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LKP Finance Ltd.

BSE: 507912 Sector: Financials
NSE: LKPMERFIN ISIN Code: INE724A01017
BSE 12:51 | 22 Jun 109.35 3.60
(3.40%)
OPEN

109.00

HIGH

110.00

LOW

106.00

NSE 05:30 | 01 Jan LKP Finance Ltd
OPEN 109.00
PREVIOUS CLOSE 105.75
VOLUME 5291
52-Week high 139.00
52-Week low 46.40
P/E 5.71
Mkt Cap.(Rs cr) 137
Buy Price 108.20
Buy Qty 25.00
Sell Price 109.20
Sell Qty 93.00
OPEN 109.00
CLOSE 105.75
VOLUME 5291
52-Week high 139.00
52-Week low 46.40
P/E 5.71
Mkt Cap.(Rs cr) 137
Buy Price 108.20
Buy Qty 25.00
Sell Price 109.20
Sell Qty 93.00

LKP Finance Ltd. (LKPMERFIN) - Director Report

Company director report

The Directors present the Thirty Sixth Annual Report and Audited Accounts of theCompany for the year ended March 31 2020.

FINANCIAL HIGHLIGHTS

The financial performance of the Company is as follows:

Rs. In lakh

Particulars

Standalone

Consolidated

Financial Year 2019-20 Financial Year 2018-19 Financial Year 2019-20 Financial Year 2018-19
Revenue from Operations 1936.13 1447.28 1936.25 1450.72
Other Income 8.01 3021.40 8.10 3021.40
Total Revenue 1944.14 4468.68 1944.35 4472.12
Profit before Tax (2268.49) 2625.35 (2273.32) 2623.69
Less: Tax expense - 643.28 - 643.29
Profit after Tax (2268.49) 1982.07 (2273.32) 1980.40
Other Comprehensive loss for the year 41.52 1.80 31.08 (6.92)
Total Comprehensive Income for the year (2226.97) 1983.87 (2242.24) 1973.48
Earnings per equity share (Face Value of Rs.10/- each)
- Basic and Diluted (in Rs.) -18.05 15.78 -18.09 15.76

RESERVE

There is no amount proposed to be transferred to Reserves out of profits of thefinancial year 2019-20.

DIVIDEND

The Company paid an interim dividend during the financial year ended March 31 2020Rs. 2/- per equity share (20%) on the equity share capital in March 2020 amounting toRs. 25137246/- (exclusive of tax on dividend).

The Board of Directors did not recommend any final dividend on the Equity Shares andaccordingly the aforesaid payment of interim dividend shall be considered as dividend forthe Financial Year ended March 31 2020.

PERFORMANCE REVIEW

The Company's revenue from operation increased to Rs.1936.13 lacs from Rs. 1447.28 lacswhereas Other Income decreased to Rs. 8.01 lacs from 3021.40 lacs. The Company has adoptedInd AS for reporting financial results of the year under review against previously IndianGAAP . There is a net loss of after tax of Rs 2268.49 lakhs as against a net profit of Rs1982.07 lakhs in the previous year. This has arisen mainly because of net loss on fairvalue changes of Rs 3009.75 lakhs (as per IND AS) caused by the crash in Stock Markets inMarch 2020.

COVID-19

Towards the end of the financial year the World Health Organisation (WHO) declaredCovid-19 a pandemic and the outbreak which infected millions has resulted in deaths of asignificant number of people globally. Covid-19 is seen having an unprecedented impact

on people and economies worldwide. The Company is taking all necessary measures interms of mitigating the impact of the challenges being faced in the business. It isfocused on controlling costs maintaining liquidity and closely monitoring to theoperations. The Company carries shares and securities in its books. The effect of mark tomarket losses thereon have been taken into account in the Statement of Profit and Loss forthe year. The Company believes that it has taken into account the impact of known eventsarising out of COVID 19 pandemic in the preparation of financial results resulting out offair valuation of these investments.

The Ministry of Home Affairs Government of India on March 24 2020 notified the firstever nationwide lockdown in India to contain the outbreak of Covid-19 pandemic. TheCompany operates its business in conformity with the highest ethical standards andemployee centricity. In view of the outbreak of the pandemic The Company undertook timelymeasures to ensure the safety and wellbeing of its employees at all levels . The employeeswere allowed to work from home by providing adequate digital and other assistance. TheCompany observed all the government advisories and guidelines thoroughly..

