baba arts ltd share price Directors report


To,

The Members,

Baba Arts Limited

Your Company9s Board of Directors (<Board=) is pleased to present the Twenty Fourth Annual Report of Baba Arts Limited (<Company=) for the financial year ended 31st March, 2023.

In Compliance with the applicable provisions of the Companies Act, 2013, (including any statutory modification(s) or re-enactment(s) thereof, for time being in force) (<the Act=) and the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (<Listing Regulations=), this report covers the financial results and other developments during the financial year ended 31st March, 2023 and up to the date of Board Meeting held on 25th May, 2023 to approve this report, in respect of Baba Arts Limited.

FINANCIAL RESULTS

(Rs. in Lakhs)

Particulars

March 31, 2023 March 31, 2022
As per IND AS

Revenue from Operations

278.75 1801.80

Other Income

103.78 90.38

Total Income

382.53 1892.18

Total Expenditure

249.29 1481.12

Profit Before Tax

133.24 411.06

Less: Tax Expenses

Current Tax

36.03 113.06

Prior Year Short Provision of Tax

(5.44) -

Deferred Tax

0.44 0.46

Net Profit /(Loss) for the Year

102.21 297.54

l DIVIDEND

In order to strengthen the reserves of the Company, your directors consider it prudent to plough back the profits and not to recommend any dividend for the financial year 2022-23.

• REVIEW OF OPERATIONS

During the year under review, income from Post Production activity increased to Rs.7.84 Lakhs from Rs. 6.46 Lakhs in the previous year. Your Company earned income from trading in IPR of Rs.251.85 Lakhs in the current year as against Rs. 1795.33 Lakhs in the previous year. After providing for depreciation of Rs. 5.89 Lakhs (Previous Year Rs. 5.88 Lakhs), Current Tax (Net of MAT Credit entitlement) of Rs. 36.03 Lakhs (Previous Year Rs. 113.06 Lakhs), your Company earned net profit after tax of Rs.102.21 Lakhs vis-?-vis net profit after tax of Rs. 297.54 Lakhs in the previous year. Other Comprehensive Expense for the year was Rs. 0.70 Lakhs (Previous Year Other Comprehensive Income Rs.0.72 Lakhs).

• TRANSFER TO RESERVES

Your directors have proposed not to transfer any amount to reserves.

• CHANGES IN NATURE OF BUSINESS, IF ANY

During the year under review your Company has ventured in to new business activity of monetizing Digital Media Content on various digital platforms like You Tube, Face Book etc.

• MATERIAL CHANGES BETWEEN THE END OF THE FINANCIAL YEAR AND THE DATE OF THIS REPORT

There have been no material changes and commitments, affecting the financial position of the Company, which have occurred between the end of the financial year of the Company to which the financial statements relate and the date of signing of this report.

• BOARD OF DIRECTORS AND KEY MANAGERIAL PERSONNEL

• DIRECTORS

Shri Santosh A. Shah and Shri Sanjiv L. Hinduja hold office as Independent Directors of the Company up to 31st March, 2024.

During the year, Ms. Juhi V. Pania resigned as Independent Director of the Company with effect from 23rd August, 2022 as she has shifted abroad for indefinite period of time.

Your board of directors have placed on record its sincere appreciation for the active participation in meetings of the board by Ms. Juhi V. Pania during her brief association with the Company as an Independent Director.

Re-appointment of Director retiring by rotation:

In terms of Section 152 of the Companies Act, 2013, Shri Nikhil G. Tanwani (DIN 01995127), Whole Time Director, retires by rotation at the forthcoming Annual General Meeting and is eligible for re-appointment. Shri Nikhil G. Tanwani has confirmed that he is not disqualified for appointment as director under Section 164 of the Act and has offered himself for re-appointment.

The necessary resolution for re-appointment of Shri Nikhil G. Tanwani forms part of the notice convening the 24th Annual General Meeting ("24th AGM") scheduled to be held on Tuesday, the 12th September, 2023.

Re-Appointment of Managing Director

Existing tenure of Shri Gordhan P. Tanwani, Managing Director of the Company will be expiring on 31st October, 2023. Pursuant to the recommendation of Nomination and Remuneration Committee (8NRC9), your board of directors has proposed to reappoint Shri Gordhan P. Tanwani as Managing Director in the category of Non-Independent Executive Director for a further period of 4 years from 1st November, 2023 to 31st October, 2027 subject to approval of the shareholders of the Company by a special resolution.

