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N K Industries Ltd.

BSE: 519494 Sector: Industrials
NSE: NKIND ISIN Code: INE542C01019
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VOLUME 1101
52-Week high 82.40
52-Week low 30.35
P/E
Mkt Cap.(Rs cr) 27
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

N K Industries Ltd. (NKIND) - Director Report

Company director report

To

The Members

Your Directors are pleased to present the 30th Annual Report along with theStandalone and Consolidated Audited Financial Statements of your Company for the FinancialYear ended on March 31 2018.

OVERVIEW OF THE ECONOMY

According to the survey commissioned by The Solvent Extractors Association of India(SEA) an estimated record yield jump of 37% in the year 2017-18 is set to push castorseed production in the country by around 34% which quantifies around 1.43 million tonnes.

The Indian Agribusiness Systems Ltd known as Agriwatch conducted the field cropsurvey for SEA for castor growing regions such as Gujarat Rajasthan Andhra Pradesh andTelangana of which Gujarat holds the highest share with 90% of total production.

A Castor production estimate for the new season has seen a significant increase of 30%on account of record yield across the country. Among the states Gujarat registered a 5.3%rise in sowing area. As a result castor seed production in the state stands at anestimated 1.22 million tonnes up by 42% rise over last year's estimate of 0.86 milliontonnes.

The Company is focused on producing the basic and special castor oil grades. TheCompany is also engaged in trading of castor oil derivatives mainly HCO which the Companyget it done on job work basis. The Company is also manufacturing other derivatives viz.12HSA and ricionic acid. The Company has a capacity to crush over 27000 MT of castor seedper month. It is currently (March 2018) operating with crushing capacity of castor seedexcess of 24000 MT per 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 Indiaand from news articles.)

FINANCIAL RESULTS

The Company has adopted Indian Accounting Standards (Ind AS) from 1st April 2017. Thefigures for the Year ended 31st March 2017 (previous year) are also Ind AS compliant.

The financial highlights are depicted below:

(' In Lakhs)

PARTICULARS

Standalone

Consolidated

Year Ended

31.03.2018

Year Ended 31.03.2017 Year Ended

31.03.2018

Year Ended 31.03.2017
Revenue from operations 11283.75 9058.86 13406.37 10805.73
Other Income 61.18 181.24 91.91 188.85
Total Income 11344.92 9240.10 13498.28 10994.58
Total Expenditure 10630.65 8658.72 12699.04 10367.15
Profit / (Loss) before Finance Cost Depreciation & Amortization and Tax Expenses 714.27 581.38 799.24 627.43
Finance Cost 0.84 0.05 11.18 0.13
Depreciation & Amortization 969.48 1192.25 1023.56 1260.92
Profit Before Tax (256.05) (610.92) (235.50) (633.62)
Tax Expense
(i) Current Tax - - 24.93 5.91
(ii) Deferred Tax 35.56 (147.07) 54.17 (156.22)
Total Tax (i+ii) 35.56 (147.07) 79.10 (150.32)
Profit after Tax (291.60) (463.85) (314.61) (483.31)
Other Comprehensive Income (19.39) 0.08 (19.39) 0.08
Total Comprehensive Income (310.99) (463.77) (334) (483.39)

PERFORMANCE HIGHLIGHTS

The key aspects of revenue and profits for the financial year 2017-18 from theCompany's Standalone and Consolidated Financial Results are as follows:

REVENUE STANDALONE

Our total income on a Standalone basis increased to ' 11283.75 Lakhs from ' 9058.86Lakhs in the previous year at a growth rate of 25%. Net loss for the year decreased from '(463.77) Lakhs to ' (310.99) Lakhs in the current year.

REVENUE CONSOLIDATED

Our total income on a consolidated basis increased to ' 13406.37 Lakhs from '10805.72 Lakhs in the previous year. Net loss for the year decreased from ' (483.23)Lakhs to ' (333.99) Lakhs in the current year.

