Kapashi Commercials Ltd Management Discussions.

In terms of the provisions of Regulation 34(2) (e) of the Listing Regulations, the Managements discussion and analysis are as follows.

INDUSTRY STRUCTURE AND DEVELOPMENT:

The financial year 2019-20 had been quite a challenging year for the Indian economy and particularly for the financial services sector. The continued liquidity crunch, uncertain and volatile credit environment and slow economic growth created headwinds. The COVID-19 pandemic and subsequent lockdowns have impacted the businesses and aggravated the prevailing sectoral challenges. NonBanking Financial Companies (NBFCs), today, are confronted with multiple challenges. The unprecedented business environment has put to test the resilience, prudence and adaptability of any business model. Having said that, the fiscal year has been full of learnings. The Company continues to closely observe the situation. The NBFC segment witnessed marginal growth during first half of 2019-20 but during the second half of the year, NBFCs were impacted on account of tight liquidity conditions, high cost of borrowing and volatility in the capital markets. The spread of the COVID-19 pandemic and the subsequent synchronized lockdown across global markets resulted in shrinking of the capital market lending business.

OPPORTUNITIES AND THREATS:

Your Company being an investment Company seeks opportunities in the capital market. The volatility in stock indices in the financial year under report represents both an opportunity and challenge for the Company. Capital market activities in which most of our activities depend on is also influenced by global events happening in the US, UK & China and hence there is an amount of uncertainty in the near term outlook of the market. However, strong and stable government at centre, the capital market prospect would significantly improve.

OUTLOOK AND FUTURE PROSPECTS

The Covid-19 crisis has disrupted global economy and created extraordinary challenges. The economic activity in India was down to a standstill owing to the nation-wide lockdown in India. The SARS-CoV-2 virus responsible for COVID-19 continues to spread across the globe and India, which has contributed to a significant decline and volatility in global and Indian Financial Markets and a significant decrease in the economic activities. On March 11, 2020, the COVID-19 outbreak was declared as a global pandemic by the World Health Organisation. On March 24, 2020 the Indian Government had announced a strict 21 day lockdown which kept on getting extended across the Country with gradual and modest relaxations. The Pandemic had a severe impact on the Capital market. The Company carries shares and securities in its books. The effect of mark to market losses thereon have been taken into account in the Statement of Profit and Loss for the year. The Company believes that it has taken into account the impact of known events arising out of COVID 19 pandemic in the preparation of financial results resulting out of fair valuation of these investments. However the impact assessment of COVID 19 is a continuing process given its nature and duration. The Company will continue to monitor for any material changes to future economic conditions During the lockdown LKP Finance migrated to 100% work from home scenario and all the business operations continue to run smoothly. The government and the RBI have introduced several liquidity and stimulus measures to support the NBFC industry however those are yet to show tangible results.

RISKS & CONCERNS

The very nature of the Companys business makesitsubject to various kinds of risks. The Company encounters credit risk and operational risks in its daily business operations. Further the performance of the Company is dependent on the capital markets for its returns. Even though it is envisaged that Indian stock market will continue to do well, global concerns can result in sharp corrections.

HUMAN RESOURCES

The Companys relations with the employees continued to be cordial SEGMENT-WISE OR PRODUCT WISE PERFORMANCE

The Company operates in only single segment. Hence segment wise performance is not applicable.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUENCY

Your Company has an effective system of accounting and administrative controls supported by an internal audit system with proper and adequate system of internal check and controls to ensure safety and proper recording of all assets of the Company and their proper and authorized utilization. As part of the effort to evaluate the effectiveness of the internal control systems, your Companys internal audit department reviews all the control measures on a periodic basis and recommends improvements, wherever appropriate. The internal audit department is manned by highly qualified and experienced personnel and reports directly to the Audit Committee of the Board. The Audit Committee regularly reviews the audit findings. An Information Security Assurance Service is also provided by independent external professionals. Based on their recommendations, the Company has implemented a number of control measures both in operational and accounting related areas, apart from security related measures.

CAUTIONARY STATEMENT

Statement made in this report describing the Companys objectives, projection, estimates and expectations may be “forward-looking statements” within the meaning of applicable laws and regulations. Actual results may differ materially from those expressed or implied. Important factors that could make a difference to the Companys operations include economic conditions affecting the Markets in which company operates; changes in the Government regulations; tax laws and other statutes and incidental factors.

RATIO SIGNIFICANT CHANGES

There is no significant change in the revenue of the company above 25% in comparison to the last year .

Registered Office By order of Board of Directors
206, S.F. ashirwad Paras 1 KAPASHI COMMERCIAL LIMITED
Near Kanti Bharwad PMT
Opposite Andaz party Plot,
Makarba , Ahmedabad
Gujarat 380051
Place: Ahmedabad Dated: Shweta Samir Shah Chairman & Managing Director DIN: 03082967