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NEL Holdings South Ltd.

BSE: 533202 Sector: Infrastructure
NSE: NITESHEST ISIN Code: INE639K01016
BSE 00:00 | 23 May 3.24 0.18
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NSE 05:30 | 01 Jan NEL Holdings South Ltd
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VOLUME 26131
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P/E 0.38
Mkt Cap.(Rs cr) 47
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OPEN 3.29
CLOSE 3.06
VOLUME 26131
52-Week high 6.65
52-Week low 1.85
P/E 0.38
Mkt Cap.(Rs cr) 47
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

NEL Holdings South Ltd. (NITESHEST) - Director Report

Company director report

Dear Members

Your Directors present their Seventeenth Annual Report with thestandalone and consolidated annual audited accounts of the Company for the year endedMarch 31 2021.

1. Financial Results:

(Rupees in Lakh)

Particulars STANDALONE CONSOLIDATED
2020-21 2019-20 2020-21 2019-20
Revenue from operations 7372 1920 12482 4165
Other Income 243 612 22708 1072
Total Income 7615 2532 35190 5237
Total Expenses 21157 12426 53463 20005
Profit/(loss) before Exceptional Items and Tax (13542) (9894) (18273) (14768)
Exceptional Items 6077 (92461) 5601 (62824)
Profit/(Loss) before Tax (7465) (102355) (12672) (77592)
Less : Tax (662) (1834) (7842) (5696)
Net Profit / (Loss) after tax (8127) (100521) (20514) (71898)

2. State of Company's Affairs:

I. Financial Statement:

The Company has complied with the applicable provisions of theCompanies Act 2013 (the Act) and the Securities and Exchange Board of India (ListingObligations & Disclosure Requirements) Regulations 2015 ('the Listing Regulations')in preparation of Standalone and Consolidated financial statements.

The audited consolidated Balance Sheet as at 31st March 2021consolidated statement of Profit and Loss for the year ended as on that date together withthe Notes and Reports of Auditors along with the Statement on Impact of AuditQualifications as stipulated in regulation 33(3)(d) Cash flow Statements ManagementDiscussion and Analysis Report forms part of the Annual Report. The financial figures havebeen regrouped wherever required in line with Schedule III of the Act disclosurerequirements.

a. Standalone:

During the year under review the Company has earned a total income ofRs. 7615 Lakhs as against Rs. 2532 Lakh in the previous year. The Company has incurredtotal expenses of Rs. 21157 Lakh as compared to previous year's expenses of Rs. 12426Lakhs. The Company has incurred net loss of Rs. 8127 Lakhs for the year 2020-2021 asagainst a loss of Rs. 100521 Lakhs in the previous year.

b. Consolidated:

During the year under review the Company has earned a total income ofRs. 35190 Lakhs as against Rs. 5237 Lakh in the previous year. The Company has incurredtotal expenses of Rs. 53463 Lakh as compared to previous year's expenses of Rs. 20005Lakhs. The Company has incurred net loss of Rs. 20514 Lakhs for the year 2020-2021 asagainst a loss of Rs. 71898 Lakhs in the previous year.

II. Exit from various Residential Projects

In accordance with the Company business policy and decisions duringthe year the Company has exited from the various residential projects namely Napa ValleyVirgin Island Park Avenue and Knights Bridge. The Company further has entered into aBusiness Transfer Agreement/Settlement Agreement and is the process of exit from few otherprojects namely Caesar's Palace and Cape Cod.

Once the Company completes all its obligations of delivery to itscustomers other stakeholders and lenders in the residential business the Company shallbe exiting this space of home building (Residential) totally.

3. Dividend:

In view of the loss no dividend could be considered.

4. Deposits

The Company has not accepted any fresh deposits as per the provisionsof Section 73 of the Act during the current financial year.

5. Transfer to Reserves

In view of the loss incurred by the Company during the financial yearno amount was required to be transferred to the reserves.

6. Material changes and commitments if any affecting the financialposition of the Company occurred between the end of the financial year to which thefinancial statement relate and the date of the report:

There were no such material changes and commitments affecting thefinancial position of the Company occurred between the end of the financial year and thedate of this Report. However The Company has incurred losses over the years resulting innegative net worth negative working capital and negative cash flows. The default inpayment of dues to banks and financial institution and creditors etc are the identifiedevents that individually or collectively still cast significant doubt on the Company'sability to continue as a going concern. The Company is in the process reduction ofsubstantial project debt by exiting from the Projects which will ease its financial burdenin the coming years.

