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NEL Holdings South Ltd.

BSE: 533202 Sector: Infrastructure
NSE: NITESHEST ISIN Code: INE639K01016
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NSE 05:30 | 01 Jan NEL Holdings South Ltd
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Buy Price 1.51
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OPEN 1.52
CLOSE 1.50
VOLUME 32188
52-Week high 2.20
52-Week low 0.60
P/E
Mkt Cap.(Rs cr) 22
Buy Price 1.51
Buy Qty 200.00
Sell Price 1.52
Sell Qty 7717.00

NEL Holdings South Ltd. (NITESHEST) - Director Report

Company director report

Dear Members

Your Directors present their Sixteenth Annual Report with the standalone andconsolidated annual audited accounts of the Company for the year ended March 31 2020.

1. Financial Results:

(Rupees in Lakh)

Particulars

STANDALONE

CONSOLIDATED

2019-20 2018-19 2019-20 2018-19
Revenue from operations 1920 8439 4165 11292
Other Income 612 178 1072 23
Total Income 2532 8617 5236 11315
Total Expenses 12426 11214 20004 27772
Profit/(loss) before Exceptional Items and Tax (9894) (2597) (14768) (16457)
Exceptional Items 92461 11866 6284 -
Profit/(Loss) before Tax (102355) (14463) (77592) (16457)
Less : Tax (1834) 87 (5695) (93)
Net Profit / (Loss) after tax (100521) (14550) (71898) (16550)

2. State of Company's Affairs:

I. Financial Statement:

The Company has complied with the applicable provisions of the Companies Act 2013 (theAct) and the Securities and Exchange Board of India (Listing Obligations & DisclosureRequirements) Regulations 2015 ('the Listing Regulations') in preparation of Standaloneand Consolidated financial statements.

The audited consolidated Balance Sheet as at 31st March 2020 consolidated statementof Profit and Loss for the year ended as on that date together with the Notes and Reportsof Auditors along with the Statement on Impact of Audit Qualifications as stipulated inregulation 33(3)(d) Cash flow Statements Management Discussion and Analysis Reportforms part of the Annual Report. The financial figures have been regrouped whereverrequired in line with Schedule III of the Act disclosure requirements.

a. Standalone:

During the year under review the Company has earned a total income of Rs. 2532 Lakhs asagainst Rs. 8617 Lakh in the previous year. The Company has incurred total expenses of Rs.12426 Lakh as compared to previous year's expenses of Rs. 11214 Lakhs. The Company hasincurred net loss of Rs. 100521 Lakhs for the year 2019-2020 as against a loss of Rs.14550 Lakhs in the previous year.

b. Consolidated:

During the year under review the Company has earned a total income of Rs. 5236 Lakhs asagainst Rs. 11315 Lakh in the previous year. The Company has incurred total expenses ofRs. 20004 Lakh as compared to previous year's expenses of Rs. 27772 Lakhs. The Company hasincurred net loss of Rs. 71898 Lakhs for the year 2019-2020 as against a loss of Rs. 16550Lakhs in the previous year.

II. Delisting from National Stock Exchange of India Limited

The equity shares of the Company have been voluntarily delisted from the National StockExchange of India Limited with effect from October 30 2019 pursuant to Regulation 6 (a)of the SEBI (Delisting of Equity Shares) Regulations 2009 as amended. The Board ofDirectors of the Company had accorded their approval for the delisting proposal at theirmeeting held on August 09 2019 and as required pursuant to the aforementioned regulationa public notice was published in the Kannada Hindi and English newspapers having widecirculation.

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 provisions of Section 73 ofthe Act during the current financial year.

5. Transfer to Reserves

In view of the loss incurred by the Company during the financial year no amount wasrequired to be transferred to the reserves.

6. Material changes and commitments if any affecting the financial position of theCompany occurred between the end of the financial year to which the financial statementrelate and the date of the report:

There were no such material changes and commitments affecting the financial positionof the Company occurred between the end of the financial year and the date of this Report.However The Company has incurred losses over the years resulting in negative net worthnegative working capital and negative cash flows. The default in payment of dues to banksand financial institution and creditors etc are the identified events that individuallyor collectively cast significant doubt on the Company's ability to continue as a goingconcern.

