Dear Members,
The Board of Directors present the Companys Thirty Fourth Annual Report and the
Companys audited financial statements for the financial year ended on March 31,2023.
FINANCIAL RESULTS
The Companys financial performance for the year ended March 31, 2023 is summarized
below:
(Rs. in crore)
Particulars |
2022-23 |
2021-22 |
Revenue from Operations |
62.72 |
86.98 |
Profit/(Loss) Before Depreciation, Amortisation, Interest and Taxes |
(6.53) |
6.41 |
Less: Interest |
0.23 |
0.18 |
Less: Depreciation and Amortisation Expense |
0.17 |
0.22 |
Profit/(Loss) Before Tax |
(6.93) |
6.01 |
Less: Tax Expense* |
0.02 |
0.00 |
(* includes current tax, deferred tax, short /excess provision of tax
relating to earlier years) |
|
|
Profit/(Loss) for the Year |
(6.95) |
6.01 |
Add: Other comprehensive Income |
- |
- |
Total Comprehensive Income for the Year |
(6.95) |
6.01 |
Less: Total Comprehensive Income attributable to Non-Controlling
Interest |
- |
- |
Total Comprehensive Income Attributable to Owners of the Company |
(6.95) |
6.01 |
Less: Appropriation (Transfer to Retained Earnings) |
(6.95) |
6.01 |
Earnings Per Share (Basic) (in Rs.) |
(5.42) |
4.68 |
RESULTS OF OPERATIONS AND THE STATE OF Companys AFFAIRS
The Financial Statements of the Company for the financial year ended March 31, 2023,
have been prepared in accordance with the applicable Indian Accounting Standards (Ind AS)
and the provisions of Companies Act, 2013.
During the year under review, the operating turnover of the Company decreased by 27.88%
to Rs. 62.72 crore as compared to Rs. 86.98 crore in the previous year.
The Company incurred a loss for the year amounting to Rs. 6.95 crore as compared to
profit of Rs. 6.01 crore in the previous year.
The Company continues its business of manufacturers of the finest chocolates, cocoa
products and cocoa derivatives. The Company supplies cocoa and chocolate products,
starting from the sourcing of fine quality cocoa beans to processing of cocoa beans and
delivering the finest chocolates. The Company has a fully integrated manufacturing
facility and is built with the best technologies and expertise from across the globe.
DIVIDEND
In view of the losses incurred, the Board of Directors of your Company has not
recommended any dividend for the financial year 2022-23. TRANSFER TO RESERVES
During the year under review, no amount has been transferred to the Reserves of the
Company.
CHANGE IN NATURE OF BUSINESS
There was no change in the nature of business carried on by the Company during the year
under review.
DETAILS OF MATERIAL CHANGES AND COMMITMENTS AFFECTING FINANCIAL POSITION BETWEEN THE
END OF THE FINANCIAL YEAR AND DATE OF REPORT
There have been no material changes and commitments affecting the financial position of
the Company between the end of the financial year to which the financial statements
relates and date of this Report.
MATERIAL EVENTS DURING THE YEAR UNDER REVIEW Change in control over the Company
Reliance Consumer Products Limited (Rs.RCPLRs.) entered into a Share Purchase Agreement
(SPA) dated December 29, 2022, with Mr. Ananth P Pai and Mr. Prakash P Pai (Rs.Erstwhile
PromotersRs.) to acquire from the Erstwhile Promoters 65,49,065 Equity Shares of the
Company constituting 51% of the total equity share capital of the Company. Further, RCPL
also entered in an Investment Agreement with the Company and certain members of the
promoter group of the Company and their affiliate entity (Rs.Promoter Group
SubscribersRs.), in terms of which RCPL and the Promoter Group Subscribers would each
infuse Rs.25,39,66,000 and subscribe to 2,53,96,600, 0.01% - 20 year non-convertible
non-cumulative redeemable preference shares of INR 10 each, at par. Additionally, RCPL
entered into a Shareholders Agreement (SHA) dated December 29, 2022, with the erstwhile
Promoters and the other members of the promoter group of the Company in terms of which on
the Closing Date (as defined in the SPA), RCPL shall become the Rs.PromoterRs. of the
Company and shall be in sole control over the Company.
