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Lakshmi Finance & Industrial Corporation Ltd.

BSE: 532562 Sector: Financials
NSE: LFIC ISIN Code: INE850E01012
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Lakshmi Finance & Industrial Corporation Ltd. (LFIC) - Director Report

Company director report

To

The Members of

Lakshmi Finance & Industrial Corporation Limited

The Board of Directors are pleased to present the Company's Ninety Seventh AnnualReport and the Company's Audited Financial Statements for the financial year ended March312021.

1). FINANCIAL PERFORMANCE

The summarized financial results of the Company for the financial year ended March312021 are presented below:

(Rs. in lakhs)

Particulars 2020-21 2019-20
Gross Income 1549.49 331.15
Profit/(Loss) before Depreciation and Tax 1412.16 (907.46)
Depreciation 12.78 13.20
Profit/(Loss) for the year before taxation 1399.38 (920.66)
Provision for Taxation 85.00 (0.49)
Profit/(Loss) after tax 1314.38 (920.17)
Prior year taxes (0.32)
Net Profit/(Loss) after Tax 1314.70 (920.17)
Deferred tax (Liability)/Asset (399.35) 261.53
Profit/(Loss) for the year after Tax 915.35 (658.63)
Profit brought Forward 338.83 1087.88
Total Profit available for appropriation 1254.18 429.25
Dividend pertaining to previous year paid during the year 60.00 75.00
Corporate Dividend Tax 15.42
Transfer to Reserve Fund (per RBI Guide Lines) 200.00
Balance carried over to Balance Sheet 994.18 338.83

2). OPERATIONAL PERFORMANCE:

During the year under review the COVID-19 pandemic had disrupted many of theoperations in trade commerce and Industry activities and the Indian Economy experienced adouble digit negative growth. Equally the pandemic disrupted the financial markets andthe stock market operations were adversely affected which resulted in significant erosionof equity share valuations. Despite the various challenges during the pandemic theeconomy during the year slowly started improving and with the stock market sentimentimproving the sensex which was at 29468 as on 31.03.2020 bounced back to 49509 as on31.03.2021. Presently all the economic industries show prospects of improved economicgrowth and the stock market environment looks encouraging in the coming year.

The Company recorded Gross Income of Rs.1549.49 lakhs as compared to Rs.331.15 lakhsin the previous year. Profit after tax stood at Rs.915.35 lakhs after providing currentyear tax provision of Rs.85 lakhs (MAT) as compared to Loss after tax of Rs.658.63 lakhsin the previous year. The increase in profitability is on account of favourable StockMarket conditions and increase in valuation of investments. The Company will continue tofocus its efforts to closely monitor portfolio investment activity to generate optimumreturns by way of capital appreciation and periodic dividend returns.

3). DIVIDEND:

Your Company has a dividend policy that inter alia balances the objectivesappropriately rewarding shareholders and retaining capital in order to fund future growth.It has a consistent track record of dividend distribution to Company Shareholders. Inrecognition of the overall performance during the year under review your Directors arepleased to recommend a dividend at the rate of 30% (i.e. Rs.3/- per Equity Share ofRs.10/- each) for the financial year 2020-21 as against 20 % dividend rate in the previousyear. The proposed dividend if approved at the 97th Annual General Meeting by theMembers will be paid to all those Equity Shareholders whose names appear in the Registerof Members as on 18.08.2021 and also to those whose names appear as beneficial owners asfurnished by the National Securities Depository Limited and Central Depository Services(India) Limited. The Company has not appropriated proposed dividend from Statement ofProfit and Loss for the year ended March 312021. The outflow on account of the dividendpayout would be Rs. 90 lakhs.

UNPAID/UNCLAIMED DIVIDEND:

In terms of the provisions of Investor Education and Protection Fund (AccountingAudit Transfer and Refund) Rules 2016 and Rules 2001 unpaid/un- claimed dividendamount of Rs.519709/- was transferred to Investor Education and Protection Fund on09.10.2020 pertaining to the financial year 2012-13.

4) . TRANSFER TO RESERVES:

The Company proposed to transfer a sum of Rs.200 lakhs i.e 20% of its Net Profit forthe year 2020-21 to Reserve Fund in terms of Sec 45-1c of the RBI Act 1934.