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

During the year under review there were no significant or material orders passed bythe regulators or courts or tribunals against the Company impacting the Company'soperations in future. There have been up to 23 NCLT matters filed against the Company tillthe end of last financial year and out of which Company has effectively settled 14 casesand all in its favour of which 6 matters have been dismissed by NCLT and 3 matters havebeen withdrawn.

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

During the year under review the significant events/actions that may have a majorbearing on the Company Affairs were:

a. The name of the Company was changed from Nitesh Estates Limited to NEL HoldingsLimited and the Company has once again applied for the name change after a period of oneyear since last change of name of the Company.

b. The Company has voluntarily delisted its shares from the National Stock ExchangeLimited.

c. There are pending cases filed under Section 138 of the Negotiable Instruments Act inrespect of Cheque bounces involving about Rs.345.90 Million for which Summons werereceived by the Company.

d. Raids conducted by Central Crime Bureau Bangalore on the Company relating to delay/ non delivery of completed units to the customers as published in the newspapers ispending before the authorities.

9. The Board of Directors and the composition thereof

I. Composition of the Board

The Board of the Company currently comprises of 5 (Five) Directors of which three areIndependent Directors. The Composition of the Board of Directors is in compliance with theapplicable provisions of the Companies Act 2013 and the Listing Regulations.

Declaration by Independent Directors

The Company has received necessary declarations from the Independent Directors statingthat they meet the criteria of independence as specified in Section 149 (6) of theCompanies Act 2013 and in the Listing Regulations. 2 out of 3 Independent Directors ofthe Company has also registered themselves as Independent Director with Indian Instituteof Corporate Affairs at Manesar in accordance with the Companies (Appointment andQualification of Directors) Rules 2014.

II. Change in the Board

During the period under review Mr. Shantanu Cousul and Mr. Jagadish Capoor resigned asIndependent Directors with effect from August 01 2019 and February 14 2020 respectively.Further Mr. Ashwini Kumar has resigned as the Executive Director of the Company witheffect from February 24 2020. Your Board places its deep appreciation for the servicesrendered by them during their association with the Company.

Reasons for resignation:

Name of the Director Reason for Cessation
Mr. Shantanu Consul Independent Director (DIN: 08366933) Being unable to devote time and attention
Mr. Jagdish Capoor Independent Director (DIN: 00002516) Attained more than 81 years and unable to devote much time and attention because of health issues inability to travel age factor and other personal reasons
Mr. Ashwini Kumar Executive Director (DIN: 02034498) Personal reasons

No New Directors were inducted on the Board during the year.

All resignations of the Directors of the Company have been duly intimated to the StockExchanges and to the Ministry of Corporate Affairs New Delhi.

III. Meetings of the Board

The Board of Directors met 7 (Seven) times during the year on April 10 2019 April 232019 May 30 2019 August 09 2019 November 13 2019 January 10 2020 and February 142020.

In accordance with the provisions of the Companies Act 2013 a separate meeting of theIndependent Directors was held on February 14 2020.

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

IV. Annual Evaluation of the Board its Committees and Individual Directors

The Independent Directors of the Company at their separate meeting held as per theprovisions of Section 149 read with Schedule V of the Companies Act 2013 and the ListingRegulations had carried out an annual evaluation of the Board Committees and individualDirectors' performance. The performance of the Board was evaluated after seeking inputsfrom the Independent Directors on the basis of criteria such as Board compositionStructure Board processes and their effectiveness information given to the Board etc.

The Board and the Nomination and Remuneration Committee (NRC) reviewed the performanceof the individual Directors' on the basis of criteria such as their participationcontribution at the meetings and their preparedness on the agenda items to be discussedetc. 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 activities of the Companyit's Management and operations and provides an overall industry perspective as well asissues being faced by the industry.

The Company also keeps the Board updated on the applicable Laws RegulationsEnactments 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 Act 2013 we onbehalf of the Board of Directors hereby state that:

a) in the preparation of the annual accounts the applicable accounting standards hadbeen followed along with proper explanation relating to 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 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; and

e) the directors had laid down internal financial controls to be followed by theCompany and such internal financial controls are adequate and were operating effectively.

f) the directors had devised proper systems to ensure compliance with the provisions ofall applicable laws and that such systems were adequate and operating effectively.

11. Nomination and Remuneration Policy

The Nomination and Remuneration Committee (NRC) has formulated a policy relating tonomination of and remuneration for the directors Key Managerial Personnel and SeniorManagement personnel.

