nesco ltd Directors report

Dear Members,

Board of Directors have pleasure in presenting 64 th annual report of your Company for the financial year ended 31 March 2023.

1. Financial Results:

(Rs. in lakhs)

	Consolidated		Standalone
Particulars
	2022-23	2021-22	2022-23	2021-22
Income	60,925.69	38,241.21	60,911.81	38,216.37
Profit before depreciation and tax	39,975.84	25,476.55	39,974.45	25,480.34
Depreciation	3,278.82	2,830.55	3,277.42	2,829.16
Profit Before Taxes	36,697.02	22,646.00	36,697.03	22,651.18
Tax Expenses	7,633.39	3,728.88	7,633.39	3,728.94
Net Profit after Taxes	29,063.63	18,917.12	29,063.64	18,922.24
Opening Balance of Retained Earnings	50.00	50.00	50.00	50.00
Amount available for appropriations:	29,109.02	19,011.52	29,109.03	19,016.64
Appropriations:
1. Dividend	2,113.80	2,113.80	2,113.80	2,113.80
2. Transfer to General Reserve	26,945.22	16,847.72	26,945.23	16,852.84
Closing Balance of Retained Earnings	50.00	50.00	50.00	50.00
Earning Per Share (Basic) (in )	41.25	26.85	41.25	26.86
Earning Per Share (Diluted) (in )	41.25	26.85	41.25	26.86

2. Review of Operations:

Your Company achieved a consolidated turnover of Rs.60,925.69 lakhs as compared to previous year consolidated turnover of Rs.38,241.21 lakhs. Consolidated profit before tax was at Rs.36,697.02 lakhs as compared to Rs.22,646.00 lakhs in the financial year 2021-22. Consolidated earnings per share amounted to Rs.41.25 (previous year 26.85). Companys reserves were Rs.1,95,050.13 lakhs (previous year Rs.1,68,364.82 lakhs).

3. Dividend:

In line with the Dividend Distribution Policy of the Company, your Directors are pleased to recommend a final dividend of 225% per equity share amounting to Rs.4.50 per equity share of 2 each (Rs.3.00 per equity share in the previous year) for the financial year ended 31 March 2023. The dividend is subject to the approval of members at the ensuing Annual General Meeting (AGM) and shall be subject to deduction of income tax at source.

Dividend Distribution Policy

As per Regulation 43A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, (Listing Regulations) the Dividend Distribution Policy is available on the Companys website at https://www.nesco.in/DividendDistributionPolicy.pdf

4. Management Discussion and Analysis:

Pursuant to Regulation 34 of the Listing Regulations, the Management Discussion and Analysis Report for the year under review, has been presented in a separate section, forming part of this report.

5. Companys Performance: i) Nesco IT Park:

During the year, revenue from IT Park increased by 11.69% to Rs.29,502.70 lakhs (previous year Rs.26,415.15 lakhs). 82% of Tower 03 and 97% of Tower 04 are occupied by our clients. Hall 3 provides Incubation Centre facility; and a Child Care Centre for children of employees working in Nesco Center.

Our IT Towers accommodate worlds leading multinationals such as HSBC, KPMG, PWC, MSCI, BlackRock, Here Solutions, Framestore, Priceline, WeWork, Apollo Global and several others.

During the financial year, your Company inaugurated 3 restaurants viz a) Foo, b) Smoke House Deli, c) Socials and a Food Court in Tower 04 of Nesco IT Park.

ii) Bombay Exhibition Center:

a. Guest Exhibitions and Events:

During the year, the facility was available for the period from 01 July 2022 to 31 March 2023. During the period, 01 April 2022 to 30 June 2022, the facility continued to serve the citizen as a covid care centre by MCGM. In the nine months period, 83 guest exhibitions and 10 guest events were held at our premises, which were organized by the existing and new clients. Income from the Exhibition Center for the year was Rs.14,976.00 lakhs compared to Rs.1,618.33 lakhs in the previous year, there was an increase in revenue by 825.40 %.

b. Nesco Events:

During the period from 01 April 2022 to 31 March 2023, 10 events were held at our premises, out of which 5 events were organized by Nesco and 5 were in strategic alliance with our clients. Income from the events during the year was Rs.606.63 lakhs.

iii) Nesco Foods:

During the year, your Company commenced operations of its Food Court and Restaurants which operates as Restaurants and Outlets a subdivision. The existing business i.e., Exhibitions and Banquets and its flagship offering The Grande is now a preferred destination for events, socials, weddings, gatherings, meetings, etc. by corporates and others in the vicinity.

