Your directors have pleasure in presenting their Twentieth Annual Report together withthe Audited Accounts for the year ended on 31st March 2019.
1. FINANCIAL RESULTS
(Rs. in Thousands)
|Particulars ||March 31 2019 ||March 31 2018 |
| ||As per IND AS |
|Revenue from Operations ||8725.01 ||14107.62 |
|Other Income ||14975.63 ||11650.97 |
|Total Income ||23700.64 ||25758.59 |
|Total Expenditure ||7952.82 ||16274.01 |
|Profit before Tax ||15747.82 ||9484.58 |
|Less : Tax Expenses || || |
|Current Tax ||2830.22 ||893.85 |
|MAT Credit Entitlement ||(2437.80) ||(867.82) |
|Prior Year Short Provision of Tax ||0.32 ||66.67 |
|Deferred Tax Liability/(Assets) ||1429.43 ||(913.13) |
|Net Profit /(Loss) for the Year ||13925.65 ||10305.00 |
In order to strengthen the reserves of the Company your directors consider it prudentto plough back the profits and not to recommend any dividend for the financial year2018-19.
3. REVIEW OF OPERATIONS
During the year under review income from Post Production activity decreased to Rs.11.59 Lac from Rs. 16.07 Lac in the previous year. Your Company did not earn any incomefrom trading of IPR during the year as against Rs. 125.00 Lacs in the previous year. TheCompany earned commission income from trading of IPR of Rs. Rs.75.66 Lac in the currentyear. Your Company earned Net Profit of Rs.139.26 Lac vis--vis Net Profit of Rs.103.05Lac in the previous year after providing for Depreciation of Rs. 5.45 Lac (Previous YearRs. 10.05 Lac).
During the year expenses amounting to Rs. 18.84 Lac incurred by the Company towards buyback of equity shares have been debited to the retained earnings and not charged to theProfit and Loss Account in compliance with IND AS 32. Correspondingly the Profit and LossAccount and Balance Sheet of the previous year has also been recast and buy back expensesamounting to Rs. 21.09 Lac incurred in the previous year which were charged to Profit andLoss Account under the head of "Exceptional Item" have now been transferred toRetained Earnings and to that extent the figures of Profit Before Tax and Profit after Taxof previous year have undergone a change.
4. TRANSFER TO RESERVES
During the year under review pursuant to buy back of 7518300 equity shares of theface value of Re. 1/- each at a price of Rs. 4.50/- per share your directors havetransferred an amount of Rs. 7518300/- from profit and loss account to CapitalRedemption Reserves. Total sum of Rs. 33832350/- has been utilized from RetainedEarnings on Buy back of Shares.
5. CHANGES IN NATURE OF BUSINESS IF ANY
There is no change in the nature of business during the year under review
6. MATERIAL CHANGES BETWEEN THE END OF THE FINANCIALYEARAND THE DATE OF THISREPORT
There have been no material changes and commitments affecting the financial positionof the Company which have occurred between the end of the financial year of the Companyto which the financial statements relate and the date of signing of this report.
7. BOARD OF DIRECTORS AND KEY MANAGERIAL PERSONNEL
In terms of Section 152 of the Companies Act 2013 Shri Gordhan P. Tanwani (DIN00040942) Managing Director retires by rotation at the forthcoming Annual GeneralMeeting and is eligible for re-appointment. Shri Gordhan P. Tanwani has confirmed that heis not disqualified for appointment as Director under Section 164 of the Act and hasoffered himself for re-appointment.
Shri Santosh A. Shah and Shri Sanjiv L. Hinduja have been reappointed as IndependentDirectors of the Company w.e.f. 1st April 2019 for a second term of Five Years up to 31stMarch 2024.
KEY MANAGERIAL PERSONNEL
Shri Ajay D. Acharya Chief Financial Officer and Shri Naishadh H. Mankad CompanySecretary continue to be Key Managerial Personnel (KMP) of the Company in compliance withthe requirements of Section 203 of the Companies Act 2013.
DECLARATIONS BY INDEPENDENT DIRECTOR(S)
The Company has complied with Regulation 25 of the Securities and Exchange Board ofIndia (Listing Obligations & Disclosure Requirements) Regulations 2015 (ListingRegulations) and provisions of Section 149(6) of the Companies Act 2013. The Company hasalso obtained declarations from all the Independent Directors pursuant to Section 149(7)of the Companies Act 2013.
