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N K Industries Ltd.

BSE: 519494 Sector: Industrials
NSE: NKIND ISIN Code: INE542C01019
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N K Industries Ltd. (NKIND) - Director Report

Company director report

To

The Members

Your Directors are pleased to present the 32nd Annual Report along withthe Standalone and Consolidated Audited Financial Statements of your Company for theFinancial Year ended on March 31 2020.

FINANCIAL RESULTS

The Company has adopted Indian Accounting Standards (Ind AS) from 1stApril 2017. The figures for the Year ended 31st March 2020 are also Ind AS compliant.

The financial highlights are depicted below:

PARTICULARS

Standalone

Consolidated

Year Ended 31.03.2020 Year Ended 31.03.2019 Year Ended 31.03.2020 Year Ended 31.03.2019
Revenue from operations 9735.62 49631.11 11489.84 51541.01
Other Income 94.54 427.41 110.71 439.75
Total Income 9830.16 50058.52 11600.55 51980.77
Total Expenditure 10340.13 52866.72 12118.47 54686.46
Profit / (Loss) before Finance Cost Depreciation & Amortization and Tax Expenses (1082.19) (2132.31) (1122.31) (3423.78)
Finance Cost 0.82 4.48 0.89 5.64
Depreciation & Amortization 571.39 671.41 603.50 712.45
Profit Before Tax (509.98) (2808.20) (517.92) (2705.69)
(i) Current Tax - - 10.25 49.00
(ii) Deferred Tax (109.53) 879.68 99.51 (895.30)
(iii) Earlier period tax (written back) - - - 5.55
Total Tax (i + ii) (109.53) 879.68 109.76 840.74
Profit after Tax (619.51) (1928.52) (626.93) (1864.95)
Other Comprehensive Income (24.46) (2.11) (24.46) (2.11)
Items that will not be reclassified to profit and loss 7.12 0.66 7.12 0.66
Total Comprehensive Income (636.84) (1929.97) (644.26) (1866.41)

Note: The above figures are extracted from the standalone andconsolidated financial statements.

PERFORMANCE HIGHLIGHTS

The key aspects of revenue and profits for the financial year 2019-20from the Company's Standalone and Consolidated Results are as follows:

REVENUE STANDALONE

Our total income on a Standalone basis decreased to ' 9735.62 lacs from' 49631.11 lacs in the previous year. Net loss for the year decreased from ' 1929.97 lacsto ' 636.84 lacs in the current year.

REVENUE CONSOLIDATED

Our total income on a consolidated basis decreased to ' 11489.84 lacsfrom ' 51541.01 lacs in the previous year. Net loss for the year increased from ' 1866.40lacs to ' 644.26 lacs in the current year.

STATE OF COMPANY'S AFFAIRS AND FUTURE OUTLOOK

With a view to curb the invariable expenditure and also generate afixed monthly income the Company decided and entered into a Dry Lease Agreement with itsGroup Company viz. N K Proteins Private Limited on 15th April 2019 whereby the FactoryPremise of the Company situated at Kadi Mehsana has been given on lease to M/s. N KProteins Private Limited.

This Agreement was further extended for a period of one year vide aSupplemental Agreement dated 15th April 2020.

Further as a consequence of such agreement the Company was able to payfor its 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 Companyduring the year under review.

SUBSIDIARY/ JOINT VENTURE COMPANIES

Your Company has three wholly owned subsidiaries as on 31st March2020. The Board of Directors also reviewed the affairs of the subsidiary companies. Inaccordance with the provisions of Section 129(3) of the Companies Act 2013 we haveprepared Consolidated Financial Statements of the Company and its Subsidiaries whichforms part of this Annual Report. The accounts of Joint Venture i.e. AWN Agro PrivateLimited has not been consolidated for the current year. The reason for non-consolidationis due to discontinuation of control on the management and financial affairs of the JointVenture Company.

Further a statement containing the salient features of the financialstatements of our Subsidiary Companies and Joint Venture Company in the prescribed formatAOC-1 is appended as "Annexure-A" to the Board's report.