The Nomination and Remuneration policy has been prepared pursuant to the applicableprovisions of the Companies Act 2013 and SEBI Listing Regulations.

Non-Executive Directors are remunerated by way of sitting fees for attending themeetings of the Board and the Committees thereof. The sitting fees paid for Board Meetingsand Audit Committee meetings is Rs. 50000/- per meeting the Nomination &Remuneration Committee is Rs 25000/- per meeting and the Stakeholders RelationshipCommittee other Committees including for a separate meeting of Independent Directors isRs. 20000/- per meeting.

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

Remuneration Details of Directors and Employees pursuant to Section 134 of theCompanies Act 2013 and the Rule 5 of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 20141

Ratio of remuneration of each Director to the median remuneration of the employees andpercentage increase in the remuneration is as follows:

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 26 Nil
3. Mr. Ashwini Kumar Executive Director - Nil

12. Vigil Mechanism / Whistle Blower Policy

The Company has a vigil mechanism policy for its Directors and Employees to reporttheir concerns about unethical behaviour actual or suspected fraud or violation of thecode of conduct/business ethics that provides for adequate safeguards againstvictimization of the director(s) and employee(s) who avail of the mechanism. None of theDirectors/Employees of the Company have been denied access to the Chairman of the AuditCommittee. No complaint has been received during the financial year 2019-20.

13. Corporate Social Responsibility

In view of continues losses the Company was not required contribute towards CSRactivities and the Company was not required to constitute Corporate Social ResponsibilityCommittee.

14. Political Contribution

The Company has not made any political contribution to any political parties during thefinancial year.

15. Internal Financial Controls

The Board of the Company is of the opinion that the Company's Internal FinancialControls were adequate and effective during the period ended as on 31st March2020 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 framework including internalcontrols over financial reporting operating controls and anti-fraud framework. Theframework is reviewed regularly by the management and tested by internal audit team andpresented to the audit committee. Based on periodical testing the framework isstrengthened from time to time to ensure adequacy and effectiveness of InternalFinancial Controls.

The Company has a proper and adequate Internal Control System to ensure that all theassets of the Company are safeguarded and protected against any loss and that all thetransactions are properly authorized and recorded. Information provided to Management isreliable and timely. Company ensures adherence to all statutes.

16. Statutory Auditors

M/s Ray & Ray Chartered Accountants (Firm Registration Number: 301072E) werere-appointed as the Statutory Auditors of the Company for a second term of 5 (five)consecutive years at the 15th Annual General Meeting of the Company held on 27thSeptember 2019.

The Statutory Auditors have expressed a modified opinion in their Audit Report for thefinancial year ended 31st March 2020.

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

Audit Qualification (each Audit Qualification separately)

1. a. Detail of Audit Qualification: The Company has incurred losses overthe 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 cast significant doubt onthe Company's ability to continue as a going concern.

In this financial scenario the management has no concrete plan to improve upon thesituation which indicates that a material uncertainty exists that may cast significantdoubt on the Company's ability to continue as a going concern. The financial statements donot adequately disclose this fact.

As the Company has not recognized this fact and has prepared the financial statement ongoing concern assumption basis without carrying out any adjustments in our opinion thefinancial statements may not give a true and fair view.

b. Type of Audit Qualification : Qualified Opinion
c. Frequency of Qualification : First Time Qualification

d. For Audit qualification where the impact is quantified by the Auditor :

Not Applicable as Auditor has not quantified the impact

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

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

ii. If Management is unable to estimate the impact reasons for the same-Cannot bequantified.

iii. Auditor's comment on (i) or (ii) above: It depends on the future plan of themanagement to improve the situation by resolving uncertainties to continue the business asa going concern. However management has not provided any concrete plan to ascertain thefuture of the company.

2. a. Detail of Audit Qualification: The Company has given unsecuredadvance amounting to Rs 1911.70 Lakhs to Winter Lands Pvt. Ltd and Rs 3515.33 Lakhs toBoulevard Developers Pvt. Ltd for acquiring various immovable properties on behalf of theCompany for which no Joint Development Agreements could be produced to us. We have beeninformed that these companies are not in a position to honor their commitment and repaythe advance. No provision has been made by the Company with respect to these advancesresulting in understatement of loss and overstatement of the networth by the said amount.