7. Significant or material orders passed by the regulators/ courts :

During the year under review there were no significant or materialorders passed by the regulators or courts or tribunals against the Company impacting theCompany's operations in future. There have been up to 28 NCLT matters filed against theCompany till the end of last financial year and out of which Company has effectivelysettled 9 cases and all in its favour of which 17 matters have been dismissed by NCLT and2 matters are pending.

The Company has however received various notices from differentstatutory authorities from time to time during the year.

8. Significant events/actions having a major bearing on the Company'saffairs:

During the year under review the significant events/actions that mayhave a major bearing on the Company Affairs were:

a. The name of the Company was changed from NEL Holdings Limited to NELHoldings South Limited during the year.

b. The Company has exited from various residential projects namelyNapa Valley Virgin Island Park Avenue and Knights Bridge. The Company further hasentered into a Business Transfer Agreement and is in the process of exit from few otherprojects namely Caesar's Palace and Cape Cod.

c. There are pending cases filed under Section 138 of the NegotiableInstruments Act in respect of Cheque bounces for which Summons were received by theCompany.

9. The Board of Directors and the composition thereof

I. Composition of the Board

The Board of the Company currently comprises of 6 (Six) Directors ofwhich three are Independent Directors and one is NonExecutive Independent Woman Director.The Composition of the Board of Directors is in compliance with the applicable provisionsof the Companies Act 2013 and the Listing Regulations.

Declaration by Independent Directors

The Company has received necessary declarations from the IndependentDirectors stating that they meet the criteria of independence as specified in Section 149(6) of the Companies Act 2013 and in the Listing Regulations. All Independent Directorsof the Company have registered themselves as Independent Director with Indian Institute ofCorporate Affairs at Manesar in accordance with the Companies (Appointment andQualification of Directors) Rules 2014.

II. Change in the Board

During the period under review Mrs. Dipali Khanna retired from theBoard as Independent Directors with effect from September 27 2020. Your Board places itsdeep appreciation for the services rendered by them during her association with theCompany.

Reasons for resignation:

Name of the Director Reason for Cessation
Mrs. Dipali Khanna Independent Director (DIN: 003395440) Retirement after completion of 5 year term period

Two New Directors were inducted on the Board during the year.

Name of the Director Date of Appointment
Mr. KUMAR NELLORE GOPALAKRISHNA Non-Executive Independent Director (DIN: 07197031) November 09 2020
Mrs. GAYATHRI MUTTUR NAGARAJ Non-Executive Independent Director (DIN: 06742638) January 08 2021

All resignations and appointment of the Directors of the Company havebeen duly intimated to the Stock Exchanges and to the Ministry of Corporate Affairs NewDelhi.

IN. Meetings of the Board

The Board of Directors met 4 (Four) times during the year on July 312020 September 15 2020 November 11 2020 and February 12 2021.

In accordance with the provisions of the Companies Act 2013 aseparate meeting of the Independent Directors was held on February 12 2021.

The Composition of the Board and the Committees along with the meetingattendance details are provided in the Corporate Governance Report.

IV. Annual Evaluation of the Board its Committees and IndividualDirectors

The Independent Directors of the Company at their separate meeting heldas per the provisions of Section 149 read with Schedule V of the Companies Act 2013 andthe Listing Regulations had carried out an annual evaluation of the Board Committees andindividual Directors' performance. The performance of the Board was evaluated afterseeking inputs from the Independent Directors on the basis of criteria such as Boardcomposition Structure Board processes and their effectiveness information given to theBoard etc.

The Board and the Nomination and Remuneration Committee (NRC) reviewedthe performance of the individual Directors' on the basis of criteria such as theirparticipation contribution at the meetings and their preparedness on the agenda items tobe discussed etc. Additionally the Chairman was also evaluated on key aspects of his role.

V. Familiarization programme for Independent Directors

The Company proactively keeps its Directors informed of the activitiesof the Company it's Management and operations and provides an overall industryperspective as well as issues being faced by the industry.

