N K Industries Ltd Directors Report.

To,

The Members,

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

FINANCIAL RESULTS

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

The financial highlights are depicted below:

PARTICULARS

Standalone

Consolidated

Year Ended 31.03.2020 Year Ended 31.03.2019 Year Ended 31.03.2020 Year Ended 31.03.2019
Revenue from operations 9735.62 49,631.11 11489.84 51541.01
Other Income 94.54 427.41 110.71 439.75
Total Income 9830.16 50,058.52 11600.55 51980.77
Total Expenditure 10340.13 52866.72 12118.47 54686.46
Profit / (Loss) before Finance Cost, Depreciation & Amortization and Tax Expenses (1082.19) (2132.31) (1122.31) (3423.78)
Finance Cost 0.82 4.48 0.89 5.64
Depreciation & Amortization 571.39 671.41 603.50 712.45
Profit Before Tax (509.98) (2808.20) (517.92) (2705.69)
(i) Current Tax - - 10.25 49.00
(ii) Deferred Tax (109.53) 879.68 99.51 (895.30)
(iii) Earlier period tax (written back) - - - 5.55
Total Tax (i + ii) (109.53) 879.68 109.76 840.74
Profit after Tax (619.51) (1928.52) (626.93) (1864.95)
Other Comprehensive Income (24.46) (2.11) (24.46) (2.11)
Items that will not be reclassified to profit and loss 7.12 0.66 7.12 0.66
Total Comprehensive Income (636.84) (1929.97) (644.26) (1866.41)

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

PERFORMANCE HIGHLIGHTS

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

REVENUE STANDALONE

Our total income on a Standalone basis decreased to 9735.62 lacs from 49,631.11 lacs in the previous year. Net loss for the year decreased from 1929.97 lacs to 636.84 lacs in the current year.

REVENUE CONSOLIDATED

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

STATE OF COMPANYS AFFAIRS AND FUTURE OUTLOOK

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

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

Further as a consequence of such agreement, the Company was able to pay for its periodic administrative and other invariable cost even at the times of lockdown emerged due to the global threat of covid pandemic.

CHANGE IN NATURE OF BUSINESS, IF ANY

There was no change in the nature of business activity of the Company during the year under review.

SUBSIDIARY/ JOINT VENTURE COMPANIES

Your Company has three wholly owned subsidiaries as on 31st March, 2020. The Board of Directors also reviewed the affairs of the subsidiary companies. In accordance with the provisions of Section 129(3) of the Companies Act, 2013, we have prepared Consolidated Financial Statements of the Company and its Subsidiaries, which forms part of this Annual Report. The accounts of Joint Venture i.e. AWN Agro Private Limited has not been consolidated for the current year. The reason for non-consolidation is due to discontinuation of control on the management and financial affairs of the Joint Venture Company.

Further a statement containing the salient features of the financial statements of our Subsidiary Companies and Joint Venture Company in the prescribed format AOC-1 is appended as "Annexure-A" to the Boards report.

SHARE CAPITAL

The paid up Equity Share Capital of the Company as at March 31,2020 stood at? 6,00,99,000. During the year under review, the Company has neither issued any shares with differential voting rights nor has granted any stock options or sweat equity. As on March 31, 2020, none of the Directors of the Company hold any instruments convertible into equity shares of the Company.

DIVIDEND AND RESERVES

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

FIXED DEPOSITS

The Company has neither invited nor accepted any deposits within the meaning of Section 73 of the Companies Act, 2013 and the Companies (Acceptance of Deposits) Rules, 2014 from the public during the year ended March 31,2020. There were no unclaimed or unpaid deposits as on March 31,2020.

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

All related party transactions entered into during FY 2019-20 were on an arms length basis and in the ordinary course of business and were in compliance with the applicable provisions of the Companies Act, 2013 (the Act) and the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015.

All related party transactions are placed before the Audit Committee for review and approval of the Committee and also to the Board for approval. The policy on materiality of related party transactions and dealing with related party transactions as approved by the Board is available on the Companys website.

The details of related party transactions entered into by the Company are provided in Form AOC-2 given as "Annexure B" of Directors Report. There are no materially significant related party transactions made by the Company with Promoters, Key Managerial Personnel or other designated persons which may have potential conflict with interest of the Company at large. The Company has developed a Related Party Transactions Policy through Standard Operating Procedures for the purpose of identification and monitoring of such transactions.

GLOBAL PANDEMIC - COVID-19

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

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

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

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

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

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

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

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

All the mandatory provisions of Corporate Governance as prescribed in Regulations 17 to 27 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 are not applicable to the Company as it does not fall under the criteria of its applicability pursuant to Regulation 15 of SEBI Listing Regulations.