However in case of Winter Lands the Company has represented that they are in theprocess of taking appropriate measures to regularize and enter development agreements withthe land owners & aggregators within next two quarters.

b. Type of Audit Qualification: Qualified Opinion
c. Frequency of Qualification: First Time Qualification

d. For Audit qualification where the impact is quantified by the Auditor:

The Auditor has quantified the amount of Rs. 1911.70 lakhs & Rs. 3513.33 lakhs fornot making provision. However Management is in the process of taking appropriate measuresto regularize and enter development agreements with the land owners & aggregatorswithin next two quarters for advances related to Winter Land for Rs. 1911.70 lakhs forwhich the impact is not being considered in aforesaid table. However the provision of Rs.3513.33 lakhs has been considered in Impact.

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

i. Not Applicable as impact is quantified.

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

iii. Auditor's comment on (i) or (ii) above: Refer to para no 2 of "AdverseOpinion para" of our standalone audit report of even date in respect of advance ofRs 1911.70 Lakhs to Winter lands Pvt Ltd which have been informed that the Company is notin a position to honor their commitment and repay the advances. Hence necessary provisionis required.

3. a. Detail of Audit Qualification: The Company had advanced Rs. 1227.98Lakhs to Somerset Infra Projects Pvt. Ltd (Somerset) for acquiring immovable properties onbehalf of the Company. Somerset has neither delivered any property to the Company as perthe agreement nor refunded the money. The Company has made full provision for the saidadvance and has entered into an agreement for assignment of claims against the party withanother company at a substantially lower consideration which may result in substantialloss to the Company.

Considering these factors we are concerned about the manner in which the funds weregiven to Somerset and other companies without obtaining any security and the correspondingprovision made in the books without taking necessary legal action for recovery.

b. Type of Audit Qualification: Qualified Opinion
c. Frequency of Qualification: First Time Qualification

d. For Audit qualification where the impact is quantified by the Auditor:

The Auditor has quantified the amount of Rs. 1227.98 lakhs for which provision hasalready been made in the year ended 31st March 2018. Hence no further impact has beenconsidered.

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

i. Not Applicable as impact is quantified.

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

iii. Auditor's comment on (i) or (ii) above: Though there is no financial impact we areconcerned about the manner of disbursing of advance and their subsequent recovery.

a. Detail of Audit Qualification: As stated in Note No 17 the Company hasnot accounted for the demand of penal interest amounting to Rs. 2177 lakhs by banks andfinancial institutions on credit facilities resulting in the understatement of loss andoverstatement of net worth by the said amount.

b. Type of Audit Qualification: Qualified Opinion
c. Frequency of Qualification: First Time Qualification

d. For Audit qualification where the impact is quantified by the Auditor:

The Auditor has quantified the amount of Rs. 2177 lakhs towards penal interest whichhas not been provided for which Management is confident to get the waiver of penalinterest as the request is being made to lenders to take haircut of principal & normalinterest outstanding also whenever a project exit is being discussed. Hence no furtherimpact has been considered.

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

i. Not Applicable as impact is quantified.

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

iii. Auditor's comment on (i) or (ii) above: Bank has yet not confirmed the waiver ofpenal interest amounting as on the balance sheet date. As uncertainties is still existingfor payment of the liability provision is required.

4. a. Detail of Audit Qualification: As stated in Note No 17 of thestandalone financial statements the Company has short provided interest on debenturesamounting to Rs 6966/- lakhs against the interest demand of Rs 11812/- Lakhs (includesinterest plus penal interest) in respect of appeal filed by Investcorp Real Estate YieldFund (Formerly known as IDFC Real Estate Yield Fund) before the National Company LawTribunal (NCLT) Bangalore resulting in the understatement of loss and overstatement ofnet worth by the said amount.

b. Type of Audit Qualification: Qualified Opinion
c. Frequency of Qualification: First Time Qualification

d. For Audit qualification where the impact is quantified by the Auditor:

The Auditor has quantified the amount of Rs. 6966 lakhs (Rs. 11812 lakhs - Rs. 4846lakhs) towards penal interest which has not been provided for which Management isconfident to get the waiver of penal interest as the discussion with debenture holders totake haircut of principal & normal interest outstanding is in final stages ofconclusion. Hence no further impact has been considered.

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

i. Not Applicable as impact is quantified.