SUBSIDIARY/ JOINT VENTURE COMPANIES

Your Company had three wholly owned subsidiaries as on 31st March 2018. TheBoard of Directors also reviewed the affairs of the subsidiary companies. In accordancewith the provisions of Section 129(3) of the Companies Act 2013 we have preparedConsolidated Financial Statements of the Company and its Subsidiaries which forms part ofthis Annual Report. The accounts of Joint Venture i.e. AWN Agro Private Limited has notbeen consolidated for the current year. The reason for nonconsolidation 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 statements of ourSubsidiary Companies and Joint Venture Company in the prescribed format AOC-1 is appendedas "Annexure-A"to the Board's report.

SHARE CAPITAL

The paid up Equity Share Capital of the Company as at March 31 2018 stood at '60099000. During the year under review the Company has neither issued any shares withdifferential voting rights nor has granted any stock options or sweat equity. As on March31 2018 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 2017-18owing to accumulated losses of the Company. In view of this your Company was unable totransfer any funds to the Reserves and Surplus Account.

DEPOSITS

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 312018. There were no unclaimed or unpaid depositsas on March 312018.

PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES REFERRED TO INSUB-SECTION (1) OF SECTION 188.

All related party transactions entered into during FY 2017-18 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 Exchange Board ofIndia (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 no materiallysignificant related party transactions made by the Company with Promoters Key ManagerialPersonnel or other designated persons which may have potential conflict with interest ofthe Company at large. The Company has developed a Related Party Transactions Policythrough Standard Operating Procedures for the purpose of identification and monitoring ofsuch 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 STATEMENT 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.

CORPORATE GOVERNANCE

All the mandatory provisions of Corporate Governance as prescribed in Regulations 17 to27 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 werenot applicable to the Company during the F.Y 2017-18 as it falls under the exemption asprovided under Regulation 15 of SEBI Listing Regulations.

MANAGEMENT DISCUSSION AND ANALYSIS REPORTS

In terms of the Regulation 34(e) read with Schedule V of SEBI (Listing Obligations& Disclosure Requirements) Regulations 2015 MDA covering details of Risks andConcerns Internal Control Systems and their Adequacy Discussion on Financial

Performance with respect to Operational Performance etc. for the year under review isset out in this Annual Report as "Annexure C".

PARTICULARS OF EMPLOYEES

The information required pursuant to Section 197 of Companies Act 2013 read with Rule5(1) of the Companies (Appointment & Remuneration of Managerial Personnel) Rules 2014in respect of employees of the Company is annexed as "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.

BOARD DIVERSITY

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 has also adopted a policy on Board Diversity which sets out theapproach to diversify the Board of Directors. The Board Diversity Policy is available atour website: http://www.nkindustriesltd.com/governance.html

PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS:

The Company has granted loans to its wholly owned subsidiaries however the same isexempted from the requirements of Section 186 of the Companies Act 2013. Apart from thesaid loans no other loans or guarantees were provided 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.

BOARD EVALUATION

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.

APPOINTMENT AND RESIGNATION OF DIRECTORS AND KEY MANAGERIAL PERSONNEL

In accordance with the provisions of Section 152(6) of the Companies Act and Articlesof Association Mr. Hasmukh K. Patel (DIN: 06587284) Whole Time 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 and Key Managerial Personnel of the Company:

1. Dr. Bharat J. Patel (DIN: 00944269) and Mr. Jaimin V. Modi (DIN: 00113689) resignedas Independent Directors of the Company w.e.f 9th March 2018 and 16thMarch 2018 respectively.

2. During the year under review Mr. Priyam N. Patel was appointed as the ChiefExecutive Officer of the Company w.e.f. 10th June 2017.

3. The tenure of Mr. Nimish Keshavlal Patel (DIN: 00240621) and Mr. Nilesh KeshavlalPatel (DIN: 00244115) as Chairman and Managing Director of the Company expired on 31stMarch 2018. They were further appointed for a period of 5 (five) consecutive years as theChairman and Managing Director of the Company respectively w.e.f 1st April2018 by the Board of Directors of the Company in the meeting held on 25thJanuary 2018.

Approval of members of the Company is required for the said appointment which is madepart of the notice convening the ensuing Annual General Meeting of the Company.

BOARD MEETINGS/ DETAILS OF OTHER MEETINGS

The Board of the Company is endlessly focused for the growth and expansion of theCompany. It is further involved to strategize the optimum utilization of the availableresources and to reduce cost so as to improve the profitability of the Company and also togenerate additional opportunities to increase overall performance of the Company.

