NEL Holdings South Ltd Directors Report.

Dear Members,

Your Directors present their Eighteenth Annual Report with the standalone and consolidated annual audited accounts of the Company for the year ended March 31, 2022.

1. Financial Results:

(Rupees in Lakh)

Particulars

STANDALONE

CONSOLIDATED

2021-22 2020-21 2021-22 2020-21
Revenue from operations 2,260 7,372 9,430 12,482
Other Income 18,065 243 18,760 22,708
Total Income 20,325 7,615 28,190 35,190
Total Expenses 7,608 21,157 19771 53,462
Profit/(loss) before Exceptional Items and Tax 12,717 (13,542) 8419 (18,272)
Exceptional Items (13,706) 6,077 14,611 5,601
Profit/(Loss) before Tax (989) (7,465) (6,192) (12,672)
Less : Tax 56 662 338 7,842
Net Profit / (Loss) after tax (1,045) (8,127) (6,530) (20,513)

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, 2022, 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 disclosure requirements under Schedule III of the Act.

a. Standalone:

During the year under review the Company has earned a total income of Rs. 20325 Lakhs as against Rs. 7615 Lakh in the previous year. The Company has incurred total expenses of Rs. 7608 Lakh as compared to previous years expenses of Rs. 21152 Lakhs. The Company has incurred net loss of Rs. 1045 Lakhs for the year 2021-2022 as against a loss of Rs. 8127 Lakhs in the previous year.

b. Consolidated:

During the year under review the Company has earned a total income of Rs. 28190 Lakhs as against Rs. 35190 Lakh in the previous year. The Company has incurred total expenses of Rs. 19771 Lakh as compared to previous years expenses of Rs. 53462 Lakhs. The Company has incurred net loss of Rs. 6530 Lakhs for the year 2021-2022 as against a loss of Rs. 20513 Lakhs in the previous year.

II. Change of Objects

The Company earlier on February 23, 2022 has amended the main Objects of the Companys Memorandum of Association and post amendment of the Object Clause, the Company shall predominantly focus in the coming years on the new objects once the obligations of ongoing 2-3 residential project in its subsidiaries and certain project exits/Land Parcel exits gets completed which are the initiatives been taken by the Company towards its overall debt reduction process.

The four major objects of the Company for future businesses shall be:

a. Trading in land and plotted development

b. Service business comprising wide areas of facilities/manpower/catering/restaurants activities

c. Proptech and related Internet Technology Services

d. Long term investment and trading in equities

Pursuant to the change in the object clause, the Company has also made an application to the Exchange to categorise the Company under Commercial Services & Supplies for Diversified Commercial Services under the Industry Classification as against current classification under Realty - Residential, Commercial Projects.

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.

The Company has an outstanding balance of advances collected from its customers in earlier years pertaining to closed / suspended residential projects, which has not been repaid till date. Such receipts are in the nature of deemed deposits under Rule 2(c) (xii) (b) of the Companies Acceptance of Deposit (Rules) 2014 and is within the purview of the provisions of sections 73 to 76 of the Companies Act, 2013. The Company has been defaulted in repayment of such advances since last three years.

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, still cast significant doubt on the Companys ability to continue as a going concern. All the banks and financial institutions have declared the outstanding loan accounts of the company as Non-Performing Accounts (NPA).

The Company is also in process of reduction of its substantial projects debts by exiting from its residential projects which will ease financial burden.

During the year, Yes Bank Limited (YBL) on June 19, 2021 has filed a complaint with the local police against the Directors and the Company for default of loans which are also being legally pursued in the DRT and various other courts.

The investigations by the Investigative authorities has now completed & the Bangalore Police has closed the Complaint & filed the "B" Report in the Court as FALSE. With this the Complaint lodged by YBL stands closed.

The Company has received a request from Promoter Group for re-classification of certain Promoters/Promoter Group to Public Shareholder category and the resolution has been placed before the shareholder in this Annual General Meeting for its approval.

