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NESCO Ltd.

BSE: 505355 Sector: Others
NSE: NESCO ISIN Code: INE317F01035
BSE 14:37 | 04 Mar 602.95 4.95
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NSE 14:29 | 04 Mar 602.75 2.65
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OPEN 595.60
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VOLUME 8578
52-Week high 741.55
52-Week low 381.10
P/E 22.88
Mkt Cap.(Rs cr) 4,248
Buy Price 602.40
Buy Qty 50.00
Sell Price 604.05
Sell Qty 7.00
OPEN 595.60
CLOSE 598.00
VOLUME 8578
52-Week high 741.55
52-Week low 381.10
P/E 22.88
Mkt Cap.(Rs cr) 4,248
Buy Price 602.40
Buy Qty 50.00
Sell Price 604.05
Sell Qty 7.00

NESCO Ltd. (NESCO) - Director Report

Company director report

Dear Members

Your Directors have pleasure in presenting 61st annual report of your Company for thefinancial year ended 31 March 2020.

1. Financial Results:

(Rs. in lakhs)
Particulars

Consolidated

Standalone

2019-20 2018-19 2019-20 2018-19
Income 47427.87 39266.43 47411.83 39206.18
Profit before depreciation and tax 31472.30 25976.83 31465.91 25956.19
Depreciation 2243.77 1187.38 2243.76 1187.38
Profit Before Taxes 29228.53 24789.45 29222.15 24768.81
Tax Expenses 5839.52 6746.64 5843.15 6750.56
Net Profit after Taxes 23389.01 18042.81 23379.00 18018.25
Opening Balance of Retained Earnings 50.00 50.00 50.00 50.00
Amount available for appropriations: 23427.75 18076.85 23417.74 18052.18
Appropriations:
1. Dividend 3875.33 1620.60 3875.33 1620.60
2. Tax on Dividend 796.58 333.12 796.58 333.12
3. Transfer to General Reserve 18705.84 16073.13 18695.83 16048.48
Closing Balance of Retained Earnings 50.00 50.00 50.00 50.00
Earning Per Share (Basic) (in Rs.) 33.19 25.61 33.18 25.57
Earning Per Share (Diluted) (in Rs.) 33.19 25.61 33.18 25.57

2. Review of Operations:

Your Company achieved a consolidated turnover of Rs.47427.87 lakhs as compared toprevious year consolidated turnover of Rs.39266.43 lakhs. Consolidated Profit before taxwas higher at Rs.29228.53 lakhs as compared to Rs.24789.45 lakhs in the year 2018-19.

Consolidated earnings per share amounted to Rs.33.19 (previous year Rs.25.61).Company's reserves were Rs.134338.59 lakhs (previous year Rs.115638.34 lakhs).

3. Dividend:

Board of Directors has decided that interim dividend of 150% amounting to Rs.3 perequity share of Rs.2 each for the financial year ended 31 March 2020 be con_rmed as _naldividend at the ensuing Annual General Meeting.

Dividend Distribution Policy As per Regulation 43A of the SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 (Listing Regulations) the DividendDistribution Policy is available on the Company's website at www.nesco.in.

4. Management Discussion and Analysis: Company has four business verticals: i) Nesco ITPark:

During the year revenue from IT Park was Rs.21416.82 lakhs (previous yearRs.13696.98 lakhs). Construction of Tower 04 is now completed. The building is Platinumrated for Core & Shell under the LEED India rating system by the Indian Green BuildingCouncil. Tower 03 is fully occupied. Hall 3 provides Incubation Centre facility; and aChild Care Centre for children of employees working in Nesco Center.

Opportunities and Threats

Goregoan East is a preferred location and demand for IT space is expected to rise inthe years to come from MNCs Banks etc. At the same time several new buildings and moreBusiness Parks are coming up to meet the growing demand.

Capital Expenditure and Expansion Plan

Having completed two IT Towers the Company is going forward to construct third Tower.Designs are being made by Singapore Based Architects – Aedas Pte Limited and sizewill be about 4.6 million sq. ft. which includes of_ce space hotel car parking otheramenities and support areas. Civil work is expected to start in FY 2021-22.

Company also undertook major refurbishment towards lift lobby areas other facilities& common areas in existing Tower 03.

ii) Bombay Exhibition Centre:

a. Guest Exhibitions and Events: During the year 128 guest exhibitions and eventswere held in our Centre out of which 18 were new organizers. Some of our new showsinclude exhibitions held by UBM India Divergent Media India Powerloom Development &EPC Taipie WTC Liaison Messe Dusseldorf India.

