You are here » Home » Companies » Company Overview » Lotus Chocolate Company Ltd

Lotus Chocolate Company Ltd.

BSE: 523475 Sector: Agri and agri inputs
NSE: N.A. ISIN Code: INE026D01011
BSE 00:00 | 19 May 170.15 7.30
(4.48%)
OPEN

167.00

HIGH

170.95

LOW

163.00

NSE 05:30 | 01 Jan Lotus Chocolate Company Ltd
OPEN 167.00
PREVIOUS CLOSE 162.85
VOLUME 13107
52-Week high 198.45
52-Week low 18.15
P/E 36.36
Mkt Cap.(Rs cr) 218
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 167.00
CLOSE 162.85
VOLUME 13107
52-Week high 198.45
52-Week low 18.15
P/E 36.36
Mkt Cap.(Rs cr) 218
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Lotus Chocolate Company Ltd. (LOTUSCHOCOLATE) - Auditors Report

Company auditors report

To The Members of Lotus Chocolate Company Limited Report on the Audit of the FinancialStatements Opinion

We have audited the accompanying financial statements of Lotus Chocolate CompanyLimited ("the Company") which comprise the Balance Sheet as at March 31 2021and the Statement of Profit and Loss (including Other Comprehensive Income) Statement ofChanges in Equity and Statement of Cash Flows for the year then ended and notes to thefinancial statements including a summary of the significant accounting policies and otherexplanatory information. (Hereinafter referred to as "financial statements") Inour opinion and to the best of our information and according to the explanations given tous the aforesaid financial statements give the information required by the Companies Act2013 ("Act") in the manner so required and give a true and fair view inconformity with the accounting principles generally accepted in India of the state ofaffairs of the Company as at March 31 2021 and profit and other comprehensive incomechanges in equity and its cash flows for the year ended on that date.

Basis for Opinion

We conducted our audit in accordance with the Standards on Auditing (SA's) specifiedunder section 143(10) of the Act. Our responsibilities under those SA's are furtherdescribed in the Auditor's Responsibilities for the Audit of the Financial Statementssection of our report. We are independent of the Company in accordance with the Code ofEthics issued by the Institute of Chartered Accountants of India together with the ethicalrequirements that are relevant to our audit of the financial statements under theprovisions of the Act and the Rules thereunder and we have fulfilled our other ethicalresponsibilities in accordance with these requirements and the Code of Ethics. We believethat the audit evidence we have obtained is sufficient and appropriate to provide a basisfor our opinion on the Financial Statements.

Key Audit Matters

Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the financial statements of the current period. These matterswere addressed in the context of our audit of the financial statements as a whole and informing our opinion thereon and we do not provide a separate opinion on these matters. Wehave determined the matter described below to be the key audit matter to be communicatedin our report including in relation to these matters. Accordingly our audit included theperformance of procedures designed to respond to our assessment of the risks of thematerial misstatement of the financial statements. The results of our audit proceduresincluding the procedures performed to address the matters below provide the basis for ouraudit opinion on the accompanying financial statements.

