The Directors present the Fortieth Annual Report and Audited Accounts of the Company for the year ended March 31, 2024.
FINANCIAL HIGHLIGHTS
The financial performance of the Company is as follows:
Rs. In lakhs
Standalone
Consolidated
Year
2023-24
2022-23
RESERVE
The Company during the year under review has transferred Rs. 1101.10 lakhs to Special Reserve as per applicable regulation for NBFCs, prescribed by the Reserve Bank of India Act, 1934.
DIVIDEND
The Board of Directors recommended the interim dividend declared and paid during the year be considered as final dividend for the financial year 2023-24.
PERFORMANCE REVIEW
The Company has prepared the financial statement in accordance with the Companies Act, 2013 and Indian Accounting Standard. The Company's standalone revenue from operations increased from Rs. 2,500.22 lakhs to Rs. 8,260.04 lakhs and Other Income also increased from Rs. 7.33 lakhs to Rs. 20.85 lakhs There is a net profit after tax of Rs. 5505.51 lakhs as against net profit of Rs. 1218.69 lakhs in the corresponding previous year.
The Company's consolidated revenue from operations increased from Rs. 2,814.17 lakhs to Rs. 8,992.03 lakhs and Other Income also increased from Rs. 7.60 lakhs to Rs. 20.85 lakhs There is a net profit after tax of Rs. 5,944.90 lakhs as against net profit of Rs. 1,387.33 lakhs in the corresponding previous year.
SHARE CAPITAL
During the year under review, there is no change in the Share capital of the Company. Further the Company has not issued any sweat equity shares or bonus shares or equity shares with differential rights.
FIXED DEPOSITS
The Company has no public deposits as of date and will not accept any deposits without prior approval of the Statutory Authorities concerned.
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 Auditors' reports to the Chairman of the Audit Committee of the Board and to the Executive Chairman.
The Internal Auditors 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. Based on the report of Internal Auditors process owners undertake corrective action in their respective areas and thereby strengthen the controls. 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. There is no risk, which in the opinion of the Board may threaten the existence of the Company.
Pursuant to section 134 (3) (n) of the Companies Act, 2013 (Act) it is stated that at present the company has not identified any element of risk which may threaten the existence of the Company.
INDIAN ACCOUNTING STANDARD (IND AS)
The Company has adopted Indian Accounting Standards ("IND AS") from April 01, 2019 with a transition date of April 01, 2018. Accordingly, the financial statement for the year 2023-24 have been prepared in accordance with IND AS, prescribed under Section 133 of the Act, read with the relevant rules issued thereunder and the other recognised accounting practices and policies to the extent applicable.
SUBSIDIARY, JOINT VENTURE, HOLDING COMPANY AND ASSOCIATE COMPANIES
As per Rule 8(1) of Companies (Accounts) Rules, 2014 the required financial information in respect of Company's subsidiary i.e. Bond Street Capital Private Limited (erstwhile Gayatri Cement and Chemical Industries Private Limited), in Form AOC 1 is annexed to this Report as "Annexure I".
Annual accounts of the Subsidiary Company and the related detailed information shall be available to shareholders of the Company and Subsidiary Company seeking such information at any point of time and also kept open for inspection by any shareholders in the Registered office of the Company and Subsidiary Company.
The annual accounts of the aforesaid subsidiary and the related detailed information shall also available to shareholders of the Company, seeking such information at Company's website i.e. www. lkpfinance.com . The Company does not have any joint ventures / associate / holding company.
CONSOLIDATED FINANCIAL STATEMENT
During the year under review, the Board has reviewed the affairs of its subsidiary. 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 thereon 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 has been placed on the website of the Company at www.lkpfinance.com. The aforesaid documents are also available to Member interested in obtaining the same upon a request made to the Company.
DIRECTORS
In terms of Section 152 of the Act, Mr. Dinesh Waghela (holding DIN: 00230087), 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 re-appointment.
The tenure of Mr. Vineet Sancheti as an Independent Director was till March 31, 2024 as per resolution passed by the members of the Company at its Annual General Meeting held on July 05, 2019. The Board of Directors place on record its sincere appreciation for the valuable guidance provided by Mr. Vineet Sancheti during his tenure.