Income from the Exhibition Centre for the year was Rs.15860.11 lakhs compared toRs.15730.24 lakhs in the previous year.

Bombay Exhibition Centre continues to bring more visitors to Mumbai than any othervenue and is spread over six air-conditioned halls.

Since 23 March 2020 in view of the lockdown to control the COVID-19 pandemic severalexhibitions have been either postponed or cancelled. This has not signi_cantly impactedperformance of financial year 2019-20. However impact on our business would depend onfuture developments and the Company will closely monitor the situation.

Opportunities and Threats

Mumbai being the commercial capital of India is a preferred venue. Number ofexhibitions organized by foreign and local organizers are increasing. Bombay ExhibitionCentre is con_dent of growth in years to come.

Capital Expenditure and Expansion Plan Bombay Exhibition Centre is consideringplans for building new Halls.

b. Nesco Events: During the year two events were organized by the Company.

Rangilo Re:

Rangilo Re started in 2017 has become one of the top 5 Navratri destinations ofMumbai. Rangilo Re showcases varied dances from the various parts of Gujarat and the bestof Gujarati cuisine in one stupendous setting. This event is organized in an indoorair-conditioned hall to celebrate Navratri festival on a scale and size unparalleled inthe city of Mumbai.

Paddy Fields:

Paddy Fields is an unique initiative the only folk and fusion revival festival inIndia. It is an exclusive event that recognizes and celebrates the beauty of folk musicand proposes to recreate that magic through talented artists from across rural and urbanIndia. Started in 2016 the festival distinguishes itself by making popular artists comeout of their comfort zone and make music with the strands of folk tradition for lovers ofthis genre.

Opportunities and Threats

There is an opportunity of potential strategic tie-ups with third party as partnerswherein the benefits could range from revenues to brand building and increased footfallsto the venue.

Competition from new venues coming up in the city is a possibility.

c. Nesco Exhibitions: A new division – Nesco Exhibitions - organizes its ownexhibitions.

During the financial year 2019-20 Company had successfully organized _ve exhibitionsincluding India Auto Show; Machine Tools Manufacturing and Technology Expo; Hobby &Lifestyle; Edutech India and Arogya Fest. Nesco's own exhibitions and events will increasethe Halls occupancy.

Opportunities and Threats

In Nesco Exhibitions we work on new topics. Getting exhibitors visitors and theGovernment on one single platform is the biggest opportunity.

Exhibitions is a competitive industry with foreign and Indian organisers who areactive in India for many years.

iii) Nesco Foods:

Income for the year from the foods division was Rs.3568.82 lakhs as compared toRs.3413.19 lakhs during the previous year. Nesco Foods caters to the needs of visitors toexhibitions and conventions and employees working in Nesco IT Park. The kitchen facilityis fully operational.

Opportunities and Threats

This Division has multiple channels of revenues through various segments: CorporateSocial and MICE. As number of exhibitions grow Nesco Foods revenue also grow.

Capital Expenditure and Expansion Plan

Nesco Foods continued its expansion by adding a new cafeteria in Hall 06 and Dining Bayin Hall 03 during the year 2019-20. The division further diversi_ed by adding a premiumlounge/bar "Dress Circle" towards the end of the year in Nesco Centre. The totalexpenditure was about Rs.350 lakhs. Plans for 2020-21 include adding new restaurants suchas Hard Rock Caf Shiro California Pizza Kitchen amongst others and new food courtswithin the premises of Tower 04. The Company is also exploring options for adding a new"Pan-Asian" restaurant in Tower 03.

iv) Indabrator:

During the year under review income from Indabrator was Rs.2327.43 lakhs as comparedto Rs.3253.65 lakhs during the previous year.

Opportunities and Threats

Indabrator is pioneer in India in this product range with capability of handling largeprojects integrated manufacturing set-up under one roof with large number ofinstallations. Spares and abrasives are recurring business.

Capital Expenditure and Expansion Plan

Indabrator has completed capacity expansion of its Abrasive plant at Karamsad inNovember 2019. Capacity of the new Abrasive plant is 2400 MT per annum. Further expansionis under consideration.

v) Investment Income:

Income from investments was Rs.4254.69 lakhs (previous year Rs.3172.36 lakhs).