The Company also keeps the Board updated on the applicable LawsRegulations Enactments etc. and any changes amendments thereon from time to time.

10. Directors' Responsibility Statement

In terms of the requirements of Section 134(5) of the Companies Act2013 we on behalf of the Board of Directors hereby state that:

a) in the preparation of the annual accounts the applicable accountingstandards had been followed along with proper explanation 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 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; and

e) the directors had laid down internal financial controls to befollowed by the Company and such internal financial controls are adequate and wereoperating effectively.

f) the directors had devised proper systems to ensure compliance withthe provisions of all applicable laws and that such systems were adequate and operatingeffectively.

11. Nomination and Remuneration Policy

The Nomination and Remuneration Committee (NRC) has formulated a policyrelating to nomination of and remuneration for the directors Key Managerial Personnel andSenior Management personnel.

The Nomination and Remuneration policy has been prepared pursuant tothe applicable provisions of the Companies Act 2013 and SEBI Listing Regulations.

Non-Executive Directors are remunerated by way of sitting fees forattending the meetings of the Board and the Committees thereof. During the year thesitting fees paid for Board Meetings and Audit Committee meetings is Rs. 50000/- permeeting the Nomination & Remuneration Committee is Rs 25000/- per meeting and theStakeholders Relationship Committee other Committees including for a separate meeting ofIndependent Directors is Rs. 20000/- per meeting. The Board however in its meeting heldon February 12 2021 has approved the proposed for reduction on sitting fees effectivefrom April 01 2021.

The Nomination & Remuneration Policy of the Company is uploaded onthe Website of the Company at: https://nelholdings.in/policies-other-related-matters/

Remuneration Details of Directors and Employees pursuant to Section 134of the Companies Act 2013 and the Rule 5 of the Companies (Appointment and Remunerationof Managerial Personnel) Rules 2014]

Ratio of remuneration of each Director to the median remuneration ofthe employees and percentage increase in the remuneration is as follows:

Sl. No. Name of the Directors Designation Ratio of remuneration to median remuneration of the Company % increase in the remuneration of Directors
1. Mr. Nitesh Shetty Managing Director Nil
2. Mr. L. S Vaidyanathan Executive Director Nil

12. Vigil Mechanism / Whistle Blower Policy

The Company has a vigil mechanism policy for its Directors andEmployees to report their concerns about unethical behaviour actual or suspected fraud orviolation of the code of conduct/business ethics that provides for adequate safeguardsagainst victimization of the director(s) and employee(s) who avail of the mechanism. Noneof the Directors/Employees of the Company have been denied access to the Chairman of theAudit Committee. No complaint has been received during the financial year 2020-21.

Corporate Social Responsibility

In view of continues losses the Company was not required to contributetowards CSR activities and has also not contributed towards any CSR activities during theyear 2020-21. The Company was also not required to constitute a separate Corporate SocialResponsibility Committee under the provisions of Companies Act 2013.

13. Political Contribution

The Company has not made any political contribution to any politicalparties during the financial year.

14. Internal Financial Controls

The Board of the Company is of the opinion that the Company's InternalFinancial Controls were adequate and effective during the period ended as on 31stMarch 2021 based on the framework of Internal Financial Controls and compliance systemsestablished and maintained by the Company work performed by the internal statutory andsecretarial auditors and external consultants specially appointed for this purposeincluding audit of Internal Financial Controls over financial reporting by the StatutoryAuditors and the reviews performed by Management and the relevant Board committeesincluding the Audit Committee.

The Company has an established Internal Financial Control frameworkincluding internal controls over financial reporting operating controls and anti-fraudframework. The framework is reviewed regularly by the management and tested by internalaudit team and presented to the audit committee. Based on periodical testing theframework is strengthened from time to time to ensure adequacy and effectiveness ofInternal Financial Controls.

The Company has a proper and adequate Internal Control System to ensurethat all the assets of the Company are safeguarded and protected against any loss and thatall the transactions are properly authorized and recorded. Information provided toManagement is reliable and timely. Company ensures adherence to all statutes.

15. Statutory Auditors

M/s Ray & Ray Chartered Accountants (Firm Registration Number:301072E) Statutory Auditors of the Company have expressed a modified opinion in theirAudit Report for the financial year ended 31st March 2021.

