Banaras Beads Ltd Directors Report.

Dear Shareholders,

Your Directors are pleased to present the 40th Annual Reports together with the Audited Financial Statements of the Company for the year ended on 31st March 2020.

FINANCIAL RESULTS:

2019-2020 2018-2019
(Rs. in lacs) (Rs. in lacs)
Revenue from Operations 2578.06 1731.17
Net Profit Before Taxation 323.26 158.97
Net Profit after taxation 234.16 115.51
Balance of Profit & Loss Account B/F 1469.30 1354.28
APPROPRIATIONS:
Transfer to General Reserve 0.00 0.00
Dividend Paid 0.00 0.00
Tax on Dividend paid 0.00 0.00
Taxes of earlier Years 4.49 0.49
Balance of Profit & Loss Account C/F 1698.97 1469.30

OPERATION / PERFORMANCE:

During the year revenue from operations of your Company increased by 49% at Rs. 2578 lacs as compared to Rs. 1731 lacs in the corresponding period of the previous year and Profit after Tax up by 103% at Rs. 234 lacs as compared to Rs. 115 lacs in the corresponding period of the previous year.

EFFECT OF COVID-19 PANDEMIC

In last month of Financial Year 2020, the world has been affected with an unprecedented pandemic COVID -19, which has adversely affected the lives and livelihood of the people of the virtually all countries. In India, the Nationwide lock down started in the last week of the March, 2020 and fourth phase completed on 31" May, 2020. During lock down period operation of the company almost closed and company main focus was to secure employees health first. Some office work was done, after getting necessary permissions from the concerned local authorities and ensuring compliances related to Covid-19 guidelines i.e. maintaining social distance, mandatory to wear face mask, proper sanitizations, cleaning hands, thermal scanning.

The operation of the company had already been resumed with all security measures as directed by government. The Company is following all relevant Government directives and guidelines regarding health and safety of the workers during work.

The Covid-19 certainly would have major negative impact on the export business as per the market condition, transportation, demand and policy of the various countries. However, the company is not expecting much future impact as major orders are not being cancelled by the Foreign Buyers/Stores, and once the situation become normal in US and other countries, the company hope to give good results.

DIVIDENDS:

Based on the Companys performance during the year 2019-20, the Board of Directors decided not to recommend declaration of dividend.

TRANSFER TO RESERVES

No amount has been transferred to reserve. The closing balance of the retained earnings of the Company for F.Y. 2019 - 2020, after all appropriation and adjustments was 1698.97 lacs.

DIRECTORS RESPONSIBILITY STATEMENT :

Pursuant to provisions of Section 134(5) of the Companies Act, 2013, the Directors hereby state and confirm -

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

(b) the directors had selected such accounting policies and applied them consistently except as required by accounting standards and other applicable law(s) and made judgments 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 and loss of the company for that period;

(c) the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

(d) the directors had prepared the annual accounts on a going concern basis; and

(e) 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 sys f tems were adequate and operating effectively. Based on the framework of internal financial controls and compliance systems established and maintained by the Company, work performed by the internal, statutory and secretarial auditors and external consultants, including audit of internal financial controls over financial reporting by the statutory auditors, and the reviews performed by management and the relevant board committees, including the audit committee, the board is of the opinion that the Companys internal financial controls were adequate and effective during FY 2019-20.

PENDING PETITION WITH NCLT:

The Special Leave Petition vide no. 25165-25166/2007 had been disposed off by Honble Supreme Court on 11.04.2018. The company had already complied and executed all the direction given by Honble Company law Board in its order dated 05.09.2007 and nothing is pending to be complied by the company and accordingly disclosed in Annual Report made thereafter. However Mr. Raj Kumar Gupta, ex-director of the company, who had not challenged CLB orders has filed an Execution Petition No. 424/2018 before Honble NCLT to get property of the company situated at Expo Mart, Greater NOIDA , which was neither part of CLB Petition No. 14/1999 nor mentioned in the list of properties to be transferred to 1st Petitioner (Mr. Raj Kumar Gupta group) in CLB final order dt. 04.07.2007 and modified order dt. 03.08.2007. Mr. Raj Kumar Gupta Ex-director of the company had already made an application to get this property before Honble Supreme Court in SLP No. 935-936/2010 and Honble Supreme Court finally dismissed the SLP with all pending applications. The present Execution Petition 424/2018 filed by Mr. Raj Kumar Gupta before Honble NCLT Allahabad is pending.. The Management does not reasonable expect that the Execution Petition, when ultimately concluded and determined, will have a material and adverse effect on the Companys results of operations or financial condition.