SHARE CAPITAL

The paid up Equity Share Capital of the Company as at March 312020stood at? 60099000. During the year under review the Company has neither issued anyshares with differential voting rights nor has granted any stock options or sweat equity.As on March 31 2020 none of the Directors of the Company hold any instrumentsconvertible into equity shares of the Company.

DIVIDEND AND RESERVES

Your Directors express their inability to recommend any dividend forthe year 2019-20 owing to accumulated losses of the Company. In view of this your Companywas unable to transfer any funds to the Reserves and Surplus Account.

FIXED DEPOSITS

The Company has neither invited nor accepted any deposits within themeaning of Section 73 of the Companies Act 2013 and the Companies (Acceptance ofDeposits) Rules 2014 from the public during the year ended March 312020. There were nounclaimed or unpaid deposits as on March 312020.

PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES REFERREDTO IN SUB-SECTION (1) OF SECTION 188.

All related party transactions entered into during FY 2019-20 were onan arm's length basis and in the ordinary course of business and were in compliance withthe applicable provisions of the Companies Act 2013 ('the Act') and the Securities andExchange Board of India (Listing Obligations and Disclosure Requirements) Regulations2015.

All related party transactions are placed before the Audit Committeefor review and approval of the Committee and also to the Board for approval. The policy onmateriality of related party transactions and dealing with related party transactions asapproved by the Board is available on the Company's website.

The details of related party transactions entered into by the Companyare provided in Form AOC-2 given as "Annexure B" of Directors' Report. There areno materially significant related party transactions made by the Company with PromotersKey Managerial Personnel or other designated persons which may have potential conflictwith interest of the Company at large. The Company has developed a Related PartyTransactions Policy through Standard Operating Procedures for the purpose ofidentification and monitoring of such transactions.

GLOBAL PANDEMIC - COVID-19

The world changed in a fortnight. As COVID-19 spread acrosscommunities homes and affected businesses citizens and enterprises alike were forced torethink how they engage with one another. The global response has paved the way to analtered future one in which business priorities & conversations have pivoted - maybefor forever. Enterprises are now worried less about disruptive technology and more abouthow they can leverage technology to navigate disruption.

Today we are in the middle of the biggest crisis we have seen in ourlifetimes the COVID-19 pandemic. So far it has created unprecedented socioeconomicdisruption fear and the tragic loss of human life. The collapse in economic activity thistime is likely at a level unseen in previous recessions. The exit path remains a vaccineand till then it is likely to be a bumpy ride with a continuous stop-start rhythm andstrict health protocols. Having said that most of us have lived through economic crisesbefore. Each time the agony has been different but each time we have adapted and bouncedback. I am hopeful that like all previous crises the COVID-19 calamity will also pass andin time a fresh wave of business energy will be unleashed. The next few months will becritical for organizations as they build their resilience in order to persist resurrecttheir businesses and master the new business environment.

No business was able to remain unaffected or untouched due to thisglobal pandemic and so was ours. With limited staff personnel and work from home policymodel also while adhering to various guidelines and norms laid down by the Central andState Authorities the Company is managing to get back on track slowly. As on the date ofthis report the management is affirmative for the future business opportunities andassures the stakeholders that we will strive hard to sustain the Company in this globaleconomic slowdown emerging as a consequence of the pandemic outbreak.

MATERIAL CHANGES AND COMMITMENT IF ANY AFFECTING THE FINANCIAL POSITIONOF THE COMPANY OCCURRED BETWEEN THE END OF THE FINANCIAL YEAR TO WHICH THIS FINANCIALSTATEMENT RELATE AND THE DATE OF THE REPORT

The Company has entered into a Dry Lease Agreement with its GroupCompany viz. N K Proteins Private Limited on 15th April 2019 the terms and conditions ofsuch lease are laid down in the Agreement itself whereby the Factory Premise of theCompany has been given on lease to M/s. N K Proteins Private Limited.

This Agreement was further extended for a period of one year vide aSupplemental Agreement dated 15th April 2020.

This decision as to giving the factory premise on lease was taken owingto the huge losses and other market conditions as well as unavoidable fixed cost andexpenses which the Company could not by any means was able to control. Therefore with thisstep we are now able to generate income without increasing the inadequate expenditures.

