Lotus Chocolate Company Ltd Directors Report

During the year under review, the revenue from operations (excluding the goods and service tax) increased to 573.75 crore (previous year 200.03 crore). The profit before depreciation, amortization, interest and tax was 31.98 crore (previous year 4.07 crore). The Companys profit after tax was 17.23 crore as compared to a profit of 5.06 crore in the previous year.

Your company has strengthened its position as one of the leading manufacturers of cocoa products in the country. Your company has two state-of-art manufacturing facilities near Hyderabad. Both facilities are equipped with the latest technologies in manufacturing with continued investment being undertaken for capacity enhancement.

Your company sources high quality cocoa beans both from Indian and global markets and manufactures cocoa derivatives including Cocoa Mass, Cocoa Butter and Cocoa Powder and also offers a range of choco chips and choco slabs which are supplied to leading Food Manufacturers, Ice-cream manufacturers and Bakeries across the country. In FY 2024-25, the company has also expanded its range of consumer products with the introduction of products in confectionery and chocolate categories and also building up an omni channel distribution pathway in general retail, standalone chains and modern trade outlets.

The Board of Directors has not recommended any dividend for the year under review.

During the year under review, no amount has been transferred to the Reserves of the Company. Please refer to Statement of changes in Equity in the Financial Statement for details pertaining to changes during the year in Other Equity.

During the year under review, the Honble National Company Law Tribunal, Hyderabad Bench, vide its order dated August 8, 2024 (effective date) sanctioned the Scheme of Amalgamation of Soubhagya Confectionery Private Limited ("SCPL"), wholly-owned subsidiary of the Company, with the Company under Sections 230 to 232 of the Companies Act, 2013 with Appointed Date being May 25, 2023. Accordingly, SCPL stood amalgamated with the Company with effect from that date.

No material changes and commitments occurred affecting the financial position of the Company between the end of the financial year to which the financial statement relates and the date of this report.

During the year under review, there has been no change in authorized and paid up share capital of the Company. The total paid-up share capital of the Company as on March 31, 2025 is 63,63,42,490/- comprising of:

12,84,10,490/- equity share capital divided into 1,28,41,049 Equity Shares of 10/- each; and

50,79,32,000/- preference share capital divided into 5,07,93,200, 0.01% Non-cumulative, Non-convertible, Non-participating and Redeemable Preference Shares of 10/- each.

Management Discussion and Analysis Report for the year under review, as stipulated under the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (‘Listing Regulations), is presented in a separate section, and forms part of this Report.

During the year under review, the Honble National Company Law Tribunal, Hyderabad Bench, vide its order dated August 8, 2024 (effective date) sanctioned the Scheme of Amalgamation of SCPL, wholly-owned subsidiary of the Company, with the Company under Sections 230 to 232 of the Companies Act, 2013 with Appointed Date being May 25, 2023. Accordingly, SCPL stood amalgamated with the Company with effect from that date. The Company did not have any other subsidiary.

The Company did not have any joint venture or associate company during the year under review.

The Company has followed the applicable Secretarial Standards, with respect to Meetings of the Board of Directors (SS-1) and General Meetings (SS-2) issued by the Institute of Company Secretaries of India.

Your Directors state that: a) in the preparation of the annual accounts for the year ended March 31, 2025, the applicable accounting standards read with requirements set out under Schedule III to the Companies Act, 2013 ("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 are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2025 and of the profit 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 Act 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 going concern basis; e) 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 f) the Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.

The Company is committed to maintaining the highest standards of Corporate Governance and adhere to Corporate Governance requirements set out by the Securities and Exchange Board of India ("SEBI"). The Company has also implemented several best governance practices. The Corporate Governance Report as stipulated under the Listing Regulations forms part of this Annual

Report. Certificatefrom KSR & Co., Company Secretaries LLP, confirmingcompliance with the conditions of Corporate Governance is attached to the Corporate Governance Report.

All contracts / arrangements / transactions entered by the Company during the financialyear with related parties were in its ordinary course of business and on an arms length basis.

