Lippi Systems Ltd Directors Report.

To,

The Members of,

LIPPI SYSTEMS LIMITED

Your directors have pleasure in presenting their 27th Annual Report together with the Audited Annual accounts for the year ended on 31st March, 2020.

FINANCIAL RESULTS:

(Rs in Lacs)

Particulars: 2019-20 2018-19
Net Sales 1391.61 1594.72
Other Income 129.54 105.68
Finance Cost 93.90 104.62
Depreciation 139.85 148.60
Income Tax Provision 13.68 21.41
Deferred Tax Liability 9.67 (16.30)
Net Profit 15.64 79.64

OPERATIONS:

Your directors are pleased to report that for the year under review, your Company has been able to achieve a net turnover of Rs. 13.92 crores as compared to Rs. 15.95 crores for the previous year. Your company could achieve a net profit of Rs. 15.64 lacs as against a net profit of Rs. 79.64 lacs for the preceding year.

Your directors expect better results for the current year.

CAPITAL STRUCTURE

The Authorised Share Capital of the Company as on March 31, 2020 was Rs 10,00,00,000 (Rupees Ten crores) divided into 1,00,00,000 (One crores ) equity shares of Rs 10 each.

The paid up share capital of the Company as on March 31, 2020, was Rs 7,00,00,000 (Rupees Seven crores only) divided into 7000000 (Seventy lakhs) equity shares of Rs 10 each.

DIVIDEND:

In view of the marginal profits for the year under review, your directors have not recommended any dividend for the year under report.

COVID-19:

In the last month of FY 2020, the COVID-19 pandemic developed rapidly into a global crisis, forcing governments to enforce lockdowns of all economic activity. For the Company, the focus immediately shifted to ensuring the health and well-being of all employees, and on minimizing disruption to services for all our customers. This response has reinforced customer confidence in Lippi and many of them have expressed their appreciation and gratitude for keeping their businesses running under most challenging conditions. Although there are uncertainties due to the pandemic and reversal of the positive momentum post lockdown, we expect business to improve gradually and that business will start moving upwards from 2nd quarter of FY20-21. We can expect the business to normalize from the 3rd quarter of FY20-21. Strong balance sheet position and inherent resilience of the business model position the Company well to navigate the challenges ahead and gain market share.

DEPOSITS:

During the year under review your company has not accepted any fixed deposits from the public under section 73 of companies act, 2013, and therefore no information is required to be furnished in respect of outstanding deposits.

VIGIL MECHANISM/WHISTLE BLOWER POLICY:

Pursuant to Section 177(9) of the Companies Act, 2013 and as per SEBI (Listing Obligation and Discourse Requirements) Regulations, 2015, the Company has formulated a Whistle Blower Policy to establish a vigil mechanism for directors and employees of the Company. The purpose and objective of this Policy is to provide a framework to promote responsible and secure whistle blowing. It protects the employees wishing to raise a concern about serious irregularities within the Company. The details of the Whistle Blower Policy are posted on the website (www.lippisystems.com) of the Company.

SECRETARIAL STANDARDS

The Company has complied with the provisions of ‘revised SS-1 - Secretarial Standards on meetings of the Board of Directors which has come into effect from October 01, 2017 and also SS- 2- Secretarial Standard on General Meetings during the year.

RISK MANAGEMENT AND INTERNAL CONTROL SYSTEMS:

The Company has established a well-defined process of risk management, wherein the identification, analysis and assessment of the various risks, measuring of the probable impact of such risks, formulation of risk mitigation strategy and implementation of the same takes place in a structured manner. Though the various risks associated with the business cannot be eliminated completely, all efforts are made to minimize the impact of such risks on the operations of the Company. Necessary internal control systems are also put in place by the Company on various activities across the board to ensure that business operations are directed towards attaining the stated organizational objectives with optimum utilization of the resources. Apart from these internal control procedures, a well-defined and established system of internal audit is in operation to independently review and strengthen these control measures, which is carried out by a reputed firm of Chartered Accountants. The Audit Committee of the Company regularly reviews the reports of the internal auditors and recommends actions for further improvement of the internal controls. The Risk Management policy is posted on the website of the Company.

RELATED PARTY TRANSACTIONS:

The Company has entered into related party transaction with relative of promoter Ms. Shashiben G. Gupta (Wife of Mr. Nandlal J. Agrawal, MD & Chairman) during the financial year 2019-20, the details of which are given in the notes forming parts of Financial Statements. All Related Party Transactions entered into are on an arms length On the recommendation of the Audit Committee, the Board of Directors has adopted a policy on Related Party Transactions, which is also uploaded on the website of the Company (www.lippisystems.com) under the head of ‘Investor. The Policy envisages the procedure governing related party transactions required to be followed to ensure compliance with the applicable laws and regulations as well as to ensure that the Related Party Transactions are managed and disclosed in accordance with the strict legal and accounting requirements.

