Your Directors have pleasure in presenting the 68th Annual Report of your company
together with the audited financial statements for the year ended 31st March, 2023.
Financial Results Rs. In lakhs
Particulars |
For the year ended 31st March, 2023 |
For the year ended 31st March, 2022 |
Gross Sales |
65,724.06 |
49,653.63 |
Less : Discounts & Schemes |
5,808.64 |
4,207.70 |
Net sales |
59,915.42 |
45,445.93 |
Add: Other Income |
1,164.04 |
431.56 |
Total Income |
61,079.46 |
45,877.49 |
Total Expenditure w/o Depn and Finance charges |
56,117.95 |
41,476.88 |
Proft before dep in and finance |
4,961.51 |
4,400.61 |
Less: Int Dep and finance charges |
4,274.51 |
4,309.92 |
Profit /(loss) before tax |
687.00 |
90.68 |
less: Provision for tax |
|
|
- Current |
120.03 |
50.00 |
- Deferred |
692.51 |
-1,109.48 |
Profit /(loss) after tax |
-125.54 |
1,150.16 |
Add: Balance Brought forward from previous year |
- 4,739.84 |
-5,921.69 |
Profit /(loss) for the year |
-125.54 |
1,150.16 |
OCI |
19.20 |
31.69 |
Balance loss transfered to Balance Sheet |
- 4,846.18 |
- 4,739.84 |
The Board of Directors has decided not to recommend any dividend for the year period
ended 31st March, 2023.
Performance Highlights
For the year ended 31st March, 2023, the Company has achieved gross sales of Rs. 65,724
lakhs as against Rs. 49,654 Lakhs for the year ended 31st March, 2022. During the year
under review, the Company has incurred a Loss after tax of Rs.125.54 lakhs as against a
Profit of Rs. 1,150.16 lakhs for the year ended 31st March, 2022.
During the year under review, the company has achieved highest ever sales. However, the
cost of few raw materials and packing materials have gone up significantly when compared
to last year as an impact of inflation and also due to Ukraine-Russian war conditions. On
account of the various cost reduction measures adopted by the Company including product
mix change, the company was able to reduce the impact and achieve Profit Before Tax of Rs.
687.00 Lakhs
Industry Trends
In the past year, inflation emerged as a significant force influencing consumer
behavior and demand. People responded by adapting the quantities they purchased and giving
precedence to essential items rather than nonessential ones, all aimed at effectively
managing their household finances. While individuals remained loyal to their preferred
brands, they began emphasizing the importance of value. Throughout this period, our
unwavering dedication remained fixed on providing exceptional products that perfectly
balanced quality and cost.
We maintained our price points to guarantee consumer convenience, which, unfortunately,
impacted our profit margins consistently over the course of the year.
Amidst strong double-digit growth in the Pie market, active efforts are underway to
enhance and diversify the Choco Pie brands portfolio, capitalizing on this favourable
trend. Impressively, our performance outpaced the growth of the Cream biscuit market.
With growths back in Confectionary segment, we focused on our core brands Coffy Bite
& Coconut Punch. Lollipops and Jellies being the high growth categories within
confectionery, we launched range of Lollipops and Fruit Jellies in the price point of Rs.
5/- & Re. 1/- respectively. These New Products helped us to garner growths..
Outlook
Markets are expected to continue the growth momentum and we are confident on riding on
this growth wave. Few raw materials are still seeing upward trend, which could impact the
margins.
This year we will commercialize our new Choco Pie line in Nemam factory. Additional
capacity will help us to further drive the penetration of the Choco Pie category.
Extensions into new flavours and availability across newer markets will drive our growths.
Our aim would be to continue making Lotte a preferred brand among the consumers.
In the confectionary category, Coffy Bite expansion into the higher growing HBC segment
will make the brand relevant to the younger urban target group. We are optimistic of the
growths we planned in the segment and enhance our market Shares. Jellies and Lollipops
remain our new focus segments.
Internal Control System
Your Company has in place adequate systems of internal control commensurate with its
size and the nature of its operations. These have been designed to provide reasonable
assurance with regard to recording and providing reliable financial and operational
information, complying with applicable statutes, safeguarding assets from unauthorized use
or losses, executing transactions with proper authorization and ensuring compliance of
internal policies. The Company has a well-defined delegation of power with authority
limits for approving revenue as well as capital expenditure. Processes for formulating and
reviewing annual and long term business plans have been laid down to ensure adequacy of
the control system, adherence to the management instructions and legal compliances.