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

iii. Auditor's comment on (i) or (ii) above: Trustee of debenture holder has yet notconfirmed the waiver of interest as on the balance sheet date. As uncertainties stillexist for payment of the liability provision is required.

5. a. Detail of Audit Qualification: As stated in Note No 43 of thestandalone financial statements the Company has collected Rs 1414 Lakhs as advance fromcustomers for closed/suspended residential projects in the earlier years which have nowbeen abandoned and such receipts are now in the nature of deemed deposits under rule 2(c) (xii) (b) of the Companies Acceptance of deposit (Rules) 2014 and are also within thepurview of sections 73 to 76 of the Companies Act 2013 and proper disclosure has not beenmade in the books of accounts in this respect.

b. Type of Audit Qualification: Qualified Opinion
c. Frequency of Qualification: First Time Qualification

d. For Audit qualification where the impact is quantified by the Auditor:

The Auditor has quantified the amount of Rs. 1414 lakhs for which Liability is alreadyappearing and no further impact has been considered.

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

i. Not Applicable as impact is quantified.

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

iii. Auditor's comment on (i) or (ii) above: It is a violation of Companies Act andliability of interest and penalty may arise in future.

6. a. Detail of Audit Qualification: The Company holds investments in itssubsidiaries and also disbursed advances of Rs 9126 lakhs as on the balance sheet date.The subsidiaries have reported consolidated negative net worth as on 31st March 2020. TheCompany has provided for impairment loss on such investments due to negative net worth inits books of account but no adjustments have been made in respect of the advances given tosuch subsidiaries which are also doubtful of recovery.

b. Type of Audit Qualification: Qualified Opinion
c. Frequency of Qualification: First Time Qualification

d. For Audit qualification where the impact is quantified by the Auditor:

The Auditor has quantified the amount of Rs. 9126 lakhs for which impact has beenconsidered in above table.

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

i. Not Applicable as impact is quantified.

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

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

7. a. Detail of Audit Qualification: The Company has CW/P and Inventoriesrelating to projects amounting to Rs 8835/- Lakhs and Rs 23232/- Lakhs [Net of"Payable to land owner for land under Joint Development Agreement JDA) respectivelyas on 31st March 2020. No impairment test has been carried out to ascertain therealizable value of Rs. 3492 lakhs and Rs 19603/- Lakhs estimated by the managementagainst these projects assets respectively. [Refer Note No 4.2(i) and 8 of the 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 the Auditor:

The Auditor has quantified the amount of Rs. 3492 lakhs and Rs 19603/- Lakhsmentioning that no impairment test has been done to ascertain the realisable value.However the management is confident of realising Rs. 3492 lakhs and Rs 19603/- Lakhsrespectively. Hence the balance value Rs 5343 lakhs & Rs. 3629 lakhs has been shownunder impact in above table.

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

i. Not Applicable as impact is quantified.

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

iii. Auditor's comment on (i) or (ii) above: Realizable value of CWIP and Inventoriesamounting Rs 3492 Lakhs and Rs 19603 Lakhs respectively are estimated by the management.The basis for the same is not provided to us hence we are in doubt of the realisability.

8. a. Detail of Audit Qualification: Year-end balance confirmationcertificates in respect of trade receivables trade payables advances and other advanceshave not been provided for our verification and record. In absence of adequate auditevidence we are unable to ascertain as to whether any provision is required with respectto the carrying amounts of these balances as at reporting date.

b. Type of Audit Qualification: Qualified Opinion
c. Frequency of Qualification: First Time Qualification

d. For Audit qualification where the impact is quantified by the Auditor:

Not applicable as impact is not quantified.

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

i. The Company could not obtain balance confirmation due to Covid-19 post year-end andreduced resources to undertake such tasks. However Management is of the view that it willnot have any additional impact on realisable value more than what has already beenimpaired under various heads.

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

Owing to the nature of observation impact cannot be quantified. However Management isof the view that it will not have any additional impact on realisable value more than whathas already been impaired under various heads.

iii. Auditor's comment on (i) or (ii) above: Impact is not ascertainable at this stage.

9. a. Detail of Audit Qualification: As stated in Note No 19(a) of thestandalone financial statements the Company has neither ascertained nor accounted forcomponent wise Deferred Tax Assets/ Liabilities as on balance sheet date and itsadjustment in the Statement of profit & loss during the year.

b. Type of Audit Qualification: Qualified Opinion
c. Frequency of Qualification: First Time Qualification

d. For Audit qualification where the impact is quantified by the Auditor:

Not applicable as impact is not quantified.