The board recommends for approval of the members by way of a special resolution, the re-appointment of Shri Gordhan P. Tanwani as Managing Director for a period of 4 years from 1st November, 2023 up to 31st October, 2027 as set out under item no. 3 of the accompanying notice of the 24th AGM of the Company.

A brief resume of directors being appointed / re-appointed along with the nature of their expertise, their shareholding in your Company and other details as stipulated under Regulation 36(3) of the Listing Regulations is given in the notice convening the 24th AGM.

• KEY MANAGERIAL PERSONNEL

Shri Gordhan P. Tanwani, Chairman & Managing Director, Shri Ajay D. Acharya, Chief Financial Officer and Shri Naishadh H. Mankad, Company Secretary continue to be Key Managerial Personnel (KMP) of the Company in compliance with the requirements of Section 203 of the Companies Act, 2013.

• INDEPENDENT DIRECTORS

In terms of Section 149 of the Act, Shri Santosh A. Shah, and Shri Sanjiv L. Hinduja are Independent Directors of the Company. They are not liable to retire by rotation in terms of Section 149(13) of the Act.

Pursuant to Section 149(7) of the Companies Act, 2013, the Company has received declarations from all Independent Directors confirming that they meet the criteria of independence as prescribed under Section 149(6) of the Act and Regulation 16(1)(b) of the Listing Regulations and are independent of the management.

In terms of Regulation 25(8) of the Listing Regulations, the independent directors have confirmed that they are not aware of any circumstance or situation, which exist or may be reasonably anticipated, that could impair or impact their ability to discharge their duties with an objective independent judgement and without any external influence. The board of directors of the Company has taken on record the declaration and confirmation submitted by the Independent Directors after undertaking due assessment of the veracity of the same.

The board is of the opinion that the Independent Directors of the Company possess requisite qualifications, experience and expertise in the fields of Legal, Accounts and Finance, Governance etc. and that they hold highest standards of integrity.

The Independent Directors of the Company have confirmed that they have enrolled themselves in the Independent Directors9 Databank maintained with the Indian Institute of Corporate Affairs (8IICA9) in terms of Section 150 of the Act read with Rule 6 of the Companies (Appointment & Qualification of Directors) Rules, 2014. Further, both the Independent Directors are exempt from the requirement to undertake the online proficiency self-assessment test conducted by IICA.

• FAMILIARISATION PROGRAMME

The Company has put in place an induction and familiarization programme for all its directors including independent directors so as to acquaint themselves with the nature of the industry in which the Company operates. The directors are periodically advised about the changes effected in the Corporate Laws, Listing Regulations, Taxation Laws and other statutes applicable to the Company, with regard to their roles, rights and responsibilities as director of the Company. The familiarization programme for independent directors in terms of the provisions of Regulation 46(2) (i) of the Listing Regulations is uploaded on the web site of the Company.

• ANNUAL EVALUATION OF BOARD

Pursuant to Regulation 17 of the Listing Regulations read with Section 134 (3)(p) of the Companies Act, 2013 and The Companies (Accounts) Rules, 2014, annual evaluation of the performance of the board, its Committees and of individual directors has been made during the year under review. To facilitate the evaluation process, the Nomination & Remuneration Committee of the board has laid down the evaluation criteria for the performance of Executive/Non-Executive / Independent Directors through a board effectiveness survey. A questionnaire of the survey is designed with the objective of reviewing the functioning and effectiveness of the board. Each board member (other than the director being evaluated) is requested to evaluate the effectiveness of the members of the board on the basis of information flow, decision making of the directors, relationship to stakeholders, Company performance, Company strategy, and the effectiveness of the whole board and its various committees on a scale of one to five.

Evaluation of Independent Directors is done on the basis of their role in governance, control and guidance and more particularly their performance in the following areas:

• Their contribution towards monitoring the Company9s corporate governance practice

• Their participation in formulating business strategies and

• Their participation in board and committee meetings and generally fulfilling their obligations and fiduciary responsibilities as directors of the Company.

• BOARD AND COMMITTEES

• NUMBER OF MEETINGS OF BOARD

The board met four times during the year, details of which are given in the Corporate Governance Report that forms part of this annual report. The intervening gap between the meetings was within the limit prescribed under the Act and the Listing Regulations.

• COMMITTEES OF BOARD

As on 31st March, 2023 the board had 3 (Three) Committees - the Audit Committee, the Nomination & Remuneration Committee and the Stakeholders Relationship Committee.