The Statement on Impact of Audit Qualifications as stipulated inregulation 33(3)(d) along with the management response to the same is as below:

Audit Qualification (each Audit Qualification separately)

Audit Qualification:

1. a. Detail of Audit Qualification: The Company has incurred lossesover the years resulting in negative net worth negative working capital and negative cashflows. The default in payment of dues to banks and financial institution and creditors etcare the identified events that individually or collectively may cast significant doubton the Company's ability to continue as a going concern.

During the year Company has sold two projects through a BusinessTransfer Agreement and repaid some portion of the bank loan. Further the Company hascancelled the development right of the project 'Nitesh Virgin Island' and handed over therights to original land owner.

Although these transactions have reduced the liability of the Companyto banks and financial institutions the ability of the Company to continue as a goingconcern continues to remain uncertain in view of the above.

As the Company has not recognized this fact and has prepared thestandalone financial statements on a going concern assumption basis without carrying outany adjustments in our opinion the standalone financial statements may not give a trueand fair view.

b. Type of Audit Qualification: Qualified Opinion

c. Frequency of Qualification: Second Time Qualification

d. For Audit qualification where the impact is quantified by theAuditor

Not Applicable as Auditor has not quantified the impact

e. For Audit qualification where the impact is not quantified by theAuditor

i. Management's estimation on the impact of audit qualification:Cannot be quantified.

ii. If Management is unable to estimate the impact reasons for thesame-Cannot be quantified.

iii. Auditor's comment on (i) or (ii) above: It depends on the futureplan of the management to improve the situation by resolving uncertainties to continue thebusiness as a going concern. However management has not provided any concrete plan toascertain the future of the company.

2. a. Detail of Audit Qualification: The Company has givenunsecured advance amounting to Rs 3515 Lakh to Boulevard Developers Pvt. Ltd (Boulevard)for acquiring various immovable properties on behalf of the Company for which no JointDevelopment Agreements could be produced to us. We have been informed that Boulevard isnot in a position to honor its commitment and repay the advance. Considering thesefactors we are concerned about the manner in which the funds were given without obtainingany security. Company has made full provision in the books during the year which in ouropinion is a matter of concern.

b. Type of Audit Qualification: Qualified Opinion

c. Frequency of Qualification: Second Time Qualification

d. For Audit qualification where the impact is quantified by theAuditor

The Auditor has quantified the amount of Rs. 3515 lakhs and is providedin the books.

e. For Audit qualification where the impact is not quantified by theAuditor

i. Not Applicable as impact is quantified.

ii. If Management is unable to estimate the impact reasons for thesame- Not applicable.

iii. Auditor's comment on (i) or (ii) above: Company will suffersubstantial loss because of uncertainties of recovery without taking any legal course ofaction.

3. a. Detail of Audit Qualification: The Company had advancedRs. 1227.98 Lakhs to Somerset Infra Projects Private Limited (Somerset) for acquiringimmovable properties on behalf of the Company. Somerset has neither delivered any propertyto the Company as per the agreement nor refunded the money. The Company has made fullprovision for the said advance in the previous years. In our opinion such injudiciousadvances are a matter of concern and may be prejudicial to the interest of the Company.

b. Type of Audit Qualification: Qualified Opinion

c. Frequency of Qualification: Second Time Qualification

d. For Audit qualification where the impact is quantified by theAuditor

The Auditor has quantified the amount of Rs. 1227.98 lakhs for whichprovision has already been made in the year ended 31st March 2018. Hence nofurther impact has been considered.

e. For Audit qualification where the impact is not quantified by theAuditor

i. Not Applicable as impact is quantified.

ii. If Management is unable to estimate the impact reasons for thesame- Not applicable

iii. Auditor's comment on (i) or (ii) above: Though there is nofinancial impact we are concerned about the manner of disbursing of advance and theirsubsequent recovery.