Further to the execution of the SPA and SHA, RCPL made an open offer to the public
shareholders of the Company in terms of the SEBI Takeover Regulations and on April 6,
2023, completed the acquisition of 130 equity shares of the Company under the open offer.
The Company also entered into a share purchase agreement dated December 29, 2022, with
Soubhagya Confectionary Private Limited (Rs.SCPLRs.) and its shareholders consisting of
the erstwhile Promoters and certain members of the promoter group of the Company for
acquiring 100% of the equity share capital of SCPL for an aggregate consideration of Rs.18
crore
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
Management Discussion and Analysis Report for the year under review as stipulated under
SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (Rs.Listing
RegulationsRs.) is presented in a separate section forming part of the Annual Report.
DEPOSITS
The Company has not accepted any deposits covered under Chapter V of the Companies Act,
2013, i.e. within the meaning of Section 2(31) of the Companies Act, 2013 read with Rule
2(1)(c) of the Companies (Acceptance of Deposits) Rules, 2014 and as such there are no
such overdue deposits outstanding as on 31st March 2023.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
The Board as on March 31, 2023 comprised of 6 (Six) Directors out of which 2 (Two) are
Independent Directors, 3 (Three) are NonExecutive Directors and 1 (One) is an Executive
Director.
a) Changes in Directors and Key Managerial Personnel
During the year under review, based on the recommendations of the Nomination and
Remuneration Committee, the Board had appointed Mr. Admala Surya Prakash Reddy (DIN:
07567290) as Non-Executive Director of the Company with effect from August 05, 2022 and
his appointment was approved by the shareholders of the Company in subsequent annual
general meeting on September 30, 2022.
b) Key Managerial Personnel
During the year under review, Mr. Vivekanand Narayan Prabhu resigned as the Chief
Financial Officer with effect from June 30, 2022 and was re-inducted as the Chief
Financial Officer of the Company with effect from December 5, 2022.
As on March 31, 2023, the following are the Key Managerial Personnel of the Company as
per the provisions of the Act and rules made thereunder:
• Mr. Ram Subramanya Ganpath (DIN: 02395478), Whole-time Director
• Mr. Vivekanand Narayan Prabhu, Chief Financial Officer
• Mr. Subodhakanta Sahoo, Company Secretary
c) Independent Directors
The Company has received requisite declarations from Independent Directors of the
Company, confirming that:
a) they meet the criteria of independence prescribed under the Act and the Listing
Regulations; and
b) they have registered their names in the Independent DirectorsRs. Databank.
The Company has devised, inter alia, the following policies viz.
i) Policy on Appointment of Directors and Senior Managerial Personnel and their
Remuneration
ii) Policy relating to the Remuneration for the Whole-time Director, KMP and Senior
Management Personnel
The aforesaid policies are available on the Companys website and can be accessed at https://www.lotuschocolate.com/documents/policies/Nominations-and-Remuneration-Policv.pdf
There has been no change in the aforesaid policies during the year.
PERFORMANCE EVALUATION
As per the provisions of the Companies Act, 2013 and SEBI (Listing Obligations and
Disclosure Requirements) Regulations, 2015, as amended from time to time the Nomination
and Remuneration Committee laid down criteria for performance evaluation of individual
director(s), the board and its committee(s). Accordingly, an annual evaluation was carried
out for the BoardRs.s performance, its Committees and individual director(s). The Board
has carried out the annual performance evaluation on parameters such as level of
engagement and contribution, independence of judgement, safeguarding the interests of the
Company and its minority shareholders etc.
SECRETARIAL STANDARDS
The Company has followed the applicable Secretarial Standards, i.e. SS-1 and SS-2,
relating to Rs.Meetings of the Board of DirectorsRs. and Rs.General MeetingsRs.
respectively.
DISCLOSURES Meetings of the Board
8 (Eight) Meetings of the Board of Directors were held during the year under review.