5. Internal Audit Systems:

a. Your Company has well laid out policies on financial reporting asset managementadherence to Management policies and also on promoting compliance of ethical andwell-defined standards. The Company follows an exhaustive budgetary control and standardcosting system. Moreover the management team regularly meets to monitor goals and resultsand scrutinizes reasons for deviations in order to take necessary corrective steps. TheAudit Committee which meets at regular intervals also reviews the internal control systemswith the Management and the internal auditors. The internal audit is conducted at variouslocations of the Company and covers all key areas. All audit observations and follow upactions are discussed with the Management as also the Statutory Auditors and the AuditCommittee reviews them regularly.

b. During the year the Company has completed implementation process of integrated SAPS4 HANA software System covering all the segments of the Company. The modules implementedincludes Manufacturing Module (MM) Finance & Costing (FICO) Business Solution Moduleand Of_ce Solution module. This will help in further strengthening of Internal FinancialControl System.

6. Finance:

Your Company had no debt as on 31 March 2020. Company's liquid resources (fixedmaturity plans mutual funds cash and bank balances) increased by 27.33% to Rs.68566.60lakhs from Rs.53851.11 lakhs. Your Company has neither accepted any deposits from thepublic during the year nor are any deposits outstanding for repayment.

7. Corporate Social Responsibility:

Your Company has undertaken various projects during the year in the _eld of promotionof Education Health Care Safe Drinking water and Women Empowerment.

The Company is evaluating and will take up more CSR activities in different areas.Annual report on CSR activities is set out in "Annexure A" attached to thisreport.

8. Directors and Key Managerial Personnel:

Mrs. Sudha S. Patel non-executive Director retires by rotation at the ensuing annualgeneral meeting pursuant to the provisions of Section 152 of the Companies Act 2013 readwith the Companies (Appointment and Quali_cation of Directors) Rules 2014 and articles ofassociation of your Company and being eligible has offered herself for reappointment. Herbrief resume and other related information have been detailed in the annexure to thenotice.

Mr. Krishna S. Patel Managing Director was also appointed as Vice Chairman of theCompany with effect from 07 February 2020.

Mr. Sumant J. Patel Executive Chairman Mr. Krishna S. Patel Vice Chairman andManaging Director Mr. Dipesh R. Singhania Chief Financial Of_cer and Head Legal and Ms.Jinal J. Shah Company Secretary and Compliance Of_cer of the Company are the KeyManagerial Personnel of the Company.

9. Board Evaluation:

Pursuant to the provisions of the Companies Act 2013 read with the rules issuedthereunder and the Listing Regulations (including any statutory modi_cation(s) orre-enactment(s) for the time being in force) the process for evaluation of the annualperformance of the Directors Board and Committees was carried out.

Regulation 17 of the Listing Regulations mandates that the Board shall monitor andreview the Board evaluation framework. The Companies Act 2013 states that a formal annualevaluation needs to be made by the Board of its own performance and that of its Committeesand individual Directors.

The evaluation of all Directors the Board and Committees as a whole was conductedbased on the criteria and framework adopted by the Board. The evaluation process has beenexplained in the Corporate Governance Report section in this annual report.

10. Training of Independent Directors:

Your Company's Independent Directors are highly quali_ed and have been associated withcorporate and business organizations. They understand Company's business and activitiesvery well however pursuant to Regulation 4 of the Listing Regulations the Company hasshown all the Independent Directors Company's business and manufacturing activities andwere also introduced to Company's staff.

11. Declaration by Independent Directors:

All Independent Directors have given declarations that they meet the criteria ofindependence as prescribed under the provisions of the Companies Act 2013 and Regulation16(1)(b) of the Listing Regulations.

12. Number of Board and Committee Meetings:

Pursuant to Section 134(3)(b) details of Board Meetings held during the year are givenin the report on Corporate Governance which forms part of this annual report.

During the year six board meetings and four audit committee meetings were held detailsof which are given in the Corporate Governance report. The intervening gap between themeetings was within the period prescribed under the Companies Act 2013.

A separate meeting of Independent Directors pursuant to Section 149(7) read withSchedule VI of the Companies Act 2013 and Regulation 25 was held on 07 February 2020.

13. Policy on Directors appointment and Remuneration and other details:

Company's policy on Directors appointment and remuneration and other matters providedin Section 178(3) of the Act has been disclosed in Corporate Governance report whichforms part of this annual report.

