Your Directors have pleasure in presenting the 29th Annual Report of your Company andthe Audited Financial statements for the Financial Year ended on 31st March 2018 togetherwith Auditors' Report thereon.
The performance of the Company during the year has been as under:
| ||Year ended on ||Year ended on |
|Particulars ||31.03.2018 ||31.03.2017 |
| ||(In Rupees) ||(In Rupees) |
|Revenue from Operations ||569167167 ||664624218 |
|Other Income ||226436 ||1273563 |
|Less: Expenses ||556801415 ||670545201 |
|Profit/(Loss) before Taxation ||12592188 ||(4647420) |
|Less: Tax Expense || || |
|Current Tax ||- ||- |
|Deferred Tax ||3299183 ||- |
|Profit/Loss after Tax ||9293005 ||(4647420) |
|Gain/loss on Foreign Exchange ||371414 ||- |
|Balance Profit/(Loss) C/F to the Next Year ||9664419 ||(4647420) |
During the year under review your company has achieved the total turnover ofRs.569167167/- as compared to Turnover of Rs.664624218/- achieved during the lastfinancial year which indicates a decline in turnover of 14% in Current year. Howevercompany has registered a total profit of Rs.9664419/- as compared to the loss amountingto Rs.4647420/- in previous year.
TRANSFER TO RESERVES:
The profit registered in the Financial Year 2017-18 amounting to Rs. 9293005/- hasbeen transferred to General Reserve.
The Company has not accepted or invited any Deposits and consequently no deposit hasmatured / become due for re-payment as on 31st March 2018.
Shri. Peraje Prakash Pai and Smt. Ashwini Pai director of the company will retire byrotation at the ensuing 29th Annual General Meeting and being eligible offers themselvesfor re-appointment as mentioned in Item number 2 & 3 of Notice annexed to thisReport. Further the Board propose the re-appointment of Shri. Dilip Mangesh Kelelkar asWhole Time Director of the Company through Special Resolution by shareholders at thisAnnual General Meeting(Item No. 5 of the Notice of Annual General Meeting ) since he willattain the age of 70 years in coming two months.
In terms of Sections 149 and 152 read with Schedule IV and other applicable provisionsof the Companies Act 2013 ("the Act") read with rules made there under and theerstwhile Clause 49 of the Listing Agreement with the stock exchanges Shri. GottemukkalaVenkatapathi Raju (DIN:02435073) and Shri. Bharathan Rajagopalan Thatai (DIN:02464132)were appointed as Independent Directors on the Board of the Company. They hold office asIndependent Directors of the Company up to the conclusion of the ensuing 29th AnnualGeneral Meeting of the Company. The Nomination and Remuneration Committee of the Board ofDirectors on the basis of the report of performance evaluation of Independent Directorshas recommended reappointment of Shri. Gottemukkala Venkatapathi Raju (DIN:02435073) andShri. Bharathan Rajagopalan Thatai (DIN:02464132) as the Independent Directors for asecond term of 5 (five) consecutive years on the Board of the Company. The item Number 6& 7 sets out the reappointment of Shri. Gottemukkala Venkatapathi Raju and Shri.Bharathan Rajagopalan Thatai through special resolution for a term of 5 years.
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 Board's functioning composition of Board and its Committees executionand performance of specific duties obligations and governance. The Performance evaluationof Independent Directors was completed. The Performance evaluation of Chairman and theNon-Independent Directors was carried out by the Independent Directors. The Board ofDirectors expressed their satisfaction with evaluation process.
The Board of Directors of your company have not recommended any dividend for thefinancial year 2017-18.
The Directors and senior management state that applicable Secretarial Standards i.e.SS-1 and SS-2 relating to Meetings of the Board of Directors' and GeneralMeetings' respectively have been duly complied by the Company.
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.An extract from the Remuneration Policy is stated in the Corporate Governance Report.
During the financial year 6(Six) Board Meetings and 4(four) Audit Committee Meetingswere convened and held. The details of which are given in the Corporate Governance Report.The intervening gap between the meetings was within the period of 120 days as prescribedunder the Companies Act 2013 and SEBI (LODR) Regulations 2015.
PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS
Details of Loans Guarantees and Investments covered under the provisions of Section186 of the Companies Act 2013 are given in the notes to the Financial Statements.
The Company has issued 7396600 @ 10% Redeemable Cumulative Preference shares toPromoters in the year 1998 which were due for redemption on 10.08.2018. Due to mountinglosses and liquidity crunch the Company was unable to pay any Dividend to PreferenceShareholders till date. The financial condition of the company continued to deteriorateresulting in negative net worth and mounting debts. The Board believes that there is noalternative to the above proposal and it would serve the long term interests of theCompany and the Shareholders and concluded to approach the Preference Shareholders forextension of redemption of shares and vary the nature and terms and conditions of theshares. Thereafter in a General Meeting held on 18th June 2018 by special resolutionmembers had approved the fresh issue of 7396600- 10% Redeemable Cumulative Preferenceshares of Rs. 10/- each for redemption period of 10 years in lieu of old 10 % RedeemableCumulative Preference shares on the same terms and conditions as per earlier issue.
Further in accordance with Sections 55(3) and 110 of the Companies Act 2013corresponding rules thereof to execute the above fresh issue the company had _led apetition to Hon'ble National Company Law Tribunal(NCLT) Hyderabad after approval fromshareholders and the same has been acknowledged by the Hon'ble Tribunal. The management islooking forward for a date of hearing from NCLT.
Except above there is no change in the Share Capital of the Company during the yearunder review.
RELATED PARTY TRANSACTIONS
During the year under review your Company has entered into transactions with relatedparties the details of said transactions are provided in Note No. 34 to the AuditedAccounts for the year 2017-18 as appended to this report. All transactions entered withRelated Parties for the year under review were on arm's length basis and in the ordinarycourse of business. There are no such transactions made by the Company with PromotersDirectors Key Managerial Personnel or other designated persons which may have a potentialconflict with the interest of the Company at large. All Related Party Transactions areplaced before the Audit Committee as also the Board for approval where ever required.Prior omnibus approval of the Audit Committee is obtained for the transactions which areof a foreseeable and repetitive nature. A statement giving details of all related partytransactions entered into pursuant to the omnibus approval so granted are placed beforethe Audit Committee and the Board of Directors on a quarterly basis. The Company hasdeveloped a Policy on Related Party Transactions for the purpose of identification andmonitoring of such transactions. The policy on Related Party Transactions as approved bythe Board is uploaded on the Company's website.
Pursuant to the provisions of Section 188 of the Companies Act 2013 read with rulesmade thereunder and Regulation 23 of Securities and Exchange Board of India (ListingObligations and Disclosure Requirements) Regulations 2015 approval of shareholders forcertain material related party transactions is mandatory. Hence in Item no. 4 as set outin the Notice your Board is seeking approval for threshold limit of Related PartyTransactions. The particulars of contracts and arrangements with related parties for theyear 2017-18 in Form AOC-2 is annexed 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.
However in the matter of Issuance of fresh 7396600 @ 10% Redeemable CumulativePreference shares your company is seeking approval from Hon'ble National Company LawTribunal (NCLT) Hyderabad and awaiting a hearing date from NCLT.
M/s. VDNR & Associates Statutory Auditors of the Company was appointed in 28thAnnual General meeting of the Company for a period of Five years i.e. from the conclusionof 28th Annual General Meeting till the conclusion of 32nd Annual General Meeting to beheld in the year 2022. In accordance with section 40 of the Companies Amendment Act 2017which omits the requirement of ratification of Appointment of Statutory Auditors in everysubsequent Annual General Meeting as stipulated under section 139 of the Companies Act2013. Therefore M/s. VDNR & Associates Chartered Accountants(Firm Regn No: 011251S)will continue to be the Statutory Auditors of the Company.
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 Whole Time Practice to undertake theSecretarial Audit of the Company for the Financial Year 2017-18. The Secretarial AuditReport in form MR-3 is annexed to this report as "Annexure-II".
The Secretarial Audit Report does not contain any qualifications reservation oradverse remarks.