Extract of Annual Return
As per the requirements of the Companies Act, 2013, copy of Annual Return is posted on
Companys website and the same can be accessed at https://www.lotteindia.com/
investor-centre.html#annual-return.
Board Meetings
During the year under review, five Board Meetings were held. Details of number of
meetings of Board of Directors and its committees thereof and attendance of the Directors
in such meetings are provided under the Corporate Governance Report.
Directors Responsibility Statement
Pursuant to sub-section (5) of Section 134 of the Companies Act, 2013, your Directors,
based on representations from the Operating Management, confirm that:
(a) in the preparation of the annual accounts, the applicable accounting standards had
been followed along with proper explanation relating to material departures;
(b) the directors had 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 and loss of the company for that period;
(c) the directors had 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.
(d) the directors had prepared the annual accounts on a going concern basis;
(e) the directors had laid down internal financial controls to be followed by the
company and that such internal financial controls are adequate and were operating
effectively.
(f) the directors had devised proper systems to ensure compliance with the provisions
of all applicable laws and that such systems were adequate and operating effectively.
Declaration from Independent Directors
Mr. D.G.Rajan (DIN: 00303060) and Ms.Jeehye You (DIN:07817025), Independent Directors
have given declarations that they meet the criteria of independence as laid down under
Section 149(6) of the Act.
Nomination & Remuneration Policy:
The Policy provides for appointment, remuneration and removal of Directors, KMP &
Senior Management Personnel and criteria for the same.
1. Appointment of Director, KMP and Senior Management Personnel: The Nomination and
Remuneration Committee (NRC) shall identify and ascertain the qualification, expertise and
experience of the persons being considered for appointment as a Director, KMP and Senior
Management level and recommend the appointment to the Board. At the time of appointment of
an Independent Director, the NRC shall ensure that the appointee shall meet with the
requirements of the Companies Act, 2013 and conditions stipulated in the Policy from time
to time, for determining independence of a director. Further, the continuity of such
Independent Director shall be on the basis of a yearly review process. While appointing,
the company will have regard to diversity, qualification, skill, integrity, industry
experience, expertise and other distinctions. In case of appointment of members of the
Board, the term of appointment shall be in accordance with Companies Act, 2013 and rules
made thereunder. The Managing Director and Whole Time Director are authorised to identify
and appoint suitable persons for the post of KMP and Senior Management personnel (other
than members of board) for administrative convenience and if need be after consulting the
NRC / Board for guidance.
2. Evaluation: The Independent Directors shall carry out evaluation of performance of
every Director including independent director. The evaluation process / criteria for the
Board, its Committees, Individual Directors and the Independent Directors shall be broadly
based on Knowledge to perform the role, time and level of participation, Performance of
duties and Professional conduct and independence. The Board Board, its Committees,
Individual Directors and the Independent Directors shall be asked to complete the
evaluation forms and submit the same to the Chairman.
The evaluation of KMP and Senior Management personnel shall be in accordance with HR
policies of the Company in force.
3. Remuneration of Directors, KMP and Senior Management Personnel:
a) Non-Executive Directors (Including Independent Directors): The sitting fee /
remuneration payable to directors shall be in accordance with Companies Act, 2013, and the
Rules made thereunder for the time being in force. Review of remuneration of nonexecutive
directors shall be made by NRC and shall be recommended to the Board for approval, if
required. An Independent Director shall not be entitled to any stock option of the
Company.
b. Managing Director, Executive Director and Wholetime director (including revisions
& alterations) shall be in accordance with Companies Act, 2013 and Rules framed
hereunder as well as the HR Policy of the Company. The remuneration is on the basis of the
Companys overall performance, individuals contribution towards Companys performance and
trends in the industry in general and comprises of a fixed salary, allowances,
reimbursements, perquisites and performance incentive.
c. Key Managerial Personnel and Senior Management Personnel: Remuneration comprises of
fixed salary, allowances, reimbursements, perquisites, performance incentive as per HR
policy of the Company and is also subject to NRC / Board approval wherever required
statutorily. The remuneration is related to the desired skill set, experience, expertise
and long term relationships.
