N K Industries Ltd
Directors Reports
To,
The Members,
Your Directors are pleased to present the 35th Annual Report along with the Standalone
and Consolidated Audited Financial Statements of your Company for the Financial Year ended
on March 31, 2023.
financial results
The Company has adopted Indian Accounting Standards (Ind AS) from 1st April, 2017. The
figures for the Year ended 31st March, 2023 are also Ind AS compliant.
The financial highlights are depicted below:
(' In Lacs)
PARTICULARS |
Standalone |
Consolidated |
|
Year Ended 31.03.2023 |
Year Ended 31.03.2022 |
Year Ended 31.03.2023 |
Year Ended 31.03.2022 |
Revenue from operations |
|
|
|
|
Other Income |
240.56 |
240.00 |
1777.47 |
2033.26 |
Total Income |
40.91 |
43 |
40.36 |
40.59 |
Total Expenditure |
281.47 |
283.00 |
1817.83 |
2073.85 |
Profit / (Loss) before Finance Cost, Depreciation |
487.54 |
531.10 |
2053.43 |
2275.52 |
& Amortization and Tax Expenses |
180.63 |
187.23 |
170.52 |
256.87 |
Finance Cost |
37.54 |
0.26 |
37.57 |
0.27 |
Depreciation & Amortization |
349.16 |
435.07 |
368.55 |
458.27 |
Profit/(Loss) Before Tax |
(206.07) |
(248.10) |
(235.60) |
(201.67) |
(i) Current Tax |
-- |
-- |
-- |
12.00 |
(ii) Deferred Tax |
45.06 |
61.75 |
(49.60) |
(60.99) |
(iii) Earlier period tax (written back) |
-- |
-- |
0.10 |
(0.12) |
Total Tax (i+ii) |
45.06 |
61.75 |
(49.50) |
(49.11) |
Profit /(Loss) after Tax |
(161.01) |
(186.35) |
(186.11) |
(152.56) |
Other Comprehensive Income |
10.83 |
6.51 |
10.83 |
6.51 |
Items that will not be reclassified to profit and loss |
15.27 |
(1.90) |
15.27 |
(1.90) |
Total Comprehensive Income |
(150.19) |
(181.73) |
(175.28) |
(147.94) |
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 2022-23 from the
Company's Standalone and Consolidated Results are as follows:
REVENUE STANDALONE
Our total income on a Standalone basis for the financial year is Rs'
240.56 lacs which is same as Rs 240.00 lacs in the previous year. Net loss for the year
decreased from Net loss for the year decreased from Rs 186.35 lacs to Rs 161.01 lacs in
the current year.
REVENUE CONSOLIDATED
Our total income on a consolidated basis decreased to Rs 1777.47 lacs from Rs 2033.26
lacs in the previous year. Net loss for the year increased from Net loss for the year
increased from ' Rs 152.56 lacs to Rs 186.11 lacs in the current year.
STATE OF COMPANY'S 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. M/s. 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. The said agreement was extended for a further period of one year
vide supplemental agreement dated 1st April, 2023.
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\ASSOCIATES
Your Company has three wholly owned subsidiaries as on 31st March, 2023. 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 nonconsolidation 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 Board's report.
SHARE CAPITAL
The paid up Equity Share Capital of the Company as at March 31,2023 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, 2023, 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 2022-23
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 31,2023. There were no unclaimed or unpaid deposits
as on March 31,2023.
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 2022-23 were on an arm's 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 Company's 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.
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
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 believes that increasing diversity at Board level is an essential element for
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: https://nkindustriesltd.com/investor/.
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. Nimesh Patel (DIN: 00240621) Chairman & Managing 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. Ms. Pooja H Khakhi resigned w.e.f 20th September, 2022 as the Company
Secretary and Compliance Officer of the Company.
2. Mr. Divyesh Aswar has been appointed as the Company Secretary and Compliance Officer
of the Company by the Board in the meeting held on 7th November, 2022.
3. Mr. Nimesh Patel is re-appointed as Chairman & Managing Director of the Company
subject to the approval of Shareholders in this Annual General Meeting w.e.f 1st
April, 2023 upto 31st March, 2028.
Save and except aforementioned, there were no other changes in the Board and Key
Managerial Personnel of the Company during the year.
