lkp securities ltd share price Directors report

STATE OF THE COMPANY’S AFFAIRS

On a consolidated basis, the revenue for FY 2022-23 was Rs.7,769.30 Lakhs, lower by 16.98% percent over the previous years revenue of Rs.9,358.44 Lakhs. The profit after tax (PAT) attributable to shareholders for FY 2022-23 and FY 2021-22 was Rs.373.38 Lakhs and Rs.1,346.73 Lakhs, respectively.

On a standalone basis, the revenue for FY 2022-23 was Rs.7,642.61 Lakhs, lower by 17.51% percent over the previous years revenue of Rs.9,264.69 Lakhs. The profit after tax (PAT) attributable to shareholders for FY 2022-23 and FY 2021-22 was Rs.316.44 Lakhs and Rs.1330.77 Lakhs, respectively.

DIVIDEND

Your Directors are pleased to recommend a Dividend of Rs. 0.10 (5%) per equity share of Rs. 2/- each for the financial year 2022-23, which is subject to consideration and approval of the Shareholders at the ensuing Annual General Meeting of the Company, and shall be paid within the statutory period to those members whose names appear in the Register of Members as on the date of book closure.

The total outflow on account of the proposed dividend shall amount to Rs. 78.39 Lakhs.

RESERVES

There is no amount proposed to be transferred to Reserves out of profits of the financial year 2022-23.

WARRANTS

The Board of Directors in their meeting held on May 20, 2022 proposed to raise funds through Issue of warrants on preferential basis to Promoter and Promoter Group Entity. The said proposal was duly approved by the Members at the 28th Annual General Meeting held on June 20, 2022. The funds were raised through issue of 59,88,023 warrants, being 29,94,011 Warrants to LKP Finance Limited (Promoter Group), 11,97,605 Warrants to Bhavana Holdings Private Limited (Promoter Group) and 17,96,407 Warrants to Mr. Mahendra V. Doshi (Promoter), at an issue price of Rs.16.70/- per warrant aggregating up to Rs. 10 Crore, 25% of the consideration was received towards allotment of the warrants equivalent to Rs. 2.5 Crore. The Warrants are exercisable (convertible) in one or more tranches, anytime within period of eighteen months into equal number of equity shares of face value of Rs. 2/- each of the Company on a preferential basis for cash from the date of allotment. Further LKP Finance Limited, Promoter Group Entity exercised its right of conversion upon the balance payment of 75% of the consideration equivalent to Rs. 3.75 Crore. The entire proceeds from the warrants was utilised for working capital requirement of the Company and as on the end of financial year 29,94,012 Warrants are yet to be exercised.

SHARE CAPITAL

The paid up equity share capital of the Company as on March 31, 2023 was Rs. 15,67,71,684/- consisting of 7,83,85,842 Equity Shares of Rs.2/- each.

During year under review, the Company has allotted 5,48,255 equity shares of Rs. 2/- each pursuant to exercise of stock options under the LKP Securities Limiteds Employees Stock Option Scheme 2017. Further consequential to exercising its right of conversion 29,94,011 equity shares were allotted to LKP Finance Limited, Promoter Group Entity.

The Company has not issued shares with differential voting rights or sweat equity shares also there was no public issue, rights issue, bonus issue etc.

EMPLOYEES STOCK OPTIONS PLAN

The Members of the Company had passed the resolutions at its Annual General Meeting held on May 24, 2017 and approved the LKP Securities Limiteds Employees Stock Option Scheme 2017 ("LKPS ESOP - 2017") and also approved to offer, issue and allot at any time or to acquire by way of secondary acquisition, to or for the benefit of eligible employees under LKPS ESOP - 2017, not exceeding 50,00,000 Equity Shares of Rs. 2 each, in one or more tranches, at such price and on such terms and conditions as may be fixed or determined by the Nomination and Remuneration Committee. The Members of the Company had verified modified and amended LKPS ESOP - 2017 by way of postal ballot dated October 16, 2020, the result of which was declared on November 27, 2020 and, subsequently the Company has granted 4,67,000 stock options on February 03, 2021 and 11,75,580 stock options on October 21, 2021 to its employees under the modified LKPS ESOP - 2017. The scheme was further verified modified and amended by the shareholders at its Annual General Meeting held on June 20, 2022, subsequently the Company has granted 3,50,000 stock options on July 27, 2022 under the modified scheme.