14. Director's Responsibility Statement:

In accordance with the provisions of Section 134(5) of the Companies Act 2013 yourDirectors con_rm that:

a. in the preparation of the annual accounts for the financial year ended 31 March2020 the applicable accounting standards and Schedule III of the Companies Act 2013have been followed and there are no material departures from the same;

b. Directors have selected such accounting policies and applied them consistently andmade judgments and estimates that are reasonable and prudent so as to give a true and fairview of the state of affairs of your Company as on 31 March 2020 and of the Profit andloss of the Company for the financial year ended 31 March 2020;

c. proper and suffiient care has been taken for the maintenance of adequate accountingrecords in accordance with the provisions of the Companies Act 2013 for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities;

d. annual accounts have been prepared on a going concern basis;

e. proper internal financial controls laid down by the Directors were followed by theCompany and that such internal financial controls are adequate and were operatingeffectively; and

f. proper systems to ensure compliance with the provisions of all applicable laws werein place and that such systems were adequate and operating effectively.

15. Auditors:

a. Statutory Audit and Auditors Report:

Board of Directors in their meeting held on 24 May 2019 on the basis ofrecommendations of the Audit Committee and in accordance with the provisions of Section139(1) of the Companies Act 2013 had appointed M/s Manubhai & Shah LLP to act asthe Statutory Auditors of your Company for a second term of _ve years i.e. till theconclusion of the 65th Annual General Meeting. The Company has received certi_cate fromthe Auditors to the effect that the appointment is in accordance with the limits speci_edunder Section 139(9) of the Companies Act 2013.

Auditors Report for the financial year 2019-20 does not contain any quali_cationreservation or adverse remark.

b. Secretarial Audit and Secretarial Audit Report:

In terms of Section 204 of the Companies Act 2013 the Board of Directors at itsmeeting held on 24 May 2019 appointed Ms. Neeta H. Desai of M/s. ND & AssociatesPractising Company Secretary as the Secretarial Auditor to conduct an audit of theSecretarial records for the financial year 2019-20.

Secretarial Audit Report for the financial year 2019-20 is annexed herewith as"Annexure B." The Secretarial Auditors Report does not contain any quali_cationreservation or adverse remark.

16. Particulars of Loans Guarantees and Investments:

Particulars of loans guarantees and investments made by the Company pursuant toSection 186 of the Companies Act 2013 have been disclosed in the financial statementsforming part of this annual report. There are no guarantees issued by the Company.

17. Vigil Mechanism/Whistle Blower Policy:

Board of Directors has formulated a Whistle Blower Policy which is in compliance withthe provisions of Section 177(10) of the Companies Act 2013 and Regulation 22 of theListing Regulations. The Company has a vigil mechanism to deal with fraud andmismanagement if any. The policy is placed on the website of the Company.

18. Safety Health and Environment:

Your Company recognizes its role in health and safety as well as its responsibilitytowards environment and society. In fact your Company's goals are: no accidents noinjuries to people and no damage to environment. Safety and security of personnel assetsand environmental protection are also on top of the agenda of the Company at itsmanufacturing facilities.

Clean environment and sustainable development integrated with the business objective isthe focus of the Company. The projects and activities are planned and designed withenvironment protection as an integral part to ensure a safe and clean environment forsustainable development.

19. Corporate Governance:

In compliance with Regulation 34 of the Listing Regulations a separate report onCorporate Governance along with a certi_cate from M/s. Manubhai & Shah LLP CharteredAccountants con_rming compliance with requirement of corporate governance forms anintegral part of this report.

20. Prevention of Sexual Harassment at Workplace:

As per the requirement of the Sexual Harassment of Women at Workplace (PreventionProhibition & Redressal) Act 2013 read with rules made thereunder your Company hasconstituted Internal Complaints Committee which is responsible for redressal of complaintsrelated to sexual harassment. During the year under review there were no complaintspertaining to sexual harassment.

21. Extract of Annual Return:

Pursuant to Section 134(3)(a) extract of annual return in form MGT- 9 has been annexedherewith as "Annexure C".

22. Particulars of Employees:

Information required under Section 197 of the Companies Act 2013 read with Rule 5 ofthe Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 inrespect of employees of the Company has been annexed herewith as "Annexure D."

