Bafna Pharmaceuticals Ltd Directors Report.

To

The Shareholders,

Your Directors have pleasure in presenting the Twenty Seventh Annual Report of your Company together with Audited Accounts for the Financial Year ended 31st March, 2022.

Financial Performance

The summarized Audited Financial Results for the year ended 31st March, 2022 along with comparative figures for the Previous year is as under:

(Rs.in Lakhs)

Particulars Standalone
31st March 2022 31st March 2021
Revenue from operations 8,514.03 7,121.79
Other Income 210.21 74.93
Total Income 8,724.24 7,196.72
Expenses
Operating Expenditure 7,993.47 6,166.23
EBDITA 1,141.42 1,030.49
Depreciation and Amortization Expenses 549.33 447.82
NET PROFIT 730.76 582.67
less Exceptional Items and OCI 218.05 -
Profit before tax (PBT) 512.71 582.67
Tax expenses (Current and Deferred Tax) - -
Profit for the year 512.71 582.67

Standalone Operating Results

Your Companys Total Income during the year under review was Rs.8,724.24 Lakhs as compared to Rs.7,196.72 Lakhs in the previous year. Profit before Tax for the year 2021 -2022 was Rs.512.71 Lakhs as against Rs. 582.67 Lakhs in the previous year. Profit after Tax for the year 2021 - 2022 stood at Rs. 512.71 Lakhs as against profit of Rs. Rs.582.67 Lakhs.

Change in Capital Structure

(Rs. In Lakhs)

Particulars 31st March, 2022 31st March, 2021
Authorized Capital 4,000.00 4,000.00
Issued, Subscribed & Paid up Capital 2,365.63 2,365.63

During the year under review the Issued, Subscribed and Paid up capital has remained the same.

Fixed Deposits

The Company has not accepted / invited any deposits from the public in terms of Section 73 of the Companies Act, 2013. Dividend

The Board has not declared any dividend for the Financial Year.

Reserves

The Company has not transferred any amount to the general reserves during the year in view of the accumulated losses. Material changes and commitments affecting the financial position of the Company:

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 the report.

Impact of CoVID 19

Your Directors have been periodically reviewing with the Management, the impact of COVID-19 on the Company. The business model position was such that the Company was able to minimize the impact on operation of the Company and was able to deliver better growth prospectus.

Change in the nature of business

Your Company is engaged in the manufacture of pharmaceutical products. There is no change in the nature of business during the year compared to previous year.

Risk Management Policy:

The Company is in the process of framing mechanism to identify, assess, monitor and mitigate various risks to key business objectives. Major risks identified by the businesses and functions are systematically addressed through mitigating actions on a continuing basis.

Adequacy of Internal Financial Controls with reference to the Financial Statements:

The Company has implemented and evaluated the internal financial controls which provide a reasonable assurance in respect of providing financial and operational information, complying with applicable statutes and policies, safeguarding of assets, prevention and detection of frauds, accuracy and completeness of accounting records. The Company has appointed internal auditors with a dedicated internal audit team. The internal audit reports were reviewed periodically by the Board. Further, the Board annually reviews the effectiveness of the Companys internal control system.

Directors

The Composition of Board and number of meetings attended by them are given in the corporate governance report. Directors Liable to Retire by Rotation

The brief resume of the Directors seeking appointment/ reappointment and other information have been detailed in the Notice. Your Board recommends the above appointments/reappointment of Directors in the best interest of the Company.

Appointment of CEO

Mr. Mahaveer Chand Bafna (DIN: 01458211) was appointed as Chief Executive Officer (CEO) with effect from 10.09.2020

Details of KMP:

According to section 203 of the Companies Act, 2013, the following are the Key Managerial Personnel of the Company Mr. Mahaveer Chand Bafna- Chief Executive Officer,

Mr. M. Sridhar- Chief Financial Officer

Mr. Jitendra Kumar Pal- Company Secretary - Date of Resignation: 21st March 2022 Mrs. Roopa Ravikumar - Company Secretary - Date of Appointment - 22nd March 2022 Declaration by Independent Directors

The Company has received necessary declaration from each independent director under Section 149(7) of the Companies Act, 2013, that he/ she meets the criteria of independence laid down in Section 149(6 ) of the Companies Act, 2013 and Regulation 25 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

Auditors

As per the provisions of the Companies Act, 2013, M/s. R. Sathyanarayanan & Co, Chartered Accountants, Chennai (FRN003656S), were appointed as Statutory Auditors of the Company for a period of five years at the annual general meeting held in 2017 till the conclusion of 27th annual general meeting.

The Board recommends the appointment of M/s Brahamayya & Co, Chartered Accountants as Statutory Auditor of the Company

The Notes on financial statements referred to in the Auditors Report are self-explanatory and do not call for any further comments.

Auditors Report:

The Report of Auditors and Notes forming part of the Accounts are attached along with the Annual Report.

Cost Audit

The Board has appointed M/s N. Sivashankaran & Co, Cost Accountants (Registration No: 100662) as the Cost Auditors of the Company to conduct audit of cost records made and maintained by the Company for financial year 2022 - 2023 at a remuneration as fixed by the Board subject to approval of members of the Company.