4. Removal: Due to reasons for any disqualification mentioned in the Act or under any
other applicable Act, Rules and Regulations or amendments thereunder and / or for any
disciplinary reasons and subject to such applicable Acts, Rules and Regulations and the
Companys prevailing HR policies, the Committee may recommend, to the Board, with
reasons recorded in writing, removal of a Director, KMP or Senior Management personnel.
The Remuneration and Nomination policy approved by the Board of Directors is posted on the
website of the Company viz., https://www.lotteindia.com/
pdf/REMUNERATION-AND-NOMINATION-POLICY.pdf
Loans/Guarantee/Investments
The Company has no Inter-Corporate Loans/ Guarantees. Investments of the Company in the
shares of other companies are provided under notes to Balance Sheet appearing elsewhere in
this Annual Report.
Related Party Transactions:
All the transactions of the Company with related parties are at arms length and have
taken place in the ordinary course of business. No transaction entered with related
parties was material. In view of the above, disclosures of related party transactions in
Form AOC-2 is not applicable.
Deposits
The company has not accepted any deposits and as such, no amount towards principal or
interest on same has been outstanding as on date.
Material Changes
There is no material change or commitments after closure of the accounting year till
the date of this report.
Conservation of energy, technology absorption and foreign exchange earnings and outgo
(A) Conservation of energy
(i) The steps taken or impact on Conservation of Energy:
a) Utilized wind power partially at Nemam & Nellikuppam factories and Head office.
b) In view of the above, your Company was able to conserve energy cost and saved around
Rs. 1.15 crores during the year 2022-23.
(ii) The steps taken by the Company for utilising alternate
sources of energy :
(a) Your Company had already installed solar power plant (125 KW) at Rohtak factory..
b) Generated 1.23 Lakhs units of Solar power at Rohtak factory, which resulted in cost
saving of around Rs. 7.99 lakhs.
c) Optimized the energy efficiency level of cooling tower at Rohtak by using the
variable frequency drive and reducing the number of cooling tower operation according to
the load. Units saved 31680 units, which resulted in cost saving of around Rs. 2.05
lakhs/annum.
d) Installed the time intervals for the stirrer motor for Chocolate tank at Rohtak
factory. Units saved 85789 Units, which resulted in cost saving of Rs. 5.57 lakhs.
e) Installed interlocking dust collector motors with flour blower operation at Rohtak
factory saved 3240 units, which resulted in cost saving of Rs. 0.21 lakhs.
(iii) the capital investment on energy conservation equipments: Nil.
(B) Technology absorption
(i) the efforts made towards technology absorption; Continued efforts of quality
control/ quality assurance procedures to enhance and maintain quality.
(ii) the benefits derived like product improvement, cost reduction, product development
or import substitution; The above resulted in enhancement of quality and reduction in cost
of manufacture.
(iii) in case of imported technology (imported during the last three years reckoned
from the beginning of the financial year)- Your Company has the advantage of availing
advanced technology and constant upgradation of the same from its holding company viz.,
Lotte Confectionery Co.Ltd, Seoul, Korea .
Details of technology imported : Technology required for
manufacturing basic raw materials
a) Year of import : 2015
b) Whether the technology been fully absorbed : Yes, fully absorbed
c) If not fully absorbed, areas where absorption has not taken place, and the reasons
thereof : Not applicable
(iv) the expenditure incurred on Research and development: Rs 55.68 lakhs
Foreign exchange earnings and Outgo:
(Rs.in lakhs)
Earnings |
2208.36 |
Outgo |
7446.73 |
Business Risk Management
The Company has developed and implemented the Risk Management Policy. The policy
envisages identification of risk and procedures for assessment and minimisation of risk
thereof. The Risk Management Policy of the Company is available at the Companys website
http://www.lotteindia.com
Corporate Social Responsibilty
Your Company has constituted a CSR committee of Board of Directors and has adopted a
CSR Policy. The same is posted in the Companys website https://www.lotteindia.com/pdf/
CSR-POLICY.pdf. The policy aims mainly for promotion of education, development of
vocational skills among children women, health, rural developments etc.
The obligation to spend towards CSR did not arise to your Company for the year 2022-23
as the limits as per section 135(1) of the Companies Act, 2013 were not applicable. A
report in prescribed format is attached herewith as Annexure 1.
Directors
Mr.Jeongkwan Heo was appointed as Whole Time Director at the Board Meeting held on
30.08.2022 in the place of Mr. In Chul Yeo, who resigned from the post of Whole Time
Director and from the Directorship of the Company with effect from on 29.03.2022. The
appointment of Mr.Jeongkwan Heo as Whole Time Director was approved by Shareholders at the
AGM held on 29.09.2022.