The Company has also received a letter from the Securities and Exchange Board of India (SEBI) dated October 12, 2021 informing the Company of the appointment of Protiviti India Member Pvt. Ltd. (Protiviti), to carry out a forensic audit and also received a summon on the same matter for submission of information before the investigating authority in relation to the forensic audit from Securities and Exchange Board of India (SEBI) vide its letter dated December 28, 2021 which has been currently stayed by the Honble High Court of Karnataka.

7. Change in the Nature of Business, if any

During the year under review, there has been no change in the nature of business. However keeping in mind the long term business strategy the Company has earlier decided to exit from its Residential/Housing Real Estate space.

Once the Company completes all its obligations of delivery to its customers, other stakeholders and lenders in the residential business, The Company shall be exiting this space of home building (Residential) totally.

Accordingly the Company has also changed its object clause and have amended in Memorandum of Association to include new objects in its main Object Clause by deleting its old objects.

8. Finance and Accounts

During the year under review, your Company has not availed any credit facilities from Banks or any other financial institutions nor has made any investments in any other entities.

As mandated by the Ministry of Corporate Affairs, the Financial Statements for the year ended March 31, 2022 have been prepared in accordance with the Ind AS, notified under Section 133 of the Companies Act, 2013 read with The Companies (Accounts) Rules, 2014, as amended from time to time. The estimates and judgments relating to the Financial Statements are made on a prudent basis, so as to give a true and fair view of the state of affairs and profits and cash flows of your Company for the year ended March 31, 2022.

9. Consolidated Financial Statements

As per Regulation 33 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (hereinafter referred to as "Listing Regulations") and Section 129 of the Act read with Schedule III to the Act, the Consolidated Financial Statements of your Company for the financial year ended March 31, 2022 have been prepared in accordance with the relevant Ind AS issued by the Institute of Chartered Accountants of India and on the basis of the audited financial statements of your Company and the last Audited Financial Statements of your Companys subsidiaries as approved by their respective Board of Directors.

10. Human Relations and Industrial Relations

During the year under review, employee relations at all sites remained cordial. Despite the exceptional challenges faced due to COVID, the motivated work force aided your Company in maintaining its Industrial Relations at all time.

11. 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. The Company is pursuing various matters in different courts and forums including NCLTs which is being addressed by the Company.

The Company has also received various notices from different statutory authorities from time to time during the due to irregular in depositing the undisputed statutory dues including provident fund, employees state insurance, income-tax, sales-tax, service tax, value added tax, goods and services tax, MSME dues and Cess. The GST department has suo moto cancelled the GST registration of the Company on October 31, 2020.

During the year under review one of the matter was admitted by the NCLT against the Company which was later settled and withdrawn between the parties.

During the year, Yes Bank Limited (YBL) on June 19, 2021 has filed a complaint with the local police against the Directors and the Company for default of loans which are also being legally pursued in the DRT and various other courts.

The investigations by the Investigative authorities has now been completed & the Bangalore Police has closed the Complaint & filed the "B" Report in the Court as FALSE. With this the Complaint lodged by YBL stands closed.

12. 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 Company was changed its main object from Realty - Residential, Commercial Projects to Commercial Services & Supplies for Diversified Commercial Services during the year.

b. The Company further has entered into a Business T ransfer Agreement for exit from Melbourne Park Project.

c. The Company has de-subsidised two of its wholly owned subsidiary namely - NIRPL Ventures Private Limited and Courtyard Hospitality Private Limited.

d. The Company has also obtained the shareholders approval for de-subsidizing of its wholly owned subsidiary - NHDPL South Private Limited and NUDPL Ventures Private Limited and shall be de-subsidized post final onetime settlement with its only lender or on receipt of lenders NOC whichever is earlier.

13. The Board of Directors and the composition thereof

I. Composition of the Board

The Board of the Company currently comprises of 7 (Seven) Directors of which four are Independent Directors including an Independent Woman Director. 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. All Independent Directors of the Company have 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.