SHARE CAPITAL

During the year under review there is no change in the Share capital of the Company.

During the year under review the Company has not issued any sweat equity shares orbonus shares or equity shares with differential rights.

FIXED DEPOSITS

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.

INDIAN ACCOUNTING STANDARD (IND AS)

The Company has adopted Indian Accounting Standards (“IND AS”) from April 012019 with a transition date of April 01 2018. Accordingly the financial statement forthe year 2019-20 have been prepared in accordance with IND AS prescribed under Section133 of the Act read with the relevant rules issued thereunder and the other recognisedaccounting practices and policies to the extent applicable.

SUBSIDIARY JOINT VENTURE HOLDING COMPANY

AND ASSOCIATE COMPANIES

As per the Circular No. 51/12/2007-CL-in dated 8th February 2011 issued byGovernment of India Ministry of Corporate Affairs the required financial information inthe consolidated balance sheet is given in respect of Company's subsidiary i.e. GayatriCement and Chemical Industries Private Limited in Form AOC 1 annexed in Annual Report as “AnnexureI”.

The annual accounts of the aforesaid subsidiary and the related detailed informationshall be made available to shareholders of the Company seeking such information atCompany's website i.e. www. lkpsec.com .

CONSOLIDATED FINANCIAL STATEMENT

During the year under review the Board has reviewed the affairs of its subsidiary. TheConsolidated Financial Statements of the Company is prepared in accordance with the Actand applicable IND AS along with the relevant documents and Auditors Report thereon formpart of this Annual Report.

In accordance with the provisions of Section 136(1) of the Act the Annual Report ofthe Company containing therein the audited standalone and consolidated financialstatements and the audited financial statement of the subsidiary has been placed on thewebsite of the Company at www.lkpsec.com. The aforesaid documents are alsoavailable to Member interested in obtaining the same upon a request made to the Company.

DIRECTORS

In terms of Section 152 of the Act Mr. Pratik Doshi is liable to retire by rotation atthe forthcoming Annual General Meeting (“AGM”) and being eligible offershimself for re-appointment. The Company has received necessary disclosure and confirmationfrom concerned Director(s) in connection with their appointment / re-appointment.Additional information on appointment / re-appointment of Directors as required underRegulation 36 of SEBI Listing Regulations is given in the Notice convening the ensuingAGM.

Pursuant to section 149 and other applicable provisions of the Companies Act 2013your Directors are seeking re-appointment of Mrs. Anjali Suresh (DIN 02545317) asIndependent Director for five consecutive years for a second term with effect from 11thJune 2020. The detail of the proposal for re-appointment of Mrs. Anjali Suresh ismentioned in the Explanatory Statement under Section 102 of the Companies Act 2013 of theNotice of the 36th Annual General Meeting.

During the year under review Mr. Amitabh Chaturvedi ceased to be a Nominee Director ofthe Company with effect from October 22 2019 detail as reported under CorporateGovernance Report of the Company.

The Company has received necessary declarations from all the Independent Directorsunder Section 149(7) of the Act that they meet the criteria of independence laid down inSection 149(6) of the Act and Regulation 25 of SEBI Listing Regulations.

PERFORMANCE EVALUATION OF BOARD

Pursuant to the provisions of the Act and SEBI Listing Regulations the Board hascarried out an annual evaluation of performance of its own the Committees thereof and theDirectors individually.

At the meeting of the Board all the relevant factors that are material for evaluatingthe performance of the Committees and of the Board were discussed in detail.

A separate exercise was carried out to evaluate the performance of individual Directorsincluding the Chairman of the Board who were inter-alia evaluated on parameterssuch as level of engagement contribution independence of judgment safeguarding theinterest of the Company and its minority shareholders etc. The performance evaluation ofthe Independent Directors was carried out by the entire Board except the Director beingevaluated. The performance evaluation of the Chairman and Non-Independent Directors wascarried out by the Independent Directors.

The Directors expressed their satisfaction with the evaluation process.

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.