MANAGEMENTS DISCUSSION AND ANALYSIS REPORT:

Managements Discussion and Analysis Report for the year under review, as stipulated under Regulation 34 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (SEBI LODR) is presented in a separate section forming part of the Annual Report.

DIRECTORS AND KEY MANAGERIAL PERSONNEL :

INDUCTIONS AND RETIREMENTS

CESSATION UPON COMPLETION OF TERM AS INDEPENDENT DIRECTORS-

During the year, Shri Ashok Kumar Kapoor, Shri Praveen Anand Singh and Shri Tanmay Deva, ceased from Directorship of the company with effect from January 21, 2020 upon completion of their term as Independent Director. The Board places on record its appreciation for their invaluable contribution and guidance.

APPOINTMENT OF ADDITIONAL AND INDEPENDENT DIRECTORS

Pursuant to the provisions of Section 149 of the Act, Mr. Sushil Kumar Kandoi, Mr. Anil Kumar Gupta, and Mr. Manan Kumar Sah were appointed to the Board as an additional and independent director considering their integrity, expertise and experience on January 17, 2020 for a period of five years subject to the approval of shareholders at the 40th AGM. The notice convening the meeting sets out the details of each directors appointment. As independent directors they have submitted declarations that each of them meet the criteria of independence as provided in Section 149(6) of the Act along with Rules framed thereunder and Regulation 16(1)(b) of the SEBI Listing Regulations.

REAPPOINTMENT-

Mrs. Shalini Chandra retires by rotation at the ensuing AGM and, being eligible, seeks reappointment. Based on the performance evaluation and recommendation of the nomination and remuneration committee, the Board recommends her reappointment.

Further the tenure of Mrs. Shalini Chandra as Executive Director has expired on 28.02.2020. Keeping her association and benefit to the company the Nomination and Remuneration Committee and the Board of Directors have recommended to re-appoint Mrs. Shalini Chandra (DIN 01036394) as Executive Director for further five years with effect from 28th February 2020.

During the year, the non-executive directors of the Company had no pecuniary relationship or transactions with the Company, other than the sitting fees to attend the meetings of the Company except few small transactions on arms length basis with the company of Sri Manan Kumar Sah .

Pursuant to the provisions of section 203 of the Act, the key managerial personnel of the Company are Mr. Ashok Kumar Gupta, Chairman & Managing Director, Mr. Siddharth Gupta, Chief Executive Officer and Managing Director, Smt. Shalini Chandra, Executive Director, Mr. R.K. Singh, Company Secretary and Mr Vinay Kumar Piyush, CFO (who has been appointed w.e.f. 01.04.2019.) There is no other changes in the key managerial personnel during the year.

The detail of cessation, appointment and reappointment are also available on www.bblinvestor.com.

BOARD EVALUATION:

The Board of Directors has carried out on 29.05.2019 and on 16.01.2020 during the year evaluation of its own performance, board committees, and individual directors pursuant to the provisions of the Act, SEBI Listing Regulations and the Guidance Note on Board Evaluation issued by the Securities and Exchange Board of India on January 5, 2017.

The performance of the board was evaluated by the board after seeking inputs from all the directors on the basis of criteria such as the board composition and structure, effectiveness of board processes, information and functioning, etc.

The performance of the committees was evaluated by the board after seeking inputs from the committee members on the basis of the criteria such as the composition of committees, effectiveness of committee meetings, etc.

The board and the nomination and remuneration committee reviewed the performance of the individual directors on the basis of the criteria such as the contribution of the individual director to the board and committee meetings like preparedness on the issues to be discussed, meaningful and constructive contribution and inputs in meetings, etc. In addition, the chairman was also evaluated on the key aspects of his role.

In separate meetings of independent directors, performance of non-independent directors, performance of the board as a whole and performance of the chairman was evaluated, taking into account the views of executive directors and non-executive directors. The same was discussed in the board meeting that followed the meeting of the independent directors, at which the performance of the board, its committees and individual directors was also discussed. Performance evaluation of independent directors was done by the entire board, excluding the independent director being evaluated.

