Your Directors are pleased to present the Twenty-Eight Annual Report ofthe Company together with the Audited Financial Statements for the financial year endedMarch 31 2022. The consolidated performance of the Company and its subsidiaries has beenreferred to wherever required.
A summary of the Consolidated and Standalone financial performance ofyour Company for the financial year ended March 31 2022 is as under:
(Rs. in lacs)
|Particulars ||Standalone ||Consolidated |
| ||Financial Year 2021-22 ||Financial Year 2020-21 ||Financial Year 2021-22 ||Financial Year 2020-21 |
|Revenue from Operations ||9264.69 ||8374.29 ||9358.44 ||8452.90 |
|Other Income ||76.05 ||65.16 ||76.05 ||65.16 |
|Total Revenue ||9340.74 ||8439.45 ||9434.49 ||8518.06 |
|Profit before Tax ||1804.30 ||553.71 ||1825.02 ||561.56 |
|Less: Tax expense ||473.53 ||162.01 ||478.29 ||164.44 |
|Profit after Tax ||1330.77 ||391.70 ||1346.73 ||397.12 |
|Other Comprehensive loss for the year ||27.94 ||6.53 ||27.96 ||6.53 |
|Total Comprehensive Income for the year ||1358.71 ||398.23 ||1374.69 ||403.66 |
|Earnings per share on equity shares of Rs. 2 each || || || || |
|- Basic (in Rs.) ||1.79 ||0.53 ||1.81 ||0.54 |
|- Diluted (in Rs.) ||1.79 ||0.53 ||1.81 ||0.54 |
The COVID-19 pandemic has emerged as a global challenge creatingdisruption across the world. Global solutions are needed to overcome the challenges -businesses & business models have transformed to create a new work order. The swifttransition to remote working was facilitated by the Company. As capital markets serviceswere declared as essential services your Company continued its operations by strictlyadhering to the minimal staff strength requirement and maintaining social distancing andother precautions as per the Government directions. Physical and emotional wellbeing ofemployees continues to be a top priority for the Company with several initiatives tosupport employees and their families during the pandemic.
The management has at the time of approving the financial statementsassessed the potential impact of the Covid-19 on the Company. Barring any future Covid-19related escalations based on the current assessment the management is of the view thatimpact of Covid-19 on the operations of the Company and the carrying value of its assetsand liabilities is not likely to be material.
STATE OF THE COMPANY?S AFFAIRS
On a consolidated basis the revenue for FY 2021-22 was Rs. 9358.44lacs higher by 10.71% percent over the previous year's revenue of Rs.8452.90 lacs. Theprofit after tax (PAT) attributable to shareholders for FY 2021-22 and FY 2020-21 wasRs.1346.73 lacs and Rs.397.12 lacs respectively.
On a standalone basis the revenue for FY 2021-22 was Rs.9264.69 lacshigher by 10.63% percent over the previous year's revenue of Rs.8374.29 lacs. The profitafter tax (PAT) attributable to shareholders for FY 2021-22 and FY 2020-21 was Rs.1330.77and Rs.391.70 lacs respectively.
Your Directors are pleased to recommend a Dividend of Rs. 0.30/- (15%)per equity share of Rs. 2/- each for the financial year 2021-22 which is subject toconsideration and approval of the Shareholders at the ensuing Annual General Meeting ofthe Company and shall be paid within the statutory period to those members whose namesappear in the Register of Members as on the date of book closure.
The total outflow on account of the proposed dividend shall amount toRs. 224.53 lakhs.
There is no amount proposed to be transferred to Reserves out ofprofits of the financial year 2021-22.
During year under review the Company has allotted 908840 equityshares of Rs. 2/- each pursuant to exercise of stock options under the LKP SecuritiesLimited's Employees' Stock Option Scheme 2017.
As at March 312022 the paid-up Equity Share Capital of the Companystood at Rs. 149687152/- consisting of 74843576 Equity Shares of Rs.2/- each.
Further there was no public issue rights issue bonus issue orpreferential issue etc. The Company has not issued shares with differential voting rightsor sweat equity shares.
EMPLOYEES STOCK OPTIONS PLAN
The Members of the Company had passed the resolutions at its AnnualGeneral Meeting held on May 24 2017 and approved the LKP Securities Limited's Employees'Stock Option Scheme 2017 ("LKPS ESOP - 2017") and also approved to offer issueand allot at any time or to acquire by way of secondary acquisition to or for the benefitof eligible employees under LKPS ESOP - 2017 not exceeding 5000000 Equity Shares of Rs.2 each in one or more tranches at such price and on such terms and conditions as may befixed or determined by the Nomination and Remuneration Committee. The Members of theCompany had verified modified and amended LKPS ESOP - 2017 by way of postal ballot datedOctober 16 2020 the result of which was declared on November 27 2020 subsequently theCompany has granted 467000 stock options on February 03 2021 and 1175580 stockoptions on October 25 2021 to its employees under the modified LKPS ESOP - 2017 .