The Company has put in place an induction and familiarization programme for all itsdirectors including independent directors so as to associate themselves with the nature ofthe industry in which the Company operates. The Directors are periodically advised aboutthe changes effected in the Corporate Laws Listing Regulations with regard to theirroles rights and responsibilities as Director of the Company. The familiarizationprogramme for independent directors in terms of the provisions of Regulation 46(2) (i) ofListing 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) ofthe Companies Act 2013 and The Companies (Accounts) Rules 2014 annual evaluation of theperformance of the Board its Committees and of individual directors has been made duringthe year under review. To facilitate the evaluation process the Nomination &Remuneration Committee of the Board has laid down the evaluation criteria for theperformance of Executive/Non Executive / Independent Directors through a Boardeffectiveness survey. A questionnaire of the survey is designed with the objective ofreviewing the functioning and effectiveness of the Board. Each Board member is requestedto evaluate the effectiveness of the members of the Board (other than the Director beingevaluated) on the basis of information flow decision making of the directorsrelationship to stakeholders Company performance Company strategy and the effectivenessof 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 GovernanceControl and Guidance and more particularly their performance in the following areas:
Their contribution towards monitoring the Company's corporate governancepractice
Their participation in formulating business strategies and
Their participation in Board and Committee meetings and generallyfulfilling their obligations and fiduciary responsibilities as Directors of the Company.
8. BOARD AND COMMITTEES
The Company's Board comprises of 50% Independent Directors in line with requirement ofthe Listing Regulations. Shri Santosh A. Shah and Shri Sanjiv L. Hinduja are IndependentDirectors.
Six (6) Board Meetings were convened and held during the year. The intervening gapbetween two meetings was less than the period prescribed under the Companies Act 2013Secretarial Standard-1 on Board Meetings and Listing Regulations.
The Board has constituted an Audit Committee with Shri Santosh A. Shah as Chairman andShri Sanjiv L. Hinduja and Smt. Malavika A. Acharya as members. There have been noinstances during the year when recommendations of the Audit Committee were not accepted bythe Board. The terms of reference of the Audit Committee are set out in the CorporateGovernance Report.
NOMINATIONAND REMUNERATION COMMITTEE
The Board has constituted Nomination & Remuneration Committee comprising of ShriSanjiv L. Hinduja as Chairman Shri Santosh A. Shah and Smt. Malavika A. Acharya asmembers. The terms of reference of the Nomination & Remuneration Committee are set outin the Corporate Governance Report.
STAKEHOLDERS' RELATIONSHIP COMMITTE
The Board has constituted Stakeholders' Relationship Committee comprising of ShriSanjiv L. Hinduja as Chairman Shri Santosh A. Shah and Shri Gordhan P. Tanwani asmembers. The terms of reference of the Stakeholders' Relationship Committee are set out inthe Corporate Governance Report.
9. POLICY ON DIRECTORS APPOINTMENT & REMUNERATION
The Board has in accordance with the provisions of Sub-Section (3) of Section 178 ofthe Companies Act 2013 formulated a policy setting out the criteria for determiningqualifications positive attributes independence of a director and policy relating toremuneration for Directors Key Managerial Personnel and other employees. The text of thepolicy is available on the website of the Company www.babaartslimited.com.
10. RISK MANAGEMENT POLICY
The Board of Directors of your Company periodically assesses the risk in the internaland 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 regularintervals by the Board.
11. VIGIL MECHANISM /WHISTLE BLOWER POLICY
The Company has adopted a Whistle Blower Policy to provide a formal vigil mechanism tothe directors and employees to report their concerns about unethical behaviour actual orsuspected fraud or violation of the Company's code of conduct or ethics policy. The policyprovides for adequate safeguards against victimization of employees who avail of themechanism and also provides for direct access to the Chairperson of the Audit Committee.It is affirmed that no personnel of the Company has been denied access to the AuditCommittee.
12. CONSERVATION OF ENERGY TECHNOLOGYABSORPTION & FOREIGN EXCHANGE
EARNINGS AND OUTGO:
The details of conservation of energy technology absorption foreign exchange earningsand outgo are as follows:
A) Conservation of energy:
|Sr. No. ||Particulars ||Details |
|i. ||the steps taken or impact on conservation of energy ||Your Company's 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. |
|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 ||Nil |
|ii ||the benefits derived like product improvement cost reduction product development or import substitution ||Nil |
|iii ||in case of imported technology (imported during the last three years reckoned from the beginning of the financial year) ||Nil |
| ||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:
There were no Foreign Exchange Earnings and Outgo during the Financial Year.
The Company is engaged in providing post production services to entertainment industryin its post production studio and creating content for Television and also in filmproduction and distribution activity where there is not much scope for exports. TheCompany is selling overseas rights of films to domestic distributors. The Company did nothave any export income during the year.
13. DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS ORTRIBUNALS IMPACTING THE GOING CONCERN STATUSAND COMPANY'S OPERATIONS IN FUTURE
There were no orders passed by regulators or courts or tribunals impacting the goingconcern status and Company's operations in future.