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 6 times during the year under review viz. on 19th May, 2022,
02nd August, 2022, 24th August, 2022, 07th November 2022,
03rd February, 2023 & 20th March, 2023. 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. Name of directors No. |
Designation |
Number of Meetings Attended / Total Meetings held during the year
2022-23 |
Attended AGM on 19th September, 2022 |
1. Mr. Nimish K. Patel |
Chairman and Managing Director |
6/6 |
V |
2. Mr. Hasmukh K. Patel |
Whole Time Director |
6/6 |
V |
3. Mr. Snehal Patel |
Independent Director |
6/6 |
V |
4. Ms. Mansheel Kaur * |
Independent Director |
6/6 |
V |
*Ms. Mansheel Kaur has Resigned as Independent Director on the Board of the Company
w.e.f 03rd August, 2023.
INDEPENDENT DIRECTORS' MEETING
As per Schedule IV of the Companies Act, 2013, a separate meeting of Independent
Director was held on 7th November, 2022 at 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, 2023 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.
A. AUDIT COMMITTEE AND ITS MEETINGS:
Audit Committee met 4 times during the year under review on 19th May, 2022.
2 nd August, 2022. 07th November, 2022 & 03rd
February, 2023.
Constitution of Audit Committee was as per the following:
Sr. No. Name of the Director |
Status in Committee |
DIN |
Total Meetings Attended/ Total Meetings Held |
1. Mr. Snehal Patel |
Chairman & Member |
01655758 |
4/4 |
2. Mr. Hasmukh Patel |
Member |
06587284 |
4/4 |
3. Ms. Mansheel Kaur |
Member |
09184066 |
4/4 |
B. NOMINATION AND REMUNERATION COMMITTEE AND ITS MEETINGS:
Nomination and Remuneration Committee met 4 times during the year under review on 19th
May, 2022, 02nd August, 2022, 07th November, 2022 and 20th
March, 2023.
Constitution of Nomination and Remuneration Committee was as per the following:
Sr. No. Name of the Director |
Status in Committee |
DIN |
Total Meetings Attended/ Total Meeting Held |
1. Mr. Snehal Patel |
Chairman & Member |
01655758 |
4/4 |
2. Mr. Hasmukh K Patel |
Member |
06587284 |
4/4 |
3. Ms. Mansheel Kaur |
Member |
09184066 |
4/4 |
C. STAKEHOLDERS RELATIONSHIP COMMITTEE AND ITS MEETING:
Stakeholders Relationship Committee met 4 times during the year under review on 19th
May, 2022, 27th July, 2022, 07th November, 2022 & 03rd
February, 2023.
Constitution of Stakeholders Relationship Committee was as per the following:
Sr. Name of the Director No. |
Status in Committee |
Nature of Directorship |
Total Meetings Attended/ Total Meeting Held |
1. Mr. Snehal Patel |
Chairman & Member |
Independent Director |
4/4 |
2. Mr. Hasmukh K Patel |
Member |
Whole Time Director |
4/4 |
3. Ms. Mansheel Kaur |
Member |
Independent Director |
3/4 |
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 Company's 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:-
https://nkindustriesltd.com/investor/ |
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 https://nkindustriesltd.com/investor/ |
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. |
NOMINATION AND REMUNERATION POLICY
The Policy of the Company on Director's 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. https://nkindustriesltd.com/investor/.
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.
DIRECTOR'S 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 31,2023, 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. Further, M/s Parikh and Majmudar, Chartered
Accountants, (Firm Registration No: 107525W), Chartered Accountants, the current Statutory
Auditors of the Company is about to completed their two terms of five consecutive years as
Statutory Auditors of the Company. M/s Parikh and Majmudar, Chartered Accountants, are not
statutorily eligible for re-appointment with effect from the conclusion of ensuing 35th
Annual General Meeting to be held for F.Y 2022-2023.
Accordingly, on completion of term of appointment of Statutory Auditors at the
conclusion of the 35th AGM and pursuant to provisions of Sections 139, 141 & 142 of
the Act and applicable Rules and other applicable provisions of the Act, the Board of
Directors at its meeting held on May 2, 2023 has approved the appointment of M/s Pankaj R.
