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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

Your Directors take great pleasure in presenting this 95th Annual Report on thebusiness and operations of your Company together with the Audited Financial Statementsfor the financial year ended 31st March 2019.

1. FINANCIAL HIGHLIGHTS (र in lakhs)

Particulars 2018-19 2017-18
Gross Income 398.73 664.83
Profit before Depreciation and Tax 191.18 478.91
Depreciation 3.54 4.99
Profit for the year before taxation 187.64 473.92
Provision for Taxation 5.00 11.50
Profit after tax 182.64 462.42
Prior year taxes 0.05 0.67
Net Profit after Tax 182.59 461.75
Profit Brought Forward 1189.96 954.58
Total Profit available for appropriation 1372.55 1416.33
Dividend pertaining to previous year paid during the year 120.00 105.00
Corporate Dividend Tax 24.67 21.37
Transfer to Reserve Fund (per RBI Guide Lines) 37.60 100.00
Balance carried over to Balance Sheet 1190.28 1189.96

2. OPERATIONAL PERFORMANCE :

The financial performance of your Company during the year ended March 31 2019decreased with Revenue from Operations lower by 43.37 per cent to Rs.344.49 lakhs fromRs.611.93 lakhs in the previous year. Other

Income marginally increased to Rs.54.24 lakhs from Rs.52.90 lakhs during the previousyear. The Net Profit after Tax is Rs.182.59 lakhs after providing Current Year Income Tax(MAT) of Rs.5.00 lakhs as against Rs.461.75 lakhs in the previous year. The decrease inprofitability is mainly on account of unfavourable Stock Market conditions

Categorization and Rationalization of Mutual Fund Schemes by SEBI and the imposition ofthe new capital gains tax and dividend tax from Financial Year 2018-19. The Company willcontinue to focus its efforts to closely monitor portfolio Investment activity to generateoptimum returns by way of capital appreciation and periodic dividend returns. The rentalincomes have been on expected basis.

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. In recognition of the overall performance during the year underreview your Directors are pleased to recommend a dividend at the rate of 25% (i.e.Rs.2.50 per Equity Share of Rs.10/- each) for the financial year 2018-19 as against 40%dividend rate in the previous year. The proposed dividend if approved at the 95th AnnualGeneral Meeting by the Members will be paid to all those Equity Shareholders whose namesappear in the Register of Members as on 02.08.2019 and also to those whose names appear asbeneficial owners as furnished by the National Securities Depository Limited and CentralDepository Services (India) Limited.

The Company has not appropriated proposed dividend from Statement of Profit and Lossfor the year ended March 31 2019. The outflow on account of the dividend payout would beRs. 90.42 lakhs including tax on dividends.

4. TRANSFER TO RESERVE :

The Company Directors have decided to retain the Surplus amount in Statement of Profitand Loss of Rs.1190.28 lakhs in the retained earnings only. However the Companytransferred a sum of Rs. 37.60 Lakhs i.e. 20% of its

Net Profit for the year 2018-19 to Reserve Fund in Terms of Sec 45-1c of the RBI Act1934.

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 HAVERESIGNED 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. The Shareholders of theCompany at their 90th Annual General Meeting held on 5th August 2014 have appointed

Sri. R.Surender Reddy (DIN 00083972) Sri. Kapil Bhatia (DIN 00090776) and Sri. KeshavBhupal (DIN 000123184) as Independent Directors of the Company till the 95th AnnualGeneral Meeting of the Company to be held in the year 2019.

As their term of appointment would expire at the ensuing Annual General Meeting basedon the recommendation of Nomination and Remuneration Committee it is proposed tore-appoint them as Independent Directors of the Company for another term of 5 consecutiveyears not liable to retire by rotation subject to the approval of Shareholders bypassing Special Resolutions.

7. DECLARATIONS GIVEN BY INDEPENDENT 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 May 27th 2019.

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 safeguarding of minorityshareholders interest adherence to Code of Conduct and Business ethics monitoring ofregulatory compliance risk assessment and review of Internal Control Systems 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 2018to 31st March 2019.

The dates on which the meetings were held are as follows:

11th May 2018 10th August 2018 10th November2018 and 8th February 2019.

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 2019-20 have been paid. TheCompany's shares are listed and traded at NSE with ISIN code ‘INE 850E01012' andStock Code ‘LFIC' with effect from 15.04.2015.

13. (i) 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 2019 74.06% of the shares in your Company have beendematerialized.

(ii) 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 2011-2012 will expire onSeptember 18 2019 and thereafter the amount standing to the credit in the said accountwill be transferred to the "Investor Education and Protection Fund" of theCentral Government.

