The Directors present the Thirty Third Annual Report and Audited Accounts of theCompany for the year ended March 31 2017.
|FINANCIAL RESULTS ||2016 -2017 ||2015 -2016 |
| ||(Rs. in lacs) ||(Rs. in lacs) |
|Profit before tax ||1256.86 ||1187.54 |
|Less: Tax Expense for the Year ||249.53 ||300.29 |
|Profit after tax ||1007.32 ||887.25 |
|Profit brought forward from previous year ||797.08 ||1114.99 |
|Amount available for appropriation ||1804.40 ||2002.24 |
|APPROPRIATIONS: || || |
|Proposed Dividend ||243.96 ||-- |
|Tax on Dividend ||49.67 ||-- |
|Interim Dividend Paid ||-- ||853.86 |
|Tax on interim Dividend ||-- ||173.85 |
|Transfer to General Reserve ||-- ||-- |
|Transfer to Special Reserve Fund ||201.46 ||177.45 |
|Balance carried to Balance Sheet ||1309.31 ||797.08 |
The Board of Directors are pleased to recommend a dividend of Rs.2/- per equity shareof the Company for the financial year ended 31st March 2017. The total cash outflow onaccount of dividend & tax thereon Rs. 293.63 lacs.
The Company's revenue from operation marginally decreased to Rs. 4388.02 lacs fromRs.4538.44 lacs whereas profit after tax increased to Rs.1007.32 lacs from Rs. 887.25 lacsin the previous year due to buoyancy in Capital Market.
SCHEME OF ARRANGEMENT OF DEMERGER
The Company's Scheme of Arrangement of Demerger of SEBI Registered IntermediariesBusiness of the Company into LKP Securities Ltd under sections 391 to 394 of the CompaniesAct 1956 and sections 52 and 55 of the Companies act 2013 was approved by the Hon'bleHigh Court of Bombay completed during the year. As per the Scheme the equity shareholdersof LKP Finance Limited were allotted 6 fully paid equity shares of Rs.2/- each in LKPSecurities Ltd. for every one equity share of Rs.10/- each held by them in LKP FinanceLtd. The equity shares of LKP Securities Limited are listed at BSE Limited with effectfrom 1st December 2016.
EMPLOYEES STOCK OPTION SCHEME
Pursuant to the approval of shareholders your Company has instituted the EmployeesStock Option Scheme 2010 and 2014. The Scheme is administered by the Nomination andRemuneration Committee of the Board of Directors.
Disclosures under the Companies (Share Capital and Debentures) Rules 2014 andSecurities And Exchange Board of India (Share Based Employee Benefits) Regulations 2014is annexed to this report herewith as "Annexure A".
The Company has no public deposits as of date and will not accept any deposits withoutprior approval of the Statutory Authorities concerned.
INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY
The Company has an Internal Control System commensurate with the size scale andcomplexity of its operations. The scope and authority of the Internal Auditors' functionis defined in their letter of engagement. To maintain its objectivity and independencethe Internal Audit function reports to the Chairman of the Audit Committee of the Board& to the Executive Chairman .
The Internal Audit Department monitors and evaluates the efficacy and adequacy ofinternal control system in the Company its compliance with operating systems accountingprocedures and policies of the Company. Based on the report of internal audit functionprocess owners undertake corrective action in their respective areas and therebystrengthen the controls. Significant audit observations and recommendations along withcorrective actions thereon are presented to the Audit Committee of the Board.
After implementation of Scheme of demerger of SEBI Registered Intermediaries Businessof the Company into LKP Securities Ltd LKP Securities Limited no longer remains as asubsidiary of the Company with effect from 8th July 2016.
As per the Circular No. 51/12/2007-CL-III dated 8th February 2011 issued by Governmentof India Ministry of Corporate Affairs the required financial information in theconsolidated balance sheet is given in respect of Company's subsidiaries i.e. GayatriCement and Chemical Industries Private Limited in Form AOC 1 annexed in Annual Report.
The annual accounts of the aforesaid subsidiary and the related detailed informationshall be made available to shareholders of the Company seeking such information at anypoint of time. The annual accounts of the subsidiary company shall also be kept open forinspection by any shareholder at the Registered office at 203 Embassy Centre NarimanPoint Mumbai 400 021.
Mr. Pratik M. Doshi retires by rotation and being eligible offers himself forre-appointment. Your Directors recommend his reappointment.
The Board of Directors reappointed Mr. Mahendra V. Doshi as Executive Director witheffect from 1st April 2017. The said reappointment has been approved by the Nomination andRemuneration Committee.
The requisite Resolution for the reappointment of Mr. Mahendra V. Doshi as ExecutiveDirector is being proposed in the Notice of the ensuing Annual General Meeting for theapproval of the Members.
The Company has received declarations from all the Independent Directors of the Companyconfirming that they meet the criteria of independence as prescribed in Section 149(6) ofthe Companies Act 2013.
The information on the particulars of the Directors proposed for re-appointment hasbeen given in the Notice of the Annual General Meeting.