The particulars of the meetings held and attended by each Director are detailed in the
Corporate Governance Report forming part of the Annual Report.
Committees of Board
The Company has several committees, which have been established as part of best
Corporate Governance practices and to comply with the requirements of the relevant
provisions of applicable laws and statutes:
The Committees and their composition as on March 31,2023 are as follows:
• Audit Committee
The Audit Committee comprised of Mr. Bharathan Rajagopalan Thatai (Chairman), Mr.
Venkatapathi Raju Gottemukkala and Ms. Usha Abbagani.
During the year under review, all the recommendations made by the Audit Committee were
accepted by the Board.
• Corporate Social Responsibility Committee
The Corporate Social Responsibility Committee comprised of Mr. Bharathan Rajagopalan
Thatai (Chairman), Mr. Gangasani Sudhakar Reddy and Ms. Usha Abbagani.
• Nomination and Remuneration Committee
The Nomination and Remuneration Committee comprised of Mr. Venkatapathi Raju
Gottemukkala, (Chairman), Mr. Bharathan Rajagopalan Thatai and Ms. Usha Abbagani.
• StakeholdersRs. Relationship Committee
The StakeholdersRs. Relationship Committee comprised of Ms. Usha Abbagani,
(Chirperson), Mr. Venkatapathi Raju Gottemukkala and Mr. Subramanya Ram Ganpath.
• Risk Management Committee
The Risk Management Committee comprised of Mr. Gangasani Sudhakar Reddy, (Chairman),
Ms. Usha Abbagani and Mr. Subramanya Ram Ganpath.
The details of the dates of the meetings, attendance and terms of reference of each of
the Committees and changes in the composition of the Committees during the year under
review are given in the Corporate Governance Report forming part of the Annual Report.
Further, during the year under review, there are no such cases where the recommendation
of any Committee of the Board, has not been accepted by the Board.
PARTICULARS OF LOANS GIVEN, INVESTMENTS MADE, GUARANTEES GIVEN OR SECURITIES PROVIDED
The Company has not given any loan or guarantee, made investment or provided security
in connection with loan to any other body corporate or person as prescribed under Section
186(2) of the Act.
CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES
All the contracts / arrangements / transactions entered by the Company during the
financial year with related parties were in the ordinary course of business and on an
armRs.s length basis.
During the year under review, the Company had not entered into contract / arrangement /
transaction with related parties which could be considered material in accordance with the
policy of the Company on Materiality of Related Party Transactions or which is required to
be reported in Form No. AOC-2 in terms of Section 134(3)(h) read with Section 188 of the
Act and Rule 8(2) of the Companies (Accounts) Rules, 2014.
The Company has made full disclosure of transactions with the related parties as set
out in Note 30 and 33 of Financial Statement, forming part of the Annual Report.
There were no materially significant related party transactions which could have
potential conflict with interests of the Company at large.
The Companys Policy on Materiality of Related Party Transactions and on dealing with
Related Party Transactions is available on the website of the Company and can be accessed
at: https://www.lotuschocolate.com/documents/policies/Policv-of-Materialitv-of-RPT.pdf
AUDITORS AND AuditorsREPORT STATUTORY AUDITORS
M/s. VDNR & Associates, Chartered Accountants (Firm Registration No. 011251S) were
appointed as the Statutory Auditors of the Company for a term of 5 consecutive years at
the Annual general Meeting held on September 30, 2022. The Auditors have confirmed that
they are not disqualified from continuing as Auditors of the Company.
The Notes on financial statements referred to in the AuditorsReport are
self-explanatory and do not call for any further comments. The AuditorsReport does not
contain any qualification, reservation, adverse remark or disclaimer.
SECRETARIAL AUDITOR
Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies
(Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company had
appointed Mrs. Rakhi Agarwal, Company Secretary in Whole-time Practice to undertake the
Secretarial Audit of the Company for the financial year 2022-23. The Secretarial Audit
Report is annexed to this report as “Annexure-IFRs..The Secretarial Audit Report does
not contain any qualification, reservation or adverse remarks.