The Management of the Company is also striving towards becoming a 100% compliant entityand to improve its investor relations by sharing latest and correct information with itsstakeholders and thereby creating a transparent atmosphere.

The Board met 5 times during the year under review viz. on 8th May 2017 10thJune 2017 12th August 2017 11th November 2017 and 25thJanuary 2018. The Board held one meeting in each quarter and the gap between any twomeetings was not more than one hundred and twenty days as prescribed under the CompaniesAct 2013.

Details of the Directors their positions attendance record at Board meetings and lastAnnual General Meeting held and convened during the financial year are as follows:

Sr. Name of directors No. Designation Number of Meetings Attended / Total Meetings held during the year 2017-18 Attended AGM 22nd July 2017
1. Mr. Nimish K. Patel Chairman and Managing Director 4/5 V
2. Mr. Nilesh K. Patel Managing Director 5/5 V
3. Mr. Hasmukh K. Patel Whole Time Director 5/5 V
4. Dr. Bharat J. Patel* Independent Director 3/5 V
5. Mr. Jaimin Modi* Independent Director 5/5 V
6. Mr. Bhawani Singh Yadav Independent Director 5/5 V
7. Ms. Mridu Sharma Independent Women Director 5/5 V

* Dr. Bharat J. Patel (DIN: 00944269) and Mr. Jaimin V. Modi (DIN: 00113689) resignedas Director of the Company w.e.f 9th March 2018 and 16th March2018 respectively.

INDEPENDENT DIRECTORS' MEETING

As per Schedule IV of the Companies Act 2013 a separate meeting of IndependentDirector was held on 5th March 2018 at 11.30 A.M. at registered office of thecompany situated at Ahmedabad to discuss the agenda items as required under the CompaniesAct 2013.

COMMITTEES MEETING

As on 31st March 2018 the Board had four committees i.e. Audit CommitteeNomination and Remuneration Committee Stakeholders Relationship Committee and CorporateSocial Responsibility (CSR) Committee. All committees are properly constituted with propercomposition of Independent Directors as mentioned in relevant provisions of Companies Act2013.

During the under review Mr. Bharat J. Patel (DIN: 00944269) and Mr. Jaimin V. Modi(DIN: 00113689) resigned as an Independent Directors of the Company w.e.f 9thMarch 2018 and 16th March 2018 respectively consequently the Boardreconstituted the committees of the Board in the Board Meeting held on 19thApril 2018.

A. AUDIT COMMITTEE AND ITS MEETINGS:

Audit Committee met 4 times during the year under review on 6th May 201712th August 2017 11th November 2017 and 25th January2018.

Constitution of Audit Committee was as per the following:

Sr. Name of the Director No. Status in Committee Nature of Directorship Total Meetings Attended/ Total Meetings Held
1. Mr. Jaimin Modi (Upto 16th March 2018) Chairman & Member Independent Director 4/4
2. Dr. Bharat J. Patel (Upto 9th March 2018) Member Independent Director 2/4
3. Mr. Nilesh K. Patel Member Managing Director 4/4
4. Mr. Bhawani S. Yadav (w.e.f. 19th April 2018) Chairman & Member Independent Director -
5. Ms. Mridu Sharma (w.e.f. 19th April 2018) Member Independent Director -

B. NOMINATION AND REMUNERATION COMMITTEE AND ITS MEETINGS:

Nomination and Remuneration Committee met 3 times during the year under review on 6thMay 2017 29th May 2017 and 22nd January 2018.

Constitution of Nomination and Remuneration Committee was as per the following:

Name of the Director Status in Committee Nature of Directorship Total Meetings Attended/ Total Meeting Held
1. Mr. Jaimin Modi (Upto 16th March 2018) Chairman & Member Independent Director 3/3
2. Dr. Bharat J. Patel (Upto 9th March 2018) Member Independent Director 2/3
3. Mr. Nimish K. Patel (upto 31st March 2018) Member Managing Director 3/3
4. Mr. Nilesh K. Patel (w.e.f. 19th April 2018) Member Managing Director -
5. Mr. Bhawani S. Yadav (w.e.f. 19th April 2018) Chairman & Member Independent Director -
6. Ms. Mridu Sharma (w.e.f. 19th April 2018) Member Independent Director -

C. STAKEHOLDERS RELATIONSHIP COMMITTEE AND ITS MEETING:

Stakeholders Relationship Committee met 4 times during the year under review on 5thMay 2017 11th August 2017 10th November 2017 and 24thJanuary 2018.