23. Conservation of energy technology absorption foreign exchange earnings and outgo:

Your Company is continuously striving to conserve energy in all its businessactivities. During the year under review Company has installed several equipment whichare reducing power consumption by over 20%.

Tower 04 of Nesco IT Park whose construction was completed during the year as a GreenBuilding with LED lightings energy ef_cient designs use of latest power savingtechniques and equipments sustainable site selection etc. will further lead to energyconservation. The Company's foreign exchange earnings during the year was Rs.348.91 lakhsand outgo during the year was Rs.327.66 lakhs.

24. Subsidiaries:

a. Nesco Foundation for Innovation and Development:

Nesco Foundation for Innovation and Development was incorporated on 09 October 2019 asa wholly owned subsidiary of the Company under Section 8.

Nesco Foundation has commissioned Nesco Incubation Centre which is located atIndabrator's Karamsad premises. Goal of the Nesco Incubation Centre is to develop newentrepreneurs.

Nesco Foundation is also in process of obtaining registration under Section 80G andSection 12AA of the Income Tax Act 1961.

b. Nesco Hospitality Private Limited:

A wholly owned subsidiary of your Company earlier operated Food Courts in the NescoComplex.

Pursuant to Section 233 of the Companies Act 2013 the Scheme of Amalgamation of NescoHospitality Private Limited with Nesco Limited as approved by the shareholders of theCompany was approved by ROC on 13 January 2020 and is submitted to the Regional Directorfor approval which is expected shortly.

A separate statement containing the salient features of financial statements ofsubsidiaries of your Company forms part of consolidated financial statements in compliancewith Section 129 and other applicable provisions if any of the Companies Act 2013.

25. Related Party Transactions:

During the financial year 2019-20 your Company has entered into transactions withrelated parties as defined under Section 2(76) of the Companies Act 2013. Alltransactions with related parties were reviewed and approved by the Audit Committee. Allrelated party transactions that were entered were on an arms length basis and were in theordinary course of business.

There are no materially signi_cant related party transactions made by the Company withPromoters Directors Key Managerial Personnel or other designated persons which may havea potential con_ict with the interest of the Company at large.

Form AOC-2 pursuant to Section 134(3)(h) of the Companies Act 2013 read with Rule 8(2)of the Companies (Accounts) Rules 2014 is set out as "Annexure E" to thisReport.

26. Deposits from Public:

The Company has not accepted any deposits from public and as such no amount on accountof principal or interest on deposits from public was outstanding as on the date of thebalance sheet.

27. Business Responsibility Report:

A Business Responsibility Report as per Regulation 34 of the Listing Regulations formspart of this annual report.

28. Indian Accounting Standards:

Your Company has adopted Indian Accounting Standard (Ind AS) noti_ed by MCA and therelevant provision of the Companies Act 2013 and the general circulars issued by theMinistry of Corporate Affairs from time to time. The signi_cant accounting policies whichare consistently applied have been set out in the notes to the financial statements. Inthe preparation of the financial statements _gures of previous year have beenreclassified or regrouped wherever necessary to bring it in line with the IndianAccounting Standard (Ind AS).

29. Consolidated Financial Statements:

The consolidated financial statements of the Company are prepared in accordance withapplicable Ind AS noti_ed by Ministry of Corporate Affairs and form part of this annualreport.

30. Impact of COVID-19 Pandemic:

Coronavirus / COVID-19 pandemic being of global concern we at Nesco are committed todoing all we can to protect the health and wellbeing of our colleagues support staffclients and the communities in which we live and work. Accordingly our Registered andCorporate Of_ce along with our Exhibition Centre were completely closed with effect from25 March 2020.

Due to closure of Exhibition Centre few exhibitions which were scheduled to be heldbetween 25 March 2020 to 31 March 2020 were postponed to a future date. This has alsoimpacted our Foods division where majority of the clients are the exhibition organisersexhibitors and visitors. COVID-19 has also impacted Indabrator division which could notdispatch large value of ready equiptments.

Five Exhibition Halls have been provided to the Municipal Corporation of Greater Mumbai(MCGM) as we continue to _ght the COVID – 19.

Nesco Foods Division is providing food to organizations catering to the needy people atdifferent places.

31. Appreciation:

Your Directors wish to convey their appreciation for the support extended by theshareholders clients and the employees of the Company.

For and on behalf of the Board of Directors

Sumant J. Patel

Executive Chairman

DIN: 00186976

Mumbai

19 May 2020

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