11. Change in the Board

During the period under review, none of the Directors resign or retire from the Board.

Mr. Rajeev Khanna (DIN-07143405) was appointed as Executive Director and Chief Financial Officer of the Company and was regularised in the last Annual General Meeting of the Company held in the year 2021. Mr. Rajeev Khanna (DIN: 07143405) who retires by rotation in this Annual General Meeting of the Company and being eligible, offers himself for re-appointment.

Mr. L S Vaidyanathan (DIN-00304652) appointed as Executive Director of the Company since 2014 and has been re-appointed in the last Annual General Meeting of the Company held in the year 2021 for the period from April 1, 20121 to May 31, 2022 has also been proposed for re-appointment in this Annual General Meeting of the Company for another period of 16 months from 1st June 2022 to 30th September 2023 (both days inclusive).

Reasons for resignation:

Name of the Director Reason for Cessation
Nil Nil

One New Directors were inducted on the Board during the year.

Name of the Director Date of Appointment
Mr. RAJEEV KHANNA, Executive Director and Chief Financial Officer (DIN:07143405) June 21 2021

All appointment 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 6 (Six) times during the year on April 09, 2021, June 29, 2021, August 13, 2021, November 12, 2021, January 19, 2022 and February 11, 2022.

In accordance with the provisions of the Companies Act, 2013 and SEBI (LODR), a separate meeting of the Independent Directors was held on February 11, 2022.

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 on February 11, 2022 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.

14. 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.

15. 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 Independent Directors are remunerated by way of sitting fees for attending the meetings of the Board and the Committees thereof. During the year the sitting fees paid for Board Meetings and Audit Committee meetings is Rs. 50,000/- and Rs. 25,000/- respectively per meeting, the Nomination & Remuneration Committee is Rs 20,000/- 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://nelholdings.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, 2014]

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 Nil

The shareholders of the Company has earlier approved the appointment of Mr. Nitesh Shetty as Managing Director and Mr. L S Vaidyanathan as Executive Director of the Company along with the terms of remuneration payable to, including the remuneration to be paid in the event of loss or inadequacy of profits in any financial year during the tenure of appointment. As the Company has still not received the NOC form the financial institutions including banks where the Company has default in payment of its dues, both Mr. Nitesh Shetty, Managing Director and Mr. L S Vaidyanathan, Executive Director of the Company has provided an undertaking to the Board for non-acceptance of any remuneration from the Company till the NOC is obtained by the Company.

16. 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 202122.

17. Corporate Social Responsibility

In view of continuing losses, the Company was not required to contribute towards CSR activities and has also not contributed towards any CSR activities during the year 2021-22. The Company was also not required to constitute a separate Corporate Social Responsibility Committee under the provisions of Companies Act 2013.

18. Political Contribution

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

19. 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, 2022, 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.

20. Statutory Auditors

M/s Ray & Ray Chartered Accountants (Firm Registration Number: 301072E), Statutory Auditors of the Company have expressed a modified opinion in their Audit Report for the financial year ended 31st March, 2022.

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. 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, may cast significant doubt on the Companys ability to continue as a going concern. The Statement does not adequately disclose this fact.

The Company is in the process of exiting the projects and settling the loans from banks, financial institutions and creditors etc. Although these transactions have reduced the liability of the Company to banks and financial institutions, the ability of the Company to continue as a going concern remains uncertain in view of the above.

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

Response : The Company is actively focusing on reviving the financial position in areas of debt reduction and liquidation of its existing dues. The Company is also looking at liguidating its major obligation for which existing liability will be liquidated.

Type of Audit Qualification: Qualified Opinion

Frequency of Qualification: Third Time Qualification

For Audit qualification where the impact is quantified by the Auditor

Not Applicable as Auditor has not quantified the impact

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 plan to ascertain the future of the company.

