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Directors Report of Lotus Chocolate Company Ltd.

Mar 31, 2016

To The Members of

Lotus Chocolate Company Limited

The Directors have pleasure in presenting the 27th Annual Report of your Company and the Audited Financial Statements for the Financial Year ended 31st March 2016 together with Auditors'' Report thereon.

FINANCIAL RESULTS:

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

(Amount in Rs.. Lakhs)

Current Year Ended 31.03.2016

Previous 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

PERFORMANCE :

During the year under review the turnover of the Company is Rs..65.40 Crores in comparison to the previous year''s figure at Rs.. 60.78 Crores.

The company has achieved net profit after tax which is reported at Rs.. 125.71 lakhs in comparison to Rs.. 71.07 lakhs in the previous year. The company has been trying hard to reduce the finance and other costs to improve more profits. In future after adopting all cost cutting measures and by improving its overall sales the company is hopeful of performing much better and improves its profitability accordingly.

FIXED DEPOSITS:

The Company has not accepted or invited any Deposits and consequently no deposit has matured / become due for re-payment as on 31st March 2016.

DIRECTORS :

All Independent Directors have given declarations that they meet the criteria of independence 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 affect their status as independent Director during the year.

The brief particulars of the Directors seeking appointment/reappointment at this Annual General Meeting are being annexed to the Corporate Governance Report.

Sri Rabindranath Jarugumilli resigned during the year 2016-17. The Directors place on record 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.

BOARD EVALUATION

Pursuant to the provisions of the Companies Act, 2013 and SEBI (LODR) Regulations, 2015 the Board has carried out performance evaluation taking into consideration of various aspects of the Board''s functioning, composition of Board, and its Committees, execution, and performance of specific duties, obligations and governance. The Performance of evaluation of Independent Directors was completed. The Performance evaluation of Chairman and the Non-Independent Directors was carried out by the Independent Directors. The Board of Directors expressed their satisfaction with evaluation process.

REMUNERATION POLICY

The Board has, on the recommendation of the Nomination & Remuneration Committee framed a policy which lays down a framework in relation to selection, appointment and remuneration to Directors, Key Managerial Personnel and Senior Management of the Company. The Remuneration Policy is stated in the Corporate Governance Report.

MEETINGS

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 gap between the meetings was within the period of 120 days as prescribed under the Companies Act, 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 Act, 2013 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 the ordinary course of business. There are no materially significant related party transactions made by the Company with Promoters, Directors, Key Managerial Personnel or other designated persons which may have a potential conflict with the interest of the Company at large. All Related Party Transactions are placed 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 are of a foreseeable and repetitive in nature. A statement giving details of all related party transactions entered into pursuant to the omnibus approval so granted are placed before the Audit Committee and the Board of Directors on a Quarterly basis. The Company has developed a Policy on Related Party Transactions for the purpose of identification and monitoring of such transactions. The policy on Related Party Transactions as approved by the Board is uploaded on the Company''s website.

The particulars of contracts and arrangements with related parties referred to in sub-section (1) of section 188 is prepared in Form AOC-2 pursuant to clause (h) of the Companies (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 that would impact the going concern status of the Company and its future operations.

AUDITORS

Statutory Auditors

Pursuant to the provisions of Section 139 of the Act and the rules framed there under, M/s S. R. Mohan & Company, Chartered Accountants, were appointed as statutory auditors of the Company from the conclusion of the 25th Annual General Meeting of the Company held on 30th September, 2014 till the conclusion of the 28th Annual General Meeting to be held in the year 2017, subject to ratification of their re-appointment at every 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 has appointed Mrs. Rakhi Agarwal, Company Secretary in Practice to undertake the Secretarial Audit of the Company for the Financial Year 2015-16. The Report of the Secretarial Audit Report is annexed herewith as "Annexure-II”.

Internal Auditors

M/s Vasanth Pai & Co. Chartered Accountants performs the duties of internal auditors of the Company and their report is reviewed by the Audit Committee from time to time.

ISO 9001:22000 CERTIFICATION

Your Company continues to hold ISO 9001-2008 Certification by meeting all the requirements of Certification from time to time.

FSSC CERTIFICATION

Your company''s manufacturing factory located at Nastipur, Medak District has been certified to the latest version of FSSC 22000:2010 (Food Safety Standard Certification by TUV NORD).