The Members of the Company at its Annual General Meeting held on July 05, 2019 had approved the LKP Securities Limiteds Employees Stock Option Scheme 2019 ("LKPS ESOP - 2019") and also approved to offer, issue and allot at any time, to or for the benefit of eligible employees including the employees of its subsidiaries under LKPS ESOP - 2019, not exceeding 35,00,000 Equity Shares of Rs. 2 each, in one or more tranches, at such price and on such terms and conditions as may be fixed or determined by the 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 Employee Benefits) Regulations, 2014 ("SBEB Regulations"), the scheme is administered by the Nomination and Remuneration Committee of the Company.

The Company has received a certificate from the M/s. MGB & Co. LLP, Chartered Accountants, that the Scheme has been implemented in accordance with the SBEB Regulations and the resolutions passed by the Members.

The applicable disclosures as stipulated under SBEB Regulations as on March 31, 2023 with regard to LKP ESOP - 2017 are provided in Annexure - I to this Report.

SUBSIDIARIES AND ASSOCIATE

During the year under review, the Board has reviewed the affairs of LKP Wealth Advisory Limited and LKP IFSC Private Limited, its subsidiaries. LKP Wealth Advisory Limited has income from operations amounting to Rs. 169.41 Lakhs and its net profit stood at Rs. 62.81 Lakhs. There has been no material change in the nature of the business of the subsidiary.

With a view to offer diversified products, your Company intends to offer an option to its customers for trading in US stocks. Consequently, your company has newly incorporated a wholly owned IFSC subsidiary LKP IFSC Private Limited. Further we are in process of obtaining SEBI & IFSC approval for commencement of IFSC business, thereby the company is yet to start its operation. The company has pre-incorporation expenses of Rs. 5.37 Lakhs.

Wise Tech Platforms Private Limited is an associate company of your Company. Wise Tech Platforms Private Limited is also a newly incorporated company, thereby is yet to start its business. The company has pre-incorporation expenses of Rs. 10.83 Lakhs.

Pursuant to the provisions of Section 129(3) of the Act, a statement containing salient features of the financial statements of the subsidiaries as on March 31, 2023 in the prescribed Form AOC-1 is attached to the financial statements, which forms part of this Annual Report.

There are no joint venture companies within the meaning of Section 2(6) of the Act.

CONSOLIDATED FINANCIAL STATEMENTS

The Consolidated Financial Statements of the Company prepared in accordance with the Act and applicable IND AS along with the relevant documents and Auditors 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, the Annual Report of the Company containing therein the audited standalone and consolidated financial statements and the audited financial statement of the subsidiary will be available for inspection to any member of the Company and has been placed on the website of the Company at www.lkpsec.com.

PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS

Details of loans granted, guarantee provided and investment made by the Company which are covered under the provisions of Section 186 of the Act, is provided in Notes forming part of Financial Statements.

MANAGEMENT DISCUSSION AND ANALYSIS

The Management Discussion and Analysis in accordance with Regulation 34 read with Schedule V of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("SEBI Listing Regulations") forms part of this Annual Report.

CORPORATE GOVERNANCE

Pursuant to the SEBI Listing Regulations, Companys Corporate Governance Report forms part of this Annual Report along with the reports on Management Discussion and Analysis and General Shareholder Information.

Further all the Board members and Senior Management personnel have affirmed compliance with the Code of Conduct for the financial year 2022-23. A declaration to this effect signed by the Managing Director of the Company also forms part of this Annual Report.