POLICY ON DIRECTORS APPOINTMENT AND REMUNERATION AND OTHER DETAILS

The Companys policy on directors appointment and remuneration and other matters provided in section 178(3) of the Act has been disclosed in the corporate governance report, which forms part of this report and same is available on www.bblinvestor.com.

INTERNAL FINANCIAL CONTROL SYSTEMS AND THEIR ADEQUACY

The details in respect of internal financial control and their adequacy are included in the management discussion & analysis, which forms part of this report.

AUDIT COMMITTEE

The details pertaining to composition of audit committee are included in the Corporate Governance Report, which forms part of this report.

AUDITORS:

At the thirty seventh AGM held on 28th September, 2017 the members approved appointment of M/s G D Dubey & Associates, Chartered Accountants (Firm Registration number 009836C) as Statutory Auditors of the Company to hold office for a period of five years from the conclusion of that AGM till the conclusion of the 42nd AGM, subject to ratification of their appointment by Members at every AGM, if so required under the Act. The requirement to place the matter relating to appointment of auditors for ratification by Members at every AGM has been done away by the Companies (Amendment) Act, 2017 with effect from May 7, 2018. Accordingly, no resolution is being proposed for ratification of appointment of statutory auditors at this AGM and a note in respect of the same has been included in Notice for this AGM.

AUDITORS REPORT

The Statutory Auditors Report does not contain any qualification, reservation or adverse remark or disclaimer.

SECRETARIAL AUDITOR:

The Board has appointed M/s Ajay Jaiswal & Co., Company Secretaries to conduct Secretarial Audit for the financial year 2019-20. The Secretarial Audit Report for the financial year ended 31st March 2020 is annexed herewith marked as Annexure –I to this report. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark.

RISK MANAGEMENT

The board of directors of the Company has formed a risk management committee to frame, implement and monitor the risk management plan for the Company. The committee is responsible for reviewing the risk management plan and ensuring its effectiveness. 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

The Company has a Whistle Blower Policy and has established the necessary vigil mechanism for directors and employees in confirmation with Section 177(9) of the Act and Regulation 22 of Listing Regulations, to report concerns about unethical behavior. The details of the policy is also available on www.bblinvestor.com.

EXTRACT OF ANNUAL RETURN

The extract of Annual Returns

[Pursuant to section 92(3) of the Companies Act, 2013 and rule 12(1) of the Companies (Management and Administration) Rules, 2014] as on the financial year ended on 31.03.2020 is attached as Annexure- II with this Report.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNING AND OUTGO:

Information as per Section 134 (3) (m) of the Companies Act, 2013 read with Companies (Accounts) Rules, 2014 are furnished as under: a) Conservation of Energy : The operations of the Company involve low energy consumption. The solar power plant of 150 KVA is properly working and saving grid electricity. During the year 138476.48 KWH power generated and approx. 42600 KWH transferred to UP electricity board by this way approximately saving of around Rs. 11.52 lacs made to the company against electric charges.

The other adequate measures are being taken to conserve the energy.

b) Technological Absorption:

The Company upgrades its technological inputs time to time for its products. However presently company has no collaboration arrangement with any foreign organization.

c) Foreign Exchange Earning and Outgo:

The actual foreign exchange earnings (inflow) of the Company during the financial year has been Rs 2416.04 lakhs from Exports of Glass Beads, Handicrafts and other items. The actual foreign Exchange Outflow during the year has been Rs. 209.12 lakhs for the import of materials, foreign traveling expenses and other sales promotional activities.

CORPORATE GOVERNANCE:

Corporate Governance Report, Management Discussion and Analysis statement and Business Responsibility Report and a certificate from the Auditors confirming compliance are annexed herewith to this report.

MATERIAL CHANGES AND COMMITMENT IF ANY AFFECTING THE FINANCIAL POSITION OF THE COMPANY OCCURRED BETWEEN THE END OF THE FINANCIAL YEAR TO WHICH THIS FINANCIAL STATEMENTS RELATE AND THE DATE OF THE REPORT

No material changes and commitments affecting the financial position of the Company occurred between the end of the financial year to which this financial statements relate on the date of this report.

SUBSIDIARIES, JOINT VENTURES AND ASSOCIATE COMPANIES

The Company does not have any Subsidiary, Joint venture or Associate Company.

NUMBER OF MEETING OF BOARD

Five Board Meetings were held during the F.Y. on 30th May 2019, 25th July 2019, 24th October, 2019, 17th January 2020 and 28th February, 2020.

