NEL Holdings South Ltd Directors Report.

Dear Members,

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

1. Financial Results:

(Rupees in Lakh)

Particulars

STANDALONE

CONSOLIDATED

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

2. State of Companys Affairs:

I. Financial Statement:

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

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

a. Standalone:

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

b. Consolidated:

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

II. Delisting from National Stock Exchange of India Limited

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

3. Dividend:

In view of the loss, no dividend could be considered.

4. Deposits

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

5. Transfer to Reserves

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

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

There were no such material changes and commitments, affecting the financial position of the Company occurred between the end of the financial year and the date of this Report. However, The Company has incurred losses over the years resulting in negative net worth, negative working capital and negative cash flows. The default in payment of dues to banks and financial institution and creditors etc are the identified events that, individually or collectively, cast significant doubt on the Companys ability to continue as a going concern.

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

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

8. Significant events/actions, having a major bearing on the Companys affairs:

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

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

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

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

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

9. The Board of Directors and the composition thereof

I. Composition of the Board

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

Declaration by Independent Directors

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

II. Change in the Board

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

Reasons for resignation:

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

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

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

III. Meetings of the Board

The Board of Directors met 7 (Seven) times during the year on April 10, 2019, April 23, 2019, May 30, 2019, August 09, 2019, November 13, 2019, January 10, 2020 and February 14, 2020.

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

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

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

The Independent Directors of the Company at their separate meeting held as per the provisions of Section 149 read with Schedule V of the Companies Act, 2013 and the Listing Regulations, had carried out an annual evaluation of the Board, Committees and individual Directors performance. The performance of the Board was evaluated after seeking inputs from the Independent Directors on the basis of criteria such as Board composition, Structure, Board processes and their effectiveness, information given to the Board, etc.

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

V. Familiarization programme for Independent Directors

The Company proactively keeps its Directors informed of the activities of the Company, its Management and operations and provides an overall industry perspective as well as issues being faced by the industry.

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

10. Directors Responsibility Statement

In terms of the requirements of Section 134(5) of the Companies Act, 2013, we, on behalf of the Board of Directors, hereby state that:

a) in the preparation of the annual accounts, the applicable accounting standards had 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 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; and

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

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

11. Nomination and Remuneration Policy

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

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

Non-Executive Directors are remunerated by way of sitting fees for attending the meetings of the Board and the Committees thereof. The sitting fees paid for Board Meetings and Audit Committee meetings is Rs. 50,000/- per meeting, the Nomination & Remuneration Committee is Rs 25,000/- per meeting and the Stakeholders Relationship Committee, other Committees including for a separate meeting of Independent Directors is Rs. 20,000/- per meeting.

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

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

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

Name of the Directors Designation Ratio of remuneration to median remuneration of the Company % increase in the remuneration of Directors
1. Mr. Nitesh Shetty Managing Director - Nil
2. Mr. L. S Vaidyanathan Executive Director 26 Nil
3. Mr. Ashwini Kumar Executive Director - Nil

12. Vigil Mechanism / Whistle Blower Policy

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

13. Corporate Social Responsibility

In view of continues losses, the Company was not required contribute towards CSR activities and the Company was not required to constitute Corporate Social Responsibility Committee.

14. Political Contribution

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

15. Internal Financial Controls

The Board of the Company is of the opinion that the Companys Internal Financial Controls were adequate and effective during the period ended as on 31st March, 2020, based on the framework of Internal Financial Controls and compliance systems established and maintained by the Company, work performed by the internal, statutory and secretarial auditors and external consultants specially appointed for this purpose, including audit of Internal Financial Controls over financial reporting by the Statutory Auditors, and the reviews performed by Management and the relevant Board committees, including the Audit Committee.

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

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

16. Statutory Auditors

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

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

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

Audit Qualification (each Audit Qualification separately)

1. a. Detail of Audit Qualification: The Company has incurred losses over the years resulting in negative net worth, negative working capital and negative cash flows. The default in payment of dues to banks and financial institution and creditors etc are the identified events that, individually or collectively, cast significant doubt on the Companys ability to continue as a going concern.

In this financial scenario, the management has no concrete plan to improve upon the situation which indicates that a material uncertainty exists that may cast significant doubt on the Companys ability to continue as a going concern. The financial statements do not adequately disclose this fact.

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

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

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

Not Applicable as Auditor has not quantified the impact

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

i. Managements estimation on the impact of audit qualification: Cannot be quantified.

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

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

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

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

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

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

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

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

i. Not Applicable as impact is quantified.

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

iii. Auditors comment on (i) or (ii) above: Refer to para no 2 of "Adverse Opinion para" of our standalone audit report of even date, in respect of advance of Rs 1911.70 Lakhs to Winter lands Pvt Ltd which have been informed that the Company is not in a position to honor their commitment and repay the advances. Hence necessary provision is required.

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

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

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

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

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

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

i. Not Applicable as impact is quantified.

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

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

a. Detail of Audit Qualification: As stated in Note No 17, the Company has not accounted for the demand of penal interest amounting to Rs. 2,177 lakhs by banks and financial institutions on credit facilities, resulting in the understatement of loss and overstatement of net worth by the said amount.

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

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

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

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

i. Not Applicable as impact is quantified.

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

iii. Auditors comment on (i) or (ii) above: Bank has yet not confirmed the waiver of penal interest amounting as on the balance sheet date. As uncertainties is still existing for payment of the liability, provision is required.