Listing

The Companys shares are listed at (i) BSE Limited (BSE) with Scrip Code No.532989 and at (ii) National Stock Exchange of India Limited with Scrip symbol BAFNAPH.

Particulars of Employees

1) The ratio of the remuneration of each director to the median employees remuneration for the financial year and such other details as prescribed are as given below:

Name Ratio
Hemalatha Shanmugam 5:1

2. The percentage increase in remuneration of each Director, Chief Financial officer, Company Secretary in the financial year

Ms. Hemalatha Shanmugam 15%
Mr. Mahaveer Chand Bafna 6.94%
Mr .Sridhar .M 15%
Mr. Jitendra Kumar Pal 15%

a. The percentage increase in the median remuneration of employees in the financial year: 28%

Information as per Section 197 (12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is provided in Annexure - A to this Report. Further, the information pertaining to Rule 5(2) & 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, pertaining to the names and other particulars of employees is available for inspection at the Registered office of the Company during business hours and pursuant to the second proviso to Section 136(1) of the Act, the Report and the accounts are being sent to the members excluding this. Any shareholder interested in obtaining a copy of the same may write to the Company Secretary/ Compliance Officer either at the Registered/Corporate Office address or by email to cs@bafnapharma.com

Foreign Exchange Earnings and Outgo

The particulars in respect of Foreign Exchange Earnings and Outgo as required under Section 134 of the Companies Act, 2013 and Rule 8(3) of the Companies (Accounts) Rules 2014, are given as in Annexure to this report.

Human Resource, Industrial Relations, Environment, Occupational Health and Safety

The Company is continuously focusing on managing talent and increasingly systematizing the HR processes. We have excellent industrial relations across all facilities including the corporate office and strongly believe that the workers will continue to work towards a profitable and productive Company.

The number of employees as on 31st March, 2022 was 320 as against 288 during FY 2020 - 2021.

Conservation of Energy, Technology Absorption & Research and Development (R&D)

The Company is conscious of its responsibility to conserve the energy and has taken measures in relation to conservation of energy and technology absorption. The particulars in respect to conservation of energy, Technology Absorption & Research and Development were given in the annexure to the Boards Report.

Insider Trading Regulations

Based on the requirements under SEBI (Prohibition of Insider Trading) Regulations, 2005, as amended from time to time, the code of conduct for prevention of insider trading and the code for corporate disclosures are in force. The Company has adopted a Code of Conduct for Prevention of Insider Trading with a view to regulate trading in securities by the Directors and designated persons of the Company, as per SEBI (Prohibition of Insider Trading) Regulations, 2015.

Corporate Governance

Report on Corporate Governance and Certificate of the Auditors of your Company regarding compliance of the conditions of Corporate Governance as stipulated in Regulation 15 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, with the Stock Exchanges, are enclosed elsewhere in the Annual Report and forms part of this report.

Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013

The Board of Directors has approved policy as per the said Act and an Internal Complaints Committee was constituted.

The committee placed a certificate before the Board of Directors on the status of compliance of the Act. As per the certificate provided by the said committee no complaints were received during the year & that there are no complaints pending as on 31st March 2022.

Particulars of Loans, Guarantee and Investment under Section 186 of Companies Act, 2013

During the year under review, no Loans advanced or investments were made during the year.

Related Party Transactions

All Related Party Transactions that were entered into during the Financial Year under review were on an arms length basis, and in the ordinary course of business and are in compliance with the applicable provisions of the Act and the Listing Regulations.

All Related Party Transactions are placed before the Audit Committee for prior approval. Prior omnibus approval of the Audit Committee is obtained for the transactions which are repetitive in nature or when the need for these transactions cannot be foreseen in advance.

There are no material related party transactions which are not in ordinary course of business or which are not on arms length basis and hence there is no information to be provided as required under Section 134(3) (h) of the Act read with Rule 8(2) of the Companies (Accounts) Rules, 2014.

The Company has adopted a Policy for dealing with Related Party Transactions which has been uploaded on the Companys website. The web-link as required under SEBI Listing Regulation, 2015 is as under:

http://bafnapharma.com/agmpdf/POLICY%20ON%20RELATED%20PARTY%20TRANSACTIONS%20-%20%20BAFNA.pdf Corporate Social Responsibility

Provision with respect to Corporate Social Responsibility under Section 135 of the Companies Act, 2013 will be applicable from this year onwards since the Companys Net Profit is more than Rs.5 Crores. The Company is taking necessary steps to comply with the provisions of CSR. The Company has formed a CSR Committee with effect from 25th June 2021. The Composition of the Committee is as follows:

Sl No Name Designation
1 R. Chitra Chairperson of Committee
2. S. Hemalatha Member
3 Atul Sachdeva Member

Secretarial Audit for the FY 2021-22

In terms of Section 204 of the Companies Act, 2013, the Rules made there under & other applicable provisions, if any, the Company is required to appoint a Secretarial Auditor to carry out secretarial Audit of the Company. Your Board of Directors has appointed M/s. A.K. Jain & Associates, Practicing Company Secretaries, Chennai for purpose of Secretarial Audit for the FY 2021-2022 at the Board Meeting held on 10.02.2022

As required under section 204(1) of the Companies Act, 2013 the Company has obtained a secretarial audit report. The copy of the Secretarial Audit report in MR-3 is attached as an annexure to the Directors Report.