Nesco Foods caters to the needs of visitors to exhibitions and conventions and employees working in Nesco IT Park. The kitchen facility is fully operational.

a. Exhibitions and Banquets (E&B):

Income for the year from the Exhibitions and Banquets section of Nesco Foods division increased by 225.55% to 3,695.85 lakhs as compared to Rs.1,135.27 lakhs during the previous year.

Nesco Foods has focused on outdoor catering for corporate and social events and is working on retail presence through its brands situated in Food Court i.e., Indic and Daily Deli.

During the year, Nesco Foods (E&B) have catered and serviced 55 social events and 90 corporate events organized at various Halls located at Nesco premises and 70 events organized at IT Towers.

b. Restaurants and Outlets (R&O):

Income during the year from the Restaurants and Outlets section of Nesco Foods division was Rs.1,166.71 lakhs

During the year, Company inaugurated 3 Restaurants and a Food Court in Tower 04 of Nesco IT Park. We also launched two new in-house brands Dress Circle and Zuo.

iv) Indabrator:

During the year under review, income from Indabrator increased by 1.78% to Rs.4,652.27 lakhs as compared to Rs.4,571.12 lakhs during the previous year.

During the year, Indabrator received 59 orders out of which 37 orders were completed and dispatched.

v) Investments and Other Income:

Income from investments and other income was Rs.6,311.65 lakhs (previous year Rs.4,476.50 lakhs), increase by 41.00%.

6. Finance:

Your Company had no debt as on 31 March 2023. Companys liquid resources (fixed maturity plans, mutual funds, cash and bank balances) increased by 37.74% to Rs.1,17,879.38 lakhs from Rs.85,578.99 lakhs.

Your Company has neither accepted any deposits from the public during the year nor are any deposits outstanding for repayment.

7. Internal Financial Controls related to Financial Statements:

Internal financial control over financial reporting have been designed to provide reasonable assurance with regards to recording and providing reliable financial information and complying with applicable accounting standards.

Your Company has well laid out policies on financial reporting, asset management, adherence to Management policies and also on promoting compliance of ethical and well-defined standards.

Your Company follows budgetary control and standard costing system. Moreover, the management team regularly meets to monitor goals and results and scrutinizes reasons for deviations in order to take necessary corrective steps.

The current system of internal financial controls is aligned with the statutory requirements. The internal financial controls are adequate and operating effectively.

Your Company periodically tracks all amendments to Indian Accounting Standards and makes changes to the underlying systems, processes and financial controls to ensure adherence to the same. Corporate accounts function is actively involved in designing large process changes as well as validating changes to IT systems that have a bearing on the books of account. All resultant changes to the policy and impact on financials are disclosed after due validation with the Audit Committee.

The Audit Committee which meets at regular intervals also reviews the internal control systems with the Management and the internal auditors. The internal audit is conducted at all locations of the Company and covers all key areas. All audit observations and follow up actions are discussed with the Management as also the Statutory Auditors and the Audit Committee reviews them regularly.

8. Corporate Social Responsibility (CSR):

Your Company has undertaken various projects during the year in the field of promotion of Education and Special Education and in promoting Health Care and Preventive Health Care. The Company is evaluating and will take up more

CSR activities in different areas. The CSR Policy of the Company is available on the website of the Company at https://www.nesco.in/CorporateSocialResponsibilityPolicy.pdf

Annual report on CSR activities undertaken during the financial year ended 31 March 2023 in accordance with Section 135 of the Companies Act, 2013 (Act) and Companies (Corporate Social Responsibility Policy) Rules, 2014 (including any statutory modification(s) or re-enactment(s) thereof for the time being in force) is set out in “Annexure A” attached to this report.

9. Directors and Key Managerial Personnel:

Mrs. Sudha S. Patel, Non-executive Director, retires by rotation at the ensuing annual general meeting pursuant to the provisions of Section 152 of the Companies Act, 2013 read with the Companies (Appointment and Qualification of Directors) Rules, 2014 and articles of association of your Company and being eligible has offered herself for reappointment. Her brief resume and other related information have been detailed in the annexure to the notice.

Mr. Manu M. Parpia, Independent Director ceased to be anIndependent Director on account of expiry of his term on 09 May 2022. The Company is evaluating and undertaking appropriate steps to re-appoint and regularize the reappointment of Mr. Manu M. Parpia as an Independent Director.