POLICY ON DIRECTORS' APPOINTMENT AND REMUNERATION

Company's policy is to have an appropriate mix of executive nonexecutive andindependent directors to maintain the independence of the Board and separate itsfunctions of governance and management. As on March 31 2020 the Board had five membersone of whom is an Executive Chairman-Managing Director a Non-executive NonindependentDirector and three Independent Directors. One of whom is a Woman Independent Director.

The Company's policy on Directors' appointment and remuneration and other mattersprovided in Section 178(3) of the Act has been disclosed in the Corporate GovernanceReport which forms part of this Annual Report.

MEETINGS

During the year four Board Meetings and 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 2020 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 loss 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.

STATUTORY AUDITORS

M/s. MGB & Co. LLP Chartered Accountants Firm Reg. No. 101169W/W100035 Mumbairetire at the conclusion of the forthcoming Annual General Meeting. The Company hasreceived a letter from them to the effect that their appointment if made would be withinthe provision prescribed under Section 139 of the Companies Act 2013. Your Directorsrecommend their re-appointment.

Auditors' Report to the members does not contain any qualification reservation andadverse remarks and the same is annexed in this Annual Report.

SECRETARIAL AUDIT

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 “AnnexureII”.

The Board of Directors affirm that the Company has complied with the applicableSecretarial Standards issued by the Institute of Companies Secretaries of India (SS1 andSS2) respectively relating to Meetings of the Board its Committees and the GeneralMeetings.

EXTRACT OF ANNUAL RETURN

The details forming part of the extract of the Annual Return in form MGT-9 is annexedherewith as “Annexure III”.

CORPORATE SOCIAL RESPONSIBILITY INITIATIVES

The company has contributed funds for the promotion of education and environmentalsustainability etc. The contribution has been made to a registered trust which mainlyundertakes activities specified under Schedule VII of the Companies Act 2013.

The report on CSR activities is annexed herewith as “Annexure IV”. RELATEDPARTY 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.

PARTICULARS OF LOANS GIVEN INVESTMENTS MADE GUARANTEES GIVEN OR SECURITY PROVIDED BYTHE COMPANY

Details of loans guarantees and investments covered under the provisions of Section186 of the Act are given in the Notes to the Financial Statement.

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 Chairman of theAudit 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 as amendedfrom time to time with a view to regulate trading in securities by the Directors anddesignated employees of the Company. The Code requires pre-clearance for dealing in theCompany's shares and prohibits the purchase or sale of Company shares by the Directors andthe designated employees while in possession of unpublished price sensitive information inrelation to the Company and during the period when the Trading Window is closed. The Boardis responsible for implementation 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 Statement of Disclosure of Remuneration under Section 197 of Companies Act 2013and Rule 5(1) of Companies (Appointment and Remuneration of Managerial Personnel) Rules2014 Annexed as “Annexure V”.

None of the employees of the Company are covered under the provisions of Rule 5(2) and5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014.

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.

MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY

There were no material changes and commitments affecting the financial position of theCompany from end of the financial year upto the date of this Board's Report.

CORPORATE GOVERNANCE

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.

DISCLOSURES

• There are no significant and material orders passed by the regulators or courtsor tribunals impacting the going concern status and the Company's operations in future.

• During the year under review the Company has not issued any Debentures.

• There is no change in the nature of business of the Company.

• Executive Chairman-Managing Director as per the terms of his appointment doesnot draw any commission or remuneration from subsidiary company. Thereby no disclosure isrequired under Section 197(14) of the Act.

• Maintenance of cost records and requirement of cost Audit as prescribed underthe provisions of Section 148(1) of the Act are not applicable to the business activitiescarried out by the Company.

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 the requirementsof the Sexual Harassment of Women at the Workplace (Prevention Prohibition &Redressal) Act 2013. Internal Complaints Committee (ICC) has been set up to redresscomplaints received regarding sexual harassment. All employees (permanent contractualtemporary trainees) are covered under this policy. The following is a summary of sexualharassment complaints received and disposed-off during the year 2019-20.

• Number of complaints received: Nil
• Number of complaints disposed off: Nil
• Number of complaints pending: Nil

ACKNOWLEDGEMENT

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 Board of Directors
(M V. Doshi)
Place: Mumbai Executive Chairman &
Date: June 27 2020 Managing Director