Apart from the above there are no other material changes that wouldaffect the financial position of the Company. CORPORATE GOVERNANCE

All the mandatory provisions of Corporate Governance as prescribed inRegulations 17 to 27 of the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 are not applicable to the Company as it does not fall under the criteriaof its applicability pursuant 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 (ListingObligations & Disclosure Requirements) Regulations 2015 MDA covering details ofRisks and Concerns Internal Control Systems and their Adequacy Discussion on FinancialPerformance with respect to Operational Performance etc. for the year under review is setout in this Annual Report as "Annexure C".

PARTICULARS OF EMPLOYEES

The information required pursuant to Section 197 of Companies Act 2013read with Rule 5(1) of the Companies (Appointment & Remuneration of ManagerialPersonnel) Rules 2014 in respect of employees of the Company is annexed as "AnnexureD"

Further no employee of the Company was employed during the year drawingremuneration exceeding the limits as prescribed under Rule 5(2) of the (Appointment andRemuneration of Managerial Personnel) Rules 2014. Hence the information under Rule 5(2)is not applicable.

BOARD DIVERSITY

The Company recognizes and embraces the benefits of having a diverseBoard of Directors and sees increasing diversity at Board level as an essential element inmaintaining a competitive advantage in the complex business that it operates.

The Board of Directors has also adopted a policy on Board Diversitywhich sets out the approach to diversify the Board of Directors. The Board DiversityPolicy is available at our 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 underreview within the purview of section 186 of the Companies Act 2013. The details of theinvestments made by Company are given in the notes to investments in the financialstatements.

DECLARATION BY INDEPENDENT DIRECTORS

The Company has received declaration from each Independent Director ofthe Company under section 149 (7) of the Companies Act 2013 that he/she meets thecriteria of independence laid down in section 149 (6) of the Companies Act 2013.

BOARD EVALUATION

The Companies Act 2013 states that the formal annual evaluation needsto be made by Board of its own performance and that of its Committees and individualDirectors Schedule IV of the Companies Act 2013 states that performance evaluation ofthe Independent Directors shall be done by the entire Board of Directors excluding thedirector being evaluated.

The evaluation of all the Directors and the entire Board was conductedbased on the criteria and framework adopted by the Board.

The Board approved the evaluation results as allotted by the Nominationand remuneration committee. The Companies Act 2013 states that the formal annualevaluation needs 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 CompaniesAct and Articles of Association Mr. Hasmukhbhai Kacharabhai Patel (DIN: 06587284) WholeTime Director of the Company shall retire by rotation and being eligible offers himselffor reappointment at the ensuing Annual General Meeting of the Company.

Further during the year under review and upto the date of this reportthe following changes occurred in the composition of Board and Key Managerial Personnel ofthe Company:

1. Vacation of office of Mridu R. Sharma (DIN: 07591599) as a casualvacancy Independent Director w.e.f 1st October 2019.

2. Mr. Tushar H. Joshi (DIN: 08118621) resigned w.e.f 28th September2019 as the Director of the Company in the meeting held on 9th November 2019.

3. Mr. Bhavani Singh Yadav (DIN: 00323601) resigned w.e.f 9th November2019 as the Independent Director of the Company in the meeting held on 9th November 2019.

4. Ms. Mridu Sharma (DIN: 07591599) has been appointed w.e.f 9thNovember 2019 as the additional non-executive independent director of the company by theBoard in the meeting held on 9th November 2019. The Notice of the ensuing Annual GeneralMeeting comprises of an agenda for appointment of Ms. Mridu Sharma as an IndependentDirector for a term of five consecutive years subject to the approval of members.

5. Mr. Snehal Patel (DIN: 01655758) has been appointed w.e.f 9thNovember 2019 as the additional non-executive independent director of the company by theBoard in the meeting held on 9th November 2019. The Notice of the ensuing Annual GeneralMeeting comprises of an agenda for appointment of Mr. Snehal Patel as an IndependentDirector for a term of five consecutive years subject to the approval of members.

BOARD MEETINGS/ DETAILS OF OTHER MEETINGS

The Board of the Company is endlessly focused for the growth expansionof the Company. It is further involved to strategize the optimum utilization of theavailable resources and to reduce cost so as to improve the profitability of the Companyand also to generate additional opportunities for better performance as a whole.