MANAGEMENT DISCUSSION AND ANALYSIS REPORTS

In terms of the Regulation 34(e) read with Schedule V of SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015, MDA covering details of Risks and Concerns, Internal Control Systems and their Adequacy, Discussion on Financial Performance with respect to Operational Performance etc. for the year under review is set out in this Annual Report as "Annexure C".

PARTICULARS OF EMPLOYEES

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

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

BOARD DIVERSITY

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

The Board of Directors has also adopted a policy on Board Diversity which sets out the approach to diversify the Board of Directors. The Board Diversity Policy is available at our website: http://www.nkindustriesltd.com/governance.html

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS:

The Company has not given any loans or guarantees during the year under review within the purview of section 186 of the Companies Act, 2013. The details of the investments made by Company are given in the notes to investments in the financial statements.

DECLARATION BY INDEPENDENT DIRECTORS

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

BOARD EVALUATION

The Companies Act, 2013 states that the formal annual evaluation needs to be made by Board of its own performance and that of its Committees and individual Directors, Schedule IV of the Companies Act, 2013 states that performance evaluation of the Independent Directors shall be done by the entire Board of Directors, excluding the director being evaluated.

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

The Board approved the evaluation results as allotted by the Nomination and remuneration committee. The Companies Act, 2013 states that the formal annual evaluation needs to be made by board of its own performance.

APPOINTMENT AND RESIGNATION OF DIRECTORS AND KEY MANAGERIAL PERSONNEL

In accordance with the provisions of Section 152(6) of the Companies Act and Articles of Association, Mr. Hasmukhbhai Kacharabhai Patel (DIN: 06587284) Whole Time Director of the Company, shall retire by rotation and being eligible offers himself for reappointment at the ensuing Annual General Meeting of the Company.

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

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

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

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

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

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

BOARD MEETINGS/ DETAILS OF OTHER MEETINGS

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

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

The Board met 5 times during the year under review viz. on 18th May,2019, 14th August,2019, 28th August, 2019, 9th November, 2019 and 25th January,2020. The Board held one meeting in each quarter and the gap between any two meetings was not more than one hundred and twenty days as prescribed under the Companies Act, 2013.

Details of the Directors, their positions, attendance record at Board meetings and last Annual General Meeting held and convened during the financial year are as follows:

Sr. No. Name of directors Designation Number of Meetings Attended / Total Meetings held during the year 2019-20 Attended AGM on 21st September,2019
1. Mr. Nimish K. Patel Chairman and Managing Director 4/5 V
2. Mr. Nilesh K. Patel Managing Director 5/5 V
3. Mr. Hasmukh K. Patel Whole Time Director 5/5 V
4. Mr. Bhawani Singh Yadav* Independent Director 3/5 V
5. Ms. Mridu Sharma* Independent Women Director/ Additional Director 2/5 V
6. Mr. Tushar H. Doshi* Independent Director 3/5 V
7. Mr. Snehal Patel* Additional Director 2/5 -

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

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

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

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

INDEPENDENT DIRECTORS MEETING

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

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

COMMITTEES MEETING

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

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

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

A. AUDIT COMMITTEE AND ITS MEETINGS:

Composition of Audit Committee was as per following:

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

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

Constitution of Audit Committee was as per the following:

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

B. NOMINATION AND REMUNERATION COMMITTEE AND ITS MEETINGS:

Composition of Nomination and Remuneration Committee was as per following:

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

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

Constitution of Nomination and Remuneration Committee was as per the following:

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

C. STAKEHOLDERS RELATIONSHIP COMMITTEE AND ITS MEETING:

<p >Composition of Stakeholders Relationship Committee was as per following:

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

Stakeholders Relationship Committee met 5 times during the year under review on 20th May, 2019, 14th August,2019, 28th August, 2019, 9th November, 2019 and 25th January,2020.

Constitution of Stakeholders Relationship Committee was as per the following:

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

D. OTHER INFORMATION RELATED TO BOARD COMMITTEES:

Name of the Committee Highlights of Duties, Responsibilities and Activities
Audit Committee • All recommendations made by the audit committee during the year were accepted by the Board.
• The Company has adopted the Vigil mechanism for Directors and employees to report concerns about unethical behavior, actual or suspected fraud, or violation of the Companys Code of Conduct and Ethics.
• In accordance with the requirements of the Companies Act, 2013, the Company has formulated policies on related party transactions. The policies, including the Vigil Mechanism Policy, are available on our website:- http://www.nkindustriesltd. com/Governance.html
Nomination and Remuneration Committee • The committee oversees and administers executive compensation, operating under a written charter adopted by our Board of Directors.
• The committee has designed and continuously reviews the compensation program for our Directors with business objectives and to link compensation with the achievement of measurable performance goals.
• The nomination and remuneration committee has framed the nomination and remuneration policy. The said policy is available on the website of the Company http://www.nkindustriesltd.com/Governance.html
Stakeholders Relationship Committee • The Committee reviews and ensures to redress investor grievances.
• The Committee noted that all the grievances of the shareholders during the year have been resolved.
Corporate Social Responsibility Committee* • The Board has laid out the Companys policy on Corporate Social Responsibility (CSR) but due to inadequate profit, the Company was unable to carry out any activities.
• The CSR policy is available on our Companys website http://www.nkindustriesltd. com/Governance.html

*Note: Corporate Social Responsibility Committee dissolved w.e.f. 19th April, 2018.

NOMINATION AND REMUNERATION POLICY

The Policy of the Company on Directors appointment and remuneration including criteria for determining qualifications, positive attributes, Independency of a Director and other matters provided under sub-section (3) of section 178 of The Companies Act, 2013, adopted by the board is available on the website i.e. http://www. nkindustriesltd.com/governance.html.

We affirm that the remuneration paid to the Directors is as per the term laid out in the Nomination and remuneration policy of the company.

DIRECTORS RESPONSIBILITY STATEMENT

To the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors make the following statements in terms of Clause (c) of Sub-Section (3) of Section 134 of the Companies Act, 2013, which states that—

a) in the preparation of the annual accounts for the year ending March 31,2020, the applicable accounting standards have been followed along with proper explanation relating to material departures;

b) the directors had 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 the company at the end of the financial year and of the profit and loss of the company for that period;

c) the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets 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;

e) the Directors have laid down Internal Financial Controls to be followed by the Company and that such Internal Financial Controls are adequate and were operating effectively; and

f) The Directors have devised proper system to ensure compliance with the provisions of all applicable laws and that such system were adequate and operating effectively.

AUDITORS

i. Statutory Auditors

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

There are certain qualifications made by the Auditors in their Standalone Report for which the Board of Directors hereby give its comments/explanation as under:

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

II. With regard to search and seizure carried out by the Directorate of Enforcement, Government of India on 30.05.2018 on the group company NKPPL, the Company along with group Company and Promoters challenged the show cause notice issued by the adjudicating authority New Delhi, before the Honble High Court of Delhi and the Honble

High Court has set aside the show cause notice. Further against the attachment of the assets of the Company, the Company has issued fresh show cause dated 30/08/2018 and the Company has filed an appeal before the PMLA Applellate Tribunal, Delhi.

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

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

1. With regard to Note 32 to the Standalone Ind AS Financial Statements and according to the same, we would hereby like to reply that though the net worth of the company is negative the company is making sincere efforts for the revival of the business of the company whereby it is making continues efforts to increase the volumes as well as to generate comprehensive margins and thereby revive the business and therefore, no provision for impairment in the fair value of the investment made in the said subsidiary companies has been made in the books of accounts.

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

3. With respect to the survey carried out u/s 133 of the income tax act in 1999 and in response to the orders passed by 1st Appellate authority and 2nd Appellate Authority subsequently with respect to survey proceedings the company preferred Application to the Honble High Court of Gujarat which was disposed off by the Honble Court vide its order dated 20/06/2016 after giving relief on certain ground and dismissing certain ground. The Said order was challenged on before the Honble Supreme Court which was dismissed by the Honble Supreme Court vide order dated 16th January, 2017. The company has already provided for interest and tax in earlier years towards the said demand. It is further stated that the Order of Honble Gujarat High Court is pending to be received from the department. Once the order is passed the net effect will be a refund to the company and hence there is no need to make any further provision in the books of accounts.

4. The demand raised by the Sales Tax Authorities is explained vide Note No. 40. The said sales tax demand is disputed in view of the fact that the Company has preferred an appeal before the appellate authority and the Company has shown the said liability as Contingent Liability under Note No. 27 of the notes forming part of the Accounts. In this view the Company has not made any provision for the said disputed liability.

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

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

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

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

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

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

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

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

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

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

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

6. Income tax department has attached the properties as mentioned in the Emphasis of Matter against the outstanding tax demands pertaining to FY 2007-08 to FY 2012-13. With respect to the said outstanding demands it is stated that all the demands are disputed demands and has been challenged by the company at various appellate forums. The subsidiary company is hopeful of obtaining favourable order from the appellate authorities. On receipt of the favorable order the demand would be deleted and attachment shall vacate.