Mr. Krishna S. Patel, Chairman and Managing Director will be completing his tenure of five years on 30 June 2023. He being eligible for re-appointment, was re-appointed on 24 May 2023 by the Board of Directors on the recommendation of Nomination and Remuneration Committee. His re-appointment is subject to approval of shareholders.

Mr. Krishna S. Patel, Chairman and Managing Director, Mr. Dipesh R. Singhania, Chief Financial Officer and Ms. Jinal J. Shah, Company Secretary and Compliance Officer of the Company are the Key Managerial Personnel of the Company.

10. Board Evaluation:

Pursuant to the provisions of the Companies Act, 2013 read with the rules issued thereunder and the Listing Regulations (including any statutory modification(s) or re-enactment(s) for the time being in force), the process for evaluation of the annual performance of the Directors, Board and Committees was carried out.

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

The Independent Directors at their separate meeting reviewed the performance of Non-Independent Directors and the Board as a whole, Chairperson of the Company after taking into account the views of Executive Director and Non-executive Directors, the quality, quantity and timeliness of flow of information between the Management and the Board that is necessary for the Board to effectively and reasonably perform their duties.

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

11. Training of Independent Directors:

Your Companys Independent Directors are highly qualified and have been associated with corporate and business organizations. They understand Companys business and activities very well, however, pursuant to Regulation 4 of the Listing Regulations, the Independent Directors were given a brief about the Companys business processes, manufacturing activities and were also introduced to the employees of the Company.

12. Declaration by Independent Directors:

All Independent Directors have submitted requisite declarations confirming that they (i) continue to meet the criteria of independence as prescribed under Section 149(6) of the Act and Regulation 16(1)(b) of the Listing Regulations and are independent; and (ii) continue to comply with the Code of Conduct laid down.

The Directors have further confirmed that they are not debarred from holding the office of director under any SEBI order or any other such authority.

13. Number of Board and Committee Meetings:

Pursuant to Section 134(3)(b), details of board meetings held during the year are given in the report on Corporate Governance which forms part of this Annual Report.

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

A separate meeting of Independent Directors, pursuant to Section 149(7) read with Schedule VI of the Companies Act, 2013 and Regulation 25 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 was held on 09 February 2023.

The meetings of the Board are scheduled at regular intervals to decide and discuss on business performance, policies, strategies and other matters of significance.

The schedules of the meetings are circulated in advance, to ensure proper planning and effective participation in meetings. In certain exigencies, decisions of the Board are also accorded through Circular Resolution.

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

The salient features of the Nomination and Remuneration Policy of the Company and other matters provided in Section 178(3) of the Act are set out in the Corporate Governance Report which forms part of this Annual Report.

The said policy of the Company, inter alia, provides that the Nomination and Remuneration Committee shall formulate the criteria for appointment and re-appointment of directors on the Board of the Company and persons holding senior management positions in the Company, including their remuneration and other matters as provided under Section 178 of the Act and Listing Regulations. The Nomination and Remuneration Policy is available on the website of the Company at https://www.nesco.in/NominationandRemunerationPolicy.pdf

The remuneration paid to the directors, key managerial personnel and senior management is in accordance with the Nomination and Remuneration Policy formulated in accordance with Section 178 of the Act and Regulation 19 of the Listing Regulations.

15. Directors Responsibility Statement:

In accordance with the provisions of Section 134(5) of the Companies Act, 2013, your Directors confirm that:

a. in the preparation of the annual accounts for the financial year ended 31 March 2023, the applicable Indian accounting standards and schedule III of the Companies Act, 2013, have been followed and there are no material departures from the same;

b. the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of your Company as on 31 March 2023 and of the profit and loss of the Company for the financial year ended 31 March 2023;

c. proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

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

e. proper internal financial controls laid down by the Directors were followed by the Company and that such internal financial controls are adequate and were operating effectively; and, f. proper systems to ensure compliance with the provisions of all applicable laws were in place and that such systems were adequate and operating effectively.

16. Auditors: a. Statutory Audit and Auditors Report:

The Board of Directors in their meeting held on 24 May 2019, on the basis of recommendation of the Audit Committee and in accordance with the provisions of Section 139(1) of the Companies Act, 2013, had appointed M/s Manubhai & Shah LLP, to act as the Statutory Auditors of your Company for a second term of five years i.e., till the conclusion of the 65 Annual General Meeting. The Company had received certificate from the Auditors to the effect that the appointment th is in accordance with the limits specified under Section 139(9) of the Companies Act, 2013.

M/s. Manubhai & Shah LLP has confirmed that they are not disqualified from continuing as Auditors of the Company.