Pursuant to the provisions of the Companies Act 2013 and provisions of Regulations ofthe SEBI (Listing Obligations and Disclosure Requirements) Regulation 2015 the Board hascarried out an evaluation of its own performance the directors individually as well asthe evaluation of the working of its Audit Nomination & Remuneration Committees. Themanner in which the evaluation has been carried out has been explained in the CorporateGovernance Report.
The Board has on the recommendation of the Nomination & Remuneration Committeeframed a policy for selection and appointment of Directors Senior Management and theirremuneration. The Remuneration Policy is stated in the Corporate Governance Report.
During the year five Board Meetings and four Audit Committee Meetings were convened andheld. The details of which are given in the Corporate Governance Report. The interveninggap between the Meetings was within the period prescribed under the Companies Act 2013.
DIRECTORS' RESPONSIBILITY STATEMENT
The Board of Directors acknowledges the responsibility for ensuring compliance with theprovisions of section 134(3)(c) read with section 134(5) of the Companies Act 2013 in thepreparation of the annual accounts for the year ended on March 31 2017 and state that :
i. in the preparation of the annual accounts the applicable accounting standards havebeen followed along with proper explanation relating to material departures if any;
ii. the Directors have selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the Company at the end of the financial year and ofthe profit of the Company for that period;
iii. the Directors have taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of this Act for safeguardingthe assets of the Company and for preventing and detecting fraud and other irregularities;
iv. the Directors have prepared the annual accounts on a going concern basis;
v. the Directors have laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and are operatingeffectively; and
vi. there is a proper system to ensure compliance with the provisions of all applicablelaws and that such systems are adequate and operating effectively.
Messrs Ford Rhodes Parks & Co.LLP Chartered Accountants Statutory Auditors ofthe Company would retire on the conclusion of this Annual General Meeting on completion oftheir term of appointment. Since Messrs Ford Rhodes Parks & Co. LLP CharteredAccountants are not eligible for reappointment as Statutory Auditors of the Company as perCompanies Act 2013 the Board of Directors on recommendation of the Audit Committeerecommended the appointment of Messrs MGB & Co. LLP Chartered Accountants (FirmRegistration No. 101169W/W100035) as Statutory Auditors of the Company to hold office fromthe conclusion of this i.e. 33rd Annual General Meeting until the conclusion of next i.e.34th Annual General Meeting. Consent and certificate from the said firm has been receivedto the effect that their appointment as Statutory Auditors of the Company if appointed atensuing Annual General Meeting would be according to the terms and conditions prescribedunder Section 139 of the Act and Rules framed thereunder. A resolution seeking theirappointment forms part of the Notice convening the 33rd Annual General Meeting and thesame is recommended for your consideration and approval.
Pursuant provisions of section 204 of the Companies Act 2013 and The Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the company hasappointed M/s V. R. Associates a firm of Company Secretaries in practice to undertake theSecretarial Audit of the Company. The Secretarial Audit report is annexed herewith as"Annexure B".
The observation made in the report with regard to appointment of at least one commonIndependent Director of Holding Company on the Board of Subsidiaries of the Company asrequired under Regulation 24(1) of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 is self explanatory.
EXTRACT OF ANNUAL RETURN
The details forming part of the extract of the Annual Return in form MGT-9 is annexedherewith as "Annexure C".
CORPORATE SOCIAL RESPONSIBILITY INITIATIVES
The company has contributed funds for the promotion of education and medical aidenvironmental sustainability etc. The contribution has been made to a registered trustwhich is mainly undertakes activities specified under Schedule VII of the Companies Act2013.
The report on CSR activities is annexed herewith as "Annexure D".
RELATED PARTY TRANSACTIONS
All related party transactions that were entered into during the financial year were onarm's length basis and were in the ordinary course of the business. There are nomaterially significant related party transactions made by the Company with Promoters KeyManagerial Personnel or other designated persons which may have potential conflict withinterest of the Company at large. The requisite details are given in Form AOC 2 is annexedherewith as Annexure E'.
CODE OF CONDUCT:
The Board of Directors has approved a Code of Conduct which is applicable to theMembers of the Board and all employees in the course of day to day business operations ofthe company. The Code has been placed on the Company's website www.lkpsec.com
The Code lays down the standard procedure of business conduct which is expected to befollowed by the Directors and the designated employees in their business dealings and inparticular on matters relating to integrity in the work place in business practices andin dealing with stakeholders.
All the Board Members and the Senior Management personnel have confirmed compliancewith the Code.
VIGIL MECHANISM / WHISTLE BLOWER POLICY
The Company is committed to the high standards of Corporate Governance and stakeholderresponsibility.
The Company has established a vigil mechanism to be known as the Whistle BlowerPolicy' for its Directors and employees to report instances of unethical behavior actualor suspected fraud or violation of the Company's Code of Conduct. The aim of the policyis to provide adequate safeguards against victimization of whistle blower who avails ofthe mechanism and also provide direct access to the Chairman of the Audit Committee inappropriate or exceptional cases.
Accordingly Whistle Blower Policy' has been formulated with a view to provide amechanism for the Directors and employees of the Company to approach the Ethics Counseloror the Chairman of the Audit Committee of the Company.