CORPORATE GOVERNANCE
The Company is committed to maintain the highest standards of Corporate Governance and
adheres to the Corporate Governance requirements set out by the Securities and Exchange
Board of India (Rs.SEBIRs.). The report on Corporate Governance as stipulated under the
Listing Regulations forms part of this Annual Report.
The Certificate from a Practicing Company Secretary confirming compliance with the
conditions of Corporate Governance is attached to the report on Corporate Governance
annexed to the Annual Report as “Annexure-IV”.
ANNUAL RETURN
Pursuant to Section 92(3) of the Companies Act, 2013 and Rule 12(1) of the Companies
(Management and Administration) Rules, 2014 (as amended), a copy of the draft Annual
Return of the Company for the financial year 2022-23 is available on the website of the
Company and can be accessed at: http://www.lotuschocolate.com/investor relation.
INTERNAL FINANCIAL CONTROLS
The Company has an Internal Control System, commensurate with the size, scale and
complexity of its operations.
The Internal Audit Department monitors and evaluates the efficacy and adequacy of
internal control systems in the Company, its compliance with operating systems, accounting
procedures and policies at all locations of the Company. Based on the report of internal
audit function, process owners undertake corrective action in their respective areas and
thereby further strengthen the controls. Significant audit observations and corrective
actions thereon are presented to the Audit Committee of the Board.
The Board has laid down internal financial controls to be followed by the Company and
that such internal financial controls are adequate and operating effectively. Your Company
has adopted policies and procedures for ensuring the orderly and efficient conduct of its
business, including adherence to the Companys policies, the safeguarding of its assets,
the prevention and detection of frauds and errors, the accuracy and completeness of the
accounting records, and the timely preparation of reliable financial disclosures.
RISK MANAGEMENT
The Board of the Company has formed a Risk Management Committee to frame, implement and
monitor the risk management policy/ plan for the Company and ensuring its effectiveness.
The Risk Management Committee oversees the risk management process including risk
identification, impact assessment, effective implementation of the mitigation plans and
risk reporting. The Audit Committee has an additional oversight in the area of financial
risks and controls. Major risks identified by the businesses and functions are
systematically addressed through mitigating actions on a continuing basis. The development
and implementation of risk management policy has been covered in the Management Discussion
and Analysis Report, which forms part of this Annual Report.
VIGIL MECHANISM / WHISTLE BLOWER POLICY
The Company has adopted a Whistle Blower Policy to provide a formal mechanism to the
Directors and employees to report concerns about unethical behaviour, actual or suspected
fraud or violation of Code of Conduct and Ethics. It also provides for adequate safeguards
against the victimization of employees who avail of the mechanism and provides direct
access to the Chairperson of the Audit Committee in exceptional cases. It is affirmed that
no personnel of the Company has been denied access to the Audit Committee. The Whistle
Blower Policy aims at conducting the affairs in a fair and transparent manner by adopting
highest standards of professionalism, honesty, integrity and ethical behaviour. The Policy
is available on the Companys website and can be accessed at: https://www.lotuschocolate.com/documents/policies/Whistle-blower-Policv.pdf.
During the year under review, no protected disclosure concerning any reportable matter
in accordance with the Vigil Mechanism and Whistle Blower Policy of the Company was
received by the Company.
CORPORATE SOCIAL RESPONSIBILITY
The Corporate Social Responsibility (Rs.CSRRs.) CommitteeRs.s prime responsibility is
to assist the Board in discharging its social responsibilities by way of formulating and
monitoring implementation of the objectives set out in the Rs.Corporate Social
Responsibility PolicyRs. (Rs.CSR PolicyRs.).
During the year under review, on the recommendation of CSR Committee, the Board of
Directors of the Company at its meeting held on January 31, 2023 approved and adopted
revised CSR Policy of the Company, which may be accessed on the Companys website at https://www.lotuschocolate.com/documents/policies/LCCL-CSR-Policy.pdf.
The CSR Policy of the Company, inter alia, covers CSR objectives, vision,
mission and also provides for governance, implementation, monitoring and reporting
framework.