A Certificate from Practicing Company Secretary regarding the compliance with the conditions of Corporate Governance as stipulated under Regulation 34 read 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. Satvinderpal Singh Gulati (DIN 02404230), Non-Executive Director of the Company is liable to retire by rotation at the forthcoming Annual General Meeting ("AGM") and being eligible, offers himself for reappointment. Your Directors have recommended his appointment for approval of the shareholders, in the ensuing AGM of your Company.

The Company has received necessary disclosures and confirmations from concerned Director(s) in connection with their appointment / re-appointment. Additional information on appointment / re-appointment of Directors as required under Regulation 36 of SEBI Listing Regulations is given in the Notice convening the ensuing AGM.

The Company has received necessary declarations from all the Independent Directors under Section 149(7) of the Act that they meet the criteria of independence laid down in Section 149(6) of the Act, Regulation 16(1)(b) and Regulation 25 of SEBI Listing Regulations. None of the Independent Directors held any equity shares of your Company during the financial year ended March 31, 2023. Further, all the Independent Directors of your Company have confirmed their registration/renewal of registration, on Independent Directors databank.

During the year under review, the Company did not have any pecuniary relationship or transactions with any of its Directors, other than payment of remuneration and payment of sitting fees and reimbursement of expenses incurred by them for the purpose of attending meetings of the Company.

In terms of Section 203 of the Act, the Company has the following Key Managerial Personnel: Mr. Pratik M. Doshi, Chairman and Managing Director, Mr. Girish Majrekar, Chief Financial Officer and Ms. Akshata Vengurlekar, Company Secretary. There is no change in the Key Managerial Personnel during the year under review.

The composition of the Board of Directors of the Company is in accordance with the provisions of Section 149 of the Act and Regulation 17 of the SEBI Listing Regulations, with an appropriate combination of Executive, Non-Executive and Independent Directors.

COMMITTEES OF THE BOARD

Details of Committees of the Board of Directors of the Company along with their terms of reference, composition and meetings held during the year, are provided in 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 the year under review, Five (5) meetings of the Board of Directors were held. The necessary quorum was present for all the meetings. The details of date of above meeting including the attendance of the Directors are given in the Corporate Governance Report that forms part of this Annual Report.

PERFORMANCE EVALUATION

Pursuant to the provisions of the Act, SEBI Listing Regulations and in line with the Corporate Governance Guidelines of the Company, Annual Performance Evaluation was conducted for all Board Members as well as the working of the Board and its Committees. The evaluation process inter-alia reviews participation of Directors at meetings, domain knowledge, business awareness and adherence to governance.

A formal annual evaluation had been made by the Independent Directors and the Board of the performance of the Committees, Individual Directors, Chairman and the Board as whole. The outcome of the Board Evaluation for the financial year 2022-23 was discussed by the Nomination and Remuneration Committee and the Board at their respective meetings.

POLICY ON DIRECTORS APPOINTMENT AND REMUNERATION

Companys policy is to have an appropriate mix of executive, non-executive and independent directors to maintain the independence of the Board, and separate its functions of governance and management. As on March 31, 2023, the Board had six members, one of whom is an executive managing director, two non-executive non-independent director and three independent directors. One of whom is a woman independent director.

The Companys policy on Directors appointment and remuneration and other matters provided in Section 178(3) of the Act, has been disclosed in the Corporate Governance 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 the Companies (Meetings of Board and its Powers) Rules, 2014 and Regulation 22 of the SEBI Listing Regulations, the Company has established a vigil mechanism to provide a framework to promote responsible and secure whistle blowing and to provide a channel to the employee(s) and Directors to report to the management, concerns about unethical behaviour, actual or suspected fraud or violation of the code of conduct or policy/ies of the Company, as adopted/framed from time to time. The mechanism provides for adequate safeguards against victimisation of employee(s) and also provides for direct access to the Chairperson of the Audit Committee in exceptional cases. The said Policy is placed on the Companys website at www.lkpsec.com.

During the financial year 2022-23, no cases under this mechanism were reported 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 for identification of RPTs, necessary approvals by the Audit Committee/Board/Members, reporting and disclosure requirements in compliance with the Act and provisions of SEBI Listing Regulations.

