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N K Industries Ltd.

BSE: 519494 Sector: Industrials
NSE: NKIND ISIN Code: INE542C01019
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OPEN 37.80
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VOLUME 501
52-Week high 47.50
52-Week low 29.15
P/E
Mkt Cap.(Rs cr) 25
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 33rd Annual Report along with the Standaloneand Consolidated Audited Financial Statements of your Company for the Financial Year endedon March 31 2021.

FINANCIAL RESULTS

The Company has adopted Indian Accounting Standards (Ind AS) from 1st April 2017. Thefigures for the Year ended 31st March 2021 are also Ind AS compliant.

The financial highlights are depicted below:

(Rs. In Lacs)
PARTICULARS

Standalone

Consolidated

Year Ended 31.03.2021 Year Ended 31.03.2020 Year Ended 31.03.2021 Year Ended 31.03.2020
Revenue from operations 240.00 9735.62 2204.51 11489.84
Other Income 42.69 94.54 60.62 110.71
Total Income 282.69 9830.16 2265.13 11600.55
Total Expenditure 579.64 10340.13 2552.86 12118.47
Profit / (Loss) before Finance Cost Depreciation & Amortization and Tax Expenses 189.67 62.22 232.33 86.47
Finance Cost 0.91 0.82 1.16 0.89
Depreciation & Amortization 485.71 571.39 509.90 603.50
Profit Before Tax (296.95) (509.98) (287.73) (517.92)
(i) Current Tax - 2.70 10.25
(ii) Deferred Tax 64.58 (109.53) (64.17) 99.51
(iii) Earlier period tax (written back) - -
Total Tax (i + ii) 64.58 (109.53) (61.60) 109.01
Profit after Tax (232.38) (619.51) (226.13) (626.93)
Other Comprehensive Income (30.52) (24.46) (30.52) (24.46)
Items that will not be reclassified to profit and loss 8.89 7.12 8.89 7.12
Total Comprehensive Income (254.01) (636.84) (247.76) (644.26)

Note: The above figures are extracted from the standalone and consolidated financialstatements.

PERFORMANCE HIGHLIGHTS

The key aspects of revenue and profits for the financial year 2020-21 from theCompany's Standalone and Consolidated Results are as follows:

REVENUE STANDALONE

Our total income on a Standalone basis for the financial year decreased to '240.00 lacsfrom '9735.62 lacs in the previous year. Net loss for the year decreased from '636.84 lacsto '254.01 lacs in the current year.

REVENUE CONSOLIDATED

Our total income on a consolidated basis decreased to '2204.51 lacs from '11489.84lacsin the previous year. Net loss for the year decreased from '644.26 lacs to '247.76 lacs inthe current year.

STATE OF COMPANY'S AFFAIRS AND FUTURE OUTLOOK

With a view to curb the invariable expenditure and also generate a fixed monthlyincome the Company decided and entered into a Dry Lease Agreement dated 15th April 2019with its Group Company viz. N K Proteins Private Limited whereby the Factory Premise ofthe Company situated at Kadi Mehsana has been given on lease to M/s. N K Proteins PrivateLimited. This Agreement was for a period of one year which was further extended for aperiod of one year vide Supplemental Agreement dated 15th April 2020 and 1st April 2021respectively. Further as a consequence of such agreement the Company was able to pay forits periodic administrative and other invariable cost even at the times of lockdownemerged due to the global threat of covid pandemic.

CHANGE IN NATURE OF BUSINESS IF ANY

There was no change in the nature of business activity of the Company during the yearunder review.

SUBSIDIARY/ JOINT VENTURE COMPANIES

Your Company has three wholly owned subsidiaries as on 31st March 2021. 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 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 2021 stoodat'60099000. During the year under review the Company has neither issued any shareswith differential voting rights nor has granted any stock options or sweat equity. As onMarch 31 2021 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 2020-21owing to accumulated losses of the Company. In view of this your Company was unable totransfer any funds to the Reserves and Surplus Account.

FIXED 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 312021. There were no unclaimed or unpaid depositsas on March 312021.