Constitution of Stakeholders Relationship Committee was as per the following:

Name of the Director Status in Committee Nature of Directorship Total Meetings Attended/ Total Meetings Held
1. Mr. Jaimin Modi (Upto 16th March 2018) Chairman & Member Independent Director 4/4
2. Mr. Hasmukh K. Patel (upto 19th April 2018) Member Whole Time Director 4/4
3. Ms. Mridu Sharma Member Independent Director 4/4
4. Mr. Bhawani S. Yadav (w.e.f. 19th April 2018) Chairman & Member Independent Director -
5. Mr. Nilesh K. Patel (w.e.f. 19th April 2018) Member Managing Director -

D. DISSOLUTION OF CORPORATE SOCIAL RESPONSIBILITY COMMITTEE:

The Board of Directors in its meeting held on 19th April 2018 decided todissolve the Corporate Social Responsibility Committee (CSR) as the provisions of Section135 r.w. Schedule VII of the Companies Act 2013 are not applicable to the Company as ondate.

E. OTHER INFORMATION RELATED TO BOARD COMMITTEES:

Name of the Committee Highlights of Duties Responsibilities and Activities
Audit Committee • All recommendations made by the audit committee during the year were accepted by the Board.

• 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 • The committee oversees and administers executive compensation operating under a written charter adopted by our Board of Directors.

• 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 Relationship Committee • The Committee reviews and ensures to redress investor grievances.

• The Committee noted that all the grievances of the shareholders during the year have been resolved.

Corporate Social Responsibility Committee* • 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.

• The CSR Dolicv is available on our ComDanv's website http://www.nkindustriesltd . com/Governance.html

*Note: Corporate Social Responsibility Committee dissolved w.e.f. 19thApril 2018.

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 the Directors is as per the term laid out inthe Nomination and remuneration policy and as approved by the members of the company.

DIRECTOR'S RESPONSIBILITY STATEMENT

To the best of their knowledge and belief and according to the information andexplanations obtained by them your Directors

make the following statements in terms of Clause (c) of Sub-Section (3) of Section 134of the Companies Act 2013 which

states that—

a) in the preparation of the annual accounts for the year ending March 312018 theapplicable accounting standards have been followed along with proper explanation relatingto material departures;

b) the directors had selected such accounting policies and applied them consistentlyand made judgments and estimates that are 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 and loss of the company for that period;

c) the directors had taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of this Act for safeguarding theassets of the company and for preventing and detecting fraud and other irregularities;

d) the directors had prepared the annual accounts on a going concern basis;

e) the Directors have laid down Internal Financial Controls to be followed by theCompany and that such Internal Financial Controls are adequate and were operatingeffectively; and

f) The Directors have devised proper system to ensure compliance with the provisions ofall applicable laws and that such system were adequate and operating effectively.

AUDITORS

i. StatutoryAuditors

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 toratification 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. National spot Exchange Limited (NSEL) has served a notice to N K Proteins PrivateLimited (Formerly known as N K Proteins Limited) who was a Trading and Clearing Member atNSEL and N K Industries Limited was only a client Company of Trading Member i.e. N KProteins Limited. As regards the balances of trade receivables and trade payables arisingout of the transactions through NSEL platform the same cannot be confirmed pursuant tothe pendency of litigations and as the matter is still pending before the respectiveauthorities.

• Further the Home Department Government of Maharashtra has issued anotification under the MPID Act 1999 securing the attachment of Land & Building andPlant & Machinery of the Company. Against this the Company had challenged thenotification issued by Home department Government of Maharashtra before the Hon'ble HighCourt of Gujarat. The Hon'ble Gujarat High Court had disposed off the application of theCompany vide its order dated 29th March 2017.Against the said order the Companyhad preferred a Special Leave Petition before the Hon'ble Supreme Court of India. TheHon'ble Supreme Court of India had disposed off the Special Leave Petition on 17/04/2017with an observation to file an application before the Hon'ble Bombay High Court. TheCompany has filed petition before the Hon'ble Bombay High Court in June 2017. Besidesthis the Company has also filed its objections against the attachment notification beforethe Designated Special MPID Court Mumbai the matter is subjudice.

ii. With respect to point no.2 of qualified opinion of Auditors Report it is herebyclarified that the Company has preferred an appeal before the Hon'ble Appellate Tribunalunder the Prevention of Money Laundering Act 2002. The matter is sub-judice.