M/s. Vasanth Pai & Co. Chartered Accountants Hyderabad performs the duties ofinternal auditors of the Company and their report is reviewed by the Audit Committee fromtime to time.
ISO 9001:22000 CERTIFICATION
Your Company continues to hold ISO 9001-2008 Certification by meeting all therequirements of Certification from time to time.
Your company's manufacturing factory located at Nastipur Village Hathnoora MandalSangareddy District has been Certified to the version of FSSC 22000:2010 (Food SafetyStandard Certification by TUV NORD). This Certification indicates our commitment in asustainable manner in meeting global quality environment health and safety standards.This is a milestone in our quest for quality.
HALAL CERTIFICATION: HIW22490213
During the year under review your company is Certified as Halal Certified Companyafter meeting with all the audits and/or Standards as required under the HalalCertification process and Shariah (Islamic) Board Guidelines it indicates that theManufacturing process of the products of our company contains permitted ingredientstherefore is lawful for Muslim consumption as well.
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 sectionforming part of the Annual Report.
The Company has implemented the procedures and adopted practices in conformity with theCode of Corporate Governance enunciated in Regulation 27(2) of the SEBI ListingRegulations 2015 with the Stock Exchanges. A separate report on Corporate Governancepractices followed by the Company together with a Certificate from the Auditors con_rmingcompliances forms an integral part of this Report.
EXTRACT OF ANNUAL RETURN
The Extract of Annual Return as per the provisions of Section 92 of the Companies Act2013 and Rule 12 of Companies (Management and Administration) Rules 2014 in Form MGT-9 isenclosed as Annexure - III to this Report.
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 e_cacy and adequacy ofinternal control system in the Company its compliance with operating systems accountingprocedures and policies at all locations of the Company and its subsidiaries. Based on thereport of internal audit function process owners undertake corrective action in theirrespective areas and thereby strengthen the controls. Significant audit observations andcorrective actions thereon 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 ande_cient conduct of its business including adherence to the company's policies thesafeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completeness of the accounting records and the timely preparation ofreliable financial 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
The Company has adopted a Whistle Blower Policy establishing vigil mechanism toprovide a formal mechanism to the Directors and employees to report concerns aboutunethical behavior actual or suspected fraud or violation of Code of Conduct and Ethics.It also provides for adequate safeguards against the victimization of employees who availof the mechanism and provides direct access to the Chairperson of the Audit Committee inexceptional cases. It is affirmed that no personnel of the Company has been denied accessto the Audit Committee. The policy of vigil mechanism is available on the Company'swebsite. The Whistle Blower Policy aims for conducting the affairs in a fair andtransparent manner by adopting highest standards of professionalism honesty integrityand ethical behaviour.
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.
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- IV forming part of this Report.
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 March2018 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 of the Company for the year under review;
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 2018 on a going concern' basis;
e) That proper internal financial controls were in place and that the financialcontrols were adequate and were operating effectively; and
f) That devised proper systems to ensure compliance with the provisions of allapplicable laws in place and were adequate and operating effectively.
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 Year2017-18 the Company received no complaints on sexual harassment.
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 Ganapath (WTD) ||2.32 |
|Shri Dilip Mangesh Kalelkar (WTD) ||1.87 |
(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) ||NIL |
|Shri Dilip Mangesh Kalelkar(WTD) ||NIL |
|Ms. Babita Chandrakar(CS) ||NIL |
(iii) The percentage increase in the median remuneration of employees in the financialyear is NIL.
(iv) The number of permanent employees on the rolls of company is 70.
(v) 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;
There were no average increase in salaries of employees.
Percentage increase in the managerial remuneration for the year is - Nil
(vi) Affirmation that the remuneration is as per the remuneration policy of the company- Yes.
Your Directors wish to place on record their appreciation to employees at all levelsfor their hard work dedication and commitment. The enthusiasm and unstinting efforts ofthe employees have enabled the Company to remain at the forefront of the industry despiteincreased competition from several existing and new players.
Statements in the Board's Report and the Management Discussion & Analysisdescribing the Company's 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 Company's 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 Company's endeavor to build andnurture strong links with trade based on mutuality respect and co-operation with eachother.
For and on behalf 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 : 14.08.2018 || |