Shah & Associates, Chartered Accountants (FRN- 107361W), as Statutory Auditors for
five consecutive years from conclusion of the 35th Annual General Meeting to be held for
F.Y 2022-2023 till the conclusion of the 40th Annual General Meeting of the Company,
subject to the approval of shareholders of the Company at this ensuing AGM.
Further the Company has received written consent(s) and certificate(s) of eligibility
from the proposed Statutory Auditors - M/s Pankaj R. Shah & Associates, Chartered
Accountants (FRN- 107361W), Chartered Accountant in accordance with Sections 139 and 141
of the Act and applicable Rules and other provisions of the Act and holds a valid
certificate issued by the Peer Review Board of the ICAI. They have further confirmed that
they are not disqualified to be appointed as the Statutory Auditors in terms of the Act
and Rules made thereunder.
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. 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 Hon'ble High
Court of Gujarat. The Hon'ble 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 Hon'ble Supreme Court of India. The Hon'ble
Supreme Court of India had disposed off the Special Leave Petition on 17/04/2017, with an
observation to file an application before the Hon'ble Bombay High Court. The Company has
filed petition before the Hon'ble 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 Hon'ble High Court of Delhi and the Hon'ble 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 various dates and further adjourned to various
dates and now the matter was further adjourned to 25th May, 2023.
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. We draw attention to Note 33 to the Standalone Ind AS Financial Statements and
according to the same, the company is having accumulated losses (after taking into account
the balance of reserves) of Rs 345.80 Crores as at 31.03.2023 and the net worth of the
company is negative However, as per the business plan and future cash flow projections
submitted by the management to us and accepted by us. The Company is making sincere
efforts for the revival of the Business & the management is confident to recover the
losses through improved profitability in foreseeable future. Therefore no provision for
the impairment has been made and accounts for the year have been prepared on "going
concern basis." Further the above projections also contains business plan/ projected
cash flow prepared by the management and accepted by us with respect to the subsidiaries
company ,the management is confident to also revive the operations of the loss making
subsidiary companies, hence 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. Attention is invited to note 39 of the Standalone Ind AS Financial Statements which
states that the Income Tax Department had carried out survey u/s 133 of the Income tax
Act, 1961(the IT Act) on the company along with other group companies during FY 2013-14
and had ordered a special audit of the books of the company u/s 142(2A) of the IT Act,
1961, for AY 2011-12 & A.Y 12-13. The department had raised a demand of Rs 133 Crores
(Rs 6.63 Crores for A.Y 10-11, Rs57.07 crores for A.Y 11-12, Rs 60.33 Crores for A.Y
12-13, Rs 7.97 Crores for A.Y 2013-14& Rs.0.86 Crores for A.Y2014-15) on the company
for the aforesaid assessment years and the said demand has been disputed by the company
and the company has initiated appellate proceedings before appropriate authorities. The
said amount has been shown as contingent liability under Note No. 27 of the notes forming
part of standalone financial statements. Further ,Income tax department has passed an
attachment order on 22.04.2015 & 14.08.15 by which it has attached properties of the
company in pursuant to a demand, the details of the properties attached which are in the
name of company is as under:
• 803, Manas Complex, Opp Star Bazaar, Nr Jodhpur Cross road, Satellite, Ahmedabad
380015.
• 603, Manas Complex, Opp Star Bazaar, Nr Jodhpur Cross road, Satellite, Ahmedabad
380015.
• Land, situated at Survey Nos.719, 720, 721, 732/1, 732/2, 733, 741, 743, 744,
745, Kadi Thol Road, Village
Kadi Kasba ,taluka- Kadi, District Mehsana-382715.
• Factory Building Situated at survey No 745, Kadi Thol Road, Village Kadi Kasba ,
taluka- Kadi, District Mehsana-382715.
3. Attention is invited to note 40 of the Standalone Ind AS Financial Statements and
according to it the company has received a notice from Income tax department for the
attachment of its registered office at 7th Floor, Popular House, opp Sales India, Ashram
Road, Ahmedabad 380009 with respect to demand raised by them as detailed in note 39 of the
financial statements.
4. Attention is invited to note 30 of the Standalone Ind AS Financial Statements and
according to which a Search & Seizure action U/S 132 of the Income Tax Act took place
on 24.2.99. The Income Tax department had raised demand of Rs. 33.12 Crores vide the block
assessment Order dt. 30.4.2001. In case of the company, the Hon'ble Income Tax Appellate
Tribunal (ITAT), Ahmedabad has subsequently given partial relief to the extent of Rs.