A statement of all related party transactions is presented before the Audit Committee on a quarterly basis, specifying the nature, value and terms &conditions of the transactions. The statement is supported by a certificate from the CEO/ CFO.

None of the Directors has any pecuniary relationships or transactions vis-a-vis the Company.

MANAGEMENTS DISCUSSION AND ANALYSIS REPORT:

Managements Discussion and Analysis Report for the year under review, as stipulated under SEBI (Listing Obligation and Discourse Requirements) Regulations, 2015, is presented in a separate section forming part of the Annual Report.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS:

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

MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY WHICH HAVE OCCURRED BETWEEN THE END OF THE FINANCIAL YEAR OF THE COMPANY TO WHICH THE FINANCIAL STATEMENTS RELATE AND THE DATE OF THE REPORT:

No material changes and commitments affecting the financial position of the company have occurred between the end of the financial year of the company to which the financial statements relate and the date of this report.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS:

The company has not given any loans or guarantees or investments covered under the provisions of section 186 of the Companies Act, 2013 during the Financial Year 2019-20

TRANSFER TO RESERVES:

The Company has transferred current years profit of Rs. 1563841/- to the Reserve & Surplus and the same is in compliance with the applicable provisions prescribed under the Companies Act, 2013.

DIRECTORS:

(i) Appointment

Ms. Swetal Sapra, was appointed as an Additional Woman Director in the Board of Directors Meeting held on 14.08.2019 and appointed her as Woman Independent Director for the period of 5 years from 14.08.2019.

(ii) Retirement by rotation

In accordance with the provisions of the Companies Act, 2013 and Articles of Association of the Company, Mr. Minesh C. Shah (DIN: 00045178) retires by rotation and is eligible for reappointment.

(iii) Declarations by Independent Directors

All Independent Directors have given declarations that they meet the criteria of independence as laid down under Section 149(6) of the Companies Act, 2013 and SEBI (Listing Obligation and Discourse Requirements) Regulations, 2015.

(iv) Board Evaluation

In compliance with the provisions of the Companies Act, 2013 and as per SEBI (Listing Obligation and Discourse Requirements) Regulations, 2015, the Board has carried out an annual performance evaluation of its own performance, the directors individually as well as the evaluation of the working of its Nomination& Remuneration Committee. The manner in which the evaluation has been carried out has been explained in the Corporate Governance Report.

(v) Nomination & Remuneration Policy

The Board has, on the recommendation of the Nomination & Remuneration Committee, framed a Policy for selection, appointment and remuneration of Directors and Key Managerial Personnel, including criteria for determining qualifications, positive attributes, Independence of Directors. More details of the same are given in the Corporate Governance Report.

(vi) Board Meetings

There are seven members of Board of the Directors of the company of Executive Directors, independent directors and Woman Director. There is no institutional nominee on the Board. During the year Seven Meetings of the Board were held. The Board of directors was met on 04/05/2019, 30/05/2019, 13/08/2019, 14/08/2019, 14/11/2019, 31/12/2019 and 14/02/2020.

The composition and attendance of Board of Directors are as:

SI. No. Name of Director Category of Director No. of Board Meetings attended Attendance at the last AGM No. of committee/ membership in which he/she is a member of Chairperson
1 Shri Nandlal Agrawal (DIN: 00336556) Managing Director -Chairman 7 Yes None
2 Shri Minesh Shah (DIN:00045178) Executive 7 Yes None
3 Shri Kunal Agrawal (DIN:00169324) Executive 7 Yes None
4 Shri Tirthraj Pandya (DIN:02972285) Independent 7 Yes Member in One Committee& Chairman in one Committee
5 Shri Kamlesh Sharma (DIN:01563040) Independent 7 Yes Chairman in one Committee
6 Ms Swetal Sapra (DIN:07155395) Woman -Independent 4 Yes Member in three Committee
7 Shri. Govind C. Thakkar (DIN:07531165) Independent 7 Yes Chairman in one Committee Member in Two Committees

CONSERVATION OF ENERGY. TECHNOLOGY ABSORPTION. FOREIGN EXCHANGE EARNING AND OUTGO:

The information relating to conservation of energy, technology absorption and foreign exchange earnings & outgo as required under Section 134(3) (m) of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014 is Annexed herewith as "Annexure - A".