This Certification indicates our commitment in a sustainable manner, in meeting global quality, environment, health and safety standards. This is a milestone in our quest for quality.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

Management Discussion and Analysis Report for the year under review as stipulated under SEBI (LODR) Regulations, 2015 with the stock exchanges, is presented in a separate section forms part of the Annual Report.

CORPORATE GOVERNANCE:

The Company has implemented the procedures and adopted practices in conformity with the Code of Corporate Governance enunciated in the SEBI (LODR) Regulations, 2015 with the Stock Exchanges.

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

EXTRACT OF ANNUAL RETURN

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

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has an Internal Control System, commensurate with the size, scale and complexity of its operations. To maintain its objectivity and independence, the Internal Audit function reports to the Chairman of the Audit Committee of the Board.

The Internal Audit Department monitors and evaluates the efficacy and adequacy of internal control system in the Company, its compliance with operating systems, accounting procedures and policies at all locations of the Company. Based on the report of internal audit function, process owners undertake corrective action in their respective areas and thereby strengthen the controls. Significant audit observations and corrective 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 by the company and that such internal financial controls are adequate and operating effectively. Your company has adopted policies and procedures for ensuring the orderly and efficient conduct of its business, including adherence to the company''s policies, the safeguarding its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial disclosures.

RISK MANAGEMENT

The Board of the Company has formed a Risk Management Committee to frame, implement and monitor the risk management policy/plan for the Company and ensuring its effectiveness. The Risk Management Committee oversees the Risk Management process including risk identification, impact assessment, effective implementation of the mitigation plans and risk reporting. The Audit Committee has additional oversight in the area of financial risks and controls. Major risks identified by the businesses and functions are systematically addressed through mitigating actions on a continuing basis. The development and implementation of risk management policy has been covered in the management discussion and 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 conducted in a fair and transparent manner by adoption of highest standards of professionalism, honesty, integrity and ethical behaviour the company has adopted a vigil mechanism policy.

HUMAN RESOURCES

Many initiatives have been taken to support business through organizational efficiency, process change support and various employee engagement programmes which has helped the Organization achieve higher productivity levels. A significant effort has also been undertaken to develop leadership as well as technical/ functional capabilities in order to meet future talent requirement.

DIRECTORS'' RESPONSIBILITY STATEMENT

To the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors make the following statements in terms of Section 134(3)(c) of the Companies Act, 2013:

a) That in the preparation of the accounts for the financial year ended 31st March, 2016, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;

b) That the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that were reasonable and prudent so as to give a true and fair view of the State of Affairs of the Company at the end of the Financial Year and of the Profit or Loss, Cash flow of the Company for the year under review;

c) That the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d) That the Directors have prepared the accounts for the financial year ended 31st March 2016 on a ''going concern'' basis;

e) That proper internal financial controls were in place and that the financial controls were adequate and operating effectively; and

f) That devised proper systems to ensure compliance with the provisions of all applicable laws were in place and adequate and operating effectively.

PARTICULARS IN RESPECT OF CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO

The information on Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and outgo required to be disclosed under Section 134(3)(m) of the Companies Act, 2013, read with Rule 8 of the Companies (Accounts) Rules, 2014 are provided in the Annexure forming part of this Report.

DISCLOSURE AS PER SEXUAL HARRASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013

The Company has zero tolerance for sexual harassment at workplace and has adopted a policy on prevention, prohibition and redressal of sexual harassment at workplace in line with the provisions of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the rules framed there under.

During the financial year 2015-16, the Company received no complaints on sexual harassment.

PARTICULARS OF EMPLOYEES

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

PARTICULARS OF REMUNERATION

Disclosures with respect to the remuneration of Directors and employees as required under Section 197(12) of Companies Act, 2013 and Rule 5 (1) Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is provided as follows:

(i) The ratio of the remuneration of each Director to the median remuneration of the employees of the company 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 Officer, Chief 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 financial year 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 and company performance;

On an average, employees received an increase of 5%. The increase in remuneration is in line with the market trends.

(vi) Comparison of the remuneration of the Key Managerial Personnel against the performance of the company;

Particulars

Rs.

Remuneration of Key Managerial Personnel (KMP) during financial year 2015-16 (aggregated)

1,345,800

Total Revenue

656,140,289

Remuneration (as % of Total Revenue)

0.205

(vii) variations in the market capitalization of the company, price earnings ratio as at 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..

