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Lotus Chocolate Company Ltd.

BSE: 523475 Sector: Agri and agri inputs
NSE: N.A. ISIN Code: INE026D01011
BSE 10:03 | 18 Jul 38.15 3.30






NSE 05:30 | 01 Jan Lotus Chocolate Company Ltd
OPEN 34.85
52-Week high 55.45
52-Week low 16.15
P/E 52.99
Mkt Cap.(Rs cr) 49
Buy Price 31.45
Buy Qty 10.00
Sell Price 37.75
Sell Qty 76.00
OPEN 34.85
CLOSE 34.85
52-Week high 55.45
52-Week low 16.15
P/E 52.99
Mkt Cap.(Rs cr) 49
Buy Price 31.45
Buy Qty 10.00
Sell Price 37.75
Sell Qty 76.00

Lotus Chocolate Company Ltd. (LOTUSCHOCOLATE) - Director Report

Company director report

Dear Member

The Directors have pleasure in presenting the 28th Annual Report of your Company andthe Audited financial statements for the financial year ended 31st March 2017 togetherwith Auditors' Report thereon.


The performance of the Company during the year has been as under:

(Amount in Rs.. Lakhs)

Current Year Ended 31.03.2017 Previous Year Ended 31.03.2016
Turnover 6646.24 6539.56
Other Income 12.73 21.84
Profit/(Loss) before exceptional items (45.99) 128.30
Profit/(Loss) before (46.47) 125.71
Net Profit after (46.47) 125.71


During the year under review the turnover of the Company is Rs. 66.46 Crores incomparison to the previous year's figure at Rs. 65.40 Crores. The company has incurred netloss which is reported at Rs. 46.47 lakhs in comparison to Rs. 125.71 lakhs net profit inthe previous year. The company has been trying hard to reduce the interest and other costsand to get more profits. In future after adopting all cost cutting measures and byimproving its overall sales the company is hopeful of performing much better and improvesits 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 2017.


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)Regulations 2015. Further there has been no change in the circumstances which may affectthe 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.


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 ofevaluation of Independent Directors was completed. The Performance evaluation of Chairmanand the Non-Independent Directors was carried out by the Independent Directors. The Boardof 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 financial year 6 Board Meetings and 5 Audit Committee Meetings were convenedand held. The details of which are given in the Corporate Governance Report. Theintervening gap between the meetings was within the period of 120 days as prescribed underthe Companies Act 2013 and SEBI (LODR) Regulations 2015.


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 10% Redeemable Cumulative Preference shares which forms part ofShare Capital to Promoters during the year 28th March 1998 which stands to be redeemedduring the year 27th March 2018 of a consideration Rs. 73966000. As the reserves ofour company is negative your Board of Directors of the Company is intending to make anapplication to NCLT under section 55(3) of Companies Act 2013 and rules and regulationsmade there under and Rule 69 as per NCLT Rules 2016 for issue further redeemablepreference shares equal to the amount due including the dividend thereon in respect ofthe unredeemed preference shares and on the issue of such further redeemable preferenceshares the unredeemed preference shares shall be deemed to have been redeemed.


All transactions entered with Related Parties for the year under review were on arm'slength basis and in the ordinary course of business. There are no materially significantrelated party transactions made by the Company with Promoters Directors Key ManagerialPersonnel or other designated persons which may have a potential confiict with theinterest of the Company at large. All Related Party Transactions are placed before theAudit Committee as also the Board for approval where ever required. Prior omnibusapproval of the Audit Committee is obtained for the transactions which are of aforeseeable 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.

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.


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.


Statutory Auditors

M/s. VDNR & Associates Statutory Auditors of the Company hold office until theconclusion of the ensuing Annual General Meeting. The Company has received a letter fromthem to the effect that their appointment if made would be within the prescribed limitsunder Section 141(3)(g) of Companies Act

2013. Accordingly the said Auditors are appointed as Statutory Auditors of the Companyat the ensuing Annual General Meeting till the conclusion of 32nd Annual General Meetingto be held in the year 2022 (subject to ratification of their appointment by the membersat every AGM held after this AGM).

Secretarial Auditors

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 2016-17. The Report of theSecretarial Audit Report is annexed herewith as "Annexure-II".

Internal Auditors

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.


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 latest version of FSSC 22000:2010 (FoodSafety Standard Certification by TUV 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 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 Regulation 27(2) of the SEBI ListingRegulations 2015 with the Stock Exchanges.

A separate report on corporate governance practices followed by the Company togetherwith a Certificate from the Company's Auditors confirming compliances forms an integralpart of this Report.


The details forming part of the extract of the Annual Return in form MGT 9 is annexedherewith as "Annexure-III".


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 InternalAudit Department monitors and evaluates the efficacy and adequacy of internal controlsystem in the Company its compliance with operating systems accounting procedures andpolicies at all locations of the Company and its subsidiaries. Based on the report ofinternal audit function process owners undertake corrective action in their respectiveareas and thereby strengthen the controls. Significant audit observations and correctiveactions 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 andeffectively. Your company has adopted policies and procedures for ensuring the orderly andefficient 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.


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.


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.


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 March2017 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 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 2017 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.


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 2016-17 the Company received no complaints on sexualharassment.


Company has not employed any individual whose remuneration falls within the purview ofthe limits prescribed under the provisions of Section 197 of the Companies Act 2013 readwith Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel)Rules 2014.