During the year under review all contracts/arrangement/transactions entered by the Company with related parties were in compliance with the applicable provisions of the Act and SEBI Listing Regulations. Requisite approval of the Audit Committee was obtained for all related party transactions. All related party transactions entered during the year were on arms length basis and in the ordinary course of business of the Company. The details of transactions with related parties are provided in the Companys financial statements in accordance with the Indian Accounting Standards.

Further there being no material related party transactions as defined under Regulation 23 of SEBI Listing Regulations, there are no details to be disclosed in Form AOC-2 in that regard.

The Companys policy on materiality of and dealing with related party transactions, as approved by the Board, is uploaded on the website of the Company and can be accessed at www.lkpsec.com.

DIRECTORS RESPONSIBILITY STATEMENT

In accordance with Section 134(5) of the Act and to the best of their ability, your Directors state that:

i. in the preparation of the annual accounts for the financial year ended March 31,2023, the applicable accounting standards have been followed along with proper explanation relating to material departures;

ii. they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for the year ended March 31,2023;

iii. they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

iv. they have prepared the annual accounts for the financial year ended March 31,2023 on a going concern basis;

v. they have laid down Internal Financial Controls to be followed by the Company and that such internal financial controls are adequate and are operating effectively; and

vi. they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

AUDIT COMMITTEE

The Audit Committee of the Company comprises of Mr. Ganesh Malhotra, Independent Director as Chairperson of the Committee, Mr. Sajid Mohamed, Independent Director, Mrs. Anjali Suresh, Independent Director and Mr. Pratik M. Doshi, Managing Director are other Members of the Audit Committee. There are no instances where the Board did not accept the recommendations of the Audit Committee. The terms of reference, powers and roles of the Committee are disclosed in the Corporate Governance Report, which forms part of this Annual Report.

PARTICULARS OF EMPLOYEES

Disclosures pertaining to remuneration and other details, as required under Section 197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, are given in Annexure - II to the Boards Report.

Further, a statement showing the names and other particulars of employees drawing remuneration in excess of the limits as set out in the Rule 5(2) and 5(3) of the aforesaid Rules, forms part of this report. However, in terms of first proviso to Section 136(1) of the Act, the Annual Report and Accounts are being sent to the members and others entitled thereto, excluding the aforesaid information. The said information is available for inspection by the members. Any member interested in obtaining a copy thereof, may write to the Company at ho compliance@lkpsec.com.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has an Internal Control System, commensurate with the size, scale 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 and independence, the Internal Auditor reports to the Chairperson of the Audit Committee of the Board and to the Managing Director.

The Internal Audit Department monitors and evaluates the efficacy and adequacy of internal control system in the Company, its compliance with operating systems, accounting procedures and policies of the Company. Significant audit observations and recommendations along with corrective actions thereon are presented to the Audit Committee of the Board.

RISK MANAGEMENT

Your Company recognizes that risk is an integral part of business and is committed to managing the risks in a proactive and efficient manner. The Board of the Company at regular intervals monitors the financial, operational, legal risk to the Company.

Pursuant to section 134(3)(n) of the Act it is stated that at present the Company has not identified any element of risk which may threaten the existence of the Company.

statutory auditors

The term of the existing Statutory Auditors M/s. MGB & Co. LLP, Chartered Accountants is coming to an end at the ensuing AGM. The Board of Directors have recommended re-appointment of M/s. MGB & Co. LLP to hold office from the conclusion of this AGM till the conclusion of the Thirtieth AGM.

The Company has received a written confirmation from the Statutory Auditors confirming that their continued appointment shall be in accordance with the applicable provisions of the Act. The Statutory Auditors have confirmed that they satisfy the criteria of independence, as required under the provisions of the Companies Act, 2013 and that they are holding a valid certificate issued by the Peer Review Board of the Institute of Chartered Accountants of India.

AUDITORS REPORT

There are no qualifications, reservations or adverse remarks made by M/s. MGB & Co. LLP, Statutory Auditors, in their report for the financial year ended March 31, 2023.