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

The Board met 5 times during the year under review viz. on 18thMay2019 14th August2019 28th August 2019 9th November 2019 and 25th January2020.The Board held one meeting in each quarter and the gap between any two meetings was notmore than one hundred and twenty days as prescribed under the Companies Act 2013.

Details of the Directors their positions attendance record at Boardmeetings and last Annual General Meeting held and convened during the financial year areas follows:

Sr. No. Name of directors Designation Number of Meetings Attended / Total Meetings held during the year 2019-20 Attended AGM on 21st September2019
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. Mr. Bhawani Singh Yadav* Independent Director 3/5 V
5. Ms. Mridu Sharma* Independent Women Director/ Additional Director 2/5 V
6. Mr. Tushar H. Doshi* Independent Director 3/5 V
7. Mr. Snehal Patel* Additional Director 2/5 -

* Mr. Bhawani Singh Yadav (DIN: 00323601) and Mr. Tushar H. Doshi (DIN:08118621) resigned as Director of the Company w.e.f 9th November 2019 and 28th September2019 respectively.

* Vacation of office of Mridu R. Sharma (DIN: 07591599) as a casualvacancy Independent Director w.e.f 1st October 2019..

* Mr. Snehal Patel (DIN: 01655758) appointed w.e.f 9th November 2019as the additional non-executive independent director of the company.

* Ms. Mridu Sharma (DIN: 07591599) vacated the office as non-executiveindependent women director of the company w.e.f 1st October 2019.

INDEPENDENT DIRECTORS' MEETING

As per Schedule IV of the Companies Act 2013 a separate meeting ofIndependent Director was on 14th March 2020 at

11.30 A.M. at registered office of the company situated at Ahmedabad todiscuss the agenda items as required under the Companies Act 2013.

COMMITTEES MEETING

As on 31st March 2020 the Board had three committees i.e. AuditCommittee Nomination and Remuneration Committee and Stakeholders Relationship Committee.All committees are properly constituted with proper composition of Independent Directorsas mentioned in relevant provisions of Companies Act 2013.

During the year under review Mr. Bhawani Singh Yadav (DIN: 00323601)and Mr. Tushar H. Doshi (DIN: 08118621) resigned as Director of the Company w.e.f 9thNovember 2019 and 28th September 2019 respectively.

Further Mr. Snehal Patel (DIN: 01655758) and Ms. Mridu Sharma (DIN:07591599) appointed as an Additional Non-Executive Independent Director of the Companyw.e.f 9th November2019 consequently the Board reconstituted the committees of the Boardin the Board Meeting held on 9th November 2019.

A. AUDIT COMMITTEE AND ITS MEETINGS:

Composition of Audit Committee was as per following:

Sr. No. Name of the Director DIN Position
1. Mr. Nilesh K. Patel (upto 9th November 2019) 00244115 Member
2. Mr. Bhawani S. Yadav (upto 9th November 2019) 00323601 Chairman & Member
3. Mr. Snehal Patel (w.e.f 9th November 2019) 01655758 Chairman & Member
4. Ms. Mridu Sharma (upto 1st October 2019) 07591599 Member
5. Ms. Mridu Sharma (w.e.f 9th November 2019) 07591599 Member
6. Mr. Hasmukh Patel (w.e.f 9th November 2019) 06587284 Member

Audit Committee met 4 times during the year under review on 18th May2019 14th August 2019 8th November 2019 and 24th January 2020.

Constitution of Audit Committee was as per the following:

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

B. NOMINATION AND REMUNERATION COMMITTEE AND ITS MEETINGS:

Composition of Nomination and Remuneration Committee was as perfollowing:

Sr. No. Name of the Director DIN Position
1. Mr. Nilesh K. Patel (upto 9th November 2019) 00244115 Member
2. Mr. Bhawani S. Yadav (upto 9th November 2019) 00323601 Chairman & Member
3. Mr. Snehal Patel (w.e.f 9th November 2019) 01655758 Chairman & Member
4. Ms. Mridu Sharma (upto 1st October 2019) 07591599 Member
5. Ms. Mridu Sharma (w.e.f 9th November 2019) 07591599 Member
6. Mr. Hasmukh Patel (w.e.f 9th November 2019) 06587284 Member

Nomination and Remuneration Committee met 3 time during the year underreview on 18th May 2019 13th August 2019 and 8th November 2019 respectively.