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

All related party transactions entered into during FY 2020-21 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 Directors' 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.

COVID-19 PANDEMIC:-

COVID-19 pandemic:- The outbreak of the deadly COVID-19 virus and the ensuing lockdownimposed across the country affected business operations. The health of the employees andworkers became a priority; stoppage of operations for an uncertain period resulted in alarge financial burden on the one hand and workforce idling on the other. COVID-19 is anunprecedented challenge. The lockdown gave India time to make a concerted effort toflatten the outbreak curve. However towards later part of the year consequent tosignificant opening of the economic activity across the nation the demand picked upcompared to that during the initial period of Covid-19. India is currently experiencing amassive second wave of Covid-19 infections. However we expect no major changes in theeconomic activity as the nation is preparing to face the Pandemic with vaccines andpreparedness.

Material changes and commitments have occurred due to the epidemic COVID 19 across theglobe at the end of the financial year to which the financial statements relates and thedate of this Report and their impact on financial position of the company is notdeterminable.

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 other material changes that would affect the financial position of theCompany.

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 are notapplicable to the Company as it does not fall under the criteria of its applicabilitypursuant to 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 Performancewith respect to Operational Performance etc. for the year under review is set out in thisAnnual 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 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.

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. Nimish K. Patel (DIN: 00240621) Chairman and Managing Director of theCompany shall retire by rotation and being eligible offers himself for reappointment atthe ensuing Annual General Meeting of the Company.

Further during the year under review and upto the date of this report the followingchanges occurred in the composition of Board and Key Managerial Personnel of the Company:

1. Mr. Nilesh Keshavlal Patel ceased to be Managing Director due to his untimely demisew.e.f 16th August2020.

2. Ms.Mridu R. Sharma (DIN: 07591599) resigned w.e.f 18th February2021 as theIndependent Director of the Company. The Board took note of the same in the board meetingheld on 07th June 2021.

3. Ms. Trusha Shah resigned w.e.f 31st January2021 as the Company Secretary andCompliance Officer of the Company.

4. Mr. Sandip Gohel has been appointed w.e.f 06th February 2021 as the CompanySecretary and Compliance Officer of the Company by the Board in the meeting held on 06thFebruary2021.

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 for better performance as a whole.

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 4 times during the year under review viz. on 01st June 2020. 29thAugust 2020 07th November 2020 & 06th February2021. The Board held one meeting ineach quarter and the gap between any two meetings was not more than one hundred and twentydays as prescribed under the Companies Act 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. No. Name of directors Designation Number of Meetings Attended / Total Meetings held during the year 2020-21 Attended AGM on 30th September2020
1. Mr. Nimish K. Patel Chairman and Managing Director 4/4 V
2. Mr. Nilesh K. Patel* Managing Director 1/4 V
3. Mr. Hasmukh K. Patel Whole Time Director 4/4 V
4. Ms. Mridu Sharma** Independent Women Director/ 1/4 V V
5. Mr. Snehal Patel Independent Director 4/4 V

*Mr. Nilesh Keshavlal Patel ceased to be Managing Director due to his untimely demisew.e.f 16th August 2020.

** Ms. Mridu Sharma (DIN: 07591599) resigned as Director of the Company w.e.f 18thFebruary 2021 as the Independent Women director of the company.

INDEPENDENT DIRECTORS' MEETING

As per Schedule IV of the Companies Act 2013 a separate meeting of IndependentDirector was on 30th September2020 at 11.30 A.M. at registered office of the companysituated at Ahmedabad to discuss the agenda items as required under the Companies Act2013.

COMMITTEES MEETING

As on 31st March 2021 the Board had Three committees i.e. Audit Committee Nominationand Remuneration Committee and Stakeholders Relationship Committee. All committees areproperly constituted with proper composition of Independent Directors as mentioned inrelevant provisions of Companies Act 2013.

During the under review Ms. Mridu Sharma (DIN: 07591599) resigned as Director of theCompany w.e.f 18TH February 2021.