The Members of the Company at its Annual General Meeting held on July05 2019 had approved the LKP Securities Limited's Employees' Stock Option Scheme 2019("LKPS ESOP - 2019") and also approved to offer issue and allot at any time toor for the benefit of eligible employees including the employees of its subsidiaries underLKPS ESOP - 2019 not exceeding 3500000 Equity Shares of Rs. 2 each in one or moretranches at such price and on such terms and conditions as may be fixed or determined bythe Nomination and Remuneration Committee.
Pursuant to the applicable provisions of the Companies Act 2013("the Act") and the Securities and Exchange Board of India (Share Based EmployeeBenefits) Regulations 2014 ("SBEB Regulations") the scheme is administered bythe Nomination and Remuneration Committee of the Company.
The applicable disclosures as stipulated under SBEB Regulations as onMarch 312022 with regard to the LKP ESOP - 2017 are provided in Annexure - I to thisReport.
During the year under review the Board has reviewed the affairs of LKPWealth Advisory Limited its subsidiary. The subsidiary has income from operationsamounting to Rs. 141.14 lakh and its net profit stood at Rs. 15.97 lakh. There has been nomaterial change in the nature of the business of the subsidiary.
Pursuant to the provisions of Section 129(3) of the Act a statementcontaining salient features of the financial statements of the subsidiary as on March 312022 in the prescribed Form AOC-1 is attached to the financial statements which formspart of this Annual Report.
There are no associates or joint venture companies within the meaningof Section 2(6) of the Act.
CONSOLIDATED FINANCIAL STATEMENTS
The Consolidated Financial Statements of the Company prepared inaccordance with the Act and applicable IND AS along with the relevant documents andAuditors Report is also presented to you and form part of this Annual Report.
In accordance with the provisions of Section 136(1) of the Act theAnnual Report of the Company containing therein the audited standalone and consolidatedfinancial statements and the audited financial statement of the subsidiary will beavailable for inspection to any member of the Company and has been placed on the websiteof the Company at www.lkpsec.com.
PARTICULARS OF LOANS GUARANTEES AND INVESTMENTS
Details of loans granted guarantee provided and investment made by theCompany which are covered under the provisions of Section 186 of the Act is provided inNotes forming part of Financial Statements.
MANAGEMENT DISCUSSION AND ANALYSIS
The Management Discussion and Analysis in accordance with Regulation 34read with Schedule V of Securities and Exchange Board of India (Listing Obligations andDisclosure Requirements) Regulations 2015 ("SEBI Listing Regulations") formspart of this Annual Report.
Pursuant to the SEBI Listing Regulations Company's CorporateGovernance Report forms part of this Annual Report along with the reports on ManagementDiscussion and Analysis and General Shareholder Information.
Further all the Board members and Senior Management personnel haveaffirmed compliance with the Code of Conduct for the financial year 2021-22. A declarationto this effect signed by the Managing Director of the Company also forms part of thisAnnual Report.
A Certificate from Practicing Company Secretary regarding thecompliance with the conditions of Corporate Governance as stipulated under Regulation 34read with Schedule V of the SEBI Listing Regulations is annexed to this Report.
DIRECTORS AND KEY MANAGERIAL PERSONNEL(S)
In terms of Section 152 of the Act Mr. Mahendra V. Doshi (DIN:00123243) is liable to retire by rotation at the forthcoming Annual General Meeting("AGM") and being eligible offers himself for re-appointment. Your Directorshave recommended his appointment for approval of the shareholders in the ensuing AGM ofyour Company.
The Company has received necessary disclosures and confirmations fromconcerned Director(s) in connection with their appointment / re-appointment. Additionalinformation on appointment / re-appointment of Directors as required under Regulation 36of SEBI Listing Regulations is given in the Notice convening the ensuing AGM.
The Company has received necessary declarations from all theIndependent Directors under Section 149(7) of the Act that they meet the criteria ofindependence laid down in Section 149(6) of the Act Regulation 16(1)(b) and Regulation 25of SEBI Listing Regulations. None of the Independent Directors held any equity shares ofyour Company during the financial year ended March 31 2022. Further all the IndependentDirectors of your Company have confirmed their registration/renewal of registration onIndependent Directors' databank.