2. Audit Qualification: The Company has accounted, Principal of Rs. 34,495 Lakhs, Accrued Interest of Rs. 8,230 Lakhs and Disputed Liability of Rs. 16,574 in its books of account as total outstanding to banks and financial institution as on 31st March, 2022. All the banks and financial institutions have declared the outstanding loan accounts of the company as Non-Performing Accounts (NPA) in the earlier years. Pending confirmation and correspondence, the outstanding balance and status of demand raised by the respective banks and financial institutions could not be verified by us. Further, penal interest on default on payment to banks and financial institution has neither been ascertained nor provided for in the books of account of the Company.

In relation to a loan taken from Yes Bank for the Commissariat Road (Soho) Project, the Bank has principally agreed for settlement of the loan for Rs. 3,000 lakhs. The Company has not provided any further interest on this loan since the previous financial year. Further, the Company had earlier been written back accrued interest amounting to Rs. 1,443 lakhs as income in the quarter ended September 30, 2021, which has now been reversed in the quarter ended March 31, 2022 and classified as Disputed Liability without any confirmation from the Bank in this regard. (Refer to note 12 of the Statement).

During the year, the Company has not provided interest for the loan outstanding from Yes Bank against the Plaza Project. Further, the Company has classified the interest outstanding as on March 31, 2022 amounting to Rs. 3,728 lakhs, to the extent allocated to the project, as a disputed liability without any confirmation from the Bank in this regard. The basis and documentation for such non provision of interest and classification as a disputed liability was not made available for our verification. (Refer to note 11 of the Statement).

During the previous year, the Company has sold / disposed two projects viz, Knightsbridge and Virgin Island. The remaining balance of the term loan related to these projects amounting to Rs 11,402 lakhs in respect of the borrowing from HDFC Limited which had earlier been written back as income in the quarter ended September 30, 2021, has now been reversed in the quarter ended March 31, 2022 and classified as Disputed Liability. (Refer note 10 of the statement).

Further, the Company has filed defense appeal before the Debt Recovery Tribunal on 23.08.2021 against which the final order has not yet received by the Company.

Response : The Company has made significant progress in deleveraging its balance sheet and currently reduced its consolidated liability in the last two years from Rs. 1100 Crores to Rs. 616 Crores currently.

The Company is also working on a one time settlement with the remaining lenders for the outstanding dues. In course of project exits, Company has also obtained NOCs from Banks and have exited from its various residential projects.

Type of Audit Qualification: Qualified Opinion

Frequency of Qualification: Para 3 is First time and balance for Third Time Qualification For Audit qualification where the impact is quantified by the Auditor

Balance Sheet Reclassification. No impact in P&L

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

3. Audit Qualification: The outstanding balance of advances collected from customers in earlier years pertaining to closed / suspended residential projects, amount to Rs. 421 lakhs as on the reporting date. Such receipts are in the nature of deemed deposits under Rule 2(c) (xii) (b) of the Companies Acceptance of Deposit (Rules) 2014 and is within the purview of the provisions of sections 73 to 76 of the Companies Act, 2013.

Response : The Company is in process of reduction of its old outstanding dues from its Customers and is hopeful of substantial reduction in the current year.

Type of Audit Qualification: Qualified Opinion

Frequency of Qualification: Third Time Qualification

For Audit qualification where the impact is quantified by the Auditor

The Auditor has quantified the amount of Rs. 421 lakhs for which Liability is already appearing and no further impact has been considered.

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.

4. Audit Qualification: In spite of the negative net worth of the subsidiaries, the Company has not accounted for impairment loss of Rs 5,389 lakhs against advance given to them, resulting in the understatement of loss and overstatement of net worth by the said amount. The Company has further disbursed fresh advance amounting Rs. 651 Lakhs during the year for which no document has been provided to us for our verification and which in our opinion is a matter of concern and is prejudicial to the interest of the Company.

Response : The Company is in the process of accessing the impact of impairment and is also trying to find an alternative means settling the advances by raising funds through further equity in the Company which shall be discussed and decided in due course of time.