14. AUDITORS:

i. Statutory Auditors:

At the Annual General Meeting held on 28.07.2017 M/s. K.S.Rao & Co. CharteredAccountants Hyderabad was appointed as Statutory Auditors of the Company to hold theoffice for a period of 5 years commencing from the conclusion of 93rd Annual GeneralMeeting till the conclusion of 98th Annual General Meeting of the Company subject toratification at every subsequent Annual General Meeting of the Company. Howeverratification of appointment of Statutory Auditors by the Members at every Annual GeneralMeeting is done away with vide notification dated May 07th 2018 issued by the CorporateAffairs New Delhi. Accordingly no resolution is proposed for the ratification ofappointment of Auditors.

The Auditors' Report for F.Y. 2018-19 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 AccountantsHyderabad perform the duties of Internal Auditors of the Company and their report isreviewed by the Audit Committee from time to time.

iii. Secretarial Auditors: According to the provisions of section 204 of theCompanies Act 2013 read with Rule 9 of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 the Secretarial Audit Report submitted by Smt. N.Madhavi Company Secretary in Practice is enclosed as a part of this report. TheSecretarial Audit

Report does not contain any qualifications reservations and adverse remarks.

15. DETAILS IN RESPECT OF ADEQUACY OF INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO THEFINANCIAL STATEMENTS: The Company has in place proper and adequate internal controlsystems commensurate with the nature of its business size and complexity of itsoperations. Internal control systems comprising of policies and procedures designed toensure reliability of financial reporting timely feedback on achievement of operationaland strategic goals compliance with policies procedure applicable laws and regulationsand all that assets and resources are acquired are used economically.

16. 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 accountingstandards have been followed along with proper explanation relating to materialdepartures. ii. Such accounting policies as mentioned in the notes to the financialstatements have been selected and applied consistently and judgments and estimates thatare reasonable and prudent made so as to give a true and fair view of the state of affairsof the Company at the end of the financial year 2018-19 and of the statement of Profit orLoss of the Company for that period. iii. Proper and sufficient care has been taken forthe maintenance of adequate accounting records in accordance with the provisions of theCompanies Act 2013 for safeguarding the assets of the Company and for preventing anddetecting fraud and other irregularities. iv. The annual accounts for the year 2018-19have been prepared on a going concern basis. v. That the proper internal financialcontrols were in place and that the financial controls were adequate and were operatingeffectively. vi. That systems to ensure compliance with the provisions of all applicablelaws were in place and were adequate and effectively mentioned under various heads of thedepartments which are in then reporting to the Managing Director.

17. 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.

18. 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 2019. Further the Company isregistered with RBI as a "Non Deposit Taking Company".

19. CHANGE IN NATURE OF BUSINESS:

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

20. 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.

21. 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 asAnnexure-I.

The policy on related party transactions as approved by the Board is uploaded on thewebsite of the Company at www.lakshmifinance.org.

22. 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.

23. 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 the Management's discussion and analysis isset out in this Annual

Report.

24. CORPORATE GOVERNANCE AND SHAREHOLDERS 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

Corporate Governance as stipulated under Listing Regulations is included as a part ofthis report.

25. 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 has not been given as the same is not applicable owing to the nature ofactivities in foreign Currency is Nil.

26. 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 Bhupal Sri.Kapil Bhatia and Sri.K.Harishchandra PrasadManaging Director. CSR Committee of the Board developed a CSR Policy and the functions ofCommittee include review of CSR initiatives undertaken by the Company formation andrecommendation to the Board of a CSR policy indicating the activities to be undertaken bythe Company and recommendation of the amount of the expenditure to be incurred for suchactivities. However during the year under review Section 135 of the Companies Act 2013relating to the Corporate Social Responsibility is not applicable to the Company and hencethe same is not adopted.

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

28. MATERIAL CHANGES AND COMMITMENTS:

Pursuant to the provisions Sec.134 (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.

29. 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.

30. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS:

There are no significant material orders passed by the Regulators/Courts which wouldimpact the going concern status of the Company and its future operations.

 31. DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE(PREVENTION PROHIBITIONAND REDRESSAL) ACT 2013:

"The Company has in place an Anti Sexual Harassment Policy in line with therequirements of The Sexual Harassment of Women at the Workplace (Prevention Prohibition& Redressal) Act 2013. Internal Complaints Committee

(ICC) has been set up to redress complaints received regarding sexual harassment. Allemployees (permanent contractual temporary trainees) are covered under this policy.

The following is a summary of sexual harassment complaints received and disposed offduring each Financial Year: No. of complaints received: Nil No. of complaints disposedoff: Nil

32. ACKNOWLEDGEMENTS:Directors take this opportunity to express their thanksto various departments of the Central and State GovernmentBanks and Shareholdersfor their continued support and guidance. The Directors wish to place on record theirappreciation for the dedicated efforts put in by the Employees of the Company at alllevels.

For and on behalf of the Board

LAKSHMI FINANCE & INDUSTRIAL CORPORATION LIMITED

Sd/- Sd/-

R. SURENDER REDDY

Director

( DIN: 00012564)

K. HARISHCHANDRA PRASAD

Managing Director

(DIN: 00083972)

Place: Hyderabad

Date: 27.05.2019

.