5) . DETAILS OF SUBSIDIARIES ASSOCIATES AND

JOINT VENTURES:

Your Company does not have any subsidiaries associates and joint ventures.

6) . DETAILS OF DIRECTORS OR KEY MANAGERIAL

PERSONAL WHO WERE APPOINTED OR HAVE RESIGNED DURING THE YEAR:

Sri. K. Kapil Prasad Director of the Company retires at the ensuing Annual GeneralMeeting and being eligible offers himself for re-appointment.

Smt. Deepa Gusain was appointed as Company Secretary of the Company with effect from03.02.2021 as per the provisions of the Companies Act 2013.

7) DECLARATIONS GIVEN BY INDEPENDET DIRECTORS:

All Independent Directors have given declarations that they meet the criteria ofIndependence as laid down under Section 149 of the Companies Act 2013 and Regulations ofSEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 which have beenrelied on by the Company and were placed at the Board Meeting held on June 29 2021.

8) EVALUATION OF THE BOARD'S PERFORMANCE:

In compliance with the Companies Act 2013 and Regulation 17(10) of SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 the performance evaluation ofthe Board was carried out during the year under review.

The Board has a formal mechanism for evaluating Board's performance and as well as thatof its Committees and Individual Directors including the Chairman of the Board based onthe criteria laid down by Nomination and Remuneration Committee which included attendancecontribution at the meetings and otherwise Independent judgment safeguard-ing ofminority shareholders interest adherence to Code of Conduct and Business ethicsmonitoring of regulatory compliance risk assessment and review of Internal ControlSystems etc.

9) . POLICY ON DIRECTOR'S APPOINTMENT AND

REMUNERATION AND OTHER DETAILS:

The Company follows a policy on remuneration of Directors and Senior ManagementEmployees. The Policy is approved by the Nomination and Remuneration Committee and theBoard . More details on the same are given in the Corporate Governance Report.

10) . NUMBER OF BOARD MEETINGS HELD:

The Board of Directors duly met 4 times during the Financial Year from 1st April 2020to 31st March 2021. The dates on which the meetings were held are as follows:

29th June 2020 11th September 2020 6th Novem- ber2020 and3rd February2021.

11) . AUDIT COMMITTEE

The details pertaining to composition and term of reference of the Audit CommitteeMembers dates of meeting held and attendance of the Directors are given separately in theCorporate Governance Report which forms part of this report.

12) . LISTING OF COMPANY'S SHARES:

The Company's shares are listed at The National Stock Exchange of India Limited (NSE)w.e.f. 15.04.2015 and the Annual Listing Fees for the year 2021-22 have been paid. TheCompany's shares are listed and traded at NSE with ISIN code ‘INE 850E01012'and Stock Code is ‘LFIC' with effect from 15.04.2015.

13) . DEMATERIALISATION OF SHARES:

Your Company shares have been made available for dematerialization through the NationalSecurities Depository Limited (NSDL) and Central Depository Services (India) Limited(CdSL). As on 31st March 202175.88% of the shares in your Company have beendematerialized.

14. UN PAID /UN CLAIMED DIVIDEND:

In terms of the provisions of the Companies Act the Company is obliged to transferdividends which remain unpaid or unclaimed for a period of seven years from thedeclaration to the credit of the Investor Education and Protection Fund established by theCentral Government. Accordingly the Members are hereby informed that the 7 years periodfor payment of the dividend pertaining to financial year 2013-2014 will expire onSeptember 10th 2021 and thereafter the amount standing to the credit in thesaid account will be transferred to the "Investor Education and Protection Fund"of the Central Government.

15). AUDITORS:

i). Statutory Auditors:

At the Annual General Meeting held on 28.07.2017 M/s. K.S.Rao & Co. CharteredAccountants Hyderabad were appointed as Statutory Auditors of the Company to hold theoffice for a period of 5 years commencing from the conclusion of 93rd AnnualGeneral Meeting till the conclusion of 98th Annual General Meeting of theCompany.