There were no contracts / arrangements / transactions with related parties which are 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 Policy on Materiality of Related Party Transactions and on Dealing with Related Party Transactions is put up on the Companys website and can be accessed at https://www.lotuschocolate.com/documents/files/Policy-on-Materiality-of-RPT.pdf. There werenomateriallysignificantrelated party transactions which could have potential conflict with the interests of the Company at large.

The Board of Directors of the Company draw attention of the Members to Note No. 32 to the Financial Statement which sets out related party disclosures pursuant to Indian Accounting Standards.

In terms of the provisions of section 135 of the Act, read with Companies (Corporate Social Responsibility Policy) Rules, 2014, the Board of Directors has constituted a Corporate Social Responsibility ("CSR") Committee comprising Prof. Dipak C. Jain (Chairman), Mr. K. Sudarshan and Mr. Ketan Mody as members. The Company has a CSR policy in place which is available on the Companys website at https://www.lotuschocolate.com/documents/files/CSR-Policy.pdf

During the year under review, the Company was not required to spend on CSR as the Company did not meet any of the criteria prescribed under Section 135 of the Act. Further, the Annual Report on CSR activities as required under the Companies (Corporate Social Responsibility Policy) Rules, 2014 is annexed herewith and marked as Annexure - I.

The Board of the Company has formed a Risk Management Committee, on voluntary basis, to frame, implement and monitor the risk management policy / plan for the Company and ensuring its effectiveness.

The Company has an elaborate Risk Management Framework, which is designed to enableriskstobeidentified,assessed and mitigated appropriately. Risk Management Committee has, inter-alia, been entrusted with the responsibility for overseeing implementation / monitoring of risk management plan and policy; and continually obtaining reasonable assurance from management that all known and emerging risks have been identified and mitigated or managed.

The details on the risk management are also covered in the Management Discussion and Analysis Report, which forms part of this Annual Report.

The Companyhasadequatesystemsofinternalfinancialcontrols to safeguard and protect the Company from loss, unauthorised use or disposition of its assets. All the transactions are properly authorised, recorded and reported to the management.

The Company is following the applicable Accounting Standards for properly maintaining the books of accounts and reporting Financial Statements.

The Internal financial controls have been embedded in the business processes. Assurance on the effectiveness of internal financial controls is obtained through management reviews and continuous monitoring as well as testing of the internal financial systems by the internal auditors during the course of their audits.

The Audit Committee reviews adequacy and effectiveness of Companys internal controls and monitors the implementation of audit recommendations.

In accordance with the provisions of the Act and the Articles of Association of the Company, Mr. Ketan Mody and Mr. Asim Parekh, Non-executive Directors of the Company, are liable to retire by rotation at the ensuing Annual General Meeting. The Board of Directors, based on the recommendation of Nomination and Remuneration Committee ("NRC"), has recommended their reappointment.

Upon completion of the second-term as an Independent Director, Mr. Bharathan Rajagopalan Thatai ceased to be director of the Company on November 25, 2024.

Mr. Dinesh Taluja resigned from the Board effective from November 25, 2024.

The Board places on record its sincere appreciation for the contribution made by them during their tenure on the Board of the Company.

The Board of Directors, based on the recommendation of the NRC, approved the appointment of Ms. Riddhi Bhimani as an Additional Director, designated as an Independent Director of the Company w.e.f. November 26, 2024 and the shareholders approved her appointment as an Independent Director of the Company, through resolution passed by postal ballot on February 21, 2025.

In the opinion of the Board, Ms. Riddhi Bhimani possesses requisite expertise, proficiency, integrity and experience.

The Board of Directors, based on the recommendation of the NRC, also approved the appointment of Mr. Abhijeet Pai and Mr. Aditya Pai as Additional Directors, designated as Non-Executive Directors of the Company and the shareholders approved their appointment as Non-Executive Directors of the Company, liable to retire by rotation, through resolution passed by postal ballot on February 21, 2025.

Ms. Renuka Shastry resigned from the Board effective from July 10, 2025.