14. DIRECTORS' 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 certainfinancial instruments which are measured at fair values the provisions of the CompaniesAct2013 (to the extent notified) and guidelines issued by SEBI. The IND AS are prescribedunder Section 133 of the Companies Act 2013 read with Rule 3 of the Companies (IndianAccounting Standards) Rules 2015 and Companies (Indian Accounting Standards) AmendmentRules 2016. Accounting Policies have been consistently applied except where a newlyissued accounting standard is initially adopted or a revision to an existing accountingstandard requires a change in the accounting policy hitherto in use.
In accordance with Section 134(5) of the Companies Act 2013 your board of directorsconfirms that:
i) in the preparation of the annual accounts the applicable accounting standards readwith requirements set out under Schedule III to the Companies Act 2013 have been followedand there are no material departures from the said standards;
ii) the accounting policies have been consistently applied and reasonable and prudentjudgment and estimates have been made so as to give a true and fair view of the profit ofthe Company for the year ended on 31st March 2019 and the state of affairs of the Companyas at 31st March 2019 as disclosed in the enclosed accounts;
iii) proper and sufficient care has been taken for maintenance of adequate accountingrecords in accordance with the provisions of the Companies Act 2013 for safeguarding theassets 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 financialcontrols are adequate and operating effectively; and
vi) they have devised proper systems to ensure compliance with provisions of allapplicable laws and such systems are adequate and operating effectively.
15. DETAILS IN RESPECT OF ADEQUECY OF INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO THEFINANCIAL STATEMENTS:
The Company has in place adequate internal financial controls with reference tofinancial statements.
The Internal Auditor continuously monitors the efficiency of the internalcontrols/compliance with the objective of providing to Audit Committee and the Board ofDirectors an independent objective and reasonable assurance of the adequacy andeffectiveness of the organization's risk management control and governance processes.This system of internal control facilitates effective compliance of Section 138 ofCompanies Act 2013 and the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015.
During the year such controls were tested and no reportable material weakness in thedesign or operation was observed.
16. MAINTENANCE OF COST RECORDS
Maintenance of Cost Records as specified by the Central Government under Section 148(1)of the Companies Act 2013 is not applicable to the Company.
M/s. Arunkumar K Shah & Co. are the Statutory Auditors of the Company who wereappointed for a period of five years in the 18th Annual General Meeting (AGM) held on 19thSeptember 2017 and hold office up to the conclusion of the 23rd Annual General Meeting ofthe Company.
Vide notification dated May 7 2018 issued by Ministry of Corporate Affairs therequirement of seeking ratification of appointment of statutory auditors by members ateach AGM has been done away with. Accordingly no such item has been proposed in thenotice of the 20th AGM.
Auditors have confirmed their eligibility and submitted the certificate in writing thatthey are not disqualified to hold the office of the Statutory Auditor.
There are no qualifications reservations or adverse remarks made by M/s. Arunkumar K.Shah & Co. Statutory Auditors in their report for the Financial Year ended 31stMarch 2019.
Pursuant to provisions of Section 143(12) of the Companies Act 2013 the StatutoryAuditors have not reported any incident of fraud to the Audit Committee of the Companyduring the year under review.
Pursuant to Section 138 of the Companies Act 2013 M/s. SCA & Associates wereappointed as the internal auditors of the Company for the financial year 2018-19.
18. EXTRACT OF ANNUAL RETURN
Pursuant to the provisions of Sections 134(3)(a) and 92(3) of the Companies Act 2013read with Rules 12(1) of the Companies (Management and Administration) Rules 2014 anextract of the Annual Return as on 31st March 2019 in prescribed Form No. MGT 9 isattached in Annexure I to this Report. The Annual Return of the Company will beplaced on the Company's Website www.babaartslimited.com.
19. SECRETARIALAUDIT REPORT
Pursuant to the provisions of Section 204 of Companies Act 2013 and the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Company withapproval of Board appointed M/s Dholakia & Associates LLP Company Secretaries inpractice to undertake the Secretarial Audit of the Company for the financial year 2018-19.The detailed report on Secretarial Audit is appended as an Annexure II to thisreport. There is no qualification reservation or adverse remarks given by SecretarialAuditors of the Company.
20. PARTICULARS OF LOAN GUARANTEE AND INVESTMENTS
The particulars of loans/advances given guarantees/securities provided and investmentsmade during the year under review under Section 186 of the Companies Act 2013 are givenin Note No. 34 of the notes forming part of the Financial Statements.
21. CORPORATE GOVERNANCE & MANAGEMENT DISCUSSION ANDANALYSIS REPORT
A separate report on Corporate Governance is provided together with a Certificate fromStatutory Auditors of the Company regarding compliance of conditions of CorporateGovernance as stipulated under Schedule V of the SEBI (Listing Obligations &Disclosure Requirements) Regulations 2015.