4. a. Detail of Audit Qualification: The Company has accountedPrincipal of Rs.35586/- Lakhs Accrued Interest of Rs.16752/- Lakhs and DisputedLiability of Rs.14933/- in its books of account as total outstanding to banks andfinancial institution as on 31st March 2021. Pending confirmation and correspondence theoutstanding balance and status of demand raised by the respective banks and financialinstitutions has not been verified by us. Further penal interest on default on payment tobanks and financial institution has neither been ascertained nor provided for in the booksof account of the Company.

b. Type of Audit Qualification: Qualified Opinion

c. Frequency of Qualification: Second Time Qualification

d. For Audit qualification where the impact is quantified by theAuditor No impact

e. For Audit qualification where the impact is not quantified by theAuditor

i. Not Applicable as impact is quantified.

ii. If Management is unable to estimate the impact reasons for thesame- Not applicable

iii. Auditor's comment on (i) or (ii) above: No Comments

5. a. Detail of Audit Qualification: The Company has sold theprojects "Nitesh Knightsbridge" and "Park Avenue" during the year onan ongoing basis through Business Transfer Agreements. Further the Company has cancelledthe development right for the development of the project 'Nitesh Virgin Island' and handedover the rights to the original land owners.

(i) The Company has borrowed Rs 28497 Lakhs from HDFC Limited forvarious projects including Nitesh Knightsbridge and British Columbia Virgin Island. Asper the terms of business transfer agreement with the third party an amount of Rs. 800Lakhs and 3500 Lakhs have been paid to HDFC Limited for release of charge on NiteshKnightsbridge and Park Avenue respectively. Basis the same the Company has classified theremaining outstanding liability to the extent allocated to the project as disputedliability.

(ii) During the financial year charge / mortgage of the project'Nitesh Virgin Island' was released by HDFC Limited. Such release was conditional that thesame shall not be construed as settlement of any kind. Consequently the Company hasaccounted for Rs 8146 Lakhs being the estimated carrying value of loan and Rs 3000 Lakhsbeing the interest component as a disputed liability in the standalone financialstatements.

b. Type of Audit Qualification: Qualified Opinion

c. Frequency of Qualification: First Time Qualification

d. For Audit qualification where the impact is quantified by theAuditor

e. For Audit qualification where the impact is not quantified by theAuditor

i. Not Applicable as impact is quantified.

ii. If Management is unable to estimate the impact reasons for thesame- Not applicable

iii. Auditor's comment on (i) or (ii) above: No Comments

6. a. Detail of Audit Qualification: As stated in the standalonefinancial statements the Company has collected Rs 452 Lakhs as advance from customersfrom closed/suspended residential projects in the earlier years which have now beenabandoned. Such receipts are in the nature of deemed deposits under rule 2(c) (xii) (b) ofthe Companies Acceptance of deposit (Rules) 2014 and is within the purview of sections 73to 76 of the Companies Act 2013. Proper disclosure has not been made in the standalonefinancial statements in this respect.

b. Type of Audit Qualification: Qualified Opinion

c. Frequency of Qualification: Second Time Qualification

d. For Audit qualification where the impact is quantified by theAuditor

The Auditor has quantified the amount of Rs. 452 lakhs for whichLiability is already appearing and no further impact has been considered.

e. For Audit qualification where the impact is not quantified by theAuditor

i. Not Applicable as impact is quantified.

ii. If Management is unable to estimate the impact reasons for thesame- Not applicable

iii. Auditor's comment on (i) or (ii) above: It is a violation ofCompanies Act.

7. a. Detail of Audit Qualification: In spite of the negativenet worth of the subsidiaries the Company has not accounted for impairment loss of Rs9224 Lakhs (after providing for Rs. 4546 Lakhs out of the total receivable) againstadvance given to them resulting in the understatement of loss and overstatement of networth by the said amount.

Even after making the above noted provision the Company has disbursedfresh advance amounting Rs 360 Lakhs during the year which in our opinion may be a matterof concern.

b. Type of Audit Qualification: Qualified Opinion

c. Frequency of Qualification: Second Time Qualification

d. For Audit qualification where the impact is quantified by theAuditor

The Auditor has quantified the amount of Rs. 9224 lakhs for whichimpact has been considered in above table.

e. For Audit qualification where the impact is not quantified by theAuditor

i. Not Applicable as impact is quantified.

ii. If Management is unable to estimate the impact reasons for thesame- Not applicable.