654,893,499

603,529,303

Price Earnings ratio

Ratio

52

85

(viii) Average percentile increase already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration;

The average increase in salaries of employees other than managerial personnel in 2015-16 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 the performance of the company;

Name of Person

Remuneration (Rs.)

Total Revenue (Rs.)

Remuneration as % of Total Revenue

Shri Subramanya Ram Ganpath, WTD

745,800

656,140,289

0.114

Shri Dilip Mangesh Kalelkar, WTD

600,000

656,140,289

0.091

(x) The key parameters for any variable component of remuneration availed by the Directors - No.

(xi) The ratio of the remuneration of the highest paid Director to that of the employees who are not Directors but receive remuneration in excess of the highest paid Director during the year - Nil

(xii) 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 levels for their hard work, dedication and commitment. The enthusiasm and unstinting efforts of the employees have enabled the Company to remain at the forefront of the industry, despite increased competition from several existing and new players.

CAUTIONARY STATEMENT

Statements in the Board''s Report and the Management Discussion & Analysis describing the Company''s objectives, expectations or forecasts may be forward-looking within the meaning of applicable securities laws and regulations. Actual results may differ materially from those expressed in the statement. Important factors that could influence the Company''s operations include global and domestic demand and supply conditions affecting selling prices of finished goods, input availability and prices, changes in government regulations, tax laws, economic developments within the country and other factors such as litigation and industrial relations.

ACKNOWLEDGEMENTS:

The Board desires to place on record its sincere appreciation for the support and co-operation that the Company received from the suppliers, customers, strategic partners, Bankers, Auditors, Registrar and Transfer Agents and all others associated with the Company. The Company has always looked upon them as partners in its progress and has happily shared with them rewards of growth. It will be the Company''s endeavor to build and nurture strong links with trade based on mutuality, respect and co-operation with 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


Mar 31, 2014

To the Members,

The Directors are pleased to present the 25th Annual Report together with the audited accounts for the year ended 31st March, 2014.

FINANCIAL RESULTS Rs. in lakhs Year Year ended ended 2014 2013

Income 5680.47 4700.05

Gross Profit before

Interest & Depreciation (162.15) (49.61)

Interest (40.65) (52.54)

Depreciation (66.50) (51.28)

Profit/(loss) for the year (269.30) (153.43)

Loss brought forward from previous year (2887.88) (2734.45)

Loss carried forward To Balance Sheet (3157.18) (2887.88)

PERFORMANCE

Lotus has achieved a sales turnover at Rs.5630 Lakhs for the financial year ended 31.03.2014 representing a growth rate of 21.21% over the preceding year. However, the company could not turn the corner as the hike in the input cost has affected the bottom line. Further, stiff competition has resulted in erosion of prices and margins of the products. The management is addressing this area of concern as major initiatives are planned during the current fiscal year. Your company''s performance has been led through modest investments in your brands, products, innovation initiatives, expansion into new product categories and managing operating costs through cost efficiency measures.

BUSINESS PLAN

During the year the company has exported Cocoa butter and work has been initiated for opening up avenues for considerable volumes in the domestic market, focusing on large national players.

During the year under review, the Company withstood heavy competition, reflecting strong consumer demand for all its products and services.

The most significant impact will be the cost escalation on the prime inputs, high escalation in the cost of power/steam generation and heavy power cuts had a cascading impact on product competitiveness.

A passionate commitment to serve a larger segment of customers is the core of your company''s business strategy.

Going forward the Company''s relentless endeavor to create new benchmarks in sustainable business practices will lend it a unique source of competitive advantage in an increasingly challenging socio- economic environment.

FSSC CERTIFICATION

Your company''s manufacturing factory located at Narsapur, Medak District has been certified to the latest version of FSSC 22000:2010 ( Food Safety Standard Certification by TUV NORD).

This Certification indicates our commitment in a sustainable manner, in meeting global quality, environment, health and safety standards. This is a milestone in our quest for quality.

RESEARCH AND DEVELOPMENT

1. The introduction of medicinal and organic ingredients in the manufacturing of chocolates had lead to a new trend and development in the country, which will be adapted by major manufacturers to remain active in the market. Keeping this in view, emphasis has been given by R & D team of flavor manufacturers specific. Development of Choco- pie enrobing mass and biscuit cream for reputed indigenous and MNC firms are under process.

2. Work on innovative consumer range of products is under progress. Adequate exposure and training are being imparted to the team in relevant areas for better understanding of the process, process controls and product needs.