Constitution of Nomination and Remuneration Committee was as per thefollowing:

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

C. STAKEHOLDERS RELATIONSHIP COMMITTEE AND ITS MEETING:

<p >Composition of Stakeholders Relationship Committee was as perfollowing:

Sr. No. Name of the Director DIN Position
1. Mr. Nilesh K. Patel (upto 9th November 2019) 00244115 Member
2. Mr. Bhawani S. Yadav (upto 9th November 2019) 00323601 Chairman & Member
3. Mr. Snehal Patel (w.e.f 9th November 2019) 01655758 Chairman & Member
4. Ms. Mridu Sharma (upto 1st October 2019) 07591599 Member
5. Ms. Mridu Sharma (w.e.f 9th November 2019) 07591599 Member
6. Mr. Hasmukh Patel (w.e.f 9th November 2019) 06587284 Member

Stakeholders Relationship Committee met 5 times during the year underreview on 20th May 2019 14th August2019 28th August 2019 9th November 2019 and 25thJanuary2020.

Constitution of Stakeholders Relationship Committee was as per thefollowing:

Sr. No. Name of the Director Status in Committee Nature of Directorship Total Meetings Attended/ Total Meeting Held
1. Ms. Mridu Sharma Member Independent Director/ Additional Director 2/5
2. Mr. Bhawani S. Yadav Chairman & Member Independent Director 4/5
3. Mr. Nilesh K. Patel Member Managing Director 4/5
4. Mr. Hasmukh K Patel Member Whole Time Director 1/5
5. Mr. Snehal Patel Chairman & Member Additional Director 1/5

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 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 policy is available on our Company'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 remunerationincluding criteria for determining qualifications positive attributes Independency of aDirector and other matters provided under sub-section (3) of section 178 of The CompaniesAct 2013 adopted by 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 theterm laid out in the Nomination and remuneration policy of the company.

DIRECTOR'S RESPONSIBILITY STATEMENT

To the best of their knowledge and belief and according to theinformation and explanations obtained by them your Directors make the followingstatements in terms of Clause (c) of Sub-Section (3) of Section 134 of the Companies Act2013 which states that—

a) in the preparation of the annual accounts for the year ending March312020 the applicable accounting standards have been followed along with properexplanation relating to material departures;

b) the directors had selected such accounting policies and applied themconsistently and made judgments and estimates that are reasonable and prudent so as togive a true and fair view of the state of affairs of the company at the end of thefinancial year and of the profit and loss of the company for that period;

c) the directors had taken proper and sufficient care for themaintenance of adequate accounting records in accordance with the provisions of this Actfor safeguarding the assets of the company and for preventing and detecting fraud andother irregularities;

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

e) the Directors have laid down Internal Financial Controls to befollowed by the Company and that such Internal Financial Controls are adequate and wereoperating effectively; and

f) The Directors have devised proper system to ensure compliance withthe provisions of all applicable laws and that such system were adequate and operatingeffectively.

AUDITORS

i. Statutory Auditors

M/s Parikh and Majmudar Chartered Accountants (Firm Registration No:107525W) were appointed as the Statutory Auditors of the Company for a consecutive periodof 4 years from 31st AGM till the conclusion of 35th AGM subject to ratification at eachAGM.

