Lakshmi Finance & Industrial Corporation Ltd Directors Report.
Your Directors take great pleasure in presenting this 95th Annual Report on the business and operations of your Company, together with the Audited Financial Statements for the financial year ended 31st March, 2019.
1. FINANCIAL HIGHLIGHTS (र in lakhs)
|Profit before Depreciation and Tax||191.18||478.91|
|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||1,189.96||954.58|
|Total Profit available for appropriation||1,372.55||1,416.33|
|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||1,190.28||1,189.96|
2. OPERATIONAL PERFORMANCE :
The financial performance of your Company during the year ended March 31, 2019, decreased with Revenue from Operations lower by 43.37 per cent to Rs.344.49 lakhs from Rs.611.93 lakhs in the previous year. Other
Income marginally increased to Rs.54.24 lakhs from Rs.52.90 lakhs during the previous year. 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 in profitability is mainly on account of unfavourable Stock Market conditions,
Categorization and Rationalization of Mutual Fund Schemes by SEBI and the imposition of the new capital gains tax and dividend tax from Financial Year 2018-19. The Company will continue to focus its efforts to closely monitor portfolio Investment activity to generate optimum returns by way of capital appreciation and periodic dividend returns. The rental incomes have been on expected basis.
Your Company has a dividend policy that, inter alia balances the objectives appropriately 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 under review, 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 Annual General Meeting by the Members, will be paid to all those Equity Shareholders whose names appear in the Register of Members as on 02.08.2019 and also to those whose names appear as beneficial owners as furnished by the National Securities Depository Limited and Central Depository Services (India) Limited.
The Company has not appropriated proposed dividend from Statement of Profit and Loss for the year ended March 31, 2019. The outflow on account of the dividend payout would be Rs. 90.42 lakhs including tax on dividends.
4. TRANSFER TO RESERVE :
The Company Directors have decided to retain the Surplus amount in Statement of Profit and Loss of Rs.1,190.28 lakhs in the retained earnings only. However the Company transferred 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 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 General Meeting and being eligible offers himself for re-appointment. The Shareholders of the Company 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. Keshav Bhupal (DIN 000123184) as Independent Directors of the Company till the 95th Annual General Meeting of the Company to be held in the year 2019.
As their term of appointment would expire at the ensuing Annual General Meeting, based on the recommendation of Nomination and Remuneration Committee, it is proposed to re-appoint them as Independent Directors of the Company for another term of 5 consecutive years, not liable to retire by rotation, subject to the approval of Shareholders by passing Special Resolutions.
7. DECLARATIONS GIVEN BY INDEPENDENT DIRECTORS:
All Independent Directors have given declarations that they meet the criteria of Independence as laid down under Section 149 of the Companies Act, 2013 and Regulations of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 which have been relied on by the Company and were placed at the Board Meeting held on May 27th , 2019.
8. EVALUATION OF THE BOARDS PERFORMANCE:
In compliance with the Companies Act, 2013 and Regulation 17(10) of SEBI (Listing Obligations and Disclosure Requirements), Regulations, 2015, the performance evaluation of the Board was carried out during the year under review.
The Board has a formal mechanism for evaluating Boards performance and as well as that of its Committees and Individual Directors, including the Chairman of the Board based on the criteria laid down by Nomination and Remuneration Committee which included attendance, contribution at the meetings and otherwise, Independent judgment, safeguarding of minority shareholders interest, adherence to Code of Conduct and Business ethics, monitoring of regulatory compliance, risk assessment and review of Internal Control Systems etc.
9. POLICY ON DIRECTORS APPOINTMENT AND REMUNERATION AND OTHER DETAILS:
The Company follows a policy on remuneration of Directors and Senior Management Employees. The Policy is approved by the Nomination and Remuneration Committee and the Board, 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, 2018 to 31st March, 2019.
The dates on which the meetings were held are as follows:
11th May, 2018, 10th August, 2018, 10th November,2018 and 8th February, 2019.
11. AUDIT COMMITTEE:
The details pertaining to composition and term of reference of the Audit Committee Members, dates of meeting held and attendance of the Directors are given separately in the Corporate Governance Report, which forms part of this report.
12. LISTING OF COMPANYS SHARES:
The Companys 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. The Companys shares are listed and traded at NSE with ISIN code INE 850E01012 and Stock Code LFIC with effect from 15.04.2015.
13. (i) DEMATERIALISATION OF SHARES:
Your Company shares have been made available for dematerialization through the National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL). As on 31st March 2019, 74.06% of the shares in your Company have been dematerialized.
(ii) UN PAID /UN CLAIMED DIVIDEND:
In terms of the provisions of the Companies Act, the Company is obliged to transfer dividends which remain unpaid or unclaimed for a period of seven years from the declaration to the credit of the Investor Education and Protection Fund established by the Central Government. Accordingly, the Members are hereby informed that the 7 years period for payment of the dividend pertaining to financial year 2011-2012 will expire on September 18, 2019 and thereafter the amount standing to the credit in the said account will be transferred to the "Investor Education and Protection Fund" of the Central Government.
i. Statutory Auditors:
At the Annual General Meeting held on 28.07.2017, M/s. K.S.Rao & Co., Chartered Accountants, Hyderabad was appointed as Statutory Auditors of the Company to hold the office for a period of 5 years commencing from the conclusion of 93rd Annual General Meeting till the conclusion of 98th Annual General Meeting of the Company, subject to ratification at every subsequent Annual General Meeting of the Company. However ratification of appointment of Statutory Auditors by the Members at every Annual General Meeting is done away with vide notification dated May 07th, 2018 issued by the Corporate Affairs, New Delhi. Accordingly, no resolution is proposed for the ratification of appointment of Auditors.