PARTICULARS OF EMPLOYEES

During the year under review, none of the employees of the Company have drawn remuneration as specified under Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975.

PARTICULARS REGARDING ENERGY CONSERVATION ETC.

The particulars required under Section 217 (1) (e) of the Companies Act, 1956 read with Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 are annexed to this Report.

DEPOSITS

The Company has not accepted any deposit during the year under review.

BOARD OF DIRECTORS

In accordance with the provisions of Section 152 of the Companies Act 2013 directors Shri.Abhijeet Pai and Shri.G V P Raju retire by rotation at the Annual General Meeting and being eligible offer themselves for reappointment. Shri Ganpath Subramanya Ram and Shri Dilip Mangesh Kalelkar was reappointed as Whole Time Directors of the Company.

AUDITORS REPORT

The observations made in the Auditor''s Report, read together with the relevant notes thereon are self explanatory and hence, do not call for any comments.

AUDITORS

M/s S R Mohan & Company, Chartered Accountants Hyderabad, Statutory Auditors of the Company hold office until the conclusion of the ensuing Annual General Meeting. The Company has received a letter from them to the effect that their appointment,if made, would be within the prescribed limits under Section 141(3)(g) of Companies Act, 2013. Accordingly the said Auditors are reappointed as Statutory Auditors of the Company at the ensuing Annual General Meeting till the conclusion of 28th Annual General Meeting to be held in the year 2017 (subject to ratification of their appointment by the members at every AGM held after this AGM).

Listing Arrangements

The Company''s shares are listed on BSE LIMITED.

The Company has paid up to date annual listing fee of the Stock Exchange.

Public Deposits

During the year under review the Company has not accepted any public deposits.

Insurance

Adequate Insurance cover has been taken for properties of the Company including Buildings, Computers, Office Equipments, Vehicles, etc.

Management''s Discussion and Analysis Report Management''s Discussion and Analysis Report for the year under review, as stipulated under Clause 49 of the Listing Agreement with the Stock Exchanges in India, is presented in a separate section forming part of the Annual Report.

DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to Section 217 (2AA) of the Companies Act, 1956, now section 134 of Companies Act 2013, with respect to Directors'' Responsibility Statement, it is hereby confirmed that-

The Board submits as under :

- that in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

- that the directors had selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit or loss of the company for that period;

- that the directors had 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;

- that the directors had prepared the annual accounts on a going concern basis Corporate Governance The Company is committed to maintain the highest standards of Corporate Governance. Your Directors affirmed to the requirements set out in the Listing Agreement with the Stock Exchanges and have implemented all the stipulations prescribed. The Report on Corporate Governance as stipulated under Clause 49 of the Listing Agreement with the Stock Exchanges forms part of the Annual Report. The requisite certificate from the Practising Company Secretary, Rakhi Agarwal from Rakhi Agarwal & Associates, confirming compliance with the conditions of Corporate Governance as stipulated under the aforesaid Clause 49, is annexed to this Report. A Cash Flow Statement for the Financial Year 2013-14 of the Company is attached to the Balance Sheet.

ACKNOWLEDGEMENT

Yours Directors place on record the appreciation for the sincere efforts and hard work put in by the employees of the Company in its operations. The Directors acknowledge the support and co - operation received from Banks and other Governmental Agencies.

The Directors express their gratitude to the shareholders of the Company for the confidence and faith reposed in the management.

For and on behalf of the Board

P.Ananth Pai GS.Ram Director Whole Time Director Place : Hyderabad Date : August 20, 2014


Mar 31, 2013

To the Members,

The Directors are pleased to present the 24th Annual Report together with the audited accounts for the year ended 31st March, 2013.

FINANCIAL RESULTS

Rs.in lakhs

Year Year ended ended 2013 2012

Income 4700.05 5569.16

Gross Profit before

Interest & Depreciation (49.61) 21.27

Interest (52.54) (179.90)

Depreciation (51.28) (49.51)

Profit/(loss) for the year (153.43) (208.14)

Loss brought forward from previous year (2734.45) (2526.31)

Loss carried forward to Balance Sheet (2887.88) (2734.45)

PERFORMANCE

Lotus has achieved a sales turnover at Rs..4645 Lakhs for the period ended 31.03.2013. The Company continued to follow its policy offering value to the customers with sales prices just below inflation. The management is addressing this area of concern as major initiatives are planned during the current fiscal year. Your company''s performance has been led through modest investments in our brands, products, innovation initiatives, expansion into new product categories and an uphill task in managing operating costs through cost efficiency measures.