Audit Committee:

In terms of Section 177 of the Companies Act, 2013 and other applicable provisions if any and as per the Regulation 18 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, as on 31st March, 2022 the Audit committee comprises 3 Directors out of which 2 are Non-Executive Independent Directors and 1 is Non-Executive Non Independent Director. The terms of reference of the Audit Committee includes matters specified in section 177 of the Companies Act 2013 and Regulation 18 of SEBI (Listing Obligations and Disclosure requirements) Regulations, 2015.

The Audit Committee consists of the following: -

Mr. P K Sundaresan- Chairman

Mr. B. Kamlesh Kumar - Member

Mr. Atul S- Member

Nomination & Remuneration Committee

In terms of Section 178 of the Companies Act, 2013 & other applicable provisions, if any, and as per the Regulation 19 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, as on 31st March, 2022 the "Nomination & Remuneration Committee" comprises of 3 Directors out of which two are Non-Executive Independent Directors and other one is Non- Executive & Non- Independent. The Policy of Nomination & Remuneration Committee was detailed in the corporate governance report. The constitution, terms and references and other details are elaborated in the Corporate Governance report annexed with this report.

The Nomination and Remuneration Committee consists of the following:- Mr. B. Kamlesh Kumar - Chairman Mr. P.K. Sundaresan- Member Mrs. Akila C Raju - Member

Stakeholders Relationship Committee

In terms of Section 178 of the Companies Act, 2013 & other applicable provisions, if any, Board of Directors at their meeting held on 30.05.2014 renamed the existing "Investor Grievance & Share Transfer Committee" as "Stakeholders Relationship Committee". The constitution, terms and references and other details are elaborated in the Corporate Governance report annexed with this report.

Management Discussion and Analysis Report

Management Discussion and Analysis Report, as required under the Listing Agreement with the Stock Exchanges is enclosed in the Annual Report and forms part of this Report. Certain Statements in the report may be forward-looking. Many factors may affect the actual results, which could be different from what the Directors envisage in terms of future performance & outlook.

Extract of Annual Return:

As per the requirements of Section 92(3) of the Act and Rules framed thereunder, the extract of the Annual Return for FY 2021-2022 is uploaded on the website of the Company and the same is available at https://bafnapharma.com

Number of Board Meetings:

The Board of Directors met 7 times during the year under review and the gap between 2 meetings did not exceed 120 days.

Transfer to Investor Education and Protection Fund (IEPF)

As required under Section 124 of the Act, 2447 equity shares, in respect of which dividend has not been claimed by the members for seven consecutive years or more was transferred by the Company to the Investor Education and Protection Fund Authority (IEPF).

Shareholders may claim their unclaimed dividend by applying in the prescribed Form No. IEPF-5. This Form can be downloaded from the website of the IEPF Authority at http://www.iepf.gov.in/IEPF/corporates.html .

Directors Responsibility Statement

Your Directors wish to inform that the Audited Accounts containing Financial Statements for the financial year ended 31st March, 2022 are in full conformity with the requirements of the Companies Act, 2013. They believe that the Financial Statements reflect fairly the form and substance of transactions carried out during the year and reasonably present your Companys financial conditions and result of operations. Your Directors further confirm that in preparation of the Annual Accounts

• The applicable accounting standards had been followed and wherever required, proper explanations relating to material departures have been given;

• The Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent 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 loss of the Company for that period;

• Proper and sufficient care has been taken 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;

• The Accounts have been prepared on a "going concern basis".

The Directors had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively.

• The Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

Reporting of Frauds

There was no instance of fraud during the year under review, which required the Statutory Auditors to report to the Audit Committee and / or to the Board as required under Section 143(12) of the Act and the rules made thereunder.

Green Initiatives

In commitment to keep in line with the Green Initiatives and going beyond it, electronic copy of the Notice of 27th Annual General Meeting of the Company including the Annual Report for FY 2021- 2022 are being sent to all Members whose e-mail addresses are registered with the Company / Depository Participant(s).

Acknowledgement and Appreciation

Your Directors would like to thank Company would like to express their gratitude for the co-operation and assistance extended to the Company by its Customers, Suppliers, Technical Consultants, Contractors, Government and Local Authorities, etc. The Directors also wish to thank all its Shareholders for their unstinted support. The Directors would like to sincerely thank and place on record their appreciation of the consistent and dedicated services of the employees at all levels who have immensely contributed to the performance of the Company during the period under review.

For BAFNA PHARMACEUTICALS LIMITED
On behalf of the Board of Directors
Place: Chennai S. Hemalatha
Date: 26-05-2022 Chairperson & Executive Director
DIN:02714329