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

i. The Company could not ascertain component wise Deferred tax due to reduced resourcesto undertake such tasks. However impact cannot be quantified until component wisedeferred tax is determined.

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

Owing to the nature of observation impact cannot be quantified until component wisedeferred tax is determined.

iii. Auditor's comment on (i) or (ii) above: Management comment is self-explanatory

10. a. Detail of Audit Qualification: The Company has not providedcustomer wise reconciled figures for the outstanding balances for "Billing in excessof revenue" (Net of debit balance) of Rs 12600 lakhs (Refer Note No 20(ii) to thefinancial statement). Due to non-availability of the said details we are unable to verifythe correctness of the same.

b. Type of Audit Qualification: Qualified Opinion
c. Frequency of Qualification: First Time Qualification

d. For Audit qualification where the impact is quantified by the Auditor:

Not applicable as impact is not quantified.

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

i. The Company could not provide the customer wise reconciliation for "Billing inexcess of revenue" as the same was never done in the past. However the same will beaddressed within next 2 quarter. However impact cannot be quantified nor the managementis not expecting any impact because of such reconciliation.

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

Owing to the nature of observation impact cannot be quantified until reconciliation ismade. However the management is expecting any impact because of such reconciliation.

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

17. Secretarial Aud itor

Mr. Kedarnath Practicing Company Secretary was appointed as the Secretarial Auditorsof the Company for the financial year 2019-20 by the Board of Directors of the Company.The Secretarial Audit Report for the year ended 31st March 2020 issued by theSecretarial Auditor in accordance with the provisions of Section 204 of the Companies Act2013 and the rules made thereunder is annexed to this report separately as Annexure -A.

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

1. The Company has not updated Website as required under Regulation 46 of theSEBI(LODR) Regulation 2015.

Management Response: The Company has recently updated the new website and were in theprocess of updating the website during which the audit was conducted. The Company hasupdated its website in accordance with the Regulation 46 of the SEBI LODR and few moreupdates are still pending and the Company is in the process of updating the same.

2. Advances collected from customers towards proposed projects which are delayed andbeing outstanding in the books for more than one year attract Section 73 of the Act readwith Companies (Acceptance of Deposits) Rules 2014.

Management Response: Due of inadequacy of funds the Company was unable to pay off theadvances collected from its Customers and its making its sincere efforts to repay the sameat the earliest.

3. The Company has defaulted compliance of the following:

a. Repayment of principal and interest to Debenture Holders (IDFC) as per the terms.

b. Payment of Listing Fee to National Stock Exchange Limited by delay.

c. Applicable General Laws such as ESI and PF requirements and MSME Act.

Management Response: The payment has been delayed due to scarcity of funds and theCompany is making its sincere efforts to pay the same and ensure compliance at theearliest.

18. Particulars of employees

The details of remuneration to Directors Key Managerial Personnel and the statement ofemployees in receipt of remuneration exceeding the limits prescribed under Section 134 ofthe Companies Act 2013 read with rules made thereunder has been provided in Annexure Bto this report. There were a total of 102 employees during the end of the financialyear and the Company has failed to pay the Salary dues to few of its employees on time.

19. Conservation of Energy Technology Absorption and Foreign Exchange Earnings andOutgo

In terms of Section 134 of the Companies Act 2013 read with rules made thereunder theparticulars of conservation of energy technology absorption and foreign exchangeearnings and outgo are set out in Annexure C to this report.

20. Corporate Governance

In terms of Regulation 34 read with Schedule V of the Securities and Exchange Board ofIndia (Listing Obligations & Disclosure Requirements) Regulations a CorporateGovernance Report is form part of this Annual Report.

Further a certificate from Mr. S. Kedarnath Practicing Company Secretary affirmingthe compliance with the various provisions of the Corporate Governance in terms ofRegulation 27 read with Schedule V of the Securities and Exchange Board of India (ListingObligations & Disclosure Requirements) Regulations 2015 forms part of the AnnualReport and exhibited separately.

21. Secretarial Standards

The Company complies with all applicable mandatory secretarial standards issued by theInstitute of Company Secretaries of India.