BUSINESS PLAN

The Company has entered into an agreement with Bharti Wal-Mart for co-brand of chocolate products and the Company is planning to launch pure milk chocolate under the brand Milk Chocolate Chuckles.

During the year under review the Company withstood heavy competition, reflecting strong consumer demand for all its products and services.

The most significant impact will be the cost escalation on the prime inputs, higher escalation on the cost of power/steam generation and heavy power cut (almost three days in a week) had a cumulative devastating impact on product competitiveness.

Indeed a passionate commitment to serve a larger segment of customers is the core of your company''s business strategy.

Going forward the Company''s relentless endeavour to create new benchmarks in sustainable business practices will lend it a unique source of competitive advantage in an increasingly challenging social-economic environment.

FSSC CERTIFICATION

Your company''s manufacturing factory located at Narsapur, Medak District has been certified to the latest version of FSSC 22000:2010 (Food Safety Standard Certification by TUV NORD). This Certification indicates our commitment in a sustainable manner, in meeting global quality, environment, health and safety standards. This is a milestone in our quest for quality.

RESEARCH AND DEVELOPMENT

During current financial year, empahasis has been given by R & D, to cater the needs of MNC Buyers.

1. By working closely with R&D team of flavor manufacturers specific, nature identical flavours are developed to boost the organoleptic characters of the consumer product and thus developed Milk Chocolate, Cashew Delight, Milkee Delight and Choco Pearls to reputed MNC and have gone into commercial production. Development of Choco-Pie enrobing mass and biscuit cream for reputed indigenous and MNC firms is under progress.

2. Our R&D progress has opened a new business avenue with one of the business giants like Bharathi Wal- Mart and could reach company''s esteemed customers'' specific needs and retained their trust in our business outlook and openness.

3. Work on innovative consumer range of products is under progress. Adequate exposure and training are being imparted to the team in relevant areas for better understanding the process, process controls and product needs.

PARTICULARS OF EMPLOYEES

During the year under review, none of the employees of the Company have drawn remuneration as specified under Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975.

PARTICULARS REGARDING ENERGY CONSERVATION ETC.

The particulars required under Section 217 (1) (e) of the Companies Act, 1956 read with Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 are annexed to this Report.

DEPOSITS

The Company has not accepted any deposit during the year under review.

BOARD OF DIRECTORS

Shri P Prakash Pai and Shri P Anantha Pai , Directors retire by rotation at the 24th Annual General Meeting and being eligible, offer themselves for reappointment.

AUDITORS

M/s S R Mohan & Company, Chartered Accountants, Hyderabad, Statutory Auditors of your Company hold office until the conclusion of the 24th Annual General Meeting and are being proposed for re-appointment. The Company has received a certificate from them to the effect that their appointment, if made would be within the limits prescribed under Section 224(1) of the Companies Act, 1956.

DIRECTORS RESPONSIBILITY STATEMENT

The Board submits as under : that in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures; that the directors had selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit or loss of the company for that period;

- that the directors had 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;

that the directors had prepared the annual accounts on a going concern basis.

ACKNOWLEDGEMENT

Yours Directors place on record the appreciation for the sincere efforts and hard work put in by the employees of the Company in its operations. The Directors acknowledge the support and co - operation received from Banks and other Governmental Agencies.

The Directors express their gratitude to the shareholders of the Company for the confidence and faith reposed in the management.

For and on behalf of the Board

Sd/- Sd/-

P.Anantha Pai GS.Ram

Director Whole Time Director

Place : Hyderabad

Date : 19th August, 2013


Mar 31, 2012

The Directors are pleased to present the 23rd Annual Report together with the audited accounts for the year ended 31st March, 2012.

FINANCIAL RESULTS

Rs in lakhs

Year ended Year ended 2012 2011

Income 5569.16 3902.54

Gross Profit before Interest & Depreciation 21.27 (337.13)

Interest (179.90) (81.79)

Depreciation (49.51) (50.67)

Profit/(loss) for the year (208.14) (469.59)

Loss brought forward from previous year (2526.31) (2039.57) Loss carried forward

To Balance Sheet (2734.45) (2526.31)

PERFORMANCE

Lotus has achieved a sales turnover at Rs.5569.16 Lakhs for the period ended 31.03.2012. The Company continued to follow its policy of offering value to the customers with sales prices just below inflation. The Management is addressing this area of concern as major initiatives are planned during the current fiscal year. Your company's performance has been led through modest investments in our brands, products, innovation initiatives, expansion into new product categories and an uphill task in managing operating costs through cost efficiency measures.

