To The Members of
Lotus Chocolate Company Limited
The Directors have pleasure in presenting the 27th Annual Report of your Company andthe Audited Financial Statements for the Financial Year ended 31st March 2016 togetherwith Auditors Report thereon.
The performance of the Company during the year has been as under:
| || ||(Amount in Rs.. Lakhs) |
| ||Current ||Previous |
| ||Year Ended 31.03.2016 ||Year Ended 31.03.2015 |
|Turnover ||6539.56 ||6077.95 |
|Other Income ||21.84 ||65.76 |
|Profit/(Loss) before exceptional items ||128.30 ||77.67 |
|Profit/(Loss) before Taxation ||125.71 ||71.07 |
|Net Profit after Taxation ||125.71 ||71.07 |
During the year under review the turnover of the Company is Rs..65.40 Crores incomparison to the previous years figure at Rs.. 60.78 Crores.
The company has achieved net Profit after tax which is reported at Rs.. 125.71 lakhs incomparison to Rs.. 71.07 lakhs in the previous year. The company has been trying hard toreduce the finance and other costs to improve more Profits. In future after adopting allcost cutting measures and by improving its overall sales the company is hopeful ofperforming much better and improves its Profitability accordingly.
The Company has not accepted or invited any Deposits and consequently no deposit hasmatured / become due for re-payment as on 31st March 2016.
All Independent Directors have given declarations that they meet the criteria ofindependence as laid down under Section 149(6) of the Companies Act 2013 and SEBI (LODR)Regulations2015. Further there has been no change in the circumstances which may affecttheir status as independent Director during the year.
The brief particulars of the Directors seeking appointment/reappointment at this AnnualGeneral Meeting are being annexed to the Corporate Governance Report.
Sri Rabindranath Jarugumilli resigned during the year 2016-17. The Directors place onrecord his appreciation for the services rendered by him during his tenure.
Pursuant to the provisions of Section 149(4) of the Act the appointment of Shri. A.Surya Prakash Reddy was formalized as the Independent Director of the Company.
Pursuant to the provisions of the Companies Act 2013 and SEBI (LODR) Regulations 2015the Board has carried out performance evaluation taking into consideration of variousaspects of the Boards functioning composition of Board and its Committeesexecution and performance of specific duties obligations and governance. The Performanceof evaluation of Independent Directors was completed. The Performance evaluation ofChairman and the Non-Independent Directors was carried out by the Independent Directors.The Board of Directors expressed their satisfaction with evaluation process.
The Board has on the recommendation of the Nomination & Remuneration Committeeframed a policy which lays down a framework in relation to selection appointment andremuneration to Directors Key Managerial Personnel and Senior Management of the Company.The Remuneration Policy is stated in the Corporate Governance Report.
During the year 5 Board Meetings and 5 Audit Committee Meetings were convened and held.The details of which are given in the Corporate Governance Report. The intervening gapbetween the meetings was within the period of 120 days as prescribed under the CompaniesAct 2013 and SEBI (LODR) Regulations 2015.
PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS
Details of Loans covered under the provisions of Section 186 of the Companies Act2013 are given in the notes to the Financial Statements.
RELATED PARTY TRANSACTIONS
All transactions entered with Related Parties for the year under review were on theordinary course of business. There are no materially significant related partytransactions made by the Company with Promoters Directors Key Managerial Personnel orother designated persons which may have a potential conflict with the interest of theCompany at large. All Related Party Transactions are placed before the Audit Committee asalso the Board for approval where ever required. Prior omnibus approval of the AuditCommittee is obtained for the transactions which are of a foreseeable and repetitive innature. A statement giving details of all related party transactions entered into pursuantto the omnibus approval so granted are placed before the Audit Committee and the Board ofDirectors on a Quarterly basis. The Company has developed a Policy on Related PartyTransactions for the purpose of identification and monitoring of such transactions. Thepolicy on Related Party Transactions as approved by the Board is uploaded on theCompanys website.
The particulars of contracts and arrangements with related parties referred to insub-section (1) of section 188 is prepared in Form AOC-2 pursuant to clause (h) of theCompanies (Accounts) Rules 2014 and the same is annexed herewith as"Annexure-I" to this Report.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURT:
There are no significant and material orders passed by the Regulators/ Courts thatwould impact the going concern status of the Company and its future operations.
Pursuant to the provisions of Section 139 of the Act and the rules framed there underM/s S. R. Mohan & Company Chartered Accountants were appointed as statutory auditorsof the Company from the conclusion of the 25th Annual General Meeting of the Company heldon 30th September 2014 till the conclusion of the 28th Annual General Meeting to be heldin the year 2017 subject to ratification of their re-appointment at every AGM.
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 hasappointed Mrs. Rakhi Agarwal Company Secretary in Practice to undertake the SecretarialAudit of the Company for the Financial Year 2015-16. The Report of the Secretarial AuditReport is annexed herewith as "Annexure-II".