In terms of Section 203 of the Act the Company has the following KeyManagerial Personnel: Mr. Pratik M. Doshi Chairman and Managing Director Mr. GirishMajrekar Chief Financial Officer and Ms. Akshata Vengurlekar Company Secretary. There isno change in the Key Managerial Personnel during the year under review.
The composition of the Board of Directors of the Company is inaccordance with the provisions of Section 149 of the Act and Regulation 17 of the SEBIListing Regulations with an appropriate combination of Executive Non-Executive andIndependent Directors.
COMMITTEES OF THE BOARD
Details of Committees of the Board of Directors of the Company alongwith their terms of reference composition and meetings held during the year are providedin the Corporate Governance Report which forms part of this Annual Report.
NUMBER OF MEETINGS OF THE BOARD
The Board meetings are normally held on a quarterly basis during theyear under review Four (4) meetings of the Board of Directors were held. The necessaryquorum was present for all the meetings. The details of date of above meeting includingthe attendance of the Directors are given in the Corporate Governance Report that formspart of this Annual Report. PERFORMANCE EVALUATION
Pursuant to the provisions of the Act SEBI Listing Regulations and inline with the Corporate Governance Guidelines of the Company Annual PerformanceEvaluation was conducted for all Board Members as well as the working of the Board and itsCommittees. The evaluation process inter-alia reviews participation of Directors atmeetings domain knowledge business awareness and adherence to governance.
A formal annual evaluation had been made by the Independent Directorsand the Board of the performance of the Committees Individual Directors Chairman and theBoard as whole. The outcome of the Board Evaluation for the financial year 2021-22 wasdiscussed by the Nomination and Remuneration Committee and the Board at their respectivemeetings.
POLICY ON DIRECTORS' APPOINTMENT AND REMUNERATION
Company's policy is to have an appropriate mix of executivenon-executive and independent directors to maintain the independence of the Board andseparate its functions of governance and management. As on March 31 2022 the Board hadsix members one of whom is an executive managing director two non-executivenon-independent director and three independent directors. One of whom is a womanindependent director.
The Company's policy on Directors' appointment and remuneration andother matters provided in Section 178(3) of the Act has been disclosed in the CorporateGovernance Report which forms part of this Annual Report.
VIGIL MECHANISM/WHISTLE BLOWER
In accordance with Section 177(9) of the Act read with Rule 7 of theCompanies (Meetings of Board and its Powers) Rules 2014 and Regulation 22 of the SEBIListing Regulations the Company has established a vigil mechanism to provide a frameworkto promote responsible and secure whistle blowing and to provide a channel to theemployee(s) and Directors to report to the management concerns about unethical behaviouractual or suspected fraud or violation of the code of conduct or policy/ies of theCompany as adopted/framed from time to time. The mechanism provides for adequatesafeguards against victimisation of employee(s) and also provides for direct access to theChairperson of the Audit Committee in exceptional cases. The said Policy is placed on theCompany's website at www.lkpsec.com.
During the financial year 2021-22 no cases under this mechanism werereported to the Company.
PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES
The Company has put in place a policy for Related Party Transactions('RPT') which has been approved by the Board of Directors. The policy provides foridentification of RPTs necessary approvals by the Audit Committee/Board/Membersreporting and disclosure requirements in compliance with the Act and provisions of SEBIListing Regulations.
During the year under review all contracts/arrangement/transactionsentered by the Company with related parties were in compliance with the applicableprovisions of the Act and SEBI Listing Regulations. Requisite approval of the AuditCommittee was obtained for all related party transactions. All related party transactionsentered during the year were on arm's length basis and in the ordinary course of businessof the Company. The details of transactions with related parties are provided in theCompany's financial statements in accordance with the Indian Accounting Standards.
Further there being no 'material' related party transactions as definedunder Regulation 23 of SEBI Listing Regulations there are no details to be disclosed inForm AOC-2 in that regard.
The Company's policy on materiality of and dealing with related partytransactions as approved by the Board is uploaded on the website of the Company and canbe accessed at www.lkpsec.com.
DIRECTORS' RESPONSIBILITY STATEMENT
In accordance with Section 134(5) of the Act and to the best of theirability your Directors state that:
i. in the preparation of the annual accounts for the financial yearended March 312022 the applicable accounting standards have been followed along withproper explanation relating to material departures;
ii. they have selected such accounting policies and applied themconsistently and made judgments and estimates that are reasonable and prudent so as togive a true and fair view of the state of affairs of the Company at the end of thefinancial year and of the profit of the Company for the year ended March 312022;
iii. they have taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of the Act for safeguardingthe assets of the Company and for preventing and detecting fraud and other irregularities;
iv. they have prepared the annual accounts for the financial year endedMarch 312022 on a going concern basis;
v. they have laid down Internal Financial Controls to be followed bythe Company and that such internal financial controls are adequate and are operatingeffectively; and
vi. they have devised proper systems to ensure compliance with theprovisions of all applicable laws and that such systems were adequate and operatingeffectively.