A certificate of the Managing Director (MD) and Chief Financial Officer (CFO) in termsof Regulation 17(8) as specified in Part B of Schedule II of SEBI (Listing Obligations& Disclosure Requirements) Regulations2015 inert alia confirming the correctness ofthe financial statements and cash flow statements adequacy of the internal controlmeasures and reporting of matters to the Audit Committee is also annexed.
The Management Discussion Analysis Report as required under the Listing Regulations ispresented in separate section and forms part of the Annual Report
22. SEXUAL HARASSMENT
The provision relating to constitution of Internal Complaints Committee under theSexual Harrassment of Women at Workplace (Prevention Prohibition and Redressal) Act 2013is not applicable to the Company as the Company is having less than 10 workers. TheCompany did not receive any complaint of sexual harassment at workplace during the yearunder review.
Your Company has not invited / accepted any deposits from public under Section 73 andSection 76 of the Companies Act 2013.
24. PARTICULARS OF CONTRACTS OR ARRANGMENT WITH RELATED PARTIES
All related party transactions that were entered into during the Financial Year underreview were on an arm's length basis and in ordinary course of business and is incompliance with the applicable provisions of the Companies Act 2013 and SEBI (ListingObligations and Disclosure Requirements) Regulations 2015.
All related party transactions are placed before the Audit Committee as also to theBoard for approval at every quarterly meeting. Details of transactions with relatedparties as required Under Section 134(3)(h) of the Companies Act 2013 read with Rule 8(2)of the Companies (Accounts) Rules 2014 are given in Annexure III in Form AOC -2and forms part of this report.
Your Company has formulated a policy on related party transactions which is alsoavailable on Company's website at www.babaartslimited.com.
25. DETAILS OF POLICY DEVELOPED AND IMPLEMENTED BY THE COMPANY ON ITS CORPORATE SOCIALRESPONSIBILITY
The provisions of the Section 135 of the Companies Act 2013 are not applicable to theCompany.
26. PARTICULARS OF EMPLOYEES
The information required under Section 197 of the Companies Act 2013 read with Rule5(1) 5(2) & 5(3) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 is given in Annexure IV.
27. 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 underreview.
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 shares during the year underreview.
BUY BACK OF SHARES
Pursuant to the approval of the Board on 13th November 2018 and approval ofshareholders vide special resolution dated 2nd January 2019 passed through PostalBallot/e-voting your Company completed buyback of 7518300 (Seventy Five Lacs EighteenThousand Three Hundred) equity shares of the Company of Re.1/- each at price of Rs.4.50/-(Rupees Four and Paise Fifty Only) per equity share aggregating to Rs.33832350/-(RupeesThree Crore Thirty Eight Lacs Thirty Two Thousand Three Hundred and Fifty Only)
The Buyback of Shares from the shareholders of the Company was on proportionate basisthrough the tender offer mechanism in accordance with the provisions of Securities andExchange Board of India (Buy-back of Securities) Regulations 2018 and the Companies Act2013. Post buy back the outstanding capital as on 31st March 2019 is Rs. 52500000/-(Rupees Five Crore Twenty Five Lac Only) comprising of 52500000 (Five Crore Twenty FiveLac) equity shares of Re. 1/- each.
Share Capital audit as per the directives of Securities & Exchange Board of Indiais being conducted on quarterly basis by M/s. Dholakia & Associates LLP CompanySecretaries and the Audit Reports are duly forwarded to BSE Limited where the shares ofthe Company are listed.
28. SUBSIDIARY JOINT VENTURES AND ASSOCIATE COMPANIES.
The Company does not have any Subsidiary Joint Venture and Associate Company.
29. SECRETARIAL STANDARDS
It is hereby confirmed that the Company has complied with the provisions of allapplicable Secretarial Standards issued by the Institute of Company Secretaries of India.
30. GREEN INITIATIVES
Pursuant to Section 101 and 136 of the Companies Act 2013 the Company has sent AnnualReport through electronic mode (e-mail) to all shareholders who have registered theiremail addresses with the Company or with Depository to receive the Annual Report throughelectronic mode and initiated steps to reduce consumption of paper. For members who havenot registered their email addresses physical copies will be sent through permitted mode.
The Board wishes to thank all the Company's customers vendors and Company's bankerswho have extended their continuous support to the Company.
Your Directors specially thank the shareholders of the Company for having reposed theirconfidence in the management of the Company and employees and technicians of the Companyat all levels for their dedicated services to the Company and the contribution made bythem towards working of the Company.
| ||For and On behalf of the Board of Directors |
| ||Gordhan P. Tanwani |
|Place : Mumbai ||Chairman & Managing Director |
|Date :9th May 2019 ||DIN: 00040942 |