Mr.Milan Wahi was reappointed as Managing Director for a period of 3 years from 10th
October, 2022 at the Board Meeting held on 30.08.2022 and approved by shareholders at the
AGM held on 29.09.2022.
Mr.Kyungwoon Cho, Director will retire by rotation at this Annual General Meeting and
being eligible offers himself for reappointment.
Ms.Jeehye You was appointed as Independent Director at the Board Meeting held on
29.03.2022 for a period of 5 years and same was approved by shareholders at the AGM held
on 29.09.2022.
Key Managerial Personnel
The Company designated Mr.Kyungwoon Cho, Chairman cum Executive Director, Mr. Milan
Wahi, Managing Director, Mr.Jeongkwan Heo, Chief Financial Officer and Mr.T.G.Karthikeyan,
Company Secretary as Key Managerial Personnel.
Statutory Auditors
M/s. Price Waterhouse Chartered Accountants LLP, Chennai was appointed as Statutory
auditors of the Company at the aGM held on 30th September, 2021 for a period of 5 years to
hold office from the conclusion of 66th AGM till the conclusion of 71st AGM.
Secretarial Audit
The Secretarial Audit Report for the Year ended 31st March, 2023 given by Mrs
R.Sucharithra, Company Secretary in Practice, is annexed to this report as Annexure 2.
Your Company has appointed Mrs.R.Sucharithra, Company Secretary in Practice, to do
Secretarial Audit for the year 2023-24 and provide the report thereon.
Internal Audit
Your company has appointed Grant Thornton Bharat LLP, Chennai as Internal Auditor for
the year 2023-24.
Industrial Relations:
During the year under review, the Industrial relations were remained cordial at all
factories. However, a group of workmen of Nemam (Chennai) factory were on strike from 20th
April, 2023 to 14th July, 2023 on various demands. After many rounds of meetings with
workmen and conciliation talks before statutory authorities at various levels, amicable
settlement was reached on 14th July, 2023 and striking workmen resumed their duty from
15th July, 2023. During the strike period, your Company managed to run the factory with
available workers.
Share Capital
The Paid up equity share capital of the Company as on 31st March, 2023 was Rs.1410.24
lakhs. The Company has neither issued any shares (other than the shares mentioned below)
nor granted stock options or sweat equity.
As approved by shareholders on 28.08.2022 vide Postal ballot, the Company had allotted
3238595 equity shares of Rs.10 each at a premium of Rs.531 per share to Lotte
Confectionery Co., Ltd., Korea (Holding Company) on preferential basis against the
investment made by holding company towards expansion of Nemam (Chennai) factory.
Change in name of Holding Company:
The name of holding Company viz., Lotte Confectionery Co., Ltd., Korea was changed to
Lotte Wellfood Co., Ltd., with effect from 1st April, 2023 following the merger of Lotte
Foods, Korea with Lotte Confectionery Co., Ltd., Korea.
Other disclosures:
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.
Maintenance of cost records as specified by Central Government under Sub-section (1) of
Section 148 of the Companies Act, 2013 is not applicable to your Company.
Your Company has complied with provisions relating to the constitution of Internal
Complaints Committee under the Sexual Harassment of Women at Workplace (Prevention,
Prohibition and Redressal) Act, 2013.
Acknowledgement
The Board wishes to place on record, its sincere appreciation for the co-operation and
support received from the Customers, Bankers, Suppliers, Converters and the Shareholders.
The Board also wishes to place on record the whole hearted co-operation given by
employees, at all levels, during the year.
Cautionary Statement
Statement in the Directors report and Management Discussion &Analysis describing
the objectives, expectations may be forward looking. Actual results may differ materially
from those expressed in the statement. Important factors that could influence the
Companys operations include global and domestic demand and supply conditions affecting
selling prices of finished goods, input availability and prices, changes in government
regulations, tax laws, economic developments within the country and other factors such as
litigation and industrial relations.
|
On behalf of the Board |
|
|
For Lotte India Corporation Limited |
|
Chennai |
Kyungwoon Cho |
Milan Wahi |
Jeongkwan Heo |
D.G.Rajan |
Date: August 29, 2023 |
Chairman cum ED |
Managing Director |
Whole Time Director & CFO |
Independent Director |
+91-9892691696