There are certain qualifications made by the Auditors in theirStandalone Report for which the Board of Directors hereby give its comments/explanation asunder:

I. The Auditors' report on the standalone financial results for theyear ended on 31st March 2019 contains qualification regarding transactions entered bycompany during f.y. 2012-13 through trading and clearing member with NSEL. With respect tothe said qualification it is to be submitted that National spot Exchange Limited (NSEL)has served a notice to N K Proteins Private Limited (Formerly known as N K ProteinsLimited) who was a Trading and Clearing Member at NSEL and N K Industries Limited was onlya client Company of Trading Member i.e. N K Proteins Limited. As regards the balances oftrade receivables and trade payables arising out of the transactions through NSELplatform the same cannot be confirmed pursuant to the pendency of litigations and as thematter is still pending before the respective authorities. Further the Home DepartmentGovernment of Maharashtra has issued a notification under the MPID Act 1999 securing theattachment of Land & Building and Plant & Machinery of the Company. Against thisthe Company had challenged the notification issued by Home department Government ofMaharashtra before the Hon'ble High Court of Gujarat. The Hon'ble Gujarat High Court haddisposed off the application of the Company vide its order dated 29th March 2017.Againstthe said order the Company had preferred a Special Leave Petition before the Hon'bleSupreme Court of India. The Hon'ble Supreme Court of India had disposed off the SpecialLeave Petition on 17/04/2017 with an observation to file an application before theHon'ble Bombay High Court. The Company has filed petition before the Hon'ble Bombay HighCourt in June 2017. Besides the above the Company has also filed its objections againstthe attachment notification before the Designated Spl MPID Court Mumbai. The matter issubjudice.

II. With regard to search and seizure carried out by the Directorate ofEnforcement Government of India on 30.05.2018 on the group company NKPPL the Companyalong with group Company and Promoters challenged the show cause notice issued by theadjudicating authority New Delhi before the Hon'ble High Court of Delhi and the Hon'ble

High Court has set aside the show cause notice. Further against theattachment of the assets of the Company the Company has issued fresh show cause dated30/08/2018 and the Company has filed an appeal before the PMLA Applellate Tribunal Delhi.

III. Government of Maharashtra has filed supplementary charge sheetdated 25th December 2018 under the MPID Act against the Company and the Chairman. TheCompany has complied with all the summons under the said charge sheet and the matter wasadjourned to 7th November 2019 and further adjourned to 15th February 2020 7th March2020 30th April 2020 21st May 2020 and new date of hearing is not yet updated.

In addition to the above the Auditors have made observations under thehead "Emphasis of Matter" reply to the said observations is as under:-

1. With regard to Note 32 to the Standalone Ind AS Financial Statementsand according to the same we would hereby like to reply that though the net worth of thecompany is negative the company is making sincere efforts for the revival of the businessof the company whereby it is making continues efforts to increase the volumes as well asto generate comprehensive margins and thereby revive the business and therefore noprovision for impairment in the fair value of the investment made in the said subsidiarycompanies has been made in the books of accounts.

2. During the year under review the Income Tax Department has raised ademand of ' 86 Lacs on the Company for the Assessment Year 2014-15 making the demand of '133 crores in aggregate. The said matter being disputed is still pending before the IncomeTax Authorities. In this regard the Income Tax Authorities have also attached theproperties of the Company against the said demand as mentioned in the Auditors in theirReport.

3. With respect to the survey carried out u/s 133 of the income tax actin 1999 and in response to the orders passed by 1st Appellate authority and 2nd AppellateAuthority 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. Thecompany 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 videNote No. 40. The said sales tax demand is disputed in view of the fact that the Companyhas preferred an appeal before the appellate authority and the Company has shown the saidliability as Contingent Liability under Note No. 27 of the notes forming part of theAccounts. In this view the Company has not made any provision for the said disputedliability.

5. As explained by the Auditors in their report at point no. 5 theCompany has sent letters obtaining confirmation of balances to various parties but due tonon-receipt of replies the balances of parties customers as well as various loans andadvances given are still awaited.

6. As explained the report the company have not received any legalnotice/communication of such proceedings against the company and that the company ishaving basic information about such suit filed as reflected on the website of the MCA.

The qualification made by the Auditors in their Consolidated Report forwhich the Board of Directors hereby give its comment/explanation as under:

The National Spot Exchange Limited (NSEL) has initiated recoveryproceedings against the Group Company N K Proteins Private Limited (Formerly known as 'N KProteins Limited') who was a trading and clearing member at NSEL. As regards the saidrecovery proceedings initiated by NSEL and has also made Tirupati Retail (India) PrivateLimited subsidiary Company a party to the said proceedings the matter is sub-judice andstill pending before the respective Authorities.