M/s Vasanth Pai & Co. Chartered Accountants performs the duties of internalauditors of the Company and their report is reviewed by the Audit Committee from time totime.
ISO 9001:22000 CERTIFICATION
Your Company continues to hold ISO 9001-2008 Certification by meeting all therequirements of Certification from time to time.
Your companys manufacturing factory located at Nastipur Medak District has beencertified to the latest version of FSSC 22000:2010 (Food Safety Standard Certification byTUV NORD).
This Certification indicates our commitment in a sustainable manner in meeting globalquality environment health and safety standards. This is a milestone in our quest forquality.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
Management Discussion and Analysis Report for the year under review as stipulated underSEBI (LODR) Regulations 2015 with the stock exchanges is presented in a separate sectionforms part of the Annual Report.
The Company has implemented the procedures and adopted practices in conformity with theCode of Corporate Governance enunciated in the SEBI (LODR) Regulations 2015 with theStock Exchanges.
A separate report on corporate governance practices followed by the Company togetherwith a Certificate from the Companys Auditors confirming compliances forms anintegral part of this Report.
EXTRACT OF ANNUAL RETURN
The details forming part of the extract of the Annual Return in form MGT 9 is annexedherewith as "Annexure-III".
INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY
The Company has an Internal Control System commensurate with the size scale andcomplexity of its operations. To maintain its objectivity and independence the InternalAudit function reports to the Chairman of the Audit Committee of the Board.
The Internal Audit Department monitors and evaluates the efficacy and adequacy ofinternal control system in the Company its compliance with operating systems accountingprocedures and policies at all locations of the Company. Based on the report of internalaudit function process owners undertake corrective action in their respective areas andthereby strengthen the controls. Significant audit observations and corrective actionsthereon are presented to the Audit Committee of the Board.
The Board of your company has laid down internal financial controls to be followed bythe company and that such internal financial controls are adequate and operatingeffectively. Your company has adopted policies and procedures for ensuring the orderly andefficient conduct of its business including adherence to the companys policies thesafeguarding its assets the prevention and detection of frauds and errors the accuracyand completeness of the accounting records and the timely preparation of reliablefinancial disclosures.
The Board of the Company has formed a Risk Management Committee to frame implement andmonitor the risk management policy/plan for the Company and ensuring its effectiveness.The Risk Management Committee oversees the Risk Management process including riskidentification impact assessment effective implementation of the mitigation plans andrisk reporting. The Audit Committee has additional oversight in the area of financialrisks and controls. Major risks identified by the businesses and functions aresystematically addressed through mitigating actions on a continuing basis. The developmentand implementation of risk management policy has been covered in the management discussionand analysis which forms part of this report.
VIGIL MECHANISM / WHISTLE BLOWER POLICY
In order to ensure that the activities of the Company and its employees are conductedin a fair and transparent manner by adoption of highest standards of professionalismhonesty integrity and ethical behaviour the company has adopted a vigil mechanism policy.
Many initiatives have been taken to support business through organizational efficiencyprocess change support and various employee engagement programmes which has helped theOrganization achieve higher productivity levels. A significant effort has also beenundertaken to develop leadership as well as technical/ functional capabilities in order tomeet future talent requirement.
DIRECTORS RESPONSIBILITY STATEMENT
To the best of their knowledge and belief and according to the information andexplanations obtained by them your Directors make the following statements in terms ofSection 134(3)(c) of the Companies Act 2013:
a) That in the preparation of the accounts for the financial year ended 31st March2016 the applicable accounting standards have been followed along with proper explanationrelating to material departures if any;
b) That the Directors have selected such accounting policies and applied themconsistently and made judgments and estimates that were reasonable and prudent so as togive a true and fair view of the State of Affairs of the Company at the end of theFinancial Year and of the Profit or Loss Cash flow of the Company for the year underreview;
c) That the Directors have taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of the Companies Act 2013for safeguarding the assets of the Company and for preventing and detecting fraud andother irregularities;
d) That the Directors have prepared the accounts for the financial year ended 31stMarch 2016 on a going concern basis;
e) That proper internal financial controls were in place and that the financialcontrols were adequate and operating effectively; and
f) That devised proper systems to ensure compliance with the provisions of allapplicable laws were in place and adequate and operating effectively.
PARTICULARS IN RESPECT OF CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGNEXCHANGE EARNINGS AND OUTGO
The information on Conservation of Energy Technology Absorption Foreign ExchangeEarnings and outgo required to be disclosed under Section 134(3)(m) of the Companies Act2013 read with Rule 8 of the Companies (Accounts) Rules 2014 are provided in theAnnexure forming part of this Report.
DISCLOSURE AS PER SEXUAL HARRASSMENT OF WOMEN AT WORKPLACE (PREVENTION PROHIBITION ANDREDRESSAL) ACT 2013
The Company has zero tolerance for sexual harassment at workplace and has adopted apolicy on prevention prohibition and redressal of sexual harassment at workplace in linewith the provisions of Sexual Harassment of Women at Workplace (Prevention Prohibitionand Redressal) Act 2013 and the rules framed there under.