A detailed note on the composition of board and its committees and the number of meetings held and attendance of directors at such meetings is provided in the Corporate Governance Report, which forms part of the Annual Report.

• POLICY ON DIRECTORS9 APPOINTMENT & REMUNERATION

The Board has in accordance with the provisions of Sub-Section (3) of Section 178 of the Act, formulated a policy setting out the criteria for determining qualifications, positive attributes, independence of a director and policy relating to remuneration for Directors, Key Managerial Personnel and other employees. The text of the policy is available on the website of the Company www.babaartslimited.com. l RISK MANAGEMENT POLICY

The Board of Directors of your Company periodically assesses the risk in the internal and external business environment and takes necessary steps to mitigate the said risks. The Company has an adequate risk management plan in place which is reviewed at regular intervals by the Board.

• VIGIL MECHANISM /WHISTLE BLOWER POLICY

The Company has adopted a Whistle Blower Policy, to provide a formal vigil mechanism to the directors and employees to report their concerns about unethical behavior, actual or suspected fraud or violation of the Company9s Code of Conduct or Ethics Policy. The policy provides for adequate safeguards against victimization of employees who avail of the mechanism and also provides for direct access to the Chairperson of the audit committee. It is affirmed that no personnel of the Company have been denied access to the audit committee.

• CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION & FOREIGN EXCHANGE EARNINGS AND OUTGO:

The details of conservation of energy, technology absorption, foreign exchange earnings and outgo are as follows:

(A) Conservation of energy:

Sr. No.

Particulars

Details

I

the steps taken or impact on conservation of energy

Your Company9s activities do not require substantial energy consumption. However, the Company continues to lay emphasis on reducing energy consumption by constantly monitoring the consumption and taking steps to reduce wasteful use of energy. Employees are trained to switch off computers, air conditioners and lights when not required.

II

the steps taken by the company for utilizing alternate sources of energy.

Not applicable, in view of comments in clause (i)

III

the capital investment on energy conservation equipments

Not applicable, in view of comments in clause (i)

(B)Technology absorption:

Sr. No.

Particulars

Details

I

the effort made towards technology absorption

The Company does not have any imported technology.

II

the benefits derived like product improvement, cost reduction, product development or import substitution

N.A.

III

in case of imported technology (imported during the last three years reckoned from the beginning of the financial year)

N.A.

a) the details of technology imported

b) the year of import;

c) whether the technology has been fully absorbed

d) if not fully absorbed, areas where absorption has not taken place, and the reasons thereof

IV

the expenditure incurred on Research and Development

Nil

(C) Foreign Exchange Earnings and Outgo:

Foreign Exchange Earning during the year was Rs. 49,23,785/- (Previous Year Rs. 87,50,000/-) and Foreign Exchange outgo during the year under review was Rs. 6,02,952/-.

Export Efforts

The Company is engaged in providing post production services to entertainment industry in its post production studio and creating content for Television and also in film production and distribution activity where there is not much scope for exports. However, the Company has earned some export income through exploitation of intellectual property rights of entertainment content.

• DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS

IMPACTING THE GOING CONCERN STATUS AND COMPANY9S OPERATIONS IN FUTURE

There were no orders passed by regulators or courts or tribunals impacting the going concern status and Company9s operations in future.

• DETAILS IN RESPECT OF ADEQUECY OF INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO THE FINANCIAL STATEMENTS:

The Company has in place adequate internal financial controls with reference to financial statements.

The Internal Auditor continuously monitors the efficiency of the internal controls/compliance with the objective of providing to audit committee and the board of directors, an independent, objective and reasonable assurance of the adequacy and effectiveness of the organization9s risk management, control and governance processes. This system of internal control facilitates effective compliance of Section 138 of the Act and the Listing Regulations.

During the year, such controls were tested and no reportable material weakness in the design or operation was observed.

• MAINTENANCE OF COST RECORDS

Maintenance of Cost Records as specified by the Central Government under Section 148(1) of the Act, is not applicable to the Company.

• AUDITORS

• Statutory Auditor

M/s. M M Nissim & Co LLP are the Statutory Auditors of the Company who were appointed for a period of five years in the 23rd Annual General Meeting held on 20th September, 2022 and hold office up to the conclusion of the 28th Annual General Meeting of the Company without any further ratification by the shareholders of the Company.

