Lakshmi Finance & Industrial Corporation Ltd

To

The Members of

Lakshmi Finance & Industrial Corporation Limited

The Board of Directors are pleased to present the Company’s Centenary Year (100^th) Annual Report and the Company’s Audited Financial Statements for the financial year ended March 31, 2024.

1). FINANCIAL PERFORMANCE

The summarized financial results of the Company for the financial year ended March 31, 2024 are presented below:

(7 in Lakhs)

2). OPERATIONAL PERFORMANCE:

India’s economy has been notably resilient amidst the past year’s global inflation and supply chain constraints, boosting an impressive growth rate of 7.8% in the F Y 2023-24 exceeding the average G20 rate of 3.4%. The strong growth in the manufacturing sector, higher than expected agricultural output and robust Government spending have made India the world’s fastest growing major economy. India is now the fifth largest economy in the world GDP rankings list.

The BSE stock market Sensex has been displaying an upward trend since 2016, characterized by a consistent formation of higher highs. Since the COVID-19 low, the BSE index has experienced a remarkable increase of 187%. In the F. Y 2023-24 the BSE Sensex started at 58,992 levels and ended at 73,651 levels marking a year on year return of 25%. During the F. Y 2023-24 the BSE Sensex index has touched multiple record highs.

The Company recorded Gross Income of Rs1,488.93 lakhs as compared to Rs360.03 lakhs in the previous year. Profit after tax stood at f1,037.74 lakhs after providing current year tax provision of Rs.116 lakhs as compared to Profit after tax of Rs55.05 lakhs in the previous year. The performance during the year ended 31.03.2024 was extremely good mainly on account of positive/encouraging Stock Market conditions and increase in valuation of investments. The rental incomes have been on expected basis. The Company continues to actively and closely monitor its portfolio investments in mutual funds and equity shares cautiously and optimistic about the Indian economy outlook to generate optimum returns by way of capital appreciation and periodic dividend returns.

3) . DIVIDEND:

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 Centenary year under review, your Directors are pleased to recommend a dividend at the rate of 40% (i.e., Rs4/- per Equity Share of Rs10/- each including Special Dividend of Rs1.50) for the financial year 2023-24 as against 20% dividend rate in the previous year. The proposed dividend, if approved at the 100th Annual General Meeting by the Members, will be paid to all those Equity Shareholders whose names appear in the Register of Members as on 14.08.2024 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 31,2024. The outflow on account of the dividend payout would beRs 120.00 lakhs.

UNPAID/UNCLAIMED DIVIDEND:

In terms of the provisions of Investor Education and Protection Fund (Accounting, Audit, Transfer and Refund) Rules, 2016 and Rules, 2001, unpaid/unclaimed dividend amount of Rs15,93,931/- was transferred to Investor Education and Protection Fund on 14.10.2023 pertaining to thefinancial year2015-16.

4) . TRANSFER TO RESERVES:

The Company proposed to transfer a sum of Rs 220 lakhs i.e 20% of its Net Profit for the year 2023-24 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 CHANGES IN DIRECTORS AND KEY MANAGERIAL PERSONNEL:

The details relating to appointment/re-appointment of Directors as required under Regulation 36(3) of SEBI (LODR) Regulation, 2015 are provided in the Notice to the Annual General Meeting. The same are briefly provided hereunder:

Shri. Simhadri Suryanarayana was appointed as Additional Director of the Company by the Board of Directors at their Meeting held on 27^th May, 2024 who holds office upto the ensuing 100^th Annual General Meeting.

Pursuant to the provisions of Section 152 of the Companies Act, 2013, the office of Directorship of Shri. K.Kapil Prasad is due for retirement by rotation at the ensuing 100^th Annual General Meeting of the Company; and being eligible, he offers himself for re-appointment. Your Board of Directors recommends his re-appointment for the approval of Members. His brief profile has been provided in the Explanatory Statement to the Notice of Annual General Meeting.

Shri. R.Surender Reddy, Shri Kapil Bhatia and Shri Keshav Bhupal, who were re-appointed at the 95^th Annual General

Meeting of the Company as Independent Directors fora second-term of five years, are due to retire at the ensuing 100^th Annual general Meeting. Pursuant to the provisions of section 149(11), the aforementioned Directors shall not be eligible for re-appointment as ‘Independent Directors’ of the Company as they have completed two terms in office.

The Company received notice from a Member pursuant to section 160 of the Companies Act, 2013 proposing the candidature(s) of Shri. Simhadri Suryanarayana and Dr. D.Nageswara Rao for their appointment to the office of ‘Independent Director(s)’ of the Company. Their brief profiles together with the Board of Directors’ justification for their appointment as ‘Independent Directors’ are provided in detail in the Explanatory Statement to the Notice of Annual General Meeting. Your Board of Directors recommends their appointment as above.