7. In view of the fact that the Management of our Company do not have any control in the Joint Venture viz. AWN Agro Pvt. Ltd and as per the exemption provided under the provisions of the Companies Act, 2013 and the Accounting standard 21 & 27, consolidation of the accounts of AWN Agro Pvt. Ltd. is not required with our company.

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

Clarification with regard to the remark in point no. (i)(c) of the CARO (Report) annexed with the Auditors Report on standalone financial statements.

i. With reference to the said remark it is to be clarified that the Company is in process of transferring the properties as mentioned by the Auditors in their report in its name.

i. Secretarial Auditor

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

The Report on the Secretarial Audit for the year ended 31st March, 2020 is annexed herewith as "Annexure E" to this Boards Report. There were no qualifications/ observations in the report.

iii. Cost Auditors

Pursuant to Section 148 of the Companies Act, 2013 read with the Companies (Cost Records and Audit) Amendment Rules 2014, the Cost Audit records maintained by the Company are required to be audited by Cost Accountant. On the recommendations of the Audit Committee, the Board of Directors of the Company had appointed M/s. N D Birla & Co., Cost Accountants, Ahmedabad as the Cost Auditors of the Company to carry out audit of Cost Accounting Records of the Company which was filed by the Company within the stipulated time during the year 2019-20.

The Board of Directors on the recommendation of the Audit Committee has appointed M/s. N D Birla & Co., Cost Accountants, Ahmedabad as the Cost Auditors of the Company to carry out audit of cost accounting records of the Company for the financial year 2019-20. As required under the Companies Act, 2013, a resolution seeking members approval for the remuneration payable to the Cost Auditor forms part of the Notice convening this 32nd Annual General Meeting.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS

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

EXTRACTS OF ANNUAL RETURN

The details forming part of the extracts of Annual return in form MGT-9, as required under Section 92 of the Companies Act, 2013 is included in this Report as "Annexure-F" and forms integral part of this report.

CORPORATE SOCIAL RESPONSIBILITY

As per the provisions of the Companies Act, 2013 "Corporate Social Responsibility" (CSR), was not applicable to the Company during the year under review. Therefore, the Board of Directors has dissolved the Corporate Social Responsibility Committee (CSR) in its meeting held on 19th April, 2018.

VIGIL MECHANISM/WHISTLE BLOWER POLICY

The Company has adopted a Vigil Mechanism/ Whistle Blower Policy to report genuine concerns or grievances. The Vigil Mechanism has been placed on the Website of the Company http://www.nkindustriesltd.com/vigilmechanism.html.

INTERNAL FINANCIAL CONTROL SYSTEM AND ITS ADEQUACY

The Company has an Internal Control System, commensurate with the size, scale and complexity of its operations. To maintain its objectivity and independence the Company has appointed Independent Internal Auditor M/s. ADPRDP & Associates, Chartered Accountants to submit Internal Audit reports to the Audit Committee of the Board.

The Internal Auditor monitors and evaluates the efficacy and adequacy of internal control system in the Company, its compliance with operating systems, accounting procedures and policies at all locations of the Company. Based on the report of Internal Auditor, Audit Committee undertakes corrective action, if any in their respective areas and thereby strengthens the controls. Significant audit observations and recommendations along with corrective actions, if any, thereon are presented to the Audit Committee of the Board.

ENVIRONMENT, HEALTH AND SAFETY

The Company is conscious of the importance of environmentally clean and safe operations. The Company is committed to health and safety of its employees, contractors and visitors. The Company is conducting operations in such a manner so as to ensure safety of all concerned, compliances of environmental regulations and preservation of natural resources.

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

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

INDUSTRIAL RELATIONS

The Company is committed to nurturing, enhancing and retaining top talent through superior Learning and Organizational Management. During the year under review, your Company enjoyed cordial relationship with workers and employees at all levels.

STATUTORY INFORMATION

i. Conservation of Energy:

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

b) No specific investment has been made in reduction in energy consumption.

c) As the impact of measures taken for conservation and optimum utilization of energy are not quantitative, its impact on cost cannot be stated accurately.

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

ii. Technology Absorption:

Companys products are manufactured by using in-house know how and no outside technology is being used for

manufacturing activities. Therefore no technology absorption is required.

iii. Foreign Exchange Earning and Outgo:

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

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

CONSOLIDATED FINANCIAL STATEMENTS

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

PREVENTION OF INSIDER TRADING

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

RISK MANAGEMENT POLICY

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

ACKNOWLEDGEMENT

Your Directors would like to express their appreciation for the assistance and co-operation received from the Companys customers, vendors, bankers, auditors, investors and government bodies during the year under review.

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

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