Upon recommendation of the Nomination and Remuneration Committee and as approved by the Board of Directors at their respective meetings held on 30th March, 2024 and 26th April, 2024, Mr. Dara Jahangir Kalyaniwala (holding DIN 03311200) has been appointed as an Additional Director to hold the office of NonExecutive, Independent Director, on the Board of the Company for a period of 5 (five) years commencing from 26th April, 2024. The approval of members of the Company for said appointment is proposed at this Annual General Meeting.
The Company has received necessary disclosure and confirmation from concerned Director(s) in connection with their appointment as required under Regulation 36 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, as 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 Companies Act, 2013 that they meet the criteria of independence laid down in Section 149(6) of the Act and Regulation 25 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015.
PERFORMANCE EVALUATION OF BOARD
Pursuant to the provisions of the Companies Act, 2013 and the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, (Listing Regulations) the Board has carried out an annual evaluation of performance of its
own, the Committees thereof and the Directors individually.
At the meeting of the Board all the relevant factors that are material for evaluating the performance of the Committees and of the Board were discussed in detail.
A separate exercise was carried out to evaluate the performance of individual Directors including the Chairman of the Board, who were inter-alia evaluated on parameters such as level of engagement, contribution, independence of judgment, safeguarding the interest of the Company and its minority shareholders, etc. The performance evaluation of the Independent Directors was carried out by the entire Board except the Director being evaluated. The performance evaluation of the Chairman and Non-Independent Directors was carried out by the Independent Directors.
The Directors expressed their satisfaction with the evaluation process.
The Board has, on the recommendation of the Nomination & Remuneration Committee framed a policy for selection and appointment ofDirectors, Senior Management and their remuneration. The Remuneration Policy is stated in the Corporate Governance Report.
POLICY ON DIRECTORS' APPOINTMENT AND REMUNERATION
Company's policy is to have an appropriate mix of executive, nonexecutive and independent directors to maintain the independence of the Board and separate its functions of governance and management. As on March 31, 2024, the Board has Six members, one of whom is an Executive Chairman-Managing Director, two Non-Executive NonIndependent Directors and three Independent Directors, one of whom is a Woman Independent Director.
The Company's 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.
MEETINGS
During the year six Board Meetings, five Audit Committee Meetings and four Stakeholder Committee Meetings were convened and held, the details of which are given in the Corporate Governance Report. The Board meetings were held on April 28, 2023, July 21, 2023, October 25, 2023, October 31, 2023, January 12, 2024 and February 03, 2024. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013.
AUDIT COMMITTEE
The Board has set up the Audit Committee with two Independent Directors, Mr. Vineet N. Suchanti, Mrs. Anjali Suresh and one Promoter Directors, Mr. M. V. Doshi. The said composition is as per Section 177 of the Companies Act, 2013 and Regulation 18 of the Listing Regulations. 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.
DIRECTORS' RESPONSIBILITY STATEMENT
The Board of Directors acknowledges the responsibility for ensuring
compliance with the provisions of section 134(3)(c) read with section 134(5) of the Companies Act, 2013 in the preparation of the annual accounts for the year ended on March 31, 2024 and state that:
i. In the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;
ii. The Directors 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 that period;
iii. The Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
iv. The Directors have prepared the annual accounts on a going concern basis;
v. The Directors 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. There is a proper system to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.
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 Forty-first 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.
RESPONSES TO QUALIFICATIONS, RESERVATIONS, ADVERSE REMARKS AND DISCLAIMERS MADE BY THE STATUTORY AUDITORS AND THE SECRETARIAL AUDITORS
a) The Company has investments in unquoted securities of Rs 8,485.62 lakhs. The Company could not obtain valuation report for securities of Rs 2,110.00 lakhs as at 31st March 2024. Further, in respect of securities of Rs 4,533.46 lakhs and Rs 210.16 lakhs, the Company has carried out valuation as on 15th December 2023 and 8th February 2024 respectively. The management considers that the value of securities is not fluctuating and not easily marketable and hence valuation is appropriate and no change is required in the carrying value of these investments.
b) The Company is unable to get the confirmation/ term sheet from two lenders as the parties are not contactable. The Company is
confident that there will be no material change in the balances outstanding.
As described in Note 30(b) to the standalone Ind AS financial statements, State Bank of India has obtained an Order from Debt Recovery Tribunal (DRT), Bangalore against Kingfisher Airlines, United Breweries (Holdings) Limited and Others for recovery of dues from them. In the earlier years the Company received a garnishee Order from the Recovery Officer, DRT, Bangalore claiming Rs. 2,500 lakhs (plus interest), as the financial statements of Kingfisher Finvest India Limited (lender) reflected the amount due from the Company. The Company has contested the claim and deposited Rs 1,126.22 lakhs and investment in mutual fund of Rs. 554.41 lakhs was attached by the recovery officer. The matter is presently pending before the Debt Recovery Appellate Tribunal, Chennai.