Type of Audit Qualification: Qualified Opinion

Frequency of Qualification: Third Time Qualification

For Audit qualification where the impact is quantified by the Auditor

The Auditor has quantified the amount of Rs. 651 lakhs for which impact has been considered in above table.

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

5. Audit Qualification: The Company has not tested impairment of its projects CWIP and Inventories amounting to Rs 8,835 Lakhs and Rs 5,181 Lakhs (Net of "Payable to land owner for land under Joint Development Agreement, JDA") respectively for ascertaining the realizable value as on 31st March, 2022. To the extent of any possible diminution of value not accounted for, the standalone financial statements may not give a true and fair view as per the requirement of Ind AS 2.

Response : The Company is confident of realisation on amounts in excess of carrying amount hence no impairment has been provided.

Type of Audit Qualification: Qualified Opinion

Frequency of Qualification: Third Time Qualification

For Audit qualification where the impact is quantified by the Auditor

The Auditor has not quantified the amount mentioning that no impairment test has been done to ascertain the realisable value.

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: In our opinion, in the current scenario recovery is uncertain

6. Audit Qualification: Year-end balance confirmation certificates in respect of trade receivables, trade payables, vendor advances, advance from customers and a few 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. Further, Trade Receivable amounting to Rs. 1,838 Lakhs receivable from customer as on 31st March, 2022 has not been considered for impairment loss based on expected credit loss method as per requirement of Ind AS 109.

Response : The Company has send the balance confirmation notices to all its Vendors and Customers but only few of them has confirmed the balances which were provided to the Auditors directly from the respective Vendors and Customers.

Type of Audit Qualification: Qualified Opinion

Frequency of Qualification: Second Time Qualification

For Audit qualification where the impact is quantified by the Auditor

The Company has posted the balance confirmations to vendors and customers and auditors have received two confirmations at their office.

i. The auditor has quantified an amount of Rs. 1838 lacs and same has been considered in impact table.

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

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

For Audit qualification where the impact is not quantified by the Auditor - Not Applicable as impact is quantified.

7. Audit Qualification: As per the records of the company and information and explanations provided to us, the Company has been irregular in depositing the undisputed statutory dues including provident fund, employees state insurance, income-tax, sales-tax, service tax, duty of custom, duty of excise, value added tax, Goods and Services tax, Cess. The GST department has suo moto cancelled the GST registration of the Company on October 31, 2020. The Company also has a receivable balance of Rs.1,199 lakhs and payable balance of Rs.9,186 lakhs from various government authorities. Due to such statutory non compliances, we are unable to comment on the actual recoverability and payment dues against such balances.

Response : The Company is hopeful of liquidation of substantial amount of statutory liabilities in the current year.

Type of Audit Qualification: Qualified Opinion

Frequency of Qualification: Second Time Qualification

For Audit qualification where the impact is quantified by the Auditor

Not applicable as impact is not quantified.

For Audit qualification where the impact is not quantified by the Auditor

i. Not applicable as impact has not been 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 violation of applicable Statutory Regulations.

21. Secretarial Auditor

Mr. Kedarnath, Practicing Company Secretary was appointed as the Secretarial Auditors of the Company for the financial year 2021-22 by the Board of Directors of the Company. The Secretarial Audit Report for the year ended 31st March, 2022 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 complied the provisions of Section 152(6) of the Companies Act, 2013 in relation to Rotation of Directors.

Management Response: Directors other than Non-Executive Independent Directors on Board of the Company during the financial year 2021-22 comprises of whole-time, non-retiring and non-rotational Directors on Board and hence none of the Directors retired on rotation. During the Current year under review, the Company appointed a rotational director who shall retire by rotation at this Annual General Meeting.

2. There are Advances outstanding which are 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 Rule 2(c)(XII)(b)of the Companies (Acceptance of Deposits) Rules, 2014 and accordingly Directors of the Company are disqualified under Sec 164 (2) (b) of the Companies Act, 2013.

Management Response: Due to 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.

