Directors Report

GQ BALL PEN INDUSTRIES LIMITED.

331/2, Tajuddin Ahmed Swarani, Bara Moghbazar,Dhaka-1217

Report of the Directors to the Shareholders

Bismillahir Rahmanir Rahim

Dear Shareholders,

In terms of provisions of Section 184 of the Companies Act 1994, Rule 12 (and the schedule there under) of the Bangladesh Securities and Exchange Rules 1987, Corporate Governance Code 2018 of Bangladesh Securities and Exchange Commission and International Accounting Standards-1 Codes as adopted by The Institute of Chartered Accountants of Bangladesh, it is the pleasure of the Board of Directors to submit its Report to the Shareholders for the year ended 30 June, 2021.

GQ Ball Pen Industries Ltd have been producing and marketing ball pens in the country for a long time. Our business was heavily affected due to the COVID 19 pandemic which resulted in all educational institutions being closed from March 2020 to September 2021.This caused our business to fall by about 75 percent. We hope that in the coming days, with the Corona pandemic improving and educational institutions reopening, we will be able to improve our production and sales. However, if the pandemic continues then unfortunately we will not see much improvement in our sales in the near future and it will be difficult to continue with the normal operation of producing and selling ball pens; and, we will have to rely on other income to mitigate continuous operation loss until we can restructure our marketing setup and modernize our machinery.

Nevertheless, our other income from investment in shares is still unaffected. In addition, construction of our 14 storied commercial building in Uttara is progressing smoothly. Once completed it will generate good rental revenue provided the country’s economy doesn’t deteriorate much. Though we have been incurring operational losses for a few years and Net Operating Cash flow is negative, the management is confident that with our other income we can pay good dividend to the shareholders in the coming years.

Our plastic division’s production and sales are also hampered due to the COVID-19 pandemic. We are trying to install new machinery as per market demand. Now we are running production partially.

Financial results:

The financial results last 5(five) years are summarized below: –

Particulars	Amount in Taka
Particulars	01 Jul’2020- 30 Jun’2021	01 Jul’2019- 30 Jun’2020	01 Jul’2018- 30 Jun’2019	01 Jul’2017- 30 Jun’2018	01 Jul’2016- 30 Jun’2017
Sales	4,60,35,002	73,270,670	75,925,424	79,223,972	107,413,972
Less: Cost of Goods Sold	6,13,65,104	80,204,171	73,666,597	77,168,105	99,476,937
Gross Profit	(15,330,101)	(69,33,501)	2,258,827	2,055,867	7,937,035
Operating expenses	(2,89,50,570)	(3,61,61,025)	31,844,128	58,266,249	48,621,404
Other Income/(Loss)	(1,71,15,699)	(1,99,43,564)	21,758,480	16,826,355	56,967,117
Net Profit Before Taxation	(61,705,723)	(63,429,949)	8,204,691	39,384,027	15,507,380
Income Tax	(5,779,821)	(976,595)	(7,121,885)	(6,316,665)	(12,858,209)
Profit after Tax	(67,485,545)	(64,406,543)	15,326,576	(45,700,692)	14,790,157
Retained Earnings	203,711,142	270,203,416	333,118,009	350,592,725	398,363,578

Auditors Qualified Opinion:

(a) The auditors opined that the note no 24.02. Dividend amounting to Tk. 3,716,118 was payable for the year 2009-2010. However, this was not recorded in the financial statements of 2010-2011. This amount is included in the previous year by restating other liabilities in contrast to applied retrospectively.

Our reply:

While thoroughly checking the shareholder wise Dividend payable, we have found that an amount of Tk.3,716,118 has been carried forward since the financial year 2009-2010 which was paid in the accounting year 2011. However, this amount was not deducted from the Dividend payable account at that time by mistake. As such, we have adjusted it with Retained Earnings as per IAS-8: “Accounting Policies, Changes in Accounting Estimates and Errors” and restated the financial statements accordingly.

(b) The company has reported Tk. 47,656,658 as loss on sales of dead stock in note 36.02 which is presented under the head of other income/(loss) to the statement of profit or loss and other comprehensive income. These inventories were included under current asset in the previous year which is presented in note 7.01. The dead stocks were reported at cost divergent to lower of cost and net realizable value.