During the financial year 2015-16 the Company received no complaints on sexualharassment.
PARTICULARS OF EMPLOYEES
The Company has not employed any individual whose remuneration falls within the purviewof the limits prescribed under the provisions of Section 197 of the Companies Act 2013read with Rule 5(2) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014.
PARTICULARS OF REMUNERATION
Disclosures with respect to the remuneration of Directors and employees as requiredunder Section 197(12) of Companies Act 2013 and Rule 5 (1) Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 is provided as follows: (i) The ratio ofthe remuneration of each Director to the median remuneration of the employees of thecompany for the financial year;
|Name of the Director ||Ratio to Median Remuneration |
|Shri Subramanya Ram Ganpath WTD ||3.739 |
|Shri Dilip Mangesh Kalelkar WTD ||3.008 |
(ii) The percentage increase in remuneration of each Director Chief Financial OfficerChief Executive Officer Company Secretary or Manager if any in the financial year;
|Name of Person ||% increase in remuneration |
|Shri Subramanya Ram Ganpath WTD ||-- |
|Shri Dilip Mangesh Kalelkar WTD ||-- |
|Shri U. V.Kini Company Secretary ||-- |
|Shri Kommula Ganeswara Rao CFO ||-- |
(iii) The percentage increase in the median remuneration of employees in the financialyear is 5%.
(iv) The number of permanent employees on the rolls of company is 135.
(v) The explanation on the relationship between average increase in remuneration andcompany performance; On an average employees received an increase of 5%. The increase inremuneration is in line with the market trends.
(vi) Comparison of the remuneration of the Key Managerial Personnel against theperformance of the company;
|Particulars ||Rs. |
|Remuneration of Key Managerial Personnel (KMP) during financial year 2015-16 (aggregated) ||1345800 |
|Total Revenue ||656140289 |
|Remuneration (as % of Total Revenue) ||0.205 |
(vii) variations in the market capitalisation of the company price earnings ratio asat the closing date of the current financial year and previous financial year;
|Particulars ||Unit ||As at 31.03.2016 ||As at 31.03.2015 |
|Closing rate of share at BSE ||Rs.. ||51 ||47 |
|EPS (Consolidated) ||Rs.. ||0.98 ||0.55 |
|Market Capitalization ||Rs.. ||654893499 ||603529303 |
|Price Earnings ratio ||Ratio ||52 ||85 |
(viii) Average percentile increase already made in the salaries of employees other thanthe managerial personnel in the last financial year and its comparison with the percentileincrease in the managerial remuneration and justification thereof and point out if thereare any exceptional circumstances for increase in the managerial remuneration;
The average increase in salaries of employees other than managerial personnel in2015-16 was 5.00%.
Percentage increase in the managerial remuneration for the year was - Nil
(ix) Comparison of the each remuneration of the Key Managerial Personnel against theperformance of the company;
|Name of Person ||Remune- ration ||Total Revenue ||Remune- ration as % of Total Revenue |
| ||(Rs.) ||(Rs.) || |
|Shri Subramanya Ram Ganpath WTD ||745800 ||656140289 ||0.114 |
|Shri Dilip Mangesh Kalelkar WTD ||600000 ||656140289 ||0.091 |
(x) The key parameters for any variable component of remuneration availed by theDirectors - No.
(xi) The ratio of the remuneration of the highest paid Director to that of theemployees who are not Directors but receive remuneration in excess of the highest paidDirector during the year - Nil
(xii) Affirmation that the remuneration is as per the remuneration policy of thecompany - Yes. Your Directors wish to place on record their appreciation to employees atall levels for their hard work dedication and commitment. The enthusiasm and unstintingefforts of the employees have enabled the Company to remain at the forefront of theindustry despite increased competition from several existing and new players.
Statements in the Boards Report and the Management Discussion & Analysisdescribing the Companys objectives expectations or forecasts may be forward-lookingwithin the meaning of applicable securities laws and regulations. Actual results maydiffer materially from those expressed in the statement. Important factors that couldinfluence the Companys operations include global and domestic demand and supplyconditions affecting selling prices of finished goods input availability and priceschanges in government regulations tax laws economic developments within the country andother factors such as litigation and industrial relations.
The Board desires to place on record its sincere appreciation for the support andco-operation that the Company received from the suppliers customers strategic partnersBankers Auditors Registrar and Transfer Agents and all others associated with theCompany. The Company has always looked upon them as partners in its progress and hashappily shared with them rewards of growth. It will be the Companys endeavor tobuild and nurture strong links with trade based on mutuality respect and co-operationwith each other.
|By Order of the Board || |
|For LOTUS CHOCOLATE COMPANY LIMITED || |
|Sd/- ||Sd/- |
|P. Ananth Pai ||G.S. Ram |
|DIRECTOR ||WHOLE TIME DIRECTOR |
|DIN: 00048339 ||DIN: 02395478 |
|Place : Hyderabad || |
|Date : 12.08.2016 || |