The Auditors Report for F.Y. 2018-19 does not contain any qualifications. The Auditors 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 of Internal Auditors of the Company and their report is reviewed by the Audit Committee from time to time.
iii. Secretarial Auditors: According to the provisions of section 204 of the Companies Act, 2013 read with Rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Secretarial Audit Report submitted by Smt. N. Madhavi, Company Secretary in Practice is enclosed as a part of this report. The Secretarial Audit
Report does not contain any qualifications, reservations and adverse remarks.
15. DETAILS IN RESPECT OF ADEQUACY OF INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO THE FINANCIAL STATEMENTS: The Company has in place proper and adequate internal control systems commensurate with the nature of its business, size and complexity of its operations. Internal control systems comprising of policies and procedures designed to ensure reliability of financial reporting, timely feedback on achievement of operational and strategic goals, compliance with policies procedure, applicable laws and regulations, and 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 to the best of their knowledge and belief and according to the information and explanation obtained by them. i. In the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures. ii. Such accounting policies as mentioned in the notes to the financial statements have been selected and applied consistently and judgments and estimates that are reasonable and prudent made so as to give a true and fair view of the state of affairs of the Company at the end of the financial year 2018-19 and of the statement of Profit or Loss of the Company for that period. iii. Proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities. iv. The annual accounts for the year 2018-19 have been prepared on a going concern basis. v. That the proper internal financial controls were in place and that the financial controls were adequate and were operating effectively. vi. That systems to ensure compliance with the provisions of all applicable laws were in place and were adequate and effectively mentioned under various heads of the departments 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 the provisions 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 review and there are no outstanding deposits as on 31st March 2019. Further, the Company is registered 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, 2013, a Vigil Mechanism for Directors and employees to report genuine concerns has been established. The Vigil Mechanism Policy has been uploaded on the website of the Company at www.lakshmifinance.org.
21. RELATED PARTY TRANSACTIONS :
Related party transactions that were entered during the financial year were on an arms length basis and were in the ordinary course of business. There were no materially significant related party transactions with the Companys Promoters, Directors, Management or their relatives, which could have had a potential conflict with the interests of the Company. Transactions with related parties entered by the Company in the normal course of business are periodically placed before the Audit Committee for its omnibus approval and the 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 the website 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 annexed herewith 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 of India . (Listing Obligations and
Disclosure Requirements) Regulations, 2015, the Managements discussion and analysis is set out in this Annual
24. CORPORATE GOVERNANCE AND SHAREHOLDERS INFORMATION:
Your Company has taken adequate steps to adhere to all the stipulations laid down in the Listing Regulations. A report on Corporate Governance is included as a part of this Annual 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 of this 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 of activities 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 of Directors of your Company has constituted a CSR Committee w.e.f 25.05.2015. The Committee Comprises of three Independent Directors and one Non-Independent Director, namely Sri.R.Surender Reddy, Sri.Keshav Bhupal, Sri.Kapil Bhatia and Sri.K.Harishchandra Prasad, Managing Director. CSR Committee of the Board developed a CSR Policy and the functions of Committee include review of CSR initiatives undertaken by the Company, formation and recommendation to the Board of a CSR policy indicating the activities to be undertaken by the Company and recommendation of the amount of the expenditure to be incurred for such activities. However, during the year under review Section 135 of the Companies Act, 2013, relating to the Corporate Social Responsibility is not applicable to the Company and hence the same is not adopted.
27. 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 and Directors 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 no material changes and commitments which affects the financial statements of the Company during the year under review.
29. RISK MANAGEMENT COMMITTEE:
The Board of Directors of the Company has formed a Risk Management Committee to frame, implement and monitor the risk management plan for the Company. The Committee is responsible for reviewing the risk management plan and ensuring its effectiveness. The Audit Committee has additional oversight in the area of financial risks and controls. Major risks identified by the business and functions are systematically addressed through mitigating actions on a continuing basis. The details of Risk Management Committee and its composition 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 would impact 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 the requirements 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. All employees (permanent, contractual, temporary, trainees) are covered under this policy.
The following is a summary of sexual harassment complaints received and disposed off during each Financial Year: No. of complaints received: Nil No. of complaints disposed off: Nil
32. ACKNOWLEDGEMENTS:Directors take this opportunity to express their thanks to various departments of the Central and State Government,Banks and Shareholders for their continued support and guidance. The Directors wish to place on record their appreciation for the dedicated efforts put in by the Employees of the Company at all levels.
For and on behalf of the Board
LAKSHMI FINANCE & INDUSTRIAL CORPORATION LIMITED
R. SURENDER REDDY
( DIN: 00012564)
K. HARISHCHANDRA PRASAD