STATEMENT OF DECLARATION GIVEN BY INDEPENDENT DIRECTORS U/S 149 (6).

All the Independent Directors have given their declaration as per Section 149(7) that they meet the criteria of independence as provided in section 149(6) of the Companies Act 2013.

POLICY ON DIRECTORS APPOINTMENT AND REMUNERATION-

The current policy is to have an appropriate mix of executive and independent directors to maintain the independence of the Board, and separate its functions of governance and management. As on 31.03.2020, the board consists of 6 members, three of whom are executive or whole-time directors including one woman and three are independent directors. The policy of the company on directors appointment and remuneration, including criteria for determining qualifications, positive attributes, independence of a director and other matters is as provided under Sub-section (3) of section 178 of the Companies Act, 2013. We affirm that the remuneration paid to the directors is as per the terms laid out in the nomination and remuneration policy of the Company.

FIXED DEPOSITS FROM PUBLIC:

The Company have not accepted any fixed deposits and as such, no amount of principal or interest was outstanding as of the balance sheet date.

FINANCE

The Company has taken credit facility by way of working capital limit from Kotak Bank Ltd. of Rs. 1000.00 lakhs and the amount of loan outstanding as on 31.3.2020 was Rs. NIL.

DETAILS OF LOANS GIVEN, INVESTMENTS MADE AND GUARANTEE GIVEN COVERED U/S 186 (4) OF THE COMPANIES ACT, 2013.

Loans given and Investments made are given under the respective heads of the Balance Sheet.

No Corporate Guarantees given by the Company in respect of loans as at 31st March, 2020.

DISCLOSURE REQUIREMENTS

As per SEBI Listing Regulations, the Corporate Governance Report with the Auditors Certificate thereon, and the Management Discussion and Analysis are attached, which form part of this report.

As per Regulation 34 of the SEBI Listing Regulations, a Business Responsibility Report is attached and is a part of this annual report.

As per Regulation 43A of the SEBI Listing Regulations, the Dividend Distribution Policy is disclosed in the Corporate Governance Report and on the website of the Company.

TRANSACTIONS WITH RELATED PARTIES.

All the transactions are done at arm length price during ordinary course of business. Information on transactions with related parties pursuant to 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 the same forms part of this report.

Particulars of contract U/s 188

Transactions, i.e. the Companys transactions that are of material nature, with its Promoters, Directors and the management, their relatives or subsidiaries, among others that may have potential conflict with the Companys interests at large.

During the period under review, the Company had not entered into any material transaction with any of its related parties that may have potential conflict with the Companys interests at large. Although all the transactions with related parties are done at arm length price and in compliance of Ind AS 24 the disclosure of transactions with related parties are set out in Note No. 32 of Financial Statements which is forming part of the Annual Report.

CORPORATE SOCIAL RESPONSIBILITY.

The Provision of Section 135 of Companies Act 2013 concerning with Corporate Social Responsibility is not applicable during the F.Y. 2019-20.

TRANSFER TO IEPF ACCOUNT

During the year the company has transferred given below unclaimed dividends alongwith its related shares to IEPF account-

- Interim unclaimed dividend for F.Y. 2011-12 amounting Rs. 221725/- and final dividend Rs. 426138/- and its related 115196 shares of 451 shareholders were transferred into IEPF account on 13.11.2019. In said transfer Rs. 219250 of dividend and corresponding 87700 shares related with Petitioners on account of continuous noncompliance of CLB orders dt. 04.07.2007 and 03.08.2007 by him/them.

- Interim unclaimed dividend for F.Y. 2012-13 amounting Rs. 702622/- and thereon 13080 shares of 120 shareholders were transferred into IEPF account on 13.05.2020.

EVALUATION REPORT ON CAPITAL

The Provision of Evaluation on Capital is not applicable to the Company. Besides that the Board met time to time and appraised performance of the Company. The ways and means were made to increase the business and growth of the Company.

INCREASE IN PAID-UP CAPITAL-

During the year no calls in arrear has been realised from any shareholders. The paid-up capital Rs. 66139220 and balance calls in arrears are @ Rs. 5 per share on 44600 shares amounting to Rs. 223000/-

MATERIAL CHANGES :

No material changes were made during the year which affects the financial and commitments of the Company.