In addition to the above the Auditors have made observations under the head"Emphasis 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 and therebyrevive the business.

2. During the year under review the Income Tax Department has raised a demand of '86Lakhs on the Company for the Assessment Year 2014-15 making the demand of ' 132.86 croresin aggregate. 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 2ndAppellate Authority subsequently with respect to survey proceedings the company preferredApplication to the Hon'ble High Court of Gujarat which was disposed off by the Hon'bleCourt vide its order dated 20/06/2016 after giving relief on certain ground and dismissingcertain ground. The Said order was challenged on before the Hon'ble Supreme Court whichwas dismissed by the Hon'ble Supreme Court vide order dated 16th January 2017.The company has already provided for interest and tax in earlier years towards the saiddemand. It is further stated that the Order of Hon'ble Gujarat High Court is pending to bereceived from the department. Once the order is passed the net effect will be a refund tothe company and hence there is no need to make any further provision in the books ofaccounts.

4. The demand raised by the Sales Tax Authorities is explained vide Note No. 36. Thesaid sales tax demand is disputed in view of the fact that the Company has preferred anappeal before the appellate authority and the Company has shown the said liability asContingent Liability under Note No. 24 of the notes forming part of the Accounts. In thisview the Company has not made any provision for the said disputed liability.

5. As explained by the Auditors in their report at point no. 5 the Company has sentletters obtaining confirmation of balances to various parties but due to non-receipt ofreplies the balances of parties customers as well as various loans and advances given arestill awaited.

6. As reported by the Auditors the Ministry of Corporate Affairs (MCA) has filed a suitagainst the company and its officers u/s 383A(1A) 372A(9) 58A(6)(A)(I) of the CompaniesAct 1956 for the year 2016. Further to clarify in this regard the Company has still notreceived any legal communication of the prosecutions filed by the ministry. The matter isstill subjudice.

The qualification made by the Auditors in their Consolidated Report for which the Boardof Directors hereby give its comment/explanation as under:

iii. The National Spot Exchange Limited (NSEL) has initiated recovery proceedingsagainst the Group Company N K

Proteins Private Limited (Formerly known as 'N K Proteins Limited') who was a tradingand clearing member at NSEL.

As regards the said recovery proceedings initiated by NSEL and has made Tirupati Retail(India) Pvt. Ltd. a party to

the said proceedings the matter is subjudice and still pending before the respectiveAuthorities.

Their report on Consolidated Financial Statements emphasizes on some additional pointswhich 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 said notification is challenged by theCompany before the Hon'ble High Court of Gujarat and the matter is sub-judice.

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 standard 21 & 27consolidation of the accounts of AWN Agro Pvt. Ltd. is not required with our company.

6. The order was passed under section 143(3) r.w.s. 142(A) of the Income Tax Act 1961(the IT Act) the said order is passed without appreciating the facts of the case. Thesubsidiary company being aggrieved by the said order has preferred an appeal before CIT(Appeals). Also the orders u/s 179 of the Income Tax Act 1961 are passed on the Directorsof the Company which is passed without appreciating the facts as the demand is contingentand highly debatable. The Directors are in the process of challenging the impugned orderat appropriate forum. Further the Company is hopeful of getting the favourable ordersfrom the CIT (Appeals).

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 to the said remark it is to be clarified that the Company is inprocess of transferring the properties as mentioned by the Auditors in their report in itsname.

ii. Secretarial Auditor

Pursuant to the provisions of Section 204 of the Companies Act 2013 and the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Company hasappointed M/s Riddhi Khaneja & Associates Practicing Company Secretary (ACS- 35651CP No. 17397) Ahmedabad to conduct a Secretarial Audit of the Company's Secretarial andrelated records for the year ended 31st March 2018.