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 AUDIT
Pursuant to 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 V. R. Associates, a firm of Company Secretaries in practice to undertake the Secretarial Audit of the Company. The Secretarial Audit Report is annexed herewith as "Annexure II".
The Board of Directors affirm that the Company has complied with the applicable Secretarial Standards issued by the Institute of Companies Secretaries of India (SS1 and SS2) respectively relating to Meetings of the Board, its Committees and the General Meetings.
The provisions relating to maintaining of cost record and to conduct cost audit are not applicable to the Company.
ANNUAL RETURN
As per Section 92 of the Companies Act, 2013, the copy of annual return of the company has been placed on the website of the company and can be accessed at www.lkpfinance.com.
CORPORATE SOCIAL RESPONSIBILITY INITIATIVES
In terms of Section 135 of the Companies Act, 2013, your Company has formed a Corporate Social Responsibility (CSR) Committee to approve activities to be undertaken, expenditure to be incurred and to monitor the performance of the CSR activities undertaken by the Company.
The Board of Directors and the CSR Committee review and monitor from time to time all the CSR activities being undertaken by the Company.
The Company has contributed funds for the promotion of education and environmental sustainability etc. The contribution has been made to a registered trust which mainly undertakes activities specified under Schedule VII of the Companies Act, 2013.
The report on CSR activities is annexed herewith as "Annexure III".
The Company's CSR policy provides guidelines and lays down the process to undertake CSR activities of the Company. The CSR Policy is also available on the website of the Company www.lkpfinance.com
RELATED PARTY TRANSACTIONS
All related party transactions that were entered into during the financial year were on arm's length basis and were in the ordinary course of the business. There are no materially significant related party transactions made by the Company with Promoters, Key Managerial Personnel or other designated persons which may have potential conflict with interest of the Company at large. The particulars of Contract or arrangement in Form AOC-2 as required under Section 134(3)(h) of the Companies Act, 2013 and Rule 8(2) of the Companies (Accounts) Rules, 2014 is annexed to this Board Report. The details of other loans and advances are mentioned in notes to accounts and are not repeated here.
PARTICULARS OF LOANS GIVEN, INVESTMENTS MADE, GUARANTEES GIVEN OR SECURITY PROVIDED BY THE COMPANY
Being an NBFC, the disclosures regarding particulars of loans given, guarantees given and security provided, is exempted under the provisions of section 186(11) of the Act. As regards investments made by the company, the details of the same are provided under financial statements of the company for the year ended 31st March, 2024.
CODE OF CONDUCT
The Board of Directors has approved a Code of Conduct which is applicable to the Members of the Board and all employees in the course of day to day business operations of the company. The Code has been placed on the Company's website at www.lkpfinance.com
The Code lays down the standard procedure of business conduct which is expected to be followed by the Directors and the designated employees in their business dealings and in particular on matters relating to integrity in the work place, in business practices and in dealing with stakeholders.
All the Board Members and the Senior Management personnel have confirmed compliance with the Code.
VIGIL MECHANISM / WHISTLE BLOWER POLICY
The Company is committed to the high standards of Corporate Governance and stakeholder responsibility.
The Company has established a vigil mechanism to be known as the ‘Whistle Blower Policy' for its Directors and employees, to report instances of unethical behavior, actual or suspected, fraud or violation of the Company's Code of Conduct. The aim of the policy is to provide adequate safeguards against victimization of whistle blower who avails of the mechanism and also provide direct access to the Chairman of the Audit Committee, in appropriate or exceptional cases.
Accordingly, ‘Whistle Blower Policy' has been formulated with a view to provide a mechanism for the Directors and employees of the Company to approach the Chairman of the Audit Committee of the Company.
The purpose of this policy is to provide a framework to promote responsible and secure whistle blowing. It protects employees willing to raise a concern about serious irregularities within the Company.
PREVENTION OF INSIDER TRADING
The Company has adopted a Code of Conduct for Prevention of Insider Trading as amended from time to time with a view to regulate trading in securities by the Directors and designated employees of the Company. The Code requires pre-clearance for dealing in the Company's shares and prohibits the purchase or sale of Company shares by the Directors and the designated employees while in possession of unpublished price sensitive information in relation to the Company and during the period when the Trading Window is closed. The Board is responsible for implementation of the Code.