BUSINESS PLAN

During the year under review the Company withstood heavy competition, reflecting strong consumer demand for all its products and services.

The most significant impact will be the cost escalation on the prime inputs, higher escalation on the cost of power/ steam generation, had a cumulative devastating impact on the product competitiveness.

Indeed a passionate commitment to serve a larger segment of customers is the core of your company's business strategy.

Going forward the Companys' relentless endeavour to create new benchmarks in sustainable business practices will lend it an unique source of competitive advantage in an increasingly challenging socio- economic environment.

ISO CERTIFICATION

Your company's manufacturing factory located at Narsapur, Medak District has been certified to the latest version of IS 22000 (FSMS- Standard for Food Safety Management System) by Llyods, a leading International Certification Company.

This certification indicates our commitment in a sustainable manner, in meeting global quality, environment, health and safety standards. This is a milestone in our quest for quality.

The Company is planning for FSSAI Certification which covers even PAS 220 and the same will be completed before 2012.

RESEARCH AND DEVELOPMENT Efforts made on the process front:

1. It is our constant investment and innovation in our basic approach, by adding quality and originality to the products/creations.

2. The Company is able to manage the stiff competition and retained the esteemed customers within its fold and also increase processing capacity.

3. Further new products will be introduced later part of this year. To achieve this, the Company is making innovative energies to harness skills, raising performance and leadership qualities.

4. We work closely with our clients own food technologies, ensuring quality performance and stability under the most rigorous industrial processing conditions.

5. The Company is earnestly focusing on installing a full fledged chocolate and confectionary laboratory scale machinery to fabricate tailor made products to our prestigious customers.

PARTICULARS OF EMPLOYEES

During the year under review, none of the employees of the Company have drawn remuneration as specified under Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975.

PARTICULARS REGARDING ENERGY CONSERVATION ETC.

The particulars required under Section 217 (1) (e) of the Companies Act, 1956 read with Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 are annexed to this Report.

DEPOSITS

The Company has not accepted any deposit during the year under review.

BOARD OF DIRECTORS

Smt.Ashwini Pai has withdrawn as Whole Time Director, further continues as a Director who retires by rotation at the 23rd Annual General Meeting and being eligible offers herself for reappointment.

AUDITORS

M/s S R Mohan & Company, Chartered Accountants, Hyderabad, Statutory Auditors of your Company hold office until the conclusion of the 23rd Annual General Meeting and are being proposed for re-appointment. The Company has received a certificate from them to the effect that their appointment if made would be within the limits prescribed under Section 224(1) of the Companies Act, 1956.

DIRECTORS RESPONSIBILITY STATEMENT The Board submits as under :

- that in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

- that the directors had selected such accounting policies and applied them consistently and made judgements and

estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit or loss of the company for that period;

- that the directors had 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;

- that the directors had prepared the annual accounts on a going concern basis.

ACKNOWLEDGEMENT

Yours Directors place on record the appreciation for the sincere efforts and hard work put in by the employees of the Company in its operations. The Directors acknowledge the support and co - operation received from Banks and other Governmental Agencies.

The Directors express their gratitude to the shareholders of the Company for the confidence and faith reposed in the management.

For and on behalf of the Board

Sd- Sd-

P.Anantha Pai G.S.Ram

Director Whole Time Director

Place : Hyderabad

Date : 20.08.2012


Mar 31, 2010

The Directors present the 21st Annual Report together with the audited accounts for the year ended 31st March, 2010.

FINANCIAL RESULTS

Rs in lakhs

Year Year ended ended 2010 2009

Income 3076.44 2723.04

Gross Profit before Interest & Depreciation 213.32 266.74

Interest (56.91) (7.43)

Depreciation (46.79) (92.68)

Profit/(loss) for the year 109.61 166.63

Loss brought forward from previous year (2149.19) (2315.81)

Loss carried forward to

Balance Sheet (2039.57) (2149.18)

Loss carried forward to Balance Sheet is Rs 2039.57 lakhs.