The Key Audit matters Auditor's Response
Revenue Recognition
The principal products of the Company comprise chocolates cocoa products and cocoa derivatives that are mainly sold through distributors and direct sale channels amongst others. Revenue is recognised when the customer obtains control of the goods and the amount of revenue can be measured reliably and recovery of the consideration is probable. In view of the significance of the matter the following audit procedures we applied in this area among others to obtain sufficient appropriate audit evidence:
We identified revenue recognition as a key audit matter because the Company focus on revenue as a key performance indicator. This could result the revenue to be overstated or recognised before control has been transferred. 1. We assessed the appropriateness of the revenue recognition accounting policies by comparing with applicable accounting standards.
2. We evaluated the design of key controls and operating effectiveness of the relevant key controls with respect to revenue recognition on selected transactions.
3. We tested on a sample basis revenue transactions recorded before and after the financial year end date to determine whether the revenue had been recognised in the appropriate financial period.
4. We tested manual journal entries posted to revenue to identify unusual items.
Provisions and Contingencies
The Company recognises a provision when it has a present obligation (legal or constructive) as a result of a past event it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. A disclosure for contingent liabilities is made where there is a possible obligation or a present obligation that may probably not require an outflow of resources. When there is a possible or a present obligation where the likelihood of outflow of resources is remote no provision or disclosure is made. We have identified litigations provisions and contingencies as a key audit matter because it requires the Company to make judgements and estimates in relation to the exposure arising out of litigations. The key judgement lies in the estimation of provisions where they may differ from the future obligations. In view of the significance of the matter we applied the following audit procedures in this area among others to obtain sufficient appropriate audit evidence:
1. We tested the effectiveness of key controls around the recording and assessment of litigations provisions and contingent liabilities.
2. We used subject matter experts wherever required to assess the value of the provisions and contingent liabilities in light of the nature of the exposures applicable regulations and related correspondences with the authorities.
3. Obtained Company's assessment of the open cases and compared the same to the assessment of subject matter experts wherever necessary to assess the reasonableness of the provision or contingency.
4. Considered the adequacy of the Company's disclosures made in relation to related provisions and contingencies in the financial statements
Trade Receivables
Our audit procedures in this area included the following:
The Company's operations comprise wide ranging characteristics of individual customers across locations some customers having a higher days sales outstanding than the average days sales outstanding. Consequently there is an inherent exposure to credit risk for these customers. - Obtaining an understanding of and testing key controls over receivables collection process and credit control process over aged receivables and customer credit approvals.
- Assessing the classification of the balances in the receivables ageing by performing an independent re-computation of the aged receivables.
- For a sample of customer balances verified the subsequent receipts against the outstanding year end balances.

Information Other than the Financial Statements and Auditor's Report Thereon

The Company's management and Board of Directors are responsible for the otherinformation. The other information comprises the information included in the Company'sannual report but does not include the financial statements and our auditors' reportthereon. Our opinion on the financial statements does not cover the other information andwe do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements our responsibility is to readthe other information and in doing so consider whether the other information ismaterially inconsistent with the financial statements or our knowledge obtained in theaudit or otherwise appears to be materially misstated. If based on the work we haveperformed we conclude that there is a material misstatement of this other information; weare required to report that fact. We have nothing to report in this regard.

Responsibilities of Management for the Financial Statements

The Company's management and Board of Directors are responsible for the matters statedin Section 134(5) of the Act with respect to the preparation of these financial statementsthat give a true and fair view of the state of affairs profit / loss and othercomprehensive income changes in equity and cash flows of the Company in accordance withthe Indian Accounting Standards (Ind AS) prescribed under section 133 of the Act read withthe Companies (Indian Accounting Standards) Rules 2015 as amended and other accountingprinciples generally accepted in India including the Indian Accounting Standards (Ind AS)specified under section 133 of the Act read with the Companies (Indian AccountingStandards) Rules 2015 as amended.

This responsibility also includes maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding the assets of the Company andfor preventing and detecting frauds and other irregularities; selection and application ofappropriate accounting policies; making judgments and estimates that are reasonable andprudent; and design implementation and maintenance of adequate internal financialcontrols that were operating effectively for ensuring the accuracy and completeness ofthe accounting records relevant to the preparation and presentation of the financialstatements that give a true and fair view and are free from material misstatement whetherdue to fraud or error.

In preparing the financial statements management and Board of Directors areresponsible for assessing the Company's ability to continue as a going concerndisclosing as applicable matters related to going concern and using the going concernbasis of accounting unless management either intends to liquidate the Company or to ceaseoperations or has no realistic alternative but to do so.

Board of Directors are also responsible for overseeing the Company's financialreporting process.

Auditor's Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financialstatements as a whole are free from material misstatement whether due to fraud or errorand to issue an auditor's report that includes our opinion. Reasonable assurance is a highlevel of assurance but is not a guarantee that an audit conducted in accordance with SAswill always detect a material misstatement when it exists. Misstatements can arise fromfraud or error and are considered material if individually or in the aggregate theycould reasonably be expected to influence the economic decisions of users taken on thebasis of these financial statements.

As part of an audit in accordance with SA's we exercise professional judgment andmaintain professional scepticism throughout the audit. We also:

Identify and assess the risks of material misstatement of the financial statementswhether due to fraud or error design and perform audit procedures responsive to thoserisks and obtain audit evidence that is sufficient and appropriate to provide a basis forour opinion. The risk of not detecting a material misstatement resulting from fraud ishigher than for one resulting from error as fraud may involve collusion forgeryintentional omissions misrepresentations or the override of internal control.