4. a. Detail of Audit Qualification: As stated in Note No 17 of the standalone financial statements, the Company has short provided interest on debentures amounting to Rs 6,966/- lakhs against the interest demand of Rs 11,812/- Lakhs (includes interest plus penal interest) in respect of appeal filed by Investcorp Real Estate Yield Fund (Formerly known as IDFC Real Estate Yield Fund) before the National Company Law Tribunal (NCLT), Bangalore, resulting in the understatement of loss and overstatement of net worth by the said amount.

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

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

The Auditor has quantified the amount of Rs. 6966 lakhs (Rs. 11,812 lakhs - Rs. 4846 lakhs) towards penal interest which has not been provided, for which Management is confident to get the waiver of penal interest as the discussion with debenture holders to take haircut of principal & normal interest outstanding is in final stages of conclusion. Hence, no further impact has been considered.

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

i. Not Applicable as impact is quantified.

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

iii. Auditors comment on (i) or (ii) above: Trustee of debenture holder has yet not confirmed the waiver of interest as on the balance sheet date. As uncertainties still exist for payment of the liability, provision is required.

5. a. Detail of Audit Qualification: As stated in Note No 43 of the standalone financial statements, the Company has collected Rs 1,414 Lakhs as advance from customers for closed/suspended residential projects in the earlier years which have now been abandoned and such receipts, are now in the nature of deemed deposits under rule 2(c ) (xii) (b) of the Companies Acceptance of deposit (Rules) 2014 and are also within the purview of sections 73 to 76 of the Companies Act, 2013 and proper disclosure has not been made in the books of accounts in this respect.

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

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

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

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

i. Not Applicable as impact is quantified.

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

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

6. a. Detail of Audit Qualification: The Company holds investments in its subsidiaries and also disbursed advances of Rs 9,126 lakhs as on the balance sheet date. The subsidiaries have reported consolidated negative net worth as on 31st March, 2020. The Company has provided for impairment loss on such investments due to negative net worth in its books of account but no adjustments have been made in respect of the advances given to such subsidiaries which are also doubtful of recovery.

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

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

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

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

i. Not Applicable as impact is quantified.

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

iii. Auditors comment on (i) or (ii) above: No comments

7. a. Detail of Audit Qualification: The Company has CW/P and Inventories relating to projects amounting to Rs 8,835/- Lakhs and Rs 23,232/- Lakhs [Net of "Payable to land owner for land under Joint Development Agreement, JDA) respectively as on 31st March, 2020. No impairment test has been carried out to ascertain the realizable value of Rs. 3,492 lakhs and Rs 19,603/- Lakhs estimated by the management against these projects assets respectively. [Refer Note No 4.2(i) and 8 of the financial statements].

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

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

The Auditor has quantified the amount of Rs. 3,492 lakhs and Rs 19,603/- Lakhs mentioning that no impairment test has been done to ascertain the realisable value. However, the management is confident of realising Rs. 3,492 lakhs and Rs 19,603/- Lakhs respectively. Hence, the balance value Rs 5,343 lakhs & Rs. 3,629 lakhs has been shown under impact in above table.

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

i. Not Applicable as impact is quantified.

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

iii. Auditors comment on (i) or (ii) above: Realizable value of CWIP and Inventories amounting Rs 3492 Lakhs and Rs 19,603 Lakhs respectively are estimated by the management. The basis for the same is not provided to us hence we are in doubt of the realisability.

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

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

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

Not applicable as impact is not quantified.

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

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

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

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

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

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

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

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

Not applicable as impact is not quantified.

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

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

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

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

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

10. a. Detail of Audit Qualification: The Company has not provided customer wise reconciled figures for the outstanding balances for "Billing in excess of revenue" (Net of debit balance) of Rs 12,600 lakhs (Refer Note No 20(ii) to the financial statement). Due to non-availability of the said details we are unable to verify the correctness of the same.

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

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

Not applicable as impact is not quantified.

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

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

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

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

iii. Auditors comment on (i) or (ii) above: No comments

17. Secretarial Aud itor

Mr. Kedarnath, Practicing Company Secretary was appointed as the Secretarial Auditors of the Company for the financial year 2019-20 by the Board of Directors of the Company. The Secretarial Audit Report for the year ended 31st March, 2020 issued by the Secretarial Auditor in accordance with the provisions of Section 204 of the Companies Act, 2013 and the rules made thereunder is annexed to this report separately as Annexure - A.

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

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

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

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

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

3. The Company has defaulted compliance of the following:

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

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

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

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

18. Particulars of employees

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

19. Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo

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

20. Corporate Governance

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

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

21. Secretarial Standards

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

22. Cost Audit and Cost Records

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

23. Code of Conduct

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

24. Management Discussion and Analysis Report

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

25. Extract of the Annual Return

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

26. Particulars of Loans, Guarantees and Investments

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

27. Related Party Transactions

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

The Related Party Transactions under IND-AS 24 undertaken during the financial year 2019-20 are detailed in the Notes to Accounts section of the Annual Financial Statements.

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

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

29. Risk Management Policy

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

30. Review of Subsidiaries and Associates

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

A statement containing the salient features of the financial statements of the Companys subsidiaries is annexed to the Consolidated Financial Statement in the prescribed format of Form AOC-1.

Further, pursuant to the provisions of Section 136 of the Companies Act, 2013, the financial statements of the Company, consolidated financial statements along with the relevant documents and separate accounts in respect of subsidiaries are available on the website of the Company.

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

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

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

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

31. Additional Information to shareholders

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

32. Acknowledgement:

Your Directors are pleased to place on record their sincere appreciation of the valuable assistance and co-operation extended to the Company by its Customers, Bankers, Financial Institutions, State and Central Government authorities, Service Providers, Contractors and the Shareholders for the Companys operations.

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

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