iii. Auditor's comment on (i) or (ii) above: No Comments

8. a. Detail of Audit Qualification: The Company has not testedimpairment of its projects' CWIP and Inventories amounting to Rs 8835/- Lakhs and Rs12466/- Lakhs (Net of "Payable to land owner for land under Joint DevelopmentAgreement JDA") respectively as on 31st March 2021.

b. Type of Audit Qualification: Qualified Opinion

c. Frequency of Qualification: Second Time Qualification

d. For Audit qualification where the impact is quantified by theAuditor

The Auditor has not quantified the amount mentioning that no impairmenttest has been done to ascertain the realisable value.

e. For Audit qualification where the impact is not quantified by theAuditor

i. Not Applicable as impact is quantified.

ii. If Management is unable to estimate the impact reasons for thesame- Not applicable.

iii. Auditor's comment on (i) or (ii) above: In our opinion in thecurrent scenario recovery is uncertain.

9. a. Detail of Audit Qualification: Year-end balanceconfirmation certificates in respect of trade payables vendor and other advances have notbeen provided for our verification and record. In absence of adequate audit evidence weare unable to ascertain as to whether any provision is required with respect to thecarrying amounts of these balances as at reporting date. Further Trade Receivableamounting to Rs.753/- Lakhs receivable from customer as on 31st March 2021 has not beenconsidered for impairment loss based on expected credit loss method as per requirement ofInd AS 109.

b. Type of Audit Qualification: Qualified Opinion

c. Frequency of Qualification: First Time Qualification

d. For Audit qualification where the impact is quantified by theAuditor

i. The Company could not obtain balance confirmation due to Covid-19post year-end and reduced resources to undertake such tasks. However Management is of theview that it will not have any additional impact on realisable value more than what hasalready been impaired under various heads.

ii. If Management is unable to estimate the impact reasons for thesame-

Owing to the nature of observation impact cannot be quantified.However Management is of the view that it will not have any additional impact onrealisable value more than what has already been impaired under various heads.

iii. Auditor's comment on (i) or (ii) above: Impact is notascertainable at this stage

e. For Audit qualification where the impact is not quantified by theAuditor

i. Not Applicable as impact is quantified.

ii. If Management is unable to estimate the impact reasons for thesame- Not applicable

iii. Auditor's comment on (i) or (ii) above: No Comments

10. a. Detail of Audit Qualification: As per the records of thegroup and information and explanations provided to us the Company has been irregular indepositing the undisputed statutory dues including provident fund employees' stateinsurance income-tax sales-tax service tax duty of custom duty of excise value addedtax Goods and Services tax cess.

b. Type of Audit Qualification: Qualified Opinion

c. Frequency of Qualification: First Time Qualification

d. For Audit qualification where the impact is quantified by theAuditor Not applicable as impact is not quantified.

e. For Audit qualification where the impact is not quantified by theAuditor

i. Not applicable as impact has not been quantified

ii. If Management is unable to estimate the impact reasons for thesame-

i. Auditor's comment on (i) or (ii) above: It is violation of IT act.

11. a. Detail of Audit Qualification: The Company has neitherascertained nor accounted for component wise Deferred Tax Assets/ Liabilities as onbalance sheet date and its adjustment in the Statement of Profit & Loss during theyear.

b. Type of Audit Qualification: Qualified Opinion

c. Frequency of Qualification: Second Time Qualification

d. For Audit qualification where the impact is quantified by theAuditor

Not applicable as impact is not quantified.

e. For Audit qualification where the impact is not quantified by theAuditor

i. The Company could not ascertain component wise Deferred taxdue to reduced resources to undertake such tasks. However impact cannot be quantifieduntil component wise deferred tax is determined.

ii. If Management is unable to estimate the impact reasons for thesame-

Owing to the nature of observation impact cannot be quantified untilcomponent wise deferred tax is determined.

iii. Auditor's comment on (i) or (ii) above: No Comments

12. a. Detail of Audit Qualification: The Company has not providedcustomer wise reconciled figures for some outstanding balances for "Billing in excessof revenue" (Net of debit balance) (Refer Note No 20(ii) to the standalone financialstatement). Due to non-availability of the said details we are unable to verify thecorrectness of the same.