Obtain an understanding of internal control relevant to the audit in order to designaudit procedures that are appropriate in the circumstances. Under section 143(3)(i) of theAct we are also responsible for expressing our opinion on whether the company hasadequate internal financial controls with reference to financial statements in place andthe operating effectiveness of such controls.

Evaluate the appropriateness of accounting policies used and the reasonableness ofaccounting estimates and related disclosures made by management.

Conclude on the appropriateness of management's use of the going concern basis ofaccounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the Company'sability to continue as a going concern. If we conclude that a material uncertainty existswe are required to draw attention in our auditor's report to the relateddisclosures in the financial statements or if such disclosures are inadequate to modifyour opinion. Our conclusions are based on the audit evidence obtained up to the date ofour auditor's report. However future events or conditions may cause the Company to ceaseto continue as a going concern.

Evaluate the overall presentation structure and content of the financialstatements including the disclosures and whether the financial statements represent theunderlying transactions and events in a manner that achieves fair presentation.

We communicate with those charged with governance regarding among other matters theplanned scope and timing of the audit and significant audit findings including anysignificant de_ciencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have compliedwith relevant ethical requirements regarding independence and to communicate with themall relationships and other matters that may reasonably be thought to bear on ourindependence and where applicable related safeguards.

From the matters communicated with those charged with governance we determine thosematters that were of most significance in the audit of the financial statements of thecurrent period and are therefore the key audit matters. We describe these matters in ourauditors' report unless law or regulation precludes public disclosure about the matter orwhen in extremely rare circumstances we determine that a matter should not becommunicated in our report because the adverse consequences of doing so would reasonablybe expected to outweigh the public interest benefits of such communication.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government in terms of Section 143(11) of the Act we give in"Annexure A" a statement on the matters specified in paragraphs 3 and 4 of theOrder.

2. (A) As required by Section 143(3) of the Act based on our audit we report that: a)We have sought and obtained all the information and explanations which to the best of ourknowledge and belief were necessary for the purposes of our audit.

b) In our opinion proper books of account as required by law have been kept by theCompany so far as it appears from our examination of those books.

c) The balance sheet the statement of Profit and Loss (including other comprehensiveincome) the statement of changes in equity and the statement of cash flows dealt with bythis Report are in agreement with relevant the books of account.

d) In our opinion the aforesaid Ind AS financial statements comply with the IndianAccounting Standards prescribed under section 133 of the Act.

e) On the basis of the written representations received from the directors of theCompany as on March 31 2021 taken on record by the Board of Directors none of thedirectors is disqualified as on March 31 2021 from being appointed as a director in termsof Section 164(2) of the Act.

f) With respect to the adequacy of the internal financial controls over financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate Report in "Annexure B".

g) In our opinion the managerial remuneration for the year ended March 31 2021 hasbeen paid / provided by the Company to its directors in accordance with the provisions ofsection 197 read with Schedule V to the Act.

(h) With respect to the other matters to be included in the Auditors' Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinionand to the best of our information and according to the explanations given to us: i. TheCompany has disclosed the impact of pending litigations on its financial position in itsfinancial statements vide Note No.33 of the notes to the financial statements. ii. TheCompany did not have any long term contracts including derivate contracts for which therewere any material foreseeable losses. iii. The Company has no amount required to betransferred to the Investor Education and Protection Fund during the year.

for VDNR & Associates Chartered Accountants
FRN - 011251S
Sd/-
Venkateswara Reddy D
Partner
Place: Hyderabad M No. 028488
Date: 29-June-2021 UDIN: 21028488AAAACC2973

ANNEXURE "A" TO THE INDEPENDENT AUDITOR'S REPORT – 31 MARCH 2021(Referred to in our report of even date) i. In respect of the Company's fixed assets:

(a) The Company has maintained proper records showing full particulars includingquantitative details and situation of property plant and equipment.

(b) The Company has a program of verification to cover all the items of property plantand equipment in a phased manner. In our opinion the manner and periodicity is reasonablehaving regard to the size of the Company and the nature of its assets. Pursuant to theprogram certain fixed assets were physically verified by the management during the year.According to the information and explanations given to us no material discrepancies werenoticed on such verification.