The Auditors' Report for F.Y. 2020-21 does not contain any qualifications. TheAuditors' Report is enclosed with the Financial Statements in this Annual Report.

ii) . Internal Auditors:

M/s M. Bhaskara Rao & Co. Chartered Accountants Hyderabad perform the duties ofInternal Auditors of the Company and their reports are reviewed by the Audit Committeefrom time to time.

iii) . Secretarial Auditors:

According to the provisions of section 204 of the Companies Act 2013 read with Rule 9of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 theSecretarial Audit Report submitted by Smt. N. Madhavi Company Secretary in Practice isenclosed as a part of this report.

16) . DETAILS IN RESPECT OF ADEQUACY OF INTER

NAL FINANCIAL CONTROLS WITH REFERENCE TO THE FINANCIAL STATEMENTS:

The Company has in place proper and adequate internal control systems commensurate withthe nature of its business and size and complexity of its operations. Internal controlsystems comprising of policies and procedures designed to ensure reliability of financialreporting timely feedback on achievement of operational and strategic goals compliancewith policies procedure applicable laws and regulations and that all assets andresources are acquired are used economically.

17) . DIRECTORS' RESPONSIBILITY STATEMENT:

Pursuant to Section 134 (5) of the Companies Act 2013 your Directors confirm that tothe best of their knowledge and belief and according to the information and explanationobtained by them.

i. In the preparation of the annual accounts the applicable accounting standards havebeen followed along with proper explanation relating to material departures.

ii. Such accounting policies as mentioned in the notes to the financial statements havebeen selected and applied consistently and judgments and estimates that are reasonable andprudent made so as to give a true and fair view of the state of affairs of the Company atthe end of the financial year 2020-21 and of the statement of Profit or Loss of theCompany for that period.

iii. Proper and sufficient care has been taken for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 2013 forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities.

iv. The annual accounts for the year 2020-21 have been prepared on a going concernbasis.

v. That the proper internal financial controls were in place and that the financialcontrols were adequate and were operating effectively.

vi. That systems to ensure compliance with the provisions of all applicable laws werein place and were adequate and effectively mentioned under various heads of thedepartments which are in then reporting to the Managing Director.

18) . PARTICULARS OF LOANS GUARANTEES OR

INVESTMENTS:.

The Company has not given Loans Guarantees and Investments covered under theprovisions of section 186 of the Companies Act 2013

19) . PUBLIC DEPOSITS:

Your Company has not accepted any deposits from the public during the year under reviewand there are no outstanding deposits as on 31st March 2021. Further theCompany is registered with RBI as a "Non-Banking Financial Institution withoutaccepting public Deposits".

20) . CHANGE IN NATURE OF BUSINESS:

There is no change in the nature of business during the year under review.

21) . VIGIL MECHANISM :

In pursuant to the provisions of section 177(9) & (10) of the Companies Act 2013a Vigil Mechanism for Directors and employees to report genuine concerns has beenestablished. The Vigil Mechanism Policy has been uploaded on the website of the Company atwww.lakshmifinance.org.in.

22) . RELATED PARTY TRANSACTIONS :

Related party transactions that were entered during the financial year were on an arm'slength basis and were in the ordinary course of business. There were no materiallysignificant related party transactions with the Company's Promoters Directors Managementor their relatives which could have had a potential conflict with the interests of theCompany. Transactions with related parties entered by the Company in the normal course ofbusiness are periodically placed before the Audit Committee for its omnibus approval andthe particulars of contracts entered during the year as per Form AOC-2 is enclosed as Annexure-I.The policy on related party transactions as approved by the Board is uploaded on thewebsite of the Company at www.lakshmifinance.org.in.

23) . EXTRACT OF ANNUAL RETURN:

The details forming part of the extract of the Annual Return in form MgT-9 is annexedherewith as "Annexure-II" to this report

24) . MANAGEMENT DISCUSSION AND ANALYSIS REPORT:

In terms of the provisions of Regulation 34 of the Securities and Exchange Board ofIndia. (Listing Obligations and Disclosure Requirements) Regulations 2015 theManagement's discussion and analysis is set out in this Annual Report.