Pursuant to provisions of the Section 143(12) of the Act, the Statutory Auditors have not reported any incident of fraud to the Audit Committee or the Board during the year under review.

SECRETARIAL AUDITOR

As required under provisions of Section 204 of the Act and read with Rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 made thereunder, Mr. V. Ramachandran (Membership No. A-7731 / CP No. 4731) Proprietor: V. R. Associates, Practicing Company Secretaries was appointed as Secretarial Auditor to conduct the Secretarial Audit of the Company for the financial year 2022-23.

The Secretarial Audit Report for the financial year 2022-23 is appended as Annexure - Ill, which forms part of this Report. There are no qualifications, reservations or adverse remarks made by M/s V. R. Associates, Practicing Company Secretaries, in their report for the financial year ended March 31, 2023.

In addition to the above and pursuant to SEBI circular dated February 08, 2019, a report on secretarial compliance by M/s. V. R. Associates, Practicing Company Secretaries for the financial year ended March 31, 2023 is being submitted to stock exchanges.

COMPLIANCE WITH SECRETARIAL STANDARDS

The Board of Directors states that the Company has complied with Secretarial Standards on meetings of the Board of Directors ("SS-1") and on General Meetings ("SS-2") as amended and issued from time to time by the Institute 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 Annual Return for the financial year ended March 31, 2023 is available on the website of the Company at www.lkpsec.com.

CORPORATE SOCIAL RESPONSIBILITY STATEMENT (CSR)

During the financial year ended March 31,2023 pursuant to the provisions of Section 135(1) of the Act, read with the Companies (Corporate Social Responsibility Policy) Rules 2014, the Company was required to spent Rs. 16,58,876/- towards CSR and the Company has made an actual spend of Rs. 16,60,000/-.

The composition and terms of reference of the CSR Committee is provided in the Corporate Governance Report, which forms part of this Annual Report. Further in compliance with Rule 3 of the Companies (Corporate Social Responsibility Policy) Rules 2014, the CSR Report is given as Annexure - IV which also forms part of this Report.

TRANSFER OF UNCLAIMED/UNPAID AMOUNTS TO THE INVESTOR EDUCATION AND PROTECTION FUND (‘IEPF)

In terms of the provisions of Section 124 of the Act, provisions of the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 and other applicable provisions, all unpaid or unclaimed dividends are required to be transferred by the Company to the Investor Education and Protection Fund ("IEPF") established by the Central Government, after completion of seven years from the date the dividend is transferred to unpaid/unclaimed account. Further, according to the Rules, the shares in respect of which dividend has not been paid or claimed by the members for seven consecutive years or more shall also be transferred to the demat account created by the IEPF Authority.

CONSERVATION OF ENERGY

The operations of the Company are not energy intensive. However, the Company has taken various measures for conservation of energy, like switching from conventional lighting systems to LED lights etc. All efforts are made to use more natural lights in office premises to optimize the consumption of energy.

TECHNOLOGY ABSORPTION

The Company, primarily being a stock broking company and not involved in any industrial or manufacturing activities, has no particulars to report regarding technology 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 the current 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 sexual harassment and discrimination is among the key priorities of the Company. In compliance with 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 of Women at the workplace. The policy includes the scope, consequence of non-compliance and redressal mechanism along with contact details of the Committee members for raising any grievance/complaint under the said policy.

The Company has constituted Internal Complaints Committee under the Sexual 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

DISCLOSURES

• The Company has not accepted any fixed deposits during the year under review and accordingly, no amount on account of principal or interest on deposits from public and/or Members were outstanding as at March 31, 2023.

• There are no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and the Companys operations in future.

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

• No material changes have taken place that could have an impact on the financial position of the Company from the date of closure of financial year under review 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, does not draw any commission or remuneration from subsidiary company. Thereby, no disclosure is required under Section 197(14) of the Act.

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

• There are no shares in the demat suspense account/ unclaimed suspense account at the beginning and at the end of the financial year.

ACKNOWLEDGEMENT