The Annual Report on CSR activities is annexed herewith and marked as Annexure-I to
this Report.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
The information on Conservation of Energy, Technology Absorption and Foreign Exchange
Earnings and Outgo required to be disclosed under Section 134(3)(m) of the Companies Act,
2013, read with Rule 8 of the Companies (Accounts) Rules, 2014 are provided in the
“Annexure-In” forming part of this Report.
DIRECTORSRs. RESPONSIBILITY STATEMENT
Your DirectorsRs. state that:
a) in the preparation of the accounts for the financial year ended March 31, 2023, the
applicable accounting standards read with the requirements set out under Schedule III to
the Act have been followed and there are no material departures from the same;
b) the Directors have selected such accounting policies and applied them consistently
and made judgments and estimates that were reasonable and prudent so as to give a true and
fair view of the state of affairs of the Company as at March 31,2023 and of the loss of
the Company for the year ended on that date;
c) the Directors have taken proper and sufficient care 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;
d) the Directors have prepared the annual accounts on a Rs.going concernRs. basis;
e) the Directors have laid down internal financial controls to be followed by the
Company and that the financial controls are adequate and are operating effectively; and
f) the Directors have devised proper systems to ensure compliance with the provisions
of all applicable laws in place and were adequate and operating effectively.
DISCLOSURES AS PER THE SEXUAL HARRASSMENT OF WOMEN AT WORKPLACE (PREVENTION,
PROHIBITION AND REDRESSAL) ACT, 2013
In accordance with the requirements of the Sexual Harassment of Women at Workplace
(Prevention, Prohibition & Redressal) Act, 2013 (Rs.POSH ActRs.) and Rules made
thereunder, the Company has in place a policy which mandates no tolerance against any
conduct amounting to sexual harassment of women at workplace. The Company has constituted
Internal Complaints Committee to redress and resolve any complaints arising under the POSH
Act. Training/awareness programs are conducted throughout the year to create sensitivity
towards ensuring respectable workplace. During the year, no complaint was received by the
Company.
PARTICULARS OF EMPLOYEES
The Company has not employed any individual whose remuneration falls within the purview
of the limits prescribed under the provisions of Section 197 (12) of the Companies Act,
2013, read with Rule 5 (2) of the Companies (Appointment and Remuneration of Managerial
Personnel) Rules, 2014.
Disclosures relating 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 forms part of this Report.
Having regard to the provisions of the second proviso to Section 136(1) of the Act and
as advised, the Annual Report excluding the aforesaid information is being sent to the
members of the Company. Any member interested in obtaining such information may address
their email to: info@lotuschocolate.com.
GENERAL
During the year under review:
1) The Company had not issued any equity shares with differential rights as to
dividend, voting or otherwise.
2) The Company had not issued any shares (including sweat equity shares) to directors
or employees of the Company under any scheme.
3) The Company had not issued any debentures, bonds, warrants or any other convertible
securities.
4) The Company does not have any scheme of provision of money for the purchase of its
own shares by employees or by trustees for the benefit of employees.
5) No significant and/or material order was passed by any Regulator/Court/Tribunal
which impacts the going concern status of the Company or its future operations.
6) No fraud has been reported by Auditors to the Audit Committee or the Board.
7) There is no application made / proceeding pending under the Insolvency and
Bankruptcy Code, 2016.
8) There was no instance of one-time settlement with any Bank or Financial Institution.
9) The Company does not have any subsidiary, joint venture or an associate company.
10) Maintenance of cost records as prescribed by the Central Government under Section
148(1) of the Act is not applicable to the Company.
ACKNOWLEDGEMENT
Your Directors wish to place on record their appreciation to all employees for their
hard work, dedication and commitment. The enthusiasm and unstinting efforts of the
employees have enabled the Company to remain at the forefront of the industry, despite
increased competition from several existing and new players.
For and on behalf of the Board of Directors
G.S. Ram |
T.R. Bharathan |
Whole time director |
Director |
DIN: 02395478 |
DIN: 02464132 |
Place : Hyderabad
Date : 22.05.2023
+91-9892691696