(c) According to the information and explanations given to us the records examined byus and based on the examination of the title deeds provided to us we report that thetitle deeds comprising all the immovable properties of land and buildings which arefreehold are held in the name of the Company as at the balance sheet date. ii. TheInventory of Finished goods raw materials stores spare parts except those in transitand with third parties have been physically verified by management during the year. Weconsider that the frequency of the verification is reasonable having regard to the natureof business and size of the company. No material discrepancies were noticed on physicalverification. iii. According to the information and explanations given to us the Companyhas not granted any loans secured or unsecured to companies firms and Limited liabilitypartnerships or other parties covered in the register maintained under Section 189 of theAct. Therefore the provisions of Clause 3 (iii)(a) (b) and (c) of the said Order are notapplicable to the Company and hence not commented upon. iv. In our opinion and accordingto the information and explanations given to us the company has not granted any loans orprovided any guarantees or security to the parties covered under Section 185 of the Actduring the year. The Company has complied with the provisions of Section 186 of the Act inrespect of loans making investments and providing guarantees and securities asapplicable. v. In our opinion and according to the information and explanations given tous the Company has not accepted deposits from the public in accordance with theprovisions of section 73 to 76 or any other relevant provisions of the Act and the rulesframed there under. Accordingly paragraph 3(v) of the Order is not applicable to theCompany. vi. The maintenance of cost records has not been specified by the CentralGovernment under section 148(1) of the Companies Act 2013 for the activities/productsmanufactured by the Company. Accordingly paragraph 3(vi) of the order is not applicableto the Company. vii. (a) According to the information and explanations given to us and onthe basis of our examination of the records of the Company amounts deducted / accrued inthe books of account in respect of undisputed statutory dues including Provident FundEmployees' State Insurance Income Tax Goods and Service Tax Duty of Customs Cess andother material statutory dues have been generally and regularly deposited during the yearby the company with the appropriate authorities. According to the information andexplanations given to us no undisputed amounts payable in respect of Provident FundEmployees' State Insurance Income Tax Goods and Service Tax Duty of Customs Cess andother material statutory dues were in arrears as at 31 March 2021 for a period of morethan six months from the date they became payable.

(b) According to the information and explanations given to us there are no dues ofIncome Tax Sales Tax Service Tax Value Added Tax Goods and Service Tax Customs DutyExcise Duty Cess and other material statutory dues in arrears as at March 31 2021 whichhave not been deposited with the appropriate authorities on account of any dispute.

viii. In our opinion and according to the information and explanations given to us theCompany has not defaulted in repayment of its dues to the banker. The Company during theyear has not availed any loans or borrowings from financial institutions banks andgovernment nor has not issued any debentures. ix. The Company did not raise any money byway of initial public offer or further public offer (including debt instruments) and termloans during the year. Accordingly paragraph 3 (ix) of the Order is not applicable. x.According to the information and explanations given to us no material fraud by theCompany or no material fraud on the Company by its officers or employees has been noticedor reported during the year. xi. According to the information and explanations given tous the Company has paid/provided managerial remuneration in accordance with the requisiteapprovals mandated by the provisions of section 197 read with Schedule V to the Act. xii.In our opinion and according to the information and explanations given to us the Companyis not a Nidhi Company as prescribed under section 406 of the Act. Accordingly paragraph3 (xii) of the Order is not applicable to the Company. xiii. According to the informationand explanations given to us and on the basis of our examination of the records of theCompany transactions with the related parties are in compliance with Section 177 and 188of the Companies Act 2013 where applicable. The details of such related partytransactions have been disclosed in the Ind AS financial statements as required by theapplicable Accounting Standards. xiv. According to the information and explanations givento us and on the basis of our examination of the records of the Company the Company hasnot made any preferential allotment or private placement of shares or fully or partly paidconvertible debentures during the year. Accordingly paragraph 3 (xiv) of the Order is notapplicable to the Company. xv. According to the information and explanations given to usand on the basis of our examination of the records of the Company the Company has notentered into any non-cash transactions with its Directors or persons connected to itsdirectors. Accordingly paragraph 3(xv) of the Order is not applicable to the Company.xvi. In our opinion and according to the information and explanations given to us theCompany is not required to be registered under section 45-IA of the Reserve Bank of IndiaAct 1934. Accordingly paragraph 3(xvi) of the Order is not applicable to the Company

for VDNR & Associates Chartered Accountants
FRN - 011251S
Sd/-
Venkateswara Reddy D
Partner
Place: Hyderabad M No. 028488
Date: 29-June-2021 UDIN: 21028488AAAACC2973