M/s. M M Nissim & Co LLP, have confirmed that they are not disqualified to hold the office of the Statutory Auditor.

There are no qualifications, reservations or adverse remarks made by M/s. M M Nissim & Co LLP, Statutory Auditors, in their report for the Financial Year ended 31st March, 2023.

Pursuant to provisions of Section 143(12) of the Act, the Statutory Auditors have not reported any incident of fraud to the Audit Committee of the Company during the year under review.

• Internal Auditor

Pursuant to Section 138 of the Act, the Board of Directors of the Company has appointed M/s. SCA & Associates, Chartered Accountants as the internal auditors of the Company for the financial year 2023-2024.

The audit committee of board of directors in consultation with the Internal Auditor formulates the scope, functioning, periodicity and methodology for conducting the Internal Audit.

•ANNUAL RETURN

The Annual Return of the Company will be placed on the Company9s Website www.babaartslimited.com after necessary certification and filing the same with the Ministry of Corporate Affairs.

An extract of the Annual Return as on 31st March, 2023, is attached in Annexure I to this report.

• SECRETARIAL AUDITOR AND SECRETARIAL AUDIT REPORT

Pursuant to the provisions of Section 204 of the Act and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company, with approval of board, appointed M/s Dholakia & Associates LLP, Company Secretaries in whole time practice to undertake the Secretarial Audit of the Company for the financial year 2022-2023. The detailed report on Secretarial Audit is appended as an Annexure II to this report. There is no qualification, reservation or adverse remarks given by Secretarial Auditors of the Company.

The board at its meeting held on 25th May, 2023 has appointed M/s Dholakia & Associates LLP, Company Secretaries in whole time practice for conducting Secretarial Audit of the Company for the financial year 2023-2024.

Annual Secretarial Compliance Report

The Company has undertaken an audit for the financial year 2022-2023 for all applicable compliances as per Securities and Exchange Board of India Regulations and Circulars / Guidelines issued there under. The annual secretarial compliance report duly signed by Shri Nrupang B. Dholakia, (ICSI Membership No. 10032) Designated Partner of M/s Dholakia & Associates LLP, Company Secretaries in whole time practice has been submitted to BSE Limited within the stipulated time in compliance with the provisions of the Regulation 24(A) of the Listing Regulations.

• PARTICULARS OF LOAN, GUARANTEE AND INVESTMENTS

During the year under review, your Company has not given loans, guarantees, provided securities or made investments covered under Section 186 of the Act, 2013.

• CORPORATE GOVERNANCE & MANAGEMENT DISCUSSION AND ANALYSIS REPORT

A separate report on Corporate Governance is provided together with a Certificate from Statutory Auditors of the Company regarding compliance of conditions of Corporate Governance as stipulated under Schedule V of the Listing Regulations.

A certificate of the Managing Director (MD) and Chief Financial Officer (CFO) in terms of Regulation 17(8) as specified in Part B of Schedule II of the Listing Regulations, inert alia, confirming the correctness of the financial statements and cash flow statements, adequacy of the internal control measures and reporting of matters to the audit committee, is also annexed.

The Management Discussion Analysis Report as required under the Listing Regulations is presented in separate section and forms part of this Annual Report.

• SEXUAL HARASSMENT

The provisions relating to constitution of Internal Complaints Committee under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 is not applicable to the Company as the Company is having less than 10 employees. The Company did not receive any complaint of sexual harassment at workplace during the year under review.

• APPLICATION MADE OR PENDING UNDER THE INSOLVENCY AND BANKRUPTCY CODE, 2016.

No Application was made or any proceedings is pending under the Insolvency and Bankruptcy Code, 2016 against the Company.

• DEPOSITS

Your Company has not invited / accepted any deposits from public under Section 73 to Section 76 of the Act, hence the disclosures required as per Rule 8 (5) (v) and (vi) of the Companies (Accounts) Rules, 2014 are not applicable to your Company.

•PARTICULARS OF CONTRACTS OR ARRANGMENT WITH RELATED PARTIES

All related party transactions that were entered into during the financial year under review were on an arm9s length basis and in ordinary course of business and were in compliance with the applicable provisions of the Act, and the Listing Regulations.

All related party transactions are placed before the Audit Committee as also before the Board for approval at every quarterly meeting. Details of transactions with related parties as required under Section 134(3)(h) of the Act read with Rule 8(2) of the Companies (Accounts) Rules, 2014 are given in Annexure III in Form AOC -2 and forms part of this report.