28.84 Crores. The company had preferred an appeal before the Hon'ble High Court of Gujarat
against the order of Hon'ble ITAT, Ahmedabad. The Hon'ble Gujarat High Court vide its
order dated 20th June,2016 had given partial relief on some of the grounds and had also
dismissed some of the grounds of the company. Against the grounds dismissed by Hon'ble
High Court of Gujarat, the company had further preferred an appeal before Hon'ble Supreme
Court of India, and the Hon'ble Supreme Court of India vide order dated 16th January,2017
had dismissed the appeal of the Company. The Company had already provided an amount of Rs
2.88 Crore against the grounds dismissed by Hon'ble ITAT, Ahmedabad during F.Y 2002-03 as
well as Rs 1.27 Crores was provided in the books of accounts for the Assessment year in
question for the interest payable up to 31 -03-2005 during F.Y 2004-05. However in view of
the management and on the basis of the Judgment of the Hon'ble Gujarat High Court, the
amount provided/paid by the company towards total demand shall result in refund to the
company. Pending effect of the various orders of adjudicating authorities by the Income
Tax Department, the Company is yet to provide final entries in its books of accounts even
during the year under review. In view of non-availability of order of the appeal effects
from the Income Tax Department, we are unable to opine on the same.
5. Attention is invited to note 41 of the Standalone Ind AS Financial Statements and
according to which the Sales Tax Department has completed the assessment proceedings for
various assessment years and raised demand of Rs. 33.14 Crores (net of recovery) for the
earlier financial years. The company has not made any provision for the above demand
raised by the sales tax authority in its books of accounts as in view of the Management,
the said demand shall not withstand before the Appellate Authorities and the company has
already preferred an appeal before the appellate authority which is still pending. In view
of the above, the said amount has been shown as contingent liability under Note No. 28 of
the notes forming part of standalone financial statements..
6. Attention is invited to Note 45 of the Standalone Ind AS Financial Statements which
states that the balance confirmation from the suppliers, customers as well as to various
loans or advances given have been called for, but the same are awaited till the date of
audit. Thus, the balances of receivables, capital advances, trade payables as well as
loans and advances and certain bank balances have been taken as per the books of accounts
submitted by the company and are subject to confirmation from the respective parties.
7. As per the information obtained from the website of the Ministry of Corporate
Affairs (MCA), a suit has been filed against the company and its officers u/s 383A(1A),
372A(9), 58A(6)(A)(I) of the Companies Act, 1956 for the year 2016. As informed by the
management, the company is having basic information about such suit filed as reflected on
the website of the MCA. However, the company does not have any communication of such
proceedings against the company and its officers. As the matter is still subjudice, we are
unable to quantify the final liability and its impact, if any, on the company and its
officers. (Refer Note No 42 of the standalone Ind AS financial statements)
The qualification made by the Auditors in their Consolidated Report for which the Board
of Directors hereby give its comment/explanation as under
IV. 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. 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.
2. 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 Hon'ble High Court of Gujarat.
The Hon'ble 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 Hon'ble Supreme Court of India. The Hon'ble Supreme
Court of India had disposed off the Special Leave Petition on 17/04/2017, with an
observation to file an application before the Hon'ble Bombay High Court. The Company has
filed petition before the Hon'ble Bombay High Court in June 2017. Besides this, the
Company has also filed its objections against the attachment notification before the
Designated Special MPID Court, Mumbai the matter is subjudice.
3. With respect to point no.2 of qualified opinion of Auditors Report, it is hereby
clarified that it is hereby clarified that the Company along with Group Company and
promoters challenged the show cause notice issued by the adjudicating authority New Delhi,
before the Hon'ble High Court of Delhi and the Hon'ble High Court has set aside the said
show cause notice. The Director of Enforcement has attached assets of the company, group
company NKPL and the promoters of the company by issuing a fresh show cause notice dated
30/08/2018 and the company has filed an appeal before PMLA Appellate Tribunal, Delhi.
Still the matter is sub-judice.