Our reply:

Since the inception of the Company the sales returns have been valued at cost and many unused & unusable raw & packing materials have piled up. As per instruction of the Board of Directors, these were segregated as inventory deadstock from the inventories to reflect the fair market value. But due to the pandamic, it was not possible to ascertain the net realisable value of the entire Dead Stock on time and hence the Dead Stock had to be shown at cost.

Statutory Auditor:

The existing Auditors, Zoha Zaman Kabir Rashid & Co. Chartered Accountants, Rupayan Karim Tower, Level-7, Suite # 7A, 80, Kakrail, Dhaka-1000, who were appointed as Auditors of the Company in the 38th Annual General Meeting of the Company, has carried out the audit for the year ended 30 June 2021. The Auditors of the Company will retire at this meeting and they have expressed their willingness to continue in office for the year 2021-2022. The Board after due consideration of the proposal made by the Audit Committee recommends for reappointment of Zoha Zaman Kabir Rashid & Co., Chartered Accountants as auditors for the year 2021-2022.

Compliance Auditors

The existing compliance auditor M/s. Dewan Nazrul Islam & Co., Chartered Accountants will retire at the 39^th Annual General Meeting. Being eligible they have offered themselves for reappointment as Compliance Auditors of the company for year 2021-2022.

Remuneration to Directors

All the Directors in the Board, except the Managing Director (CC), are non-executive and receive no remuneration or benefits from the Company other than the Board Meeting attendance fee. The salary and other perquisites paid to the Managing Director (CC) for his service has been disclosed in the notes to the accounts.

Related Party Transactions

All transactions with related parties are made on a commercial basis and the basis was the principle of “Arm’s Length Transaction”. Details of related party transaction are disclosed in the Note no. 10.01.01 & note no. 23 of the Financial Statements.

Extraordinary Gain/Loss

No extra-ordinary gain or loss exists during the year as prescribed by the International Financial Reporting Standards (IFRS).

Board of Directors

The Board of Directors of the Company consist of 5 (Five) members including 1 (one) Independent Directors.

Re-election of Directors

By operation of Article 82 & 83 of the Company’s Articles of Association, Ms. Sara Huq retires by rotation at the 39th AGM and being eligible offers for re-election.

Books of Accounts

The books of accounts of the Company have been maintained in accordance with provisions of the Companies Act 1994.

Accounting Policies

Appropriate accounting policies have been consistently applied in preparation of the Financial Statements and that the accounting estimates are based on reasonable and prudent judgment.

Application of IASs or IFRSs to the Financial Statements

International Accounting Standards (IASs) and International Financial Reporting Standards (IFRSs) have been followed in preparation of the financial statements.

Internal Control

Internal Control Policies in GQ Ball Pen Indusries Ltd is designed to ensure operational efficiency, reliable financial reporting and sound governance within and outside the Company. Accordingly, the Board of Directors of the Company is of the opinion that the system of Internal Control is sound in design and has been effectively implemented and monitored.

Declaration/Certification of CEO & CFO

The declaration or certification by the Chief Executive Officer (CEO) and the Chief Financial Officer (CFO) to the Board of the Company as prescribed under the Codes of Corporate Governance issued by Bangladesh Securities and Exchange Commission is disclosed in Annexure – A of this report.

Board Meeting & Attendance

During the financial year 2020-2021, a total number of 5 (five) meetings of the Board of Directors were held to transact Company’s affairs.

Shareholding Pattern

The pattern of shareholding as on 30 June 2021 of the Company as prescribed by the Code of Corporate Governance issued by the Bangladesh Securities and Exchange Commission (BSEC) is furnished in Annexure-I of this report.

Going Concern

The Board is of the opinion that the Company is indeed a going concern. This is recognized through appropriate enquiries and analysis, which establishes that the resources are adequate to support the operations and that sufficient business opportunities exist to justify the organization as a going concern. The Directors analyse the financial statements accordingly. Therefore, the Financial Statements are prepared on a going concern basis and there is no doubt whatsoever upon the Company’s ability to continue as such.

Directors’ declaration on the Financial Statements

The Directors are responsible for the governance of the Company and as part of preparation and presentation of the financial statements, the Directors confirm, to the best of their knowledge that:

The financial statements prepared by the Management of the Company which was scrutinised by the external auditors, present fairly its state of affairs, the result of its operations, cash flows and changes in equity;
Proper books of accounts of the Company have been maintained;
Appropriate accounting policies have been consistently applied in preparation of the financial statements and that the accounting estimates are based on reasonable and prudent judgment;
The International Accounting Standards, as applicable in Bangladesh, have been followed in preparation of the financial statements and any departure therefrom has been adequately disclosed;
The system of internal control is sound in design and has been effectively implemented and monitored; and
There is no doubt whatsoever upon the Company’s ability to continue as a going concern.