22. Cost Audit and Cost Records

During the year under review Cost Audit was not applicable to the Company. Howeverthe maintenance of Cost Records as prescribed under the provisions of Section 148 of theAct was applicable for the business activities carried out by the Company.

23. Code of Conduct

In terms of Regulation 34 read with Schedule V of the Securities and Exchange Board ofIndia (Listing Obligations & Disclosure Requirements) Regulations a declarationsigned by Mr. Nitesh Shetty the Chairman & Managing Director of the Company affirmingcompliance with the Code of Conduct by the Directors and Senior Management Personnel ofthe Company for the financial year 2019-20 forms part of the Corporate Governance Report.

24. Management Discussion and Analysis Report

In terms of the Securities and Exchange Board of India (Listing Obligations &Disclosure Requirements) Regulations 2015 the Management Discussion and Analysis Reportis presented in a separate section of the Annual Report.

25. Extract of the Annual Return

In accordance with the provisions of Section 134 of the Companies Act 2013 read withthe Companies (Management and Administration) Rules 2014 the extract of the AnnualReturn in the prescribed format of MGT-9 for the financial year 2019-20 is provided in AnnexureD to this Report.

26. Particulars of Loans Guarantees and Investments

Pursuant to the provisions of Section 134 of the Companies Act 2013 the particulars ofthe loans guarantees and investments made by the Company under Section 186 of theCompanies Act 2013 is detailed in the Notes to Accounts section of the Annual FinancialStatements.

27. Related Party Transactions

During the year under review the Company has not entered into any contract/arrangement/ transaction with a related party which can be considered as material in termsof the policy adopted by the Company Section 188 of the Companies Act 2013 and theListing Regulations on the Related Party transactions.

The Related Party Transactions under IND-AS 24 undertaken during the financial year2019-20 are detailed in the Notes to Accounts section of the Annual Financial Statements.

28. Disclosures as per the Sexual Harassment of Women at Workplace (PreventionProhibition and Redressal) Act 2013

The Company has zero tolerance for sexual harassment at workplace and has adopted apolicy on prevention prohibition and redressal of sexual harassment at workplace in linewith the provisions of the Sexual Harassment of Women at Workplace (PreventionProhibition and Redressal) Act 2013 and the Rules made thereunder for prevention andredressal of complaints of sexual harassment at workplace.

29. Risk Management Policy

The Company has formulated a comprehensive Risk Management Policy and the is in regularcompliance of the same.

30. Review of Subsidiaries and Associates

Pursuant to Section 129 of the Companies Act 2013 the consolidated financialstatements of the Company and its subsidiaries and associates prepared in accordance withthe relevant Accounting Standards specified under Section 133 of the Companies Act 2013read with the rules made thereunder forms part of the Annual Report.

A statement containing the salient features of the financial statements of theCompany'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 Companies Act 2013 thefinancial statements of the Company consolidated financial statements along with therelevant documents and separate accounts in respect of subsidiaries are available on thewebsite of the Company.

During the year the following material changes occurred relating to subsidiaries:

- the name of Nitesh Housing Developers Private Limited was changed to NHDPL PropertiesPrivate Limited on June26 2019 and was further changed to NHDPL South Private Limitedeffective from April 22 2020.

- the name of Nitesh Urban Development Private Limited was changed to NUDPL EnterprisesPrivate Limited on June 26 2019 and was further changed to NUDPL Ventures Private Limitedeffective from March 23 2020.

In terms of the Securities and Exchange Board of India (Listing Obligations &Disclosure Requirements) Regulations 2015 the Company has adopted a policy fordetermining material subsidiaries. The Policy may be accessed on the Company's website atthe link: https://nelholdings.in/policies-other-related-matters/

31. Additional Information to shareholders

All important and pertinent investor information such as financial results investorpresentations press releases project updates are made available on a regular basis onthe website www.nelholdines.in of the Company.

32. Acknowledgement:

Your Directors are pleased to place on record their sincere appreciation of thevaluable assistance and co-operation extended to the Company by its Customers BankersFinancial Institutions State and Central Government authorities Service ProvidersContractors and the Shareholders for the Company's operations.

Your Directors also place on record their appreciation on the significant contributionsmade and support extended by the employees of the Company at all levels during the year.

For and on behalf of the Board of Directors
Place: Bengaluru Nitesh Shetty
Date: July 31 2020 Chairman & Managing Director
DIN:00304555

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