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 of the remuneration of each director to the median remuneration of theemployees of the company for the financial year;

Name of the Director Ratio to Median Remuneration
Shri Subramanya Ram Ganpath WTD 4.19
Shri Dilip Mangesh Kalelkar WTD 3.37

(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 Whole Time Director --
Shri Dilip Mangesh Kalelkar Whole Time Director --
Ms. Babita Chandrakar Company Secretary --
Shri P. Ravi Kumar Chief Financial Officer --

(iii) The percentage increase in the median remuneration of employees in the financialyear is 3%.

(iv) The number of permanent employees on the rolls of company is 139.

(v) The explanation on the relationship between average increase in remuneration andcompany performance;

On an average employees received an increase of 3%. The increase in remuneration is inline 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 2016-17 (aggregated) 1345800
Total Revenue 665897781
Remuneration (as % of Total Revenue) 0.202

(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 31.03.2017 As at 31.03.2016
Closing rate of share at BSE Rs.. 34.9 51
EPS (Consolidated) Rs.. (0.36) 0.98
Market Capitalization Rs.. 4481526101 654893499
Price Earnings ratio Ratio (0.28) 52

(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;

There were no average increase in salaries of employees other than managerial personnelin 2016-17.

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 Remuneration ( Rs. ) Total Revenue (Rs.) Remuneration as % of Total Revenue
Shri Subramanya Ram Ganpath WTD 745800 665897781 0.112
Shri Dilip Mangesh Kalelkar WTD 600000 665897781 0.090

(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 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.

By Order of the Board


Sd/- Sd/-
P. Anantha Pai G.S. Ram
DIN: 00048339 DIN: 02395478
Place : Hyderabad
Date : 09.08.2017


Information Under Section 134(3) (m) of The Companies Act 2013 Read with Rules 8(3)of the Companies (Accounts) Rules 2014:

A. Conservation of Energy

a. Energy Conservation measures taken:

The Company has installed the following energy saving devices:

- CFL Lamps and LED Lamps

- Power Capacitors

- Steam Condensate Recovery

- Street Lighting Timer

- Water Level Controller

- Timmers

b. Additional investment and proposals if any being implemented for reduction ofconsumption of energy:

Energy saving devices are being installed to reduce consumption of electrical energy.

c. Impact of measures at (a) & (b) above for reduction of energy consumption &consequent impact on the cost of production of goods.

d. Total energy consumption & energy consumption per unit of production inprescribed Form Rs.A'

Year ended 31st March 2017 Year ended 31st March 2016
A. Power & fuel consumption in respect of
1. Electricity
a. Purchased : 2019445 2280717
Units (Kwh)
Total (Rs..) 14721377 16807715
Rate per unit (Rs..) 7.29 7.36
b. Own Generation :
Through Diesel Generator
Units (Kwh) 135060 103158
Units per Liter of Diesel Oil 2.87 2.85
Cost per Unit (Rs..) 22.49 17.39
2. Furnace Oil/LSHS/LDO/HSD
Qty (Lts) Nil Nil
Total Amount (Rs..) Nil Nil
Average (Rs./Ltr) Nil Nil
3. Wood/Coal
Qty (Kgs.) 630185 634576
Total Amount (Rs..) 3115741 3314746
Average (Rs./Kgs.) 4.94 5.22
B. Consumption per unit of production
Cocoa & Chocolate products (tonnes)
i. Electricity (KWH/Tonnes)
- Cocoa 570 unit/MT 614 units/MT
- Chocolate 640 units/MT 598 units/MT
ii. Furnace Oil/LSHS/LDO
HSD (KL/Tonne)
- Cocoa Nil Nil
- Chocolate Nil Nil
iii.Wood/coal (KG/MT)
- Cocoa 262 kgs/MT 269 Kgs/MT
- Chocolate 118 kgs/MT 10 Kgs/MT

B Technology Absorption

e. Efforts made in technology absorption in Form Rs.B

Research & Development

1. Specific areas in which R & D was carried out by the Company:

Research and Development work has been continued to develop tailormade receipes.Improved the packing mode of consumer products with better appeal and product protection.Improvements in Cocoa process carried out to improve product safety and quality. Cocoaplant is being certified for HACCP(Food Safety Systems) and successfully undergone throughsurveillance audits.

2. Benefits derived as a result of the above R & D: The Company could sustain thestiff competition and is able to retain the esteemed customers within its fold and alsoincrease its capacity.

3. Future Plans & Actions

Further new Chocolate products will be introduced later this year. To achieve this theCompany is making special efforts to development management skills raising performanceLeadership capabilities sharpening the customers at all levels within the company.

4. Expenditure on R & D:

a. Capital - Nil
b. Recurring - Rs. 3996
c. Total as % turnover - 0.00%

1. Technology Absorption Adoption and Innovation : -

C. Foreign Exchange Earnings & Outgo:

f. Activities relating to exports initiatives taken to increase the exportsdevelopment of new export markets for products and services and export plans:

The Company has exported its Cocoa and Chocolate Products to Nepal. g Total foreignexchange used and earned (CIF Value):

Rs. in Lacs
i) Foreign Exchange earnings Nil
ii) Foreign Exchange Outgo (including raw materials components and spare parts of capital goods and other expenditures in foreign currency including dividends) Nil

By Order of the Board


Sd/- Sd/-
P. Anantha Pai G.S. Ram
DIN: 00048339 DIN: 02395478
Place : Hyderabad
Date : 09.08.2017