A. AUDIT COMMITTEE AND ITS MEETINGS:

Audit Committee met 4 times during the year under review on 01st June 2020. 29thAugust 2020 07th November2020 & 06th February2021

Constitution of Audit Committee was as per the following:

Sr. No. Name of the Director Status in Committee DIN Total Meetings Attended/ Total Meetings Held
1. Mr. Snehal Patel Chairman & Member 01655758 4/4
2. Ms. Mridu Sharma (upto 18TH February 2021) Member 07591599 1/4
3. Mr. Hasmukh Patel Member 06587284 4/4

B. NOMINATION AND REMUNERATION COMMITTEE AND ITS MEETINGS:

Nomination and Remuneration Committee met 1 time during the year under review on 06thFebruary 2021.

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

Sr. No. Name of the Director Status in Committee DIN Total Meetings Attended/ Total Meeting Held
1. Mr. Snehal Patel Chairman & Member 01655758 1/1
2. Ms. Mridu Sharma upto 18TH February 2021 Member 07591599 0/1
3. Mr. Hasmukh K Patel Member 06587284 1/1

C. STAKEHOLDERS RELATIONSHIP COMMITTEE AND ITS MEETING:

Stakeholders Relationship Committee met 4 times during the year under review on 01stJune 2020. 29th August 2020 07th November 2020 & 06th February 2021 .

Constitution of Stakeholders Relationship Committee was as per the following:

Sr. No. Name of the Director Status in Committee Nature of Directorship Total Meetings Attended/ Total Meeting Held
1. Mr. Snehal Patel Chairman & Member Independent Director 4/4
2. Ms. Mridu Sharma Member Independent Director 1/4
3. Mr. Hasmukh K Patel Member Whole Time Director 4/4

D. 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 • The Committee reviews and ensures to redress investor grievances.
Committee • The Committee noted that all the grievances of the shareholders during the year have been resolved.

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 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 ofClause (c) of Sub-Section (3) of Section 134 of the Companies Act 2013 which statesthat:

a) in the preparation of the annual accounts for the year ending March 312021 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. 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 4 yearsfrom 31st AGM till the conclusion of 35th AGM subject to ratification at each AGM.

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 Company hadpreferred a Special Leave Petition before the Hon'ble Supreme Court of India. The Hon'bleSupreme Court of India had disposed off the Special Leave Petition on 17/04/2017 with anobservation to file an application before the Hon'ble Bombay High Court. The Company hasfiled petition before the Hon'ble Bombay High Court in June 2017. Besides the above theCompany has also filed its objections against the attachment notification before theDesignated Spl MPID Court Mumbai. The matter is subjudice.

II. With regard to search and seizure carried out by the Directorate of EnforcementGovernment of India on 30.05.2018 on the group company NKPPL the Company along with groupCompany and Promoters challenged the show cause notice issued by the adjudicatingauthority New Delhi before the Hon'ble High Court of Delhi and the Hon'ble High Court hasset aside the show cause notice. Further against the attachment of the assets of theCompany the Company has issued fresh show cause dated 30/08/2018 and the Company hasfiled an appeal before the PMLA Applellate Tribunal Delhi.

III. Government of Maharashtra has filed supplementary charge sheet dated 25thDecember 2018 under the MPID Act against the Company and the Chairman. The Company hascomplied with all the summons under the said charge sheet and the matter was adjourned to7th November 2019 and further adjourned to 15th February 2020 7th March 2020 30thApril 2020 21st May 2020 18th July2020 08th September 2020 9th October 202010thDecember 2020 6th February 2021 5th May 2021 and new date of hearing is not yetupdated.

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. We draw attention to Note 35 to the Standalone Ind AS Financial Statements andaccording to the same the company is having accumulated losses (after taking into accountthe balance of reserves) of Rs 343.99 Crores as at 31.3.2021 and the net worth of thecompany is negative However as per the business plan and future cash flow projectionssubmitted by the management to us and accepted by us. The Company is making sincereefforts for the revival of the Business & the management is confident to recover thelosses through improved profitability in foreseeable future. Therefore no provision forthe impairment has been made and accounts for the year have been prepared on "goingconcern basis." Further the above projections also contains business plan/ projectedcash flow prepared by the management and accepted by us with respect to the subsidiariescompany the management is confident to also revive the operations of the loss makingsubsidiary companies hence no provision for impairment in the fair value of theinvestment made in the said subsidiary companies has been made in the books of accounts.

