Lotus Chocolate Company Ltd Management Discussions

The business outlook for FY25-26 is positive with both value and volume expected to grow.

The focus remains on strengthening the B2B business while parallelly building presence in the B2C segment through omni channel distribution and portfolio encompassing products across key segment.

W ith global cocoa prices at all-time high, the industry will beimpactedbysignificantshifts in consumer behaviour expected.

In the short term, there is likely to be impact on volumes, while value growth will continue to be healthy. In due course, there is likely to be increased pace of innovation, as manufacturers endeavour to deliver superior experiences while minimizing price inflation.

RISK MANAGEMENT

Y our Company maintains a robust system of internal controls, commensurate with the size and complexity of its business operations. The system provides, inter alia, a reasonable assurance of protection against any probable loss of the Companys assets announcements and actions while the Companys ‘code of conduct policy provides detailed guidance on disclosures and situations depicting conflict of interest. The organization has a zero-tolerance policy towards unfair conduct or fraud.

Financing Risks

Most of the Companys debt is in the form of short-term debt from capital markets. This exposes the Company to the risk of non-availability of external capital due to macro factors such as liquidity, volatility in interest rates, and general economic environment. The Company continually monitors funding requirements, evaluates market conditions, and engages with multiple financial institutions to mitigate the risk of capital inadequacy.

Human Resource Risk

T alented human capital is a critical enabler of our business success. The Companys ability to drive growth, innovation, and operational excellence is heavily reliant on its ability to attract, retain, and develop skilled professionals. Given the competitive talent landscape and industry-wide scarcity of specialized skills, retention and succession planning remain key focus areas.

T o mitigate this risk, the Company has invested in building an agile and performance-oriented organization structure, supported by robust talent acquisition processes, career development frameworks, and employee engagement initiatives. Our focus on internal capability building and structured leadership development programs is designed to create a future-ready talent pipeline.

The Company has an adequate system of internal controls to ensure that transactions are properly authorised, recorded, and reported, apart from safeguarding its assets. The internal control system is supplemented by well-documented policies, guidelines and procedures and reviews carried out by the Companys internal audit function, which submits reports periodically to the Management and the Audit Committee of the Board. In order to foster an improved internal control culture in the Company, wherein every employee is fully aware of all the major risk/ controls faced in his / her work sphere and assumes responsibility for the controls performed therein. The Self-Assessments by process /control owner are also used as the basis of

CEO/CFO certification as required under Regulation 17(8) of the Listing Regulations. Our Company has a favourable environment that motivates performance, customer focus and innovation while adhering to the highest degree of quality and integrity.

The Companys financial performance for the year ended March 31, 2025 is summarized below:

The Financial Statements of the Company for the financial year ended March 31, 2025, 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 increased by 186.83% to 573.75 crore as compared to 200.03 crore in the previous year.

The Profit before interest, depreciation and tax was 31.98 crore as compared to 4.07 crore Profit in the previous year. The Profit beforeTax was 23.06 Crore as compared to 2.24 crore in the previous year.

The Profit for the year was 17.23 crore as compared to 5.06 Crore in the previous year.

D uring FY 2024–25, the Company witnessed strong momentum in people expansion and capability building. The total headcount grew from 85 at the end of FY 2023-24 significantincrease to 173attheendofFY2024-25,reflecting support business growth across sales, factories, and support functions. This includes 41 new hires in the B2C Confectionery business.

Employee engagement and retention have remained key priorities, resulting in a healthy employee retention rate. On the industrial relations front, the Company maintained a stable and compliant environment. A landmark Long-Term Settlement was signed at Factory in FY 2024-25, ensuring long-term harmony and alignment. Statutory compliance and contractor governance continue to be closely monitored.

Significantefforts have been directed towards leadership development and enhancing technical and functional capabilities, aligning our team with the evolving needs of our industry. Our commitment to building a high-performing culture has been evident through numerous engagement initiatives, fostering a sense of belonging and motivation among our employees. The year also marked the successful rollout of digital HR tools to enable employee life cycle. With structured training interventions and capability building initiatives, HR remains focused on enabling a performance-driven and future-ready workforce. As we stride forward into the coming year, we remain resolute in our commitment to harnessing and optimizing our human capital, ensuring sustained growth and success for the Company.