The Audit Committee of the Company comprises of Mr. Ganesh MalhotraIndependent Director as Chairperson of the Committee Mr. Sajid Mohamed IndependentDirector Mrs. Anjali Suresh Independent Director and Mr. Pratik M. Doshi ManagingDirector are other Members of the Audit Committee. There are no instances where the Boarddid not accept the recommendations of the Audit Committee. The terms of reference powersand roles of the Committee are disclosed in the Corporate Governance Report which formspart of this Annual Report.
PARTICULARS OF EMPLOYEES
Disclosures pertaining to remuneration and other details as requiredunder Section 197(12) of the Act read with Rule 5(1) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 are given in Annexure - II to theBoard's Report.
Further a statement showing the names and other particulars ofemployees drawing remuneration in excess of the limits as set out in the Rule 5(2) and5(3) of the aforesaid Rules forms part of this report. However in terms of first provisoto Section 136(1) of the Act the Annual Report and Accounts are being sent to the membersand others entitled thereto excluding the aforesaid information. The said information isavailable for inspection by the members. Any member interested in obtaining a copythereof may write to the Company at ho email@example.com.
INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY
The Company has an Internal Control System commensurate with the sizescale and complexity of its operations. The scope and authority of the Internal Auditors'function is defined in their letter of engagement. To maintain its objectivity andindependence the Internal Audit function reports to the Chairperson of the AuditCommittee of the Board and to the Managing Director.
The Internal Audit Department monitors and evaluates the efficacy andadequacy of internal control system in the Company its compliance with operating systemsaccounting procedures and policies of the Company. Significant audit observations andrecommendations along with corrective actions thereon are presented to the Audit Committeeof the Board.
Your Company recognizes that risk is an integral part of business andis committed to managing the risks in a proactive and efficient manner. The Board of theCompany at regular intervals monitors the financial operational legal risk to theCompany. There is no risk which in the opinion of the Board which may threaten theexistence of the Company.
The term of the existing Statutory Auditors M/s MGB & Co. LLPChartered Accountants is coming to an end at the ensuing AGM. The Board of Directors haverecommended re-appointment of M/s MGB & Co. LLP to hold office from the conclusion ofthis AGM till the conclusion of the Twenty-Nine AGM.
The Company has received a written confirmation from the StatutoryAuditors confirming that their continued appointment shall be in accordance with theapplicable provisions of the Act. The Statutory Auditors have confirmed that they satisfythe criteria of independence as required under the provisions of the Companies Act 2013and that they are holding a valid certificate issued by the Peer Review Board of theInstitute of Chartered Accountants of India.
There are no qualifications reservations or adverse remarks made byM/s MGB & Co. LLP Statutory Auditors in their report for the financial year endedMarch 31 2022.
Pursuant to provisions of the Section 143(12) of the Act the StatutoryAuditors have not reported any incident of fraud to the Audit Committee or the Boardduring the year under review.
As required under provisions of Section 204 of the Act and read withRule 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014made thereunder Mr. V. Ramachandran (Membership No. A-7731 / CP No. 4731) Proprietor: V.R. Associates Practicing Company Secretaries was appointed as Secretarial Auditor toconduct the Secretarial Audit of the Company for the financial year 2021-22.
The Secretarial Audit Report for the financial year 2021-22 is appendedas Annexure - III which forms part of this Report.
The Secretarial Audit Report states that LKP Finance Limited (Promoter)had acquired 4.77% of total equity shares in the Company through open market on 9th June2021. Further there was an inter-se transfer (by gift) amongst the Promoters of theCompany i.e from Mr. Mahendra V. Doshi to Mr. Pratik M. Doshi for 1.32% of total equityshares on 27th August 2021 thereby crossing the gross acquisition limit of 5% for afinancial year as provided in the Explanation to Regulation 3(2) of the Securities andExchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations2011 the said inter-se transfer need exemption report as required under regulation 10(6)and 10(7) of the Securities and Exchange Board of India (Substantial Acquisition of Sharesand Takeovers) Regulations 2011 to which the management states that it was missed due tooversight and inadvertence on behalf of the company.