EXTRACT OF ANNUAL RETURN:

The details forming part of the extract of the Annual Return in form MGT-9 is annexed herewith as "Annexure - B".

AUDIT COMMITTEE:

Pursuant to Section 177 of the Companies Act, 2013 the board of directors has constituted an audit committee. The audit committee comprises of Shri Govind C Thakkar(DIN: 07531165) Chairperson, Shri Tirthraj Pandya(DIN: 02972285) Member and Smt. Jesalben Shah (DIN: 07155395) Member up to 14.08.2019, Smt. Swetal Sapra (DIN: 08536677) from 14.08.2019.

DIRECTORS RESPONSIBILITY STATEMENT

To the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors make the following statements in terms of the Section 134(3)of the Companies Act, 2013:

(i) that in the preparation of the annual financial statements for the year ended March 31, 2020, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;

(ii) That such accounting policies, as mentioned in the Financial Statements as ‘Significant Accounting Policies have been selected and applied consistently and judgments and estimates have been made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company as at March 31, 2020 and of the profit of the Company for the year ended on that date;

(iii) That 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) That the annual financial statements have been prepared on a going concern basis;

(v) That proper internal financial controls were in place and that the financial controls were adequate and were operating effectively;

(vi) That proper systems to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively

AUDITORS:

(i) Statutory Auditors

M/s. Vijay Moondra & Co., Chartered Accountants Firm (Firm Reg. No.l 12308W) was appointed as Statutory Auditor of the company to hold office from 29th September, 2017, till conclusion of the 28th Annual General Meeting to be held in the year 2021 of the company.

(ii) Secretarial Audit

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed M/s Gaurang R. Shah, a firm of Company Secretaries in Practice, to undertake the Secretarial Audit of the Company. The Report of the Secretarial Audit is annexed herewith as "Annexure - C".

Reply to the Observation:

1. The Board noted the fact about the No-Dematerialization of some of the promoters Share Holding and accordingly intimated to the concerned Promoters. The Company has received the positive response from the same promoter and the process of the conversion has been initiated by them.

(iii) Internal Auditor

Pursuant to provisions of Section 138 of the Companies Act, 2013 and the Companies (Accounts) Rules, 2014, M/s. ASHOK DHARIWAL &CO., a Firm of Chartered Accountants in Practice, is appointed as an Internal Auditors of the Company for the Financial Year 2020-21.

PARTICULARS OF EMPLOYEES

The provisions of Rule 5(2) & (3) of the Companies (Appointment & Remuneration of Managerial Personnel) Rules, 2014 requiring particulars of the employees in receipt of remuneration in excess of Rs.60 lacs per year to be disclosed in the Report of Board of Directors are not applicable to the Companys none of the employees was in receipt of remuneration in excess of Rs.60 lacs during the financial year 2019-20.

The information required under Section 197(12) of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment & Remuneration of Managerial Personnel) Rules, 2014 is given in the Statement annexed herewith as "Annexure - D".

CORPORATE GOVERNANCE

A Report on Corporate Governance regarding compliance of the conditions of Corporate Governance pursuant to Regulation 34(3) of the SEBI (Listing Obligation and Disclosure Requirements) Regulations, 2015 is annexed herewith as "Annexure - E".

SEXUAL HARASSMENT:

The Company has complied with the provisions relating to the Constitution of Internal Complaints Committee under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. There was no case filled or registered with the Committee during the year, under the Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013. Further Company ensures that there is a healthy and safe environment for every women employee at the workplace and made the necessary policies for safe and secure environment for women employee.

COST RECORDS

The Company is not required to maintain cost records as specified by the Central Government under sub-section (1) of Section 148 of the Companies Act, 2013.

ADEQUACY OF INTERNAL FINANCIAL CONTROL

The Company has adequate internal financial control with reference to the financial statements commensurate with its size and nature of business. These controls include well documented procedures, covering financial and operational functions. The internal financial controls of the Company are adequate to ensure the accuracy and completeness of accounting records, timely preparation of reliable financial information, prevention and detection of frauds and errors and safeguard against any losses or unauthorized use or disposal of assets. These controls are assessed on a regular basis by Internal Audit

ACKNOWLEDGEMENT:

The Board wishes to place on record their sincere appreciation and acknowledge with gratitude the effort put in and co-operation extended by bankers, shareholders, employees at all levels and all other associated persons, bodies or agencies for their continued support.

Place: Ahmedabad For and on Behalf of Board of Directors
Date: 14/08/2020 Nandlal J. Agrawal
Chairman & Managing Director
(DIN:00336556)