All Board Directors and the designated employees have confirmed compliance with the Code.
INFORMATION PURSUANT TO SECTION 134(3) OF THE COMPANIES ACT, 2013
The Statement of Disclosure of Remuneration under Section 197 of Companies Act, 2013 and Rule 5(1) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is Annexed as "Annexure IV".
A statement showing the names of the top ten employees in term of remuneration drawn and the name of every employee, who was in receipt of remuneration not less than the limits as set out in the Rule 5(2) and Statement of Particulars as per Rule 5(3) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 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 at the Registered Office of the Company during business hours on working days and through electronic means. Further in terms of proviso to said Rule 5(3), such particulars shall be available to any shareholder on specific request made by him in writing or e- mail to Company Secretary, at lkpfininvestor.relations@lkpsec.com.
The prescribed particulars of Conservation of Energy, Technology Absorption do not apply to your Company. There are no foreign exchange earnings & outgo during the year under report.
During the year Promoter/s of the Company had entered in to a Share Purchase Agreement with M/s Mufin Green Finance Limited and Mr. Kapil Garg, (Acquirers) being acquirers of 32,67,745 equity shares of the Company from the Promoters as per the ‘Detailed Public Statement' made by the Acquirers on 9th February 2024. An Open Offer was made to the Shareholders of LKP Finance Limited under Regulation 23(1) of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulation, 2011 ("SEBI SAST Regulations, 2011") subject to prior approval from Reserve Bank of India (RBI) in terms of RBI Master Direction- Reserve Bank of India (Non-Banking Financial Company - Scale Based Regulation) Directions, 2023, for transfer of Management and Control of Non-Banking Finance Company. The said Open Offer stands withdrawn in terms of Regulation 23(1)(a) of the SEBI SAST Regulations, 2011 in view of denial of approval by Reserve Bank of India vide its letter dated April 03, 2024.
The Institute of Company Secretaries of India, a Statutory Body, has issued Secretarial Standards on various aspects of corporate law and practices. The Company has complied with all the applicable secretarial standards.
TRANSFER OF UNCLAIMED/UNPAID AMOUNTS TO THE INVESTOR EDUCATION AND PROTECTION FUND (‘IEPF')
In terms of the provisions of Section 124, 125 and other applicable provisions, if any, of the Act, read with 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, in terms of Section 124(6) of the Act, read with the IEPF Rules, all the shares in respect of which dividend has remained unpaid/ unclaimed for seven consecutive years or more from the date of transfer to the unpaid dividend account are required to be transferred to the demat account of the Investor Education and Protection Fund Authority.
The details of unpaid/ unclaimed dividend and equity shares so transferred are uploaded on the website of the Company at https:// www.lkpfinance.com as well as that of the Ministry of Corporate Affairs, Government oflndia athttp://www.mca.gov.in.
The Members/Claimants whose shares and unclaimed dividend have been transferred to IEPF may claim the shares or apply for refund by making an application to IEPF Authority in Form IEPF 5 (available on www.iepf.gov.in). The Member/Claimant can file only one consolidated claim in a Financial Year as per the IEPF Rules.
MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY
There were no material changes and commitments, affecting the financial position of the Company from end of the financial year up to the date of this Board's Report.
CORPORATE GOVERNANCE
The Report on Corporate Governance along with a Certificate of compliance from the Practising Company Secretaries and Management Discussion and Analysis Report forms part of this Report.
DISCLOSURES
• There are no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and the Company's operations in future.
• During the year under review, the Company has not issued any Debentures.
• There is no change in the nature of business of the Company.
• Executive Chairman-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.
DISCLOSURES WITH RESPECT TO DEMAT SUSPENSE ACCOUNT/ UNCLAIMED SUSPENSE ACCOUNT
Declaration that the voting rights on shares in the suspense account shall remain frozen till the rightful owner of such shares claims the shares - Not Applicable
DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND 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 the year 2023-24:
• Number of complaints received : Nil
• Number of complaints disposed-off: Nil
• Number of complaints pending : Nil
ACKNOWLEDGEMENT
Your Directors would like to place on record their sincere appreciation to Shareholders, Bankers, Institutions and Employees for their cooperation and support.
For and on behalf of Board of Directors