In addition to the above and pursuant to SEBI circular dated February08 2019 a report on secretarial compliance by M/s. V. R. Associates Practicing CompanySecretaries for the financial year ended March 31 2022 is being submitted to stockexchanges.
COMPLIANCE WITH SECRETARIAL STANDARDS
The Board of Directors states that the Company has complied withSecretarial Standards on meetings of the Board of Directors ("SS-1") and onGeneral Meetings ("SS-2") as amended and issued from time to time by theInstitute of Company Secretaries of India in terms of Section 118(10) of the Act.
EXTRACT OF ANNUAL RETURN
In accordance with Section 92(3) of the Act a copy of the AnnualReturn for the financial year ended March 31 2022 is available on the website of theCompany at www.lkpsec.com.
CORPORATE SOCIAL RESPONSIBILITY STATEMENT (CSR)
During the financial year ended March 312022 pursuant to theprovisions of Section 135(1) of the Act read with the Companies (Corporate SocialResponsibility Policy) Rules 2014 no amount is required to be spent by the Companytowards CSR.
The composition and terms of reference of the CSR Committee is providedin the Corporate Governance Report which forms part of this Annual Report. Further incompliance with Rule 3 of the Companies (Corporate Social Responsibility Policy) Rules2014 the CSR Report is given as Annexure - IV which also forms part of this Report.
TRANSFER OF UNCLAIMED/UNPAID AMOUNTS TO THE INVESTOR EDUCATION ANDPROTECTION FUND (IEPF')
In terms of the provisions of Section 124 of the Act provisions of theInvestor Education and Protection Fund Authority (Accounting Audit Transfer and Refund)Rules 2016 and other applicable provisions all unpaid or unclaimed dividends arerequired to be transferred by the Company to the Investor Education and Protection Fund("IEPF") established by the Central Government after completion of seven yearsfrom the date the dividend is transferred to unpaid/unclaimed account. Further accordingto the Rules the shares in respect of which dividend has not been paid or claimed by themembers for seven consecutive years or more shall also be transferred to the demat accountcreated by the IEPF Authority.
CONSERVATION OF ENERGY
The operations of the Company are not energy intensive. However theCompany has taken various measures for conservation of energy like switching fromconventional lighting systems to LED lights etc. All efforts are made to use more naturallights in office premises to optimize the consumption of energy.
The Company primarily being a stock broking company and not involvedin any industrial or manufacturing activities has no particulars to report regardingtechnology absorption as required under Section 134 of the Act and Rules made thereunder.
FOREIGN EXCHANGE EARNINGS AND OUTGO
The Company did not enter into any foreign currency transactions in thecurrent year and previous year.
DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE(PREVENTION PROHIBITION AND REDRESSAL) ACT 2013
Providing a safe working environment for all genders free from sexualharassment and discrimination is among the key priorities of the Company. In compliancewith the Sexual Harassment of Women at Workplace (Prevention Prohibition and Redressal)Act 2013 the Company has put in place a policy on Prevention of Sexual Harassment ofWomen at the workplace. The policy includes the scope consequence of non-compliance andredressal mechanism along with contact details of the Committee members for raising anygrievance/complaint under the said policy.
The Company has constituted Internal Complaints Committee under theSexual Harassment of Women at Workplace (Prevention Prohibition and Redressal) Act 2013.Adequate workshops and awareness programs are conducted across the organization.
No. of complaints received: 0
No. of complaints disposed of: 0
No. of cases pending for more than 90 days: 0
The Company has not accepted any fixed deposits during the yearunder review and accordingly no amount on account of principal or interest on depositsfrom public and/or Members were outstanding as at March 31 2022.
There are no significant and material orders passed by theregulators or courts or tribunals impacting the going concern status and the Company'soperations in future.
During the year under review the Company has not issued anyDebentures.
No material changes have taken place that could have an impacton the financial position of the Company from the date of closure of financial year underreview till the date of signing of Accounts.
There is no change in the nature of business of the Company.
The 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 asprescribed under the provisions of Section 148(1) of the Act are not applicable to thebusiness activities carried out by the Company.
There are no shares in the demat suspense account/ unclaimedsuspense account at the beginning and at the end of the financial year.
Your Board of Directors would like to express its gratitude and itsappreciation for the continued support and co-operation provided to your Company by itsMembers and in particular the customers regulatory authorities and its banks andfinancial institutions. Your Directors would also like to place on record its sincereappreciation for the efforts put in by the Management and the employees of the Company.
| ||For and on behalf of the Board of Directors |
| ||Sd/- |
| ||Pratik M. Doshi |
|Place: Mumbai ||Chairman & Managing Director |
|Date : April 29 2022 ||DIN: 00131122 |