2. Attention is invited to note 38 of the Standalone Ind AS Financial Statements whichstates that the Income Tax Department had carried out survey u/s 133 of the Income taxAct 1961(the IT Act) on the company along with other group companies during FY 2013-14and had ordered a special audit of the books of the company u/s 142(2A) of the IT Act1961 for AY 2011-12 & A.Y 12-13. The department had raised a demand of Rs 133 Crores(Rs 6.63 Crores for A.Y 10-11 Rs57.07 crores for A.Y 11-12 Rs 60.33 Crores for A.Y12-13 Rs 7.97 Crores for A.Y 2013-14& '0.86 Crores for A.Y2014-15) on the company forthe aforesaid assessment years and the said demand has been disputed by the company andthe company has initiated appellate proceedings before appropriate authorities. The saidamount has been shown as contingent liability under Note No. 27 of the notes forming partof standalone financial statements. Further Income tax department has passed anattachment order on 22.04.2015 & 14.08.15 by which it has attached properties of thecompany in pursuant to a demand the details of the properties attached which are in thename of company is as under:

• 803 Manas Complex Opp Star Bazaar Nr Jodhpur Cross road Satellite Ahmedabad380015.

• 603 Manas Complex Opp Star Bazaar Nr Jodhpur Cross road Satellite Ahmedabad380015.

• Land situated at Survey Nos.719 720 721732/1732/2 733 741743 744 745Kadi Thol Road Village Kadi Kasba taluka- Kadi District Mehsana-382715.

• Factory Building Situated at survey No 745 Kadi Thol Road Village Kadi Kasbataluka- Kadi District Mehsana-382715.

3. Attention is invited to note 29 of the Standalone Ind AS Financial Statements andaccording to which a Search & Seizure action U/S 132 of the Income Tax Act took placeon 24.2.99. The Income Tax department had raised demand of Rs.33.12 Crores vide the blockassessment Order dt. 30.4.2001. In case of the company the Hon'ble Income Tax AppellateTribunal ( ITAT) Ahmedabad has subsequently given partial relief to the extent ofRs.28.84 Crores. The company had preferred an appeal before the Hon'ble High Court ofGujarat against the order of Hon'ble ITAT Ahmedabad. The Hon'ble Gujarat High Court videits order dated 20th June2016 had given partial relief on some of the grounds and hadalso dismissed some of the grounds of the company. Against the grounds dismissed byHon'ble High Court of Gujarat the company had further preferred an appeal before Hon'bleSupreme Court of India and the Hon'ble Supreme Court of India vide order dated 16thJanuary2017 had dismissed the appeal of the Company. The Company had already provided anamount of Rs 2.88 Crore against the grounds dismissed by Hon'ble ITAT Ahmedabad duringF.Y 2002-03 as well as Rs 1.27 Crores was provided in the books of accounts for theAssessment year in question for the interest payable up to 31-03-2005 during F.Y 2004-05.However in view of the management and on the basis of the Judgment of the Hon'ble GujaratHigh Court the amount provided/paid by the company towards total demand shall result inrefund to the company. Pending effect of the various orders of adjudicating authorities bythe Income Tax Department the Company is yet to provide final entries in its books ofaccounts even during the year under review. In view of non availability of order of theappeal effects from the Income Tax Department we are unable to opine on the same.

4. Attention is invited to note 40 of the Standalone Ind AS Financial Statements andaccording to which the Sales Tax Department has completed the assessment proceedings forvarious assessment years and raised demand of Rs.3314.22 lakhs (net of recovery) for theearlier financial years. The company has not made any provision for the above demandraised by the sales tax authority in its books of accounts as in view of the Managementthe said demand shall not withstand before the Appellate Authorities and the company hasalready preferred an appeal before the appellate authority which is still pending. In viewof the above the said amount has been shown as contingent liability under Note No. 27 ofthe notes forming part of standalone financial statements.