The Board of Directors, based on the recommendation of the NRC, also approved the appointment of Mr. Natarajan Venkataraman (DIN: 05324934) as an Additional Director and Whole-time Director of the Company with effect from July 16, 2025. The Company has received requisite notice in writing from a member proposing his candidature for appointment as a Director, liable to retire by rotation. The Board of Directors has recommended the appointment of Mr. Natarajan Venkataraman as Director and Whole-time Director of the Company for a period of 5 years for approval of members at the ensuing Annual General Meeting.

The Company has received declarations from all the Independent Directors of the Company confirming that: a) they meet the criteria of independence prescribed under the Act and the Listing Regulations; b) they have registered their names in the Independent Directors Databank; and c) they have affirmed compliance to the code of conduct for Independent Directors as prescribed in Schedule IV to the Act.

The Company has devised, inter alia, the following policies viz.: a) Policy for selection of Directors and determining Directors independence; and b) Remuneration Policy for Directors, Key Managerial Personnel and other employees.

The Policy for selection of Directors and determining Directors independence sets out the guiding principles for the NRC for identifying persons who are qualified to become Directors and to determine the independence of Directors, while considering their appointment/ re-appointment as Independent Directors of the Company. The Policy also provides for the factors in evaluating the suitability of individual board members with diverse background and experience that are relevant for the Companys operations. The Policy is available on the Companys website and can be accessed at https://www.lotuschocolate.com/documents/files/Policy-for-Selection-of-Directors.pdf.

The Companys remuneration policy is directed towards rewarding performance based on review of achievements. The remuneration policy is in consonance with existing industry practice. The Policy is available on the Companys website and can be accessed at https://www.lotuschocolate.com/documents/files/Remuneration-Policy-for-Directors.pdf .

The Company has a policy for performance evaluation of the Board, Committees and other individual Directors (including Independent Directors) which includes criteria for performance evaluation of Directors.

In accordance with the manner of evaluation specified by the NRC, the Board carried out annual performance evaluation of the Board, its Committees and Individual Directors. The Independent Directors carried out annual performance evaluation of the Chairman, the non-independent directors and the Board as a whole. The Chairman of the respective Committees shared the report on evaluation with the respective Committee members. The performance of each Committee was evaluated by the Board based on the report of evaluation received from the respective Committees. A consolidated report was shared with the Chairman of the Board for his review and giving feedback to each Director.

Deloitte Haskins & Sells LLP, Chartered Accountants (Firm Registration No: 117366W/W-100018) ("DHS"), were appointed as the Statutory Auditors of the Company for a term of 5 consecutive years, at the 34^th Annual General Meeting held on August 10, 2023.

DHS have confirmed that they are not disqualified from continuing as the StatutoryAuditors of the Company.

The Auditors Report does not contain any qualification, reservation, adverse remark or disclaimer. The Notes to the financial statements referred in the Auditors Report are self-explanatory and do not call for any further comments.

The Board had appointed KSR & Co., Company Secretaries LLP, to conduct Secretarial Audit of the Company for the FY 2024-25.

The Secretarial Audit Report for the financial year ended March 31, 2025 is annexed and marked asAnnexure- II to this Report. The Secretarial Audit Report does not contain any qualification, reservation, adverse remark or

In accordance with the provisions of Section 204 of the Act read with Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 and Regulation 24A of the Listing Regulations, the Board has recommended to the Members of the Company, the appointment of KSR & Co., Company Secretaries LLP (Firm Registration No. P2008TN006400) as the Secretarial Auditor of the Company for a term of 5 consecutive financial years commencing from the financial year 2025-26 to the financial year 2029-30 to conduct Secretarial Audit of the Company. They have confirmed their eligibility and qualification required under the Act and the Listing Regulations for holding office, as the Secretarial Auditor of the Company.

Five Meetings of the Board of Directors were held during the financial year under review. The particulars of the meetings held and attendance of each Director are detailed in the Corporate Governance Report forming part of this Annual Report.

Further, maximum interval between two meetings of the Board of the Directors has not exceeded 120 days.

The Company has in place the Committee(s) as mandated under the provisions of the Act and the Listing Regulations. There are currently five committees of the Board, namely:

1. Audit Committee

2. Nomination and Remuneration Committee

3. Stakeholders Relationship Committee

4. Corporate Social Responsibility Committee

5. Risk Management Committee (constituted voluntarily by the Company).

Details of the Committees along with their terms of reference, composition and meetings held during the year, are provided in the Corporate Governance Report, which forms part of this report.