The Auditors have issued an unmodified opinion on the Standalone and Consolidated Financial Statements for the financial year ended 31 March 2023. The Auditors Report for the financial year ended 31 March 2023 on the Standalone and Consolidated Financial Statements of the Company forms a part of this Annual Report.

The Auditors Report for the financial year 2022-23, does not contain any qualification, reservation or adverse remark.

b. Secretarial Audit and Secretarial Audit Report:

In terms of Section 204 of the Companies Act, 2013, the Board of Directors on the recommendation of the Audit Committee at its meeting held on 25 May 2022 had appointed Ms. Neeta H. Desai of M/s. ND & Associates, Practising Company Secretary, as the Secretarial Auditor to conduct an audit of the Secretarial records for the financial year 2022-23.

The Secretarial Audit Report for the financial year 2022-23 is annexed herewith as “Annexure B”. The Secretarial Auditors Report does not contain any qualification, reservation or adverse remark.

c. Cost Auditors and Cost Audit Report:

Pursuant to the provisions of Section 148 and other applicable provisions, if any, of the Companies Act, 2013 read with Rule 3 of the Companies (Cost Records and Audit) Rules, 2014, the Board of Directors on the recommendation of the Audit Committee at its meeting held on 25 May 2022 appointed M/s. Y. S. Thakar & Co. (Firm Registration No. 000318) as the Cost Auditor to conduct the audit of Companys cost records for the financial year ended 31 March 2023 maintained by the Company in respect of Indabrator division.

The Cost Audit Report for the financial year 2022-23 does not contain any qualification, reservation or adverse remark.

The Board of Directors of the Company, on the recommendation made by the Audit Committee, have appointed M/s. Y. S. Thakar & Co. (Firm Registration No. 000318) as the Cost Auditors of the Company to conduct the audit of Companys cost records for the financial year ended 31 March 2024 maintained by the Company in respect of Indabrator division.

M/s. Y. S. Thakar & Co., being eligible, have given their consent to act as the Cost Auditors of the Company for the financial year 2023-24.

In accordance with the provisions of Section 148 of the Act read with the Companies (Audit and Auditors) Rules, 2014, since the remuneration to be paid to the Cost Auditor for financial year 2023-24 is required to be ratified by the members, the Board of Directors recommends the same for approval by members at the ensuing AGM.

17. Particulars of Loans, Guarantees and Investments:

The particulars of loans, guarantees and investments made by the Company pursuant to Section 186 of the Companies Act, 2013 have been disclosed in the financial statements forming part of this annual report. There are no guarantees issued by the Company.

18. Vigil Mechanism and Whistle Blower Policy:

The Board of Directors has formulated a Whistle Blower Policy which is in compliance with the provisions of Section 177(10) of the Companies Act, 2013 and Regulation 22 of the Listing Regulations. The Company has a vigil mechanism to deal with fraud and mismanagement, if any. The policy is placed on the website of the Company https://www.nesco.in/WhistleBlowerPolicy.pdf

The Company believes in the conduct of the affairs of its constituents in a fair and transparent manner by adopting the highest standards of professionalism, honesty, integrity and ethical behaviour.

Pursuant to Section 177(9) of the Companies Act, 2013 and Regulation 22 of the Listing Regulations, a Whistle Blower and Vigil Mechanism Policy was established for directors and employees to report to the management instances of unethical behaviour, actual or suspected, fraud or violation of the Companys code of conduct or ethics policy, genuine concerns, to provide for adequate safeguards against victimization of persons who use such mechanism and make provision for direct access to the Chairperson of the Audit Committee.

19. Risk Management:

The Company endeavors to continually sharpen its Risk Management systems and processes in line with a rapidly changing business environment. The Company, through its risk management process, aims to contain the risks within its risk appetite. There are no risks which in the opinion of the Board threaten the existence of the Company.

The Board of Directors of the Company on the recommendation of the Risk Management Committee has developed risk management policy for the Company which articulates the Companys approach to address the uncertainties in its endeavor to achieve its stated and implicit objectives.

The Board of Directors has constituted a Risk Management Committee (RMC) which oversees the Enterprise Risk Management (“ERM”) process periodically.

The Audit Committee has additional oversight in the area of financial risks and controls. The major risks identified by the businesses and functions are systematically addressed through mitigating actions on a continuing basis.

20. Safety, Health and Environment:

Your Company recognizes its role in health and safety, as well as its responsibility towards environment and society. In fact, your Companys goals are: no accidents, no injuries to people and no damage to environment. Safety and security of personnel, assets and environmental protection are also on top of the agenda of the Company at its manufacturing facilities.