The Company has also not accepted any fresh deposits as per the provisions of Section 73 of the Act during the current financial year. Further the Company has been making its sincere efforts in repaying these outstanding advances in due course of time.

3. The Company has appointed / reappointed the present Executive Director of the Company for a period up to 31st May 2022 at the last Annual General Meeting under Sections 196(4) and 197 read with Schedule V. However, no prior approval of the lending Banks / Institutions was obtained as required. In terms of Proviso (ii) of Schedule V (Part II)(Section II) (A) of the Companies Act, 2013, prior approval of the Bank or Financial Institution or other secured creditor shall be obtained by the Company before the approval in General Meeting for such appointment.

Management Response: The appointment of Executive Director was placed and approved by the Shareholders in the last Annual General Meeting of the Company. The Company has however not been able to obtain the prior approval from the lending Banks / Institutions due to which Mr. L S Vaidyanathan, Executive Directors of the Company has provided the undertaking that he shall not draw any remuneration from the Company which was also placed before the Board and the Board considered and took note of the same.

4. The existing Chief Financial Officer (CFO) was appointed on the Board as Additional Director during the financial year and the resolution states that no remuneration would be paid for his capacity as an Executive Director. However, remuneration is being paid in the capacity of CFO. The appointment of CFO as an Executive Director attracts the provisions of Sections 196(4) and 197 read with Schedule V of the Companies Act, 2013 as a Director drawing any remuneration would come under the provisions applicable to a Whole-time Director and also prior approval of the lending institutions are mandated vide Schedule V(Part II)(Section II) (A) of the Companies Act, 2013 before obtaining the shareholders approval.

Management Response: Mr. Rajeev Khanna was appointed as Chief Financial Officer of the Company under his professional capacity and was eligible for remuneration as per the terms of his employment and as approved by the Nomination and Remuneration Committee of the Company.

The Company has appointed Mr. Rajeev Khanna also as Executive Director Finance and the resolution for appointed without remuneration to the Executive Director was placed and approved by the Shareholders in the last Annual General Meeting of the Company.

Since Mr. Rajeev Khanna has been appointed to perform his duties and functions under professional capacity as CFO and has been also designated as Executive Director Finance of the Company, no prior approval was deemed to be necessary from the lending Banks / Institutions.

5. A notice from the Registrar of Companies, Karnataka, was received by the Company for non-filing of Cost Audit Report for 2018-19. However, the Company responded that the same is not applicable.

Management Response: The Company turnover from operations for the year ended 31st March 2018 (immediately preceding financial year) for the applicability of Cost Audit for the Financial Year 2018-19 was much below the statutory limit for applicability of Cost Audit Report under provisions of Section 148 of the Companies Act, 2013 read with Rule 4 of the Companies (Cost Record and Audit) Rules, 2014 and hence the Cost Audit Report was not filed by the Company.

6. Delay in furnishing prior intimation to the Stock Exchanges under Regulation 29(2)/29(3) of the SEBI (LODR) Regulations, 2015 about proposed Board Meeting. The Company has incurred a penalty of Rs.10000/- as imposed by the Stock Exchange.

Management Response: The Company earlier has already decided to schedule the Board Meeting for the fourth quarter well in advance and has also communicated to all its Board Members including Independent Directors by email. However, the Company has received a request to extend the meeting from one the senior Board Members and in order to check the availability with other Board Members and due to weekend holidays, the confirmation was delayed and was finally confirmed not to extended the date due to unavailability of other members on the new proposed date. Accordingly the intimation was delayed for furnishing prior intimation about the meeting of the board of directors and the Company has paid a penalty of Rs. 10,000.

7. Company has received an email, as also a letter from the Securities and Exchange Board of India (SEBI) dated October 12, 2021 informing the Company of the appointment of Protiviti India Member Pvt. Ltd. (Protiviti), to carry out a forensic audit for the financial years ended from 31 March 2018 to 31 March 2021(both inclusive) and also received a summon on the same matter for submission of information before the investigating authority in relation to the forensic audit from SEBI vide its letter dated December 28, 2021 which has been currently stayed by the Honble High Court of Karnataka.