Pursuant to section 203 of the Companies Act, 2013, the Key managerial personnel (KMP) of the Company are:

1. Shri. K.Harishchandra Prasad, Managing Director

2. Shri. U.Vijay Kumar, Chief Financial Officer

3. Smt.Deepa Gusain, Company Secretary

There was no change in the KMP of the Company during the year under review.

7) . DECLARATIONS GIVEN BY INDEPENDET 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 27, 2024.

8) . EVALUATION OF THE BOARD’S 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 Board’s 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 DIRECTOR’S 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 FinancialYear from 1st April, 2023 to 31^st March, 2024. The dates on which the Meetings were held are as follows:

30^th May, 2023, 9^th August, 2023, 9^th November,2023 and 7^th February,2024.

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 COMPANY’S SHARES:

The Company’s 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 year2024-25 have been paid. The Company’s shares are listed and traded at NSE with ISIN code ‘INE 850E01012’ and Stock Code is ‘LFIC’ with effect from 15.04.2015.

13) . 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 31⁵¹ March 2024, 81.36% of the shares in your Company have been dematerialized.

14. 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 2016-2017 will expire on September 2nd, 2024 and thereafter the amount standing to the credit in the said account will be transferred to the “Investor Education and Protection Fund” ofthe Central Government.

15). AUDITORS:

i) . Statutory Auditors:

At the Annual General Meeting held on 28.09.2022, M/s. Brahmayya & Co., Chartered Accountants, Hyderabad were appointed as Statutory Auditors of the Company to hold the office for a period of 5 years commencing from the conclusion of98^rd Annual General Meeting till the conclusion of 103^rd Annual General Meeting.

The Auditors’ Report for F.Y. 2023-24 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 reports are 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 M/s N. Madhavi & Associates, Company Secretaries is enclosed as a part of this report.

“As regards the observation made by the Secretarial Auditor regarding appointment of Managing Director, the Company hereby states that utmost caution and care is exercised to ensure compliance with the applicable laws. In the given scenario, the Company is of the view that under section 196 ofthe Companies Act, 2013, the approval of Members is to be obtained by way of ratification subsequent to the appointment by the Board of Directors. Accordingly, the appointment of Managing Director by the Board w.e.f 01.04.2023 was duly approved by the Members byway of special resolution at the immediate Annual General Meeting held on 09.08.2023. It is hereby stated that the present issue is a case of interpretation and that there is no intent to disregard the laws. Your Board has always been and will be committed to strict compliance of laws.”

16) . 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, and 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 that all assets and resources are acquired are used economically.

17) . DIRECTORS’ RESPONSIBILITY STATEMENT:

Pursuant to Section 134 (5) ofthe Companies Act, 2013, your Directors confirm that to the best of their knowledge and beliefand 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.

H. 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 2023-24 and of the statement of Profit or Loss of the Company for that period.

Hi. 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 2023-24 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.

18) . 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

19) . 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 31^st March 2024. Further, the Company is registered with RBI as a “Non-Banking Financial Institution without accepting public Deposits”.

20) . CHANGE IN NATURE OF BUSINESS:

There is no change in the nature of business during the year under review.

21) . VIGIL MECHANISM :

In pursuant to the provisions of section 177(9) & (10) ofthe 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.ora.in.

22) . RELATED PARTY TRANSACTIONS :

Related party transactions that were entered during the financial year were on an arm’s length basis and were in the ordinary course of business. There were no materially significant related party transactions with the Company’s 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.ora.in.

23) . EXTRACT OF ANNUAL RETURN:

The details forming part of the extract of the Annual Return in form MGT-9 is annexed herewith as “Annexure-ll” to this report,

24) . 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 Management’s discussion and analysis is set out in this Annual Report.

25) . 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. Brahmayya & 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.

26) . CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO:

Information required under section 134(3)(m) read with Rule, 8 ofthe Companies (Accounts) Rules, 2014, of the Companies Act, was not given as the same is not applicable owing to the nature of activities in foreign Currency is Nil.

27) . 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 ofthe Companies Act, 2013, relating to the Corporate Social Responsibility is not applicable to the Company and hence the same is not adopted.

28) . 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-lll

29) . MATERIAL CHANGES AND COMMITMENTS:

Pursuant to the provisions Sec.134 (3) (I) 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.

30) . 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.

31) . 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.

32) . 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 followinq is a summary of sexual harassment complaints received and disposed off during each Financial Year:

33). 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