PERFORMANCE

Lotus sales turnover at Rs.3076.44 Lakhs was up 12.98 % over last year. The Company continued to follow its policy of offering value to the customers with sales prices just below inflation. The Companys volumes however remain stagnates as the capacity available was just sufficient to meet the existing market presence. The Management is addressing this area of concern as major initiatives are planned during the current fiscal year. Your companys performance has been led through modest investments in our brands , products, innovation initiatives, expansion into new product categories and an upheard task in managing operating costs through cost efficiency measures.

In the current year the actual production was 5885.66 MT as against 6988.06 MT during the previous year giving a moderate dip of 18.73%.

Concerted efforts have contributed to increase in revenue by 12.98% over previous year to Rs.3076.44 lakhs and record a net profit of Rs. 109.61 lakhs.

Your company has achieved these results despite significant increase in input costs, particularly cocoa beans, sugar, oils and fats coupled with aggressive pricing in the trade and industry.

Despite stiff competition your company stabilized and held its market share, even though 2009 was a challenging year, your company continues to operate with minimum trade pipelines selling as per the market demands and maintaining a very efficient supply chain.

BUSINESS PLAN

The promoters who acquired the business in the year 2008 has acknowledged for their understanding of common needs and robust business model. During the year the company sustained focus on generating consumer insights, innovation and renovation while continuing it on going efforts to strengthen capabilities, augment equipment capacities that continue to delight the consumers and help it to leverage its trusted brands.

Further new chocolate products will be introduced later this year.

We envisage a pan India performance by the end of this fiscal, towards this, have opened up all the markets of North India. Further we have concluded an agreement with the reputed Oil Company i.e Bharat Petroleum Corporation Limited(BPCL) for distribution of our consumer brand chocolates through their strong network.

ISO CERTIFICATION

Your companys manufacturing factory located at Narsapur, Medak District has been certified to the latest version of IS 22000 (FSMS- Standard for Food Safety Management System) by Llyods, a leading International Certification Company.

This certification indicates our commitment in meeting in a sustainable manner, global quality, environment, health and safety standards. This is a milestone in our quest for quality.

Our Company has been rated by CRISIL as SME III.

RESEARCH AND DEVELOPMENT

The research and development (R & D) function has led a significant role to play in supporting the

performance of the Company this year. Their major area of contribution lay in fuelling innovation through a number of new product development, culminating in the launch of various new products during the year.

The management intends to create the function of Innovation by engaging best leveraging external expertise to value add to our R&D programme with a view to building the medium and long term pipelines.

BIFR

A reference in terms of Section 15(1) of the Sick Industrial Companies(Special Provisions) Act, 1985 has been done and registered with the Board of Industrial and Financial Reconstrution (BIFR) for determination of the measures which shall be adopted with respect to the Company, further the company is awaiting for the hearing of the same.

PARTICULARS OF EMPLOYEES

During the year under review, none of the employees of the Company have drawn remuneration as specified under Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975.

PARTICULARS REGARDING ENERGY CONSERVATION ETC.

The particulars required under Section 217 (1) (e) of the Companies Act, 1956 read with Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 are annexed to this Report.

DEPOSITS

The Company has not accepted any deposit during the year under review.

BOARD OF DIRECTORS

Shri Prakash Pai and Shri Anantha Pai, Directors retires by rotation at the 21st Annual General Meeting and being eligible offers themselves for reappointment.

AUDITORS

M/s S R Mohan & Company, Chartered Accountants, Hyderabad, Statutory Auditors of your Company hold office until the conclusion of the

21st Annual General Meeting and are being proposed for re-appointment. The Company has received a certificate from them to the effect that their appointment if made would be within the limits prescribed under Section 224(1) of the Companies Act, 1956.

DIRECTORS RESPONSIBILITY STATEMENT

The Board submits as under:

- that in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

- that the directors had selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit or loss of the company for that period;

- that the directors had 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;

- that the directors had prepared the annual accounts on a going concern basis.

ACKNOWLEDGEMENT

Yours Directors place on record the appreciation for the sincere efforts and hard work put in by the employees of the Company in its operations. The Directors acknowledge the support and co - operation received from Banks and other Governmental Agencies.

The Directors express their gratitude to the shareholders of the Company for the confidence and faith reposed in the management.

For and on behalf the Board

Sd/- Sd/- P.Anantha Pai G.S.Ram Director Whole time Director Place : Hyderabad Date : 13.08.2010

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