Management Response: The matter is sub-judice as it has been stayed by the Honble High Court of Karnataka.

8. The Company has also received an email from BSE seeking clarification on the auditors qualification for the F.Y. 201819, 2019-20 & 2020-21 in relation to the forensic audit being conducted by SBI which the Company has responded that matter is sub-judice and has been stayed by the Honble High Court of Karnataka and further requested to kindly await the final outcome of the matter.

Management Response: The matter is sub-judice as it has been stayed by the Honble High Court of Karnataka.

9. The Company has defaulted in compliance of the following and as a result, received Notices under-

a. Applicable General Laws, such as ESI and PF requirements and MSME Act.2006 and Income Tax Act, 1961 and Goods and Services Tax Act, 2017 etc.

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 Compliances.

10. The Company has received Notices under the Real Estate Regulatory Authority (RERA) for not refunding the amounts as per the Order in respect of certain Projects which have not been completed. These notices have been responded suitably. No action has been initiated.

Management Response: The Company have been responding such notices suitably.

11. A complaint filed by the Companys lender, Yes Bank, with the local police against the Directors and the Company for default of loans which has now been closed and B Report has been filed in the Court as FALSE.

Management Response: The Complaint filed by Yes Bank has now been closed and B Report has been filed in the Court as FALSE.

22. Particulars of remuneration 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 63 employees during the end of the financial year and the Company has failed to pay the Salary dues to its few employees on time.

23. 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.

24. Corporate Governance

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

Further, a certificate from Mr. S. Kedarnath & Associates, 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.

25. Secretarial Standards

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

26. Reconciliation of Share Capital Audit

As per the directive of Securities and Exchange Board of India, M/s S. Kedarnath & Associates, Practicing Company Secretary, (CP No.: 4422), undertook the Reconciliation of Share Capital Audit on a quarterly basis and the reconciliation documents, for the year under review, have been duly uploaded on the website of the Stock Exchange.

27. 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.

28. 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 2020-21 forms part of the Corporate Governance Report.

29. 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.

30. 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, rule 12, sub rule (1) as amended, the extract of the Annual Return (MGT-9) is no longer required to be attached along with Board Report. The copy of the Annual Return for the year 2021-22 can be accessed on the Companys website at the link: https://nelholdings.in/Annual Return/

31. 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.

32. 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 transactions entered with the Related Parties as defined under the Companies Act, 2013 and identified by the Company are at arm length and in the normal course of business transactions only and hence do not requires any Shareholders approval. The same also has been placed before and approved by the Audit Committee of the Board

The Related Party Transactions under IND-AS 24 undertaken during the financial year 2021-22 are detailed in the Notes to Accounts section of the Annual Financial Statements.

33. 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.

34. Risk Management Policy

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

35. 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 wholly owned subsidiary of the Company - NIRPL Ventures Private Limited was de-subsidized by the Company

- the wholly owned subsidiary of the Company - Courtyard Hospitality Private Limited was de-subsidized by the Company

- the Company has also obtained the shareholders approval for de-subsidizing of its wholly owned subsidiary - NHDPL South Private Limited and NUDPL Ventures Private Limited and shall be de-subsidized post final onetime settlement with its only lender or on receipt of lenders NOC whichever is earlier.

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/

36. Other disclosures/Reporting

No disclosure or reporting is required in respect of the following items as there was no transaction on these items during the year under review:

• Issue of Equity Shares with or without differential rights as to Dividend, voting or otherwise

• Issue of Shares (including sweat equity shares) to Employees of the Company under any scheme

• None of the Directors including Managing Directors or Whole Time Directors of the Company received any remuneration or commission from any of the Companys subsidiaries

• No frauds has been reported by the Internal Auditors to the Audit Committee

37. Additional Information to shareholders

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

38. 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: April 29, 2022 Chairman & Managing Director
DIN:00304555