5. Attention is invited to Note 44 of the Standalone Ind AS Financial Statements whichstates that the balance confirmation from the suppliers customers as well as to variousloans or advances given have been called for but the same are awaited till the date ofaudit. Thus the balances of receivables capital advancestrade payables as well as loansand advances and certain bank balances have been taken as per the books of accountssubmitted by the company and are subject to confirmation from the respective parties.

6. As per the information obtained from the website of the Ministry of CorporateAffairs (MCA) a suit has been filed against the company and its officers u/s 383A(1A)372A(9) 58A(6)(A)(I) of the Companies Act 1956 for the year 2016. As informed by themanagement the company is having basic information about such suit filed as reflected onthe website of the MCA. However the company does not have any communication of suchproceedings against the company and its officers. As the matter is still subjudice we areunable to quantify the final liability and its impact if any on the company and itsofficers. (Refer Note No 41 of the standalone Ind AS financial statements)

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

IV. The National Spot Exchange Limited (NSEL) has initiated recovery proceedingsagainst the Group Company N K Proteins Private Limited (Formerly known as 'N K ProteinsLimited') who was a trading and clearing member at NSEL. As regards the said recoveryproceedings initiated by NSEL and has also made Tirupati Retail (India) Private Limitedsubsidiary Company a party to the said proceedings the matter is sub-judice and stillpending before the respective Authorities.

Their report on Consolidated Financial Statements emphasizes on some additional pointswhich the management has to reply as under:

1. 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.

2. Further the Home Department Government of Maharashtra has issued a notificationunder the MPID Act 1999 securing the attachment of Land & Building and Plant &Machinery of the Company. Against this the Company had challenged the notification issuedby Home department Government of Maharashtra before the Hon'ble High Court of Gujarat.The Hon'ble Gujarat High Court had disposed off the application of the Company vide itsorder dated 29th March 2017.Against the said order the Company had preferred a SpecialLeave Petition before the Hon'ble Supreme Court of India. The Hon'ble Supreme Court ofIndia had disposed off the Special Leave Petition on 17/04/2017 with an observation tofile an application before the Hon'ble Bombay High Court. The Company has filed petitionbefore the Hon'ble Bombay High Court in June 2017. Besides this the Company has alsofiled its objections against the attachment notification before the Designated SpecialMPID Court Mumbai the matter is subjudice.

3. With respect to point no.2 of qualified opinion of Auditors Report it is herebyclarified that it is hereby clarified that the Company along with Group Company andpromoters challenged the show cause notice issued by the adjudicating authority New Delhibefore the Hon'ble High Court of Delhi and the Hon'ble High Court has set aside the saidshow cause notice. The Director of Enforcement has attached assets of the company groupcompany NKPL and the promoters of the company by issuing a fresh show cause notice dated30/08/2018 and the company has filed an appeal before PMLA Appellate Tribunal Delhi.Still the matter is sub-judice.

4. With regard to the supplementary charge sheet filed the Company has complied withthe summons dated 19/03/2019 to remain present before the MPID Court on 26/04/2019. Thematter is now adjourned to 21/05/2020 but new date of hearing is not yet updated.Therefore the matter is sub-judice.

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. i. 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 (FCS- 10221CP No. 17397) Ahmedabad to conduct a Secretarial Audit of the Company's Secretarial andrelated records for the year ended 31st March 2021.

The Report on the Secretarial Audit for the year ended 31st March 2021 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 2020-21.

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 2020-21.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 this 33rdAnnual General Meeting.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS

There are no material orders passed by the regulators/courts/tribunals during the year.

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 has dissolved 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 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 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. 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 2020-21 Amount in Rs
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 theProvisions 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
Nimish K. Patel
Date:31/07/2021 Chairman & Managing Director
Place: Ahmedabad DIN:00240621

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