Their report on Consolidated Financial Statements emphasizes on someadditional points which the management has to reply as under:

1. With regard to Note 33 to the Consolidated Ind AS financialstatements and according to the same we would hereby like to reply that though theConsolidated accounts as well as Holding Company and Subsidiary Companies as at 31.03.2020is negative the Holding Company is making sincere efforts for the revival of the

business of the company whereby it is making continues efforts toincrease the volumes as well as to generate comprehensive margins and thereby revive thebusiness of the Subsidiary Companies and therefore no provision for impairment in thefair value of the investment made in the said subsidiary companies has been made in thebooks of accounts.

2. As explained earlier at point no. i above N K Proteins PrivateLimited (N K Proteins Limited) was a trading cum clearing member of National Spot Exchange(NSEL). In the said matter NSEL has filed a recovery suit in Bombay High Court against N KProteins Private Limited and others. N K Oil Mills Private Limited was neither a tradingmember nor a client of N K Proteins Private Limited. In this regard a Notice of Motion isfiled before the Hon'ble Bombay High Court on behalf of N K Oil Mills Private Limited andthe matter is sub- judice

3. As explained by the Auditors in their report at point no. 5 theCompany has sent letters obtaining confirmation of balances to various parties but due tonon-receipt of replies the balances of parties customers as well as various loans andadvances given are still awaited.

4. The Home Department Maharashtra has through notification under theMaharashtra Protection of Interest of Depositors Act 1999 attached the properties ofBanpal Oilchem Private Limited as mentioned by the Auditors. The Company has filed itsdetailed Objections against the said attachment Notification before the Designated Courtat Mumbai and the matter is still subjudice.

5. The Directorate of Enforcement had through a provisional attachmentorder dated 27/08/2014 attached the assets of one of the Subsidiary Company viz. BanpalOilchem Private Limited however the Company has challenged the said attachment orderbefore the PMLA Appellate Tribunal New Delhi and the matter is sub- judice.

6. Income tax department has attached the properties as mentioned inthe Emphasis of Matter against the outstanding tax demands pertaining to FY 2007-08 to FY2012-13. With respect to the said outstanding demands it is stated that all the demandsare disputed demands and has been challenged by the company at various appellate forums.The subsidiary company is hopeful of obtaining favourable order from the appellateauthorities. On receipt of the favorable order the demand would be deleted and attachmentshall vacate.

7. In view of the fact that the Management of our Company do not haveany control in the Joint Venture viz. AWN Agro Pvt. Ltd and as per the exemption providedunder the provisions 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.

8. The order was passed under section 143(3) r.w. Section 142(A) of theIncome Tax Act 1961(the IT Act) the said order is passed without appreciating the factsof the case. The subsidiary company viz. Tirupati Retail (India) Private Limited beingaggrieved by the said order has preferred an appeal before CIT (Appeals). Also the ordersu/s 179 of the Income Tax Act 1961 are passed on the Directors of the Company which ispassed without appreciating the facts as the demand is contingent and highly debatable.The Directors are in the process of challenging the impugned order at appropriate forum.Further the Company is hopeful of getting the favourable orders from 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 theCompany is in process of transferring the properties as mentioned by the Auditors in theirreport in its name.

i. Secretarial Auditor

Pursuant to the provisions of Section 204 of the Companies Act 2013and the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 theCompany has appointed M/s Riddhi Khaneja & Associates Practicing Company Secretary(FCS- 10221 CP No. 17397) Ahmedabad to conduct a Secretarial Audit of the Company'sSecretarial and related records for the year ended 31st March 2020.

The Report on the Secretarial Audit for the year ended 31st March 2020is annexed herewith as "Annexure E" to this Board's Report. There were noqualifications/ observations in the report.

iii. Cost Auditors

Pursuant to Section 148 of the Companies Act 2013 read with theCompanies (Cost Records and Audit) Amendment Rules 2014 the Cost Audit records maintainedby the Company are required to be audited by Cost Accountant. On the recommendations ofthe Audit Committee 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 outaudit of Cost Accounting Records of the Company which was filed by the Company within thestipulated time during the year 2019-20.