The Report on the Secretarial Audit for the year ended 31st March 2018 is annexedherewith as "Annexure E" to this Board's Report. There were no qualifications/observations in the report.

iii. Cost Auditors

Pursuant to Section 148 of the Companies Act 2013 read with the Companies (CostRecords and Audit) Amendment Rules 2014 the Cost Audit records maintained by the Companyare required to be audited by Cost Accountant. On the recommendations of the AuditCommittee the Board of Directors of the Company had appointed M/s. N D Birla & Co.Cost Accountants Ahmedabad as the Cost Auditors of the Company to carry out audit of CostAccounting Records of the Company which was filed by the Company within the stipulatedtime during the year 2017-18.

The Board of Directors on the recommendation of the Audit Committee has appointed M/s.N D Birla & Co. Cost Accountants Ahmedabad as the Cost Auditors of the Company tocarry out audit of cost accounting records of the Company for the financial year 2018- 19.As required 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 BYTHE REGULATORS OR COURTS OR TRIBUNALS

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'ble BombayHigh Court. Further the Company has filed the petition before the Hon'ble Mumbai HighCourt against the said attachment notification as well as without prejudice filedobjection before the Hon'ble MPID Court Mumbai.

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-F" and forms integral part of this report.

CORPORATE SOCIAL RESPONSIBILITY

As per the provisions of the Companies Act 2013 "Corporate SocialResponsibility" (CSR) was not applicable to the Company during the year underreview. Therefore the Board of Directors decided to dissolve the Corporate SocialResponsibility Committee (CSR) in its meeting held on 19th April 2018.

VIGIL MECHANISM/WHISTLE BLOWER POLICY

The Company has adopted a Vigil Mechanism/ Whistle Blower Policy to report genuineconcerns or grievances. The Vigil Mechanism has been placed on the Website of the Company http://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 Company hasappointed Independent Internal Auditor M/s. ADPRDP & Associates Chartered Accountantsto 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 HEALTH AND SAFETY

The Company is conscious of the importance of environmentally clean and safeoperations. The Company is committed to health and safety of its employees contractorsand visitors. The Company is conducting operations in such a manner so as to ensure safetyof all concerned compliances of environmental regulations and preservation of naturalresources.

DISCLOSURE AS PER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION PROHIBITIONAND REDRESSAL) ACT 2013

The Company has zero tolerance towards sexual harassment at the workplace and hasadopted a policy on prevention prohibition and redressal of sexual harassment atworkplace in line with the provisions of the Sexual Harassment of Women at Workplace(Prevention Prohibition and Redressal) Act 2013 and the Rules thereunder.

INDUSTRIAL RELATIONS

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 the manufacturing operations are conducted in the mannerwhereby optimum utilization and maximum possible savings of energy is achieved.

b) No specific investment has been made in reduction in energy consumption.

c) As the impact of measures taken for conservation and optimum utilization of energyare not quantitative its impact on cost cannot be stated accurately.

d) Since the Company does not fall under the list of industries which should furnishthis information in Form-A as annexed to the aforesaid Rules the question of furnishingthe same does not arise.

ii. TechnologyAbsorption:

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 2017-18 Amount in '
Foreign Earnings -
Foreign Outflow -

CONSOLIDATED FINANCIAL STATEMENTS

The Consolidated Financial Statements of the Company prepared in accordance with IndianAccounting Standards (Ind AS) 110 issued by the Ministry of Corporate Affairs forms partof this Annual Report.

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.

RISK MANAGEMENT POLICY

All the mandatory provisions of Corporate Governance as prescribed in Regulations 17 to27 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 are notapplicable to your Company as the Company does not fall under the criteria of itsapplicability pursuant to Regulation 15 of SEBI Listing Regulations. However all theProvisons Rules and Regulations under the Companies Act 2013 related to the CorporateGovernance are applicable to the extent and have been comply by the Company.

ACKNOWLEDGEMENT

Your Directors would like to express their appreciation for the assistance andco-operation received from the Company's customers vendors bankers auditors investorsand government bodies during the year under review.

Your Directors place on record their appreciation of the contributions made byemployees at all levels.

For and on behalf of the Board

sd/-

Nimish K. Patel

Date : 28th April 2018 Chairman & Managing Director

Place : Ahmedabad DIN: 00240621