INTERNAL FINANCIAL CONTROLS:

The Company has in place adequate internal financial controls with reference to financial statements. During the year, such controls were tested and no reportable material weakness in the design or operation were observed.

QUALITY INITIATIVES AND SOCIAL AUDIT

The Company continues to sustain its commitment on quality control with new technology and reduction of cost. The Company successfully completed the Audits done by BQC certificates for its product specifically quality certifications viz., ISO 9001-2015.

The Company has also successfully completed Factory/Social Audit SA8000 done by British Standards Institution (BSI) in the month of December, 2019 and they have accorded GREEN status/rating till December, 2020.

COMPLAINTS PERTAINING TO SEXUAL HARASSMENT:

The details of complaints filed, disposed of and pending during the financial year pertaining to sexual harassment is provided in the Business responsibility report of this Annual Report.

PARTICULARS OF EMPLOYEES:

The details pertaining to remuneration as required under section 197(12) of the companies act, 2013 read with rule 5(1) of the companies (appointment and remuneration of managerial personnel) rules, 2014.

(i) The percentage increase in remuneration of each Director, Chief Financial Officer and Company Secretary during the financial year 2019-20, ratio of the remuneration of each Director to the median remuneration of the employees of the Company for the financial year 2019-20 and the comparison of remuneration of each Key Managerial Personnel (KMP) against the performance of the Company are as under:

Sl. No. Name of Director/KMP and Designation Remuneration of Director/KMP for financial year 2019- 20 in Rs % increase in Remuneration in the Financial Year 2019-20 Ratio of remuneration of each Director/to median remuneration of employee Comparison of the Remuneration of the KMP against the performance of the Company
1 Ashok Kumar Gupta Chairman & Managing Director 2421600 NIL 26.44 Both, Profit before Tax and after tax increase by 103% in Financial year 2019-20
2 Siddharth Gupta CEO & Managing Director 1666560 NIL 18.20 in comparison to previous financial year.
3 Shalini Chandra Executive Director 672000 NIL 7.34
4 Ramesh Kumar Singh Company Secretary 850944 7.05 9.29
5 Vinay Kumar Piyush Chief Finance Officer 389760 Not Applicable as appointed CFO w.e.f. 01.04.2019. 4.26

ii) The median remuneration of employees of the Company during the financial year 2019-20 is Rs .91579 and in Financial Year 2018-19 was Rs. 77276.

iii) In the financial year, there was increase of 18.51 % (previous year decrease of 1.42%) in the median remuneration of employees;

iv) There were 258 permanent employees on the rolls of Company as on March 31, 2020;

v) Relationship between average increase in remuneration and company performance:-

The Profit before Tax for the financial year ended March 31, 2020 increase by 103 % and increase in median remuneration was 18.51%.

vi) Comparison of Remuneration of the Key Managerial Personnel(s) against the performance of the Company:

The total remuneration of Key Managerial Personnel Increased by 4.29 % from 57.53 lacs (annualised) in 2018-19 to 60.00 lacs in 2019-20 whereas the Profit before Tax increased by 103% to 323.26 lacs in 2019-20 (159.53 lacs in 2018-19) .

vii) a) Variations in the market capitalisation of the Company :

The market capitalisation as on March 31, 2020 was Rs.1981.32 lacs (Rs. 3201.98 lacs as on March 31, 2019).

b) Price Earnings ratio of the Company was 8.07 as at March 31, 2020 and was 27.57 as at March 31, 2019.

vii) Average percentage increase was made in the salaries of employees other than the managerial personnel in the last financial year i.e. 2019-20 is 8.59 % and in the managerial remuneration increase for the last financial year was 1.69 %.

viii) 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 – Not Applicable; and

i x) It is hereby affirmed that the remuneration paid is as per the Remuneration Policy for Directors, Key Managerial Personnel and other Employees.

TRADING OF SHARES UNDER "B" GROUP:

The shares of your Company are presently being traded with BSE and NSE Stock Exchanges under "B" Group.

ACKNOWLEDGMENT:

The Directors wish to place on record their sincere appreciation of the devoted and efficient services rendered by all officers, employees and others associated with the Company. The Board place on record a deep appreciation for the valuable contribution and guidance rendered by Independent Directors who completed their tenure during the year.

Place : VARANASI Date : 25.06.2020

By order of the Board of Directors For BANARAS BEADS LTD.

(Ashok Kumar Gupta) Chairman & Managing Director