b. Type of Audit Qualification: Qualified Opinion

c. Frequency of Qualification: Second Time Qualification

d. For Audit qualification where the impact is quantified by theAuditor Not applicable as impact is not quantified.

e. For Audit qualification where the impact is not quantified by theAuditor

i. The Company has provided the workings of billing in excess ofrevenue However impact cannot be quantified nor the management is not expecting anyimpact because of such reconciliation.

ii. If Management is unable to estimate the impact reasons for thesame-

Owing to the nature of observation impact cannot be quantified untilreconciliation is made. However the management is expecting any impact because of suchreconciliation.

iv. Auditor's comment on (i) or (ii) above: No Comments

16. Secretarial Auditor

Mr. Kedarnath Practicing Company Secretary was appointed as theSecretarial Auditors of the Company for the financial year 2020-21 by the Board ofDirectors of the Company. The Secretarial Audit Report for the year ended 31stMarch 2021 issued by the Secretarial Auditor in accordance with the provisions of Section204 of the Companies Act 2013 and the rules made thereunder is annexed to this reportseparately as Annexure - A.

The qualifications or adverse remakes in the Secretarial Audit Reportas explained by the Board of Directors of the Company are as below:

1. There are Advances outstanding which are collected from customerstowards proposed projects which are delayed and being outstanding in the books for morethan one year attract Section 73 of the Act read with Companies (Acceptance of Deposits)Rules 2014.

Management Response: Due to inadequacy of funds the Company wasunable to pay off the advances collected from its Customers and its making its sincereefforts to repay the same.

2. The Company has not complied the provisions of Section 152(6) of theCompanies Act 2013 in relation to Rotation of Directors.

Management Response: The Company has all its Directors aswhole-time non-retiring and non-rotational Directors on Board.

3. The Company has defaulted compliance of the following:

a. Applicable General Laws such as ESI and PFrequirements and MSMEAct.2006

b. Income Tax Act 1961 and Goods and Services Tax Act 2017

Management Response: The payment has been delayed due to scarcityof funds and the Company is making its sincere efforts to pay the same and ensureCompliance.

4. The Company has not appointed Women Director in the Board asrequired under the regulation 17(1) of LODR (Regulation) 2015 and Section 149 of theCompanies Act 2013.

Management Response: Post retirement of Woman Director on Board ofthe Company the Company has been looking for the Woman Director to be appointed asDirector on Board of the Company. However the Company was unable to comply with theregulation 17 of SEBI (LODR) Regulations 2015 and Section 149 of Companies Act 149 due toCOVID related restrictions and prevailing COVID cases in the Company and also due toyearend holidays.

SEBI further levied the penalty for non-compliance of regulation 17 ofSEBI (LODR) Regulations 2015 and the Company paid the same.

The Company has appointed Woman Director on Board of the Company on Jan08 2021.

17. Particulars of employees

The details of remuneration to Directors Key Managerial Personnel andthe statement of employees in receipt of remuneration exceeding the limits prescribedunder Section 134 of the Companies Act 2013 read with rules made thereunder has beenprovided in Annexure B to this report. There were a total of 63 employees duringthe end of the financial year and the Company has failed to pay the Salary dues to its fewemployees on time.

18. Conservation of Energy Technology Absorption and Foreign ExchangeEarnings and Outgo

In terms of Section 134 of the Companies Act 2013 read with rules madethereunder the particulars of conservation of energy technology absorption and foreignexchange earnings and outgo are set out in Annexure C to this report.

19. Corporate Governance

In terms of Regulation 34 read with Schedule V of the Securities andExchange Board of India (Listing Obligations & Disclosure Requirements) RegulationsCorporate Governance Report forms part of this Annual Report.

Further a certificate from Mr. S. Kedarnath Practicing CompanySecretary affirming the compliance with the various provisions of the Corporate Governancein terms of Regulation 27 read with Schedule V of the Securities and Exchange Board ofIndia (Listing Obligations & Disclosure Requirements) Regulations 2015 forms part ofthe Annual Report and exhibited separately.

20. Secretarial Standards

The Company complies with all applicable mandatory secretarialstandards issued by the Institute of Company Secretaries of India.

