofapproval by the Board if any : 21/05/2016 and it was further ratified on 08/05/2017 f)Amount paid as advances if any: N.A.
Note: Form shall be signed by the person who has signed the Board's Report.
|For or on behalf of the Board |
|Nimish K. Patel |
|Chairman & Managing Director |
|DIN: 00240621 |
|Date : 8th May 2017 |
|Place : Ahmedabad |