The purpose of this policy is to provide a framework to promote responsible and securewhistle blowing. It protects employees willing to raise a concern about seriousirregularities within the Company.
PREVENTION OF INSIDER TRADING
The Company has adopted a Code of Conduct for Prevention of Insider Trading with a viewto regulate trading in securities by the Directors and designated employees of theCompany. The Code requires pre-clearance for dealing in the Company's shares and prohibitsthe purchase or sale of Company shares by the Directors and the designated employees whilein possession of unpublished price sensitive information in relation to the Company andduring the period when the Trading Window is closed. The Board is responsible forimplementation of the Code.
All Board Directors and the designated employees have confirmed compliance with theCode.
INFORMATION PURSUANT TO SECTION 134(3) OF THE COMPANIES ACT 2013
The information required pursuant to rule 5 (2) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 forms a part of this report. However asper the first proviso to section 136(1) and second proviso of rule 5 (2) of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the report and thefinancial statements are being sent to the members of the Company excluding statement ofparticulars of employees under rule 5 (2) of the Companies (Appointment and Remunerationof Managerial Personnel) Rules 2014. If any member is interested in obtaining the copy ofthe said statement may write to the Company Secretary in advance.
The prescribed particulars of Conservation of Energy Technology Absorption do notapply to your Company. There are no foreign exchange earnings & outgo during the yearunder report.
CONSOLIDATED FINANCIAL STATEMENTS
The Consolidated Financial Statements are furnished herewith and form part of thisReport and Accounts. These statements have been prepared on the basis of audited financialstatements received from the Subsidiary Company as approved by their Board of Directors.
The Report on Corporate Governance along with a Certificate of compliance from thePractising Company Secretaries and Management Discussion and Analysis Report forms part ofthis Report.
Your Directors would like to place on record their sincere appreciation toShareholders Bankers Institutions and Employees for their cooperation and support.
For and on behalf of the Board of Directors
|Mumbai ||( M. V. Doshi ) |
|Date: April 26 2017 ||Executive Chairman |
Annexure A to the Directors' Report
Disclosures under the Companies (Share Capital and Debentures) Rules 2014 andSecurities And Exchange Board of India (Share Based Employee Benefits) Regulations 2014.
| || ||Employees Stock Option Scheme 2010 Granted on April 21 2010 ||Employees Stock Option Scheme 2010 Granted on June 26 2012 ||Employees Stock Option Scheme 2014 Granted on January 29 2015 |
|1. ||Options Granted ||599500 ||447000 ||775000 |
|2. ||Pricing Formula ||Up to 5 % discount on the average of the closing price of the Company's shares in the BSE during the last 15 days preceding the date of grant of options. ||At a price of Rs. 80/- per option. ||At a price of Rs. 80/- per option. |
|3. ||Options Vested ||528270 ||414375 ||-- |
|4. ||Options Exercised ||-- ||-- ||-- |
|5. ||Total number of Ordinary Shares arising as a result of exercise of Options ||-- ||-- ||-- |
|6. ||Options Lapsed/ Forfeited/ Surrendered/ Cancelled ||266970 ||173875 ||775000 |
|7. ||Variations of terms of Options ||-- ||-- ||-- |
|8. ||Money realized by exercise of the Options ||-- ||-- ||-- |
|9. ||Total number of Options in force ||261300 ||240500 ||-- |
|10. ||Employee-wise details of Options granted to: || || |
| ||i) Details of Options granted to senior managerial personnel ||-- ||-- |
| ||ii) Any other employee who receives a grant in any one year of Option amounting to 5% or more of Options granted during that Year. ||A total of 744500 options were granted to the Employees of the Company Including its subsidiary and also including the options given in 10 iii) below. ||A total of 610000 options were granted to the Employees of the Company Including its subsidiary and also including the options given in 10 iii) below. |
| ||iii) Identified employees who were granted Options during any one year equal to or exceeding 1% of the issued capital (excluding outstanding warrants and conversions) of the Company at the time of the grant. ||One employee received 390000 options. ||Two employees received 610000 options in aggregate. |
|11. ||Diluted Earnings Per Share (EPS) calculated in accordance with Accounting Standard 20 issued by ICAI for the year ended March 31 2016. ||Rs. 7.93 || |
|12. ||i) Method of calculation of employee compensation cost. ||Intrinsic Value ||Intrinsic Value |
| ||ii) Difference between the employee compensation cost so computed at (i) above and the employee compensation cost that shall have been recognized if fair value of Options had been used. ||As the fair value is lower than the intrinsic value the charge to profit and loss account is based on intrinsic value. ||As the fair value is lower than the intrinsic value the charge to profit and loss account is based on intrinsic value. |
| ||iii) The impact of difference on profits and EPS of the Company for the year ended March 31 2013 had fair value Options had been used for accounting Employee Options. ||There is no change in the reported diluted EPS. ||There is no change in the reported diluted EPS. |
|13. ||Weighted-average exercise price of options granted is equal/exceeds/less than market price of stock. ||All Options granted are exceeds the market price |