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

21. Corporate Governance:

In compliance with Regulation 34 of the Listing Regulations, a separate report on Corporate Governance along with a certificate from M/s. Manubhai & Shah LLP, Chartered Accountants confirming compliance with requirement of corporate governance forms an integral part of this report.

22. Prevention of Sexual Harassment at Workplace:

As per the requirement of the Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013, read with rules made thereunder, your Company has constituted Internal Complaints Committee which is responsible for redressal of complaints related to sexual harassment. During the year under review, there were no complaints pertaining to sexual harassment.

At Nesco Limited, all employees are of equal value. There is no discrimination between individuals at any point on the basis of race, colour, gender, religion, political opinion, national extraction, social origin, sexual orientation or age. All employees (permanent, contractual, temporary and trainees) are covered under this policy.

23. Annual Return:

The Annual Return of the Company for the financial year ended 31 March 2023 in Form MGT 7 in accordance with Section 92(3) of the Act read with the Companies (Management and Administration) Rules, 2014, is available on the website of the Company athttps://www.nesco.in/financials.

24. Particulars of Employees:

The information required under Section 197 of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, in respect of employees of the Company has been annexed herewith as “Annexure C.”

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

Information on energy, technology absorption, foreign exchange earnings and outgo forming part of this Annual Report has been annexed herewith as “Annexure D.”

26. Subsidiaries:

a. Nesco Foundation for Innovation and Development:

Nesco Foundation for Innovation and Development being a Section 8 Company, is working towards enhancing the quality of life of the poor and needy sections of society by providing education; promoting women and rural empowerment; fulfilling the requirements of schools in the rural areas; setting up and managing incubation and research centers for promotion of innovations and technologies; promoting healthcare centres and allied services which forms part of the Corporate Social Responsibility (CSR) activities as per Schedule VII of the Act.

During the year, Company received Rs.17.31 lakhs and contributed Rs.8.39 lakhs towards the CSR activities.

b. Nesco Hospitality Private Limited:

Nesco Hospitality Private Limited, erstwhile wholly owned subsidiary of your Company had gone under voluntary liquidation pursuant to the provisions of Section 59 of Insolvency and Bankruptcy Code, 2016 and other applicable provisions of all other applicable statutes, read with applicable regulations of Insolvency and Bankruptcy Board of India (Voluntary Liquidation Process) Regulations, 2017 with effect from 17 January 2022.

Mr. Ajay Kumar, Insolvency Professional registered with Insolvency and Bankruptcy Board of India was appointed as Liquidator of the Company for this process. The liquidator has completed the process of realization of assets and liabilities.

Final Report is being filed with Registrar of Companies (ROC) and Insolvency and Bankruptcy Board of India (IBBI).

The dissolution will be completed upon receipt of approval from ROC.

A separate statement containing the salient features of financial statements of subsidiary of your Company prescribed in Form AOC-1 forms part of consolidated financial statements in compliance with Section 129 and other applicable provisions, if any, of the Act.

In accordance with Section 136 of the Act, the audited financial statements, including the consolidated financial statements and related information of the Company and the financial statements of each of the subsidiary companies, are available on our website at https://www.nesco.in/financials.

The Companys Policy for determining material subsidiaries may be accessed on the website of the Company at https://www.nesco.in/PolicyfordeterminingMaterialSubsidiaries.pdf

Your Company does not have a material subsidiary.

27. Related Party Transactions:

During the financial year 2022-23, your Company has entered into transactions with related parties as defined under Section 2(76) of the Companies Act, 2013. All transactions with related parties were reviewed and approved by the Audit Committee. All related party transactions that were entered were on an arms length basis and were in the ordinary course of business.

There are no materially significant related party transactions made by the Company with Promoters, Directors, Key Managerial Personnel or other designated persons which may have a potential conflict 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 this Report.

28. Deposits from Public:

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

29. Business Responsibility and Sustainability Report:

A Business Responsibility and Sustainability Report as per Regulation 34 of the Listing Regulations forms part of this Annual Report.

30. Indian Accounting Standards:

Your Company has adopted Indian Accounting Standard (Ind AS) notified by MCA and the relevant provision of the Companies Act, 2013 and the general circulars issued by the Ministry of Corporate Affairs from time to time. The significant accounting policies which are consistently applied have been set out in the notes to the financial statements.

31. Appreciation:

Your Directors wish to convey their appreciation for the support extended by the shareholders, clients, employees and other stakeholders of the Company.