21. Cost Audit and Cost Records

During the year under review Cost Audit was not applicable to theCompany. However the maintenance of Cost Records as prescribed under the provisions ofSection 148 of the Act was applicable for the business activities carried out by theCompany.

22. Code of Conduct

In terms of Regulation 34 read with Schedule V of the Securities andExchange Board of India (Listing Obligations & Disclosure Requirements) Regulations adeclaration signed by Mr. Nitesh Shetty the Chairman & Managing Director of theCompany affirming compliance with the Code of Conduct by the Directors and SeniorManagement Personnel of the Company for the financial year 2020-21 forms part of theCorporate Governance Report.

23. Management Discussion and Analysis Report

In terms of the Securities and Exchange Board of India (ListingObligations & Disclosure Requirements) Regulations 2015 the Management Discussionand Analysis Report is presented in a separate section of the Annual Report.

24. Extract of the Annual Return

In accordance with the provisions of Section 134 of the Companies Act2013 read with the Companies (Management and Administration) Rules 2014 rule 12 subrule (1) as amended the extract of the Annual Return (MGT-9) is no longer required to beattached along with Board Report. The copy of the Annual Return for the year 2020-21 canbe accessed on the Company's website at the link: https://nelholdings.in/Annual Return/

25. Particulars of Loans Guarantees and Investments

Pursuant to the provisions of Section 134 of the Companies Act 2013the particulars of the loans guarantees and investments made by the Company under Section186 of the Companies Act 2013 is detailed in the Notes to Accounts section of the AnnualFinancial Statements.

26. Related Party Transactions

During the year under review the Company has not entered into anycontract/ arrangement/ transaction with a related party which can be considered asmaterial in terms of the policy adopted by the Company Section 188 of the Companies Act2013 and the Listing Regulations on the Related Party transactions.

The Related Party Transactions under IND-AS 24 undertaken during thefinancial year 2020-21 are detailed in the Notes to Accounts section of the AnnualFinancial Statements.

27. Disclosures as per the Sexual Harassment of Women at Workplace(Prevention Prohibition and Redressal) Act 2013

The Company has zero tolerance for sexual harassment at workplace andhas adopted 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 made thereunder forprevention and redressal of complaints of sexual harassment at workplace.

28. Risk Management Policy

The Company has formulated a comprehensive Risk Management Policy andis in regular compliance of the same.

29. Review of Subsidiaries and Associates

Pursuant to Section 129 of the Companies Act 2013 the consolidatedfinancial statements of the Company and its subsidiaries and associates prepared inaccordance with the relevant Accounting Standards specified under Section 133 of theCompanies Act 2013 read with the rules made thereunder forms part of the Annual Report.

A statement containing the salient features of the financial statementsof the Company's subsidiaries is annexed to the Consolidated Financial Statement in theprescribed format of Form AOC-1.

Further pursuant to the provisions of Section 136 of the CompaniesAct 2013 the financial statements of the Company consolidated financial statementsalong with the relevant documents and separate accounts in respect of subsidiaries areavailable on the website of the Company.

During the year the following material changes occurred relating tosubsidiaries:

- the name of NHDPL Properties Private Limited was changed to NHDPLSouth Private Limited on April 22 2020.

- the name of Nitesh Indiranagar Retail Private Limited was changed toNIRPL Ventures Private Limited on December 29 2020.

In terms of the Securities and Exchange Board of India (ListingObligations & Disclosure Requirements) Regulations 2015 the Company has adopted apolicy for determining material subsidiaries. The Policy may be accessed on the Company'swebsite at the link: https://nelholdings.in/policies-other-related-matters/

30. Additional Information to shareholders

All important and pertinent investor information such as financialresults press releases project updates and other corporate announcements are madeavailable on a regular basis on the website www.nelholdings.in of the Company.

31. Acknowledgement:

Your Directors are pleased to place on record their sincereappreciation of the valuable assistance and co-operation extended to the Company by itsCustomers Bankers Financial Institutions State and Central Government authoritiesService Providers Contractors and the Shareholders for the Company's operations.

Your Directors also place on record their appreciation on thesignificant contributions made and support extended by the employees of the Company atall levels during the year.

For and on behalf of the Board of Directors
Nitesh Shetty
Place: Bengaluru Chairman & Managing Director
Date: June 29 2021 DIN:00304555

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