The Board of Directors on the recommendation of the Audit Committee hasappointed M/s. N D Birla & Co. Cost Accountants Ahmedabad as the Cost Auditors ofthe Company to carry out audit of cost accounting records of the Company for the financialyear 2019-20. As required under the Companies Act 2013 a resolution seeking member'sapproval for the remuneration payable to the Cost Auditor forms part of the Noticeconvening this 32nd Annual General Meeting.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS ORTRIBUNALS

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

EXTRACTS OF ANNUAL RETURN

The details forming part of the extracts of Annual return in formMGT-9 as required under Section 92 of the Companies Act 2013 is included in this Reportas "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 toreport genuine concerns or grievances. The Vigil Mechanism has been placed on the Websiteof 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 sizescale and complexity of its operations. To maintain its objectivity and independence theCompany has 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 adequacyof internal control system in the Company its compliance with operating systemsaccounting procedures and policies at all locations of the Company. Based on the report ofInternal Auditor Audit Committee undertakes corrective action if any in their respectiveareas and thereby strengthens the controls. Significant audit observations andrecommendations along with corrective actions if any thereon are presented to the AuditCommittee of the Board.

ENVIRONMENT HEALTH AND SAFETY

The Company is conscious of the importance of environmentally clean andsafe operations. The Company is committed to health and safety of its employeescontractors and visitors. The Company is conducting operations in such a manner so as toensure safety of all concerned compliances of environmental regulations and preservationof natural resources.

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

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

INDUSTRIAL RELATIONS

The Company is committed to nurturing enhancing and retaining toptalent through superior Learning and Organizational Management. During the year underreview your Company enjoyed cordial relationship with workers and employees at alllevels.

STATUTORY INFORMATION

i. Conservation of Energy:

a) Company ensures that the manufacturing operations are conducted inthe manner whereby optimum utilization and maximum possible savings of energy is achieved.

b) No specific investment has been made in reduction in energyconsumption.

c) As the impact of measures taken for conservation and optimumutilization of energy are not quantitative its impact on cost cannot be statedaccurately.

d) Since the Company does not fall under the list of industries whichshould furnish this information in Form-A as annexed to the aforesaid Rules the questionof furnishing the same does not arise.

ii. Technology Absorption:

Company's products are manufactured by using in-house know how and nooutside technology is being used for

manufacturing activities. Therefore no technology absorption isrequired.

iii. Foreign Exchange Earning and Outgo:

During the period under review the foreign exchange earnings andoutflow was as follows:

Year 2019-20 Amount in Rs
Foreign Earnings -
Foreign Outflow -

CONSOLIDATED FINANCIAL STATEMENTS

The Consolidated Financial Statements of the Company prepared inaccordance with Indian Accounting Standards (Ind AS) 110 issued by the Ministry ofCorporate Affairs forms part of this Annual Report.

PREVENTION OF INSIDER TRADING

The Company has adopted a Code of Conduct for Prevention of InsiderTrading with a view to regulate trading in securities by the Directors and designatedemployees of the Company. The Code requires pre-clearance for dealing in the Company'sshares and prohibits the purchase or sale of Company shares by the Directors and thedesignated employees while in possession of unpublished price sensitive information inrelation to the Company and during the period when the Trading Window is closed. The Boardis responsible for implementation of the Code.

RISK MANAGEMENT POLICY

All the mandatory provisions of Corporate Governance as prescribed inRegulations 17 to 27 of the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 are not applicable to your Company as the Company does not fall underthe criteria of its applicability pursuant to Regulation 15 of SEBI Listing Regulations.However all the Provisions Rules and Regulations under the Companies Act 2013 relatedto the Corporate Governance are applicable to the extent and have been comply by theCompany.

ACKNOWLEDGEMENT

Your Directors would like to express their appreciation for theassistance and co-operation received from the Company's customers vendors bankersauditors investors and government bodies during the year under review.

Your Directors place on record their appreciation of the contributionsmade by employees at all levels.

For and on behalf of the Board
Sd/-
Date : 29/08/2020 Nimish K. Patel
Place : Ahmedabad Chairman & Managing Director
DIN:00240621

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