4. With regard to the supplementary charge sheet filed the Company has complied with
the summons dated 19/03/2019 to remain present before the MPID Court on 26/04/2019. The
matter is now adjourned to 25/05/2023, but new date of hearing is not yet updated.
Therefore the matter is sub-judice.
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.
ii. 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 Chirag Shah & Associates, Practicing Company Secretary (FCS- 5545, COP
3498) Ahmedabad to conduct a Secretarial Audit of the Company's Secretarial and related
records for the year ended 31st March, 2023.
The Report on the Secretarial Audit for the year ended 31st March, 2023 is annexed
herewith as "Annexure E" to this Board's Report. There were no qualifications/
observations in the report.
iii. Cost Auditor
Provisions Section 148 of the Companies Act, 2013 read with the Companies (Cost Records
and Audit) Amendment Rules 2014, the Cost Audit records are not applicable to the company
during the year 2021-22 and 2022-23. However, 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 above financial year and have obtained the report for the year 2021-22. But
their appointment is not proposed to be made for the year 2023-24 as the same is not
applicable to the Company as per the criteria laid down in the rule 3 and rule 4 of with
the Companies (Cost Records and Audit) Amendment Rules 2014.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS
An order dated 23/05/2022 was passed by Office of the Commissioner of Customs (Export)
for duty forgone amount of Rs. 1.32 Crore on the goods imported duty free against the 12
Licenses issued to the Company, plus applicable interest thereon under the provision of
Customs read with conditions of Bond executed in terms of Section 143 of the Customs Act,
1962. However, the Company has filed a writ petition before Bombay High Court Challenging
the Order on the grounds of Limitation that after a period of 25 Years no inquiry can be
made or can only be made after giving appropriate opportunity to the Petitioners
i.e. Company as the matter is 25 years old and licenses were issued during the period
from 16.02.1996 to 27.03.1997. In the above matter the company has received positive
response from the Bombay High Court, that has impugned the above order on 18/11/2022 and
accordingly the above matter has been quashed and set aside.
EXTRACTS OF ANNUAL RETURN
{In pursuance to Section 92 and 134 (3) (a) of the Companies Act, 2013 ("the
Act") read with relevant Rules thereunder}
The Annual Return of the Company for the Financial Year 2021-2022 in the prescribed
format in Form MGT-7 is available on the website of the Company at:
https://nkindustriesltd.com/investor/. And the Annual Return for the FY 2022-23 shall be
uploaded on the above link once the same is filed on MCA website.
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
https://nkindustriesltd.com/investor/.
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.
lYear2022-23 |
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 Company's 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.
LISTING OF SHARES
The Company's shares are listed at NSE Limited & BSE Limited and the listing fee
for the year 2023-2024 has been duly paid. REPORTING OF FRAUDS
There was no instance of fraud during the Financial Year 2022-23, which were required
by the Statutory Auditors to report to the Audit Committee and / or Board under Section
143(12) of Act and Rules framed thereunder.
DETAILS OF APPLICATION MADE OR PROCEEDINGS PENDING UNDER INSOLVENCY AND BANKRUPTCY CODE
2016:
During the year under review, there were no applications made or proceedings pending in
the name of the Company under the Insolvency and Bankruptcy Code, 2016.
DETAILS OF DIFFERENCE BETWEEN VALUATION AMOUNT ON ONE TIME SETTLEMENT AND VALUATION
WHILE AVAILING LOAN FROM BANKS AND FINANCIAL INSTITUTIONS:
During the year under review, there has been no one time settlement of loan taken from
Banks and Financial Institutions. CAUTIONARY STATEMENT
Statements in this Directors' Report describing the Company's objectives, projections,
estimates, expectations or predictions may be "forward-looking statements"
within the meaning of applicable securities laws and regulations. Actual results could
differ materially from those expressed or implied. Important factors that could make
difference to the Company's operations include raw material availability and its prices,
cyclical demand and pricing in the Company's principal markets, changes in Government
regulations, Tax regimes, economic developments within India and the countries in which
the Company conducts business and other ancillary factors.
ACKNOWLEDGEMENT
Your Directors would like to express their appreciation for the assistance and
co-operation received from the Company's 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 of Directors
Sd/-
Nimish K. Patel Chairman & Managing Director
DIN:00240621
Date: 25/08/2023 Place: Ahmedabad
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