25) . CORPORATE GOVERNANCE AND SHARE

HOLDERS INFORMATION:

Your Company has taken adequate steps to adhere to all the stipulations laid down inthe Listing Regulations. A report on Corporate Governance is included as a part of thisAnnual Report. Certificate from the Statutory Auditors of the Company M/s. K.S. Rao &Co. Chartered Accountants confirming the compliance with the conditions of CorporateGovernance as stipulated under Listing Regulations is included as a part of this report.

26) . CONSERVATION OF ENERGY TECHNOLOGY

ABSORPTION FOREIGN EXCHANGE EARNINGS AND OUTGO:

Information required under section 134(3)(m) read with Rule 8 of the Companies(Accounts) Rules 2014 of the Companies Act was not given as the same is not applicableowing to the nature of activities in foreign Currency is Nil.

27) . CORPORATE SOCIAL RESPONSIBILITY (CSR) :

In terms of section 135 and Schedule VII of the Companies Act 2013 the Board ofDirectors of your Company has constituted a CSR Committee w.e.f 25.05.2015. The CommitteeComprises of three Independent Directors and one Non-Independent Director namelySri.R.Surender Reddy Sri.Keshav Bhu- pal Sri.Kapil Bhatia and Sri.K.HarishchandraPrasad Managing Director. CSR Committee of the Board developed a CSR Policy and thefunctions of Committee include review of CSR initiatives undertaken by the Companyformation and recommendation to the Board of a CSR policy indicating the activities to beundertaken by the Company and recommendation of the amount of the expenditure to beincurred for such activities. However during the year under review Section 135 of theCompanies Act 2013 relating to the Corporate Social Responsibility is not applicable tothe Company and hence the same is not adopted.

28) . REMUNERATION RATIO OF THE DIRECTORS / KEY MANAGERIAL PERSONNEL (KMP) / EMPLOYEES:

The information required pursuant to Section 197 read with Rule 5 of The Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 and Companies(Particulars of Employees) Rules 1975 in respect of employees of the Company andDirectors is given in Annexure-III

29) . MATERIAL CHANGES AND COMMITMENTS:

Pursuant to the provisions Sec.1 34 (3) (l) of the Companies Act 2013 there were nomaterial changes and commitments which affects the financial statements of the Companyduring the year under review.

30) . RISK MANAGEMENT COMMITTEE

The Board of Directors of the Company has formed a Risk Management Committee to frameimplement and monitor the risk management plan for the Company. The Committee isresponsible for reviewing the risk management plan and ensuring its effectiveness. TheAudit Committee has additional oversight in the area of financial risks and controls.Major risks identified by the business and functions are systematically addressed throughmitigating actions on a continuing basis. The details of Risk Management Committee and itscomposition is given in the Corporate Governance Report which form part of this report.

31) . SIGNIFICANT AND MATERIAL ORDERS PASSED

BY THE REGULATORS OR COURTS There are no significant material orders passed by theRegulators/Courts which would impact the going concern status of the Company and itsfuture operations.

32) . DISCLOSURE UNDER THE SEXUAL HARASSMENT

OF WOMEN AT WORKPLACE (PREVENTION PROHIBITION AND REDRESSAL) ACT 2013: "TheCompany has in place an Anti Sexual Harassment Policy in line with the requirements of TheSexual Harassment of Women at the Workplace (Prevention Prohibition & Redressal) Act2013. Internal Complaints Committee (ICC) has been set up to redress complaints receivedregarding sexual harassment. All employees (permanent contractual temporary trainees)are covered under this policy. The following is a summary of sexual harassment complaintsreceived and disposed off during each Financial Year:

No. of complaints received: Nil
No. of complaints disposed off: Nil

33). ACKNOWLEDGEMENTS:

Directors take this opportunity to express their thanks to various departments of theCentral and State Government Banks and Shareholders for their continued support andguidance.

The Directors wish to place on record their appreciation for the dedicated efforts putin by the Employees of the Company at all levels.

For and on behalf of the Board

LAKSHMI FINANCE & INDUSTRIAL CORPORATION LIMITED

Place: Hyderabad Date: 29.06.2021 Sd/- R. SURENDER REDDY Director (DIN: 00083972) Sd/- K. HARISHCHANDRA PRASAD Managing Director ( DIN: 00012564)

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