As required under the BSEC directives, the Directors further confirm that:

The CEO and CFO have certified to the Board that they have reviewed the financial statements and affirmed that these statements do not contain any materially untrue statement or omit any material fact or contain statements that might be misleading.

Other regulatory disclosures:

Pursuant to the BSEC Notification on ‘Codes of Corporate Governance’ dated 3rd June 2018, the Directors of GQ Ball Pen Indusries Ltd also report that :

The Company is aware of its various risks and concerns. The financial risk management has been disclosed under note 2.37 of the financial statements;
All transactions with related parties have been made on a commercial basis and the details of related party and transactions have been disclosed in the financial statements;
Proper books of account of the Company have been maintained;
Appropriate accounting policies have been followed in preparation of the financial statements and that the accounting estimates are based on reasonable and prudent judgment;
The financial statements are prepared in accordance with IAS/IFRS and any departure therefrom has been adequately disclosed;
The Company’s IPO was made during inception. No further issue of any instrument was made during the year;
From inception the financial results of the Company have continued to grow as reflected in the yearly financial statements of the Company;
No extraordinary gain or loss has been recognised in the financial statements of the Company;
No significant variations have occurred between quarterly and final financial results of the Company during 2021;
During the year, the Company has paid a total amount of BDT 210,000 as Board meeting attendance fees without any remuneration to the directors except Managing Director(CC).
All significant deviations from the previous year in the operating results of the Company have been highlighted and reasons thereof have been explained;
During 2021 a total of 5 (five) Board meetings were held, which meets the regulatory requirements in this respect.
Rights and interests of minority shareholders have been duly protected by means of transparent operations and proper disclosure of material information of the Company.
No bonus or stock dividend has been declared as interim dividend during the year.

Corporate Governance Compliance Status

GQBPIL believes in sustainable business development through quality assurance, customer focus, innovation, fairness, transparency and compliance, and continuous improvement for enriching the quality of life of the people. It has been a company having multinational heritage and good corporate culture. Corporate Governance at its utmost has been practiced in GQBPIL. However, the Board and management of the Company are committed to continuously strive for the highest standards and ethics in governance practices with a view to safeguard the interest of its shareholders and innumerable stakeholders. In this connection, we are pleased to confirm that the Company has meanwhile complied with all the requirements under the Corporate Governance Code adopted by Bangladesh Securities and Exchange Commission. The compliance checklist for the year ended 30 June 2021 in this regard is appended in Annexure-V of the Directors’ Report. However, the Corporate Governance Compliance Certificate as provided by M/s. Dewan Nazrul Islam & Co. Chartered Secretaries, is also enclosed in Annexure-B of this report.

Nomination and Remuneration Committee (NRC)

In compliance with the Corporate Governance Code, the Board of Directors of the Company has constituted a Nomination and Remuneration Committee (NRC) as a sub-committee of the Board with the following non-executive Directors:

Mainul Huq, Chairman Independent Director
Qazi M.Salman Sarwar, Member Director
Sara Huq,Member Director

Mr. Uzzal Kumar Saha, the Company Secretary is the ‘Secretary’ of the NRC. A detailed Terms of Reference (ToR) of the NRC and Policy has also been approved by the Board. The terms of reference of the Nomination & Remuneration Committee and Policy include, among other items, the determination of the Company’s policy on unique remuneration for top executives, the review and approval of the Company’s remuneration policy, the creation of evaluation criteria for independent directors and the Board of Directors, identifying persons who are eligible to become directors and who may be appointed to senior management in accordance with the criteria laid down and recommending the appointment or removal of such persons to the Board and discharging such other functions and exercising such other powers as the Board of Directors may delegate/direct from time to time. During the financial year 2020-21 one (1) meeting of the Nomination and Remuneration Committee (NRC) was conducted on 18 November 2021.

Dividend Recommended

Considering the current market scenario and pandemic situation, the Board of Directors has recommended 5% cash dividend for the year ended June 30, 2021 for the General Shareholders (the Directors & Sponsors of the Company will not receive any dividend) subject to approval by the shareholders in the 39th AGM. Total paid up shares is 89,280,914 nos. and General Shareholders holding is 51,89,278 number of