ANNEXURE "B" TO THE INDEPENDENT AUDITOR'S REPORT

Report on the Internal Financial Controls Over Financial Reporting under Clause (i) ofSub-section 3 of Section 143 of the Companies Act 2013 ("the Act")

(Referred to in paragraph 2(A)(f) under ‘Report on Other Legal and RegulatoryRequirements' section of our report of even date) We have audited the internal financialcontrols with reference to financial statements of LOTUS CHOCOLATE COMPANY LIMITED("the Company") as of March 31 2021 in conjunction with our audit of thefinancial statements of the Company for the year ended on that date.

Management's Responsibility for Internal Financial Controls

The Company's management and the Board of Directors of the Company is responsible forestablishing and maintaining internal financial controls based on the internal financialcontrols with reference to the financial statements criteria established by the Companyconsidering the essential components of internal control stated in the Guidance Note.These responsibilities include the design implementation and maintenance of adequateinternal financial controls that were operating effectively for ensuring the orderly andefficient conduct of its business the safeguarding of its assets the prevention anddetection of frauds and errors the accuracy and completeness of the accounting recordsand the timely preparation of reliable financial information as required under theCompanies Act 2013.

Auditor's Responsibility

Our responsibility is to express an opinion on the internal financial controls overfinancial reporting of the Company based on our audit. We conducted our audit inaccordance with the Guidance Note and the Standards on Auditing prescribed under Section143(10) of the Act to the extent applicable to an audit of internal financial controlswith reference to the financial statements. Those Standards and the Guidance Note requirethat we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether adequate internal financial controls over financialreporting was established and maintained and if such controls operated effectively in allmaterial respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system over financial reporting and their operatingeffectiveness. Our audit of internal financial controls over financial reporting includedobtaining an understanding of internal financial controls over financial reportingassessing the risk that a material weakness exists and testing and evaluating the designand operating effectiveness of internal control based on the assessed risk. The proceduresselected depend on the auditor's judgement including the assessment of the risks ofmaterial misstatement of the financial statements whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Company's internal financial controls withrespect to the financial statements.

Meaning of Internal Financial Controls with reference to Financial Statements

A company's internal financial controls with reference to financial statements is aprocess designed to provide reasonable assurance regarding the reliability of financialreporting and the preparation of financial statements for external purposes in accordancewith generally accepted accounting principles. A company's internal financial controlswith reference to financial statements includes those policies and procedures that (1)pertain to the maintenance of records that in reasonable detail accurately and fairlyreflect the transactions and dispositions of the assets of the company; (2) providereasonable assurance that transactions are recorded as necessary to permit preparation offinancial statements in accordance with generally accepted accounting principles and thatreceipts and expenditures of the company are being made only in accordance withauthorisations of management and directors of the company; and (3) provide reasonableassurance regarding prevention or timely detection of unauthorised acquisition use ordisposition of the company's assets that could have a material effect on the financialstatements.

Inherent Limitations of Internal Financial Controls with reference to FinancialStatements

Because of the inherent limitations of internal financial controls over financialreporting including the possibility of collusion or improper management override ofcontrols material misstatements due to error or fraud may occur and not be detected.Also projections of any evaluation of the internal financial controls over financialreporting to future periods are subject to the risk that the internal financial controlover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion the Company has in all material respects adequate internal financialcontrols with reference to financial statements and such internal financial controls wereoperating effectively as at 31 March 2021 based on the internal financial controls withreference to financial statements criteria established by the Company considering theessential components of internal control stated in the Guidance Note on Audit of InternalFinancial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India (the "Guidance Note").

for VDNR & Associates Chartered Accountants
FRN - 011251S
Sd/-
Venkateswara Reddy D
Partner
Place: Hyderabad M No. 028488
Date: 29-June-2021 UDIN: 21028488AAAACC2973

.