The Company has established a robust Vigil Mechanism and has a Whistle Blower Policy ("Policy"), to provide a formal mechanism to its employees and other stakeholders to report instances of fraud, actual or suspected violations of applicable laws and regulations and the Code of Conduct. The Policy provides for a mechanism to report such concerns to the Compliance Officer of the Company or Chairman of the Audit Committee in exceptional cases.

During the year under review, no Protected Disclosure concerning any Reportable Matter in accordance with the Policy of the Company was received by the Company.

The Policy is available on the Companys website and can be accessed at https://www.lotuschocolate.com/documents/files/Vigil-Mechanism-and-Whistle-Blower-Policy.pdf.

In accordance with the requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013 (‘POSH Act) 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 an Internal Committee to redress and resolve any complaint arising under the POSH Act. Training/awareness programs are conducted throughout the year to create sensitivity towards ensuring respectable workplace.

The Company has not given any loan or provided guarantee or made any investments or offered any security in connection with loans to any other body corporate or individual during the year under review. (Please refer Note 34 to the financial statement).

The particulars relating to conservation of energy, technology absorption and foreign exchange earnings & outgo, as required to be disclosed under the Act, are provided in Annexure - III to this Report.

The Annual Return of the Company as on March 31, 2025 is available on the Companys website and can be accessed at https://www. lotuschocolate.com/documents/downloads/Annual_Return_24-25.pdf.

In terms of the provisions of Section 197(12) of the Act read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, a statement showing the names of top ten employees in terms of remuneration drawn forms part of this Report. Further, since there is no employee drawing remuneration in excess of the limits prescribed under Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the requirement of disclosure in terms of Section 197(12) of the Act read with said rule does not arise.

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 investors@lotuschocolate.com.

During the year under review: a) the Company has not accepted deposits covered under Chapter V of the Act; b) the Company has not issued equity shares with differential rights as to dividend, voting or otherwise; c) the Company has not issued shares (including sweat equity shares) to employees of the Company under any scheme; d) the Company has not issued any debentures, bonds, warrants or any other convertible securities; e) the Company did not have any scheme for provision of money for the purchase of its own shares by employees or by trustees for the benefit of employees; material orders were passed by the Regulators or Courts or Tribunals which impact the going concern status f) no significant and Companys operations in future; g) no fraud has been reported by the Auditors to the Audit Committee or the Board of Directors of the Company; h) as the Company did not have any joint venture or associate company during the year, the reporting requirements under Rule

8(1) and Rule 8(5)(iv) of the Companies (Accounts) Rules, 2014 are also not applicable to the Company; i) there has been no change in capital structure of the Company; j) there has been no instance of transferring the funds to the Investor Education and Protection Fund; k) there has been no change in the nature of business of the Company; l) the Company is not required to maintain cost records as prescribed by the Central Government under Section 148(1) of the Act; m) the Company has not bought back its shares, pursuant to the provisions of Section 68 of the Act and Rules made thereunder; n) the Company did not have any Managing Director ("MD") or Whole-time Director ("WTD"), hence the disclosure requirement in respect of receipt of remuneration does not arise; o) the financial statements of theCompany were not revised. p) statement of deviation or variation in connection with preferential issue was not applicable to the Company; q) the Company has not failed to implement any corporate action; r) there was no amendment in the policies referred to in this report; s) the Company is fully compliant with the provisions of the Maternity BenefitAct,1961.Maternityleaveandbenefitsare applicable to all eligible women as per the applicable statutory guidelines. t) there is no proceeding pending under the Insolvency and Bankruptcy Code, 2016; and u) there was no instance of one-time settlement with any Bank or Financial Institution.

The Board places on record its deep sense of appreciation for the committed services by all the employees of the Company. The Board of Directors would also like to express their sincere appreciation for the assistance and co-operation received from the banks, government and regulatory authorities, stock exchange, customers, vendors and members during the year under review.