Your Company has formulated a policy on related party transactions which is also available on Company9s website at www.babaartslimited.com. l DETAILS OF POLICY DEVELOPED AND IMPLEMENTED BY THE COMPANY ON ITS CORPORATE SOCIAL RESPONSIBILITY

INITIATIVES

The provisions of the Section 135 the Act, are not applicable to the Company.

• PARTICULARS OF EMPLOYEES

The information required under Section 197 of the Act, read with Rule 5(1), 5(2) & 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is given in Annexure IV.

• SHARE CAPITAL

The Company has only one class of shares viz. equity shares with a face value of Re.1/- each.

• ISSUE OF EQUITY SHARES WITH DIFFERENTIAL RIGHTS

The Company has not issued equity shares with differential rights during the year under review.

• ISSUE OF SWEAT EQUITY SHARES

The Company has not issued sweat equity shares during the year under review.

• ISSUE OF EMPLOYEE STOCK OPTIONS

The Company has not issued any Employee Stock Options during the year under review.

• SHARE CAPITAL AUDIT

Share Capital audit as per the directives of Securities & Exchange Board of India is being conducted on quarterly basis by M/s. Dholakia & Associates LLP, Company Secretaries in whole time practice and the audit reports are duly forwarded to BSE Limited where the shares of the Company are listed.

• BUSINESS RESPONSIBILITY REPORT

The Business Responsibility Reporting as required by Regulation 34(2) (f) of the Listing Regulations is not applicable to your Company for the financial year ended 31st March, 2023.

•GREEN INITIATIVES

Pursuant to Section 101 and 136 of the Act, the Company has sent the annual report through electronic mode (e-mail) to all shareholders who have registered their email addresses with the Company or with Depository to receive the annual report through electronic mode and initiated steps to reduce consumption of paper.

Physical copy of this annual report is mailed to those shareholders whose e mail addresses are not registered with the Depository or with the Registrar and Transfer Agents of the Company. The annual report is also available on the web site of the Company www.babaartslimited.com.

• SUBSIDIARY, JOINT VENTURES AND ASSOCIATE COMPANIES.

The Company does not have any Subsidiary, Joint Venture and Associate Company.

• SECRETARIAL STANDARDS

The Company has in place proper systems to ensure compliance with the provisions of the applicable Secretarial Standards issued by the Institute of Company Secretaries of India and such systems are adequate and operating effectively. During the financial year under review, the Company was in compliance with Secretarial Standards i.e. SS 1 and SS 2 relating to <Meetings of Board of Directors= and <General Meetings= respectively.

• DIRECTORS9 RESPONSIBILITY STATEMENT

The financial statements are prepared in accordance with Indian Accounting Standards (IND AS) under the historical cost convention on accrual basis except for certain financial instruments, which are measured at fair values, the provisions of the Companies Act,2013 and guidelines issued by SEBI. The IND AS are prescribed under Section 133 of the Companies Act, 2013 read with Rule 3 of the Companies (Indian Accounting Standards) Rules, 2015 and Companies (Indian Accounting Standards) Amendment Rules, 2016. Accounting Policies have been consistently applied except where a newly issued accounting standard is initially adopted or a revision to an existing accounting standard requires a change in the accounting policy hitherto in use.

In accordance with Section 134(5) of the Companies Act, 2013, your board of directors confirms that:

i) In the preparation of the annual accounts, the applicable accounting standards read with requirements set out under Schedule III to the Companies Act, 2013 have been followed and there are no material departures from the said standards;

ii) The accounting policies have been consistently applied and reasonable and prudent judgment and estimates have been made so as to give a true and fair view of the profit of the Company for the year ended on 31st March, 2023 and the state of affairs of the Company as at 31st March, 2023 as disclosed in the enclosed accounts;

iii) Proper and sufficient care has been taken for 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;

iv) The annual accounts have been prepared on a going concern basis.

v) They have laid down internal financial controls for the Company and such financial controls are adequate and operating effectively; and

vi) They have devised proper systems to ensure compliance with provisions of all applicable laws and such systems are adequate and operating effectively.

ACKNOWLEDGEMENT

The Board wishes to thank all the Company9s customers, vendors and Company9s bankers, who have extended their continuous support to the Company.

Your directors specially thank the shareholders of the Company for having reposed their confidence in the management of the Company and employees and technicians of the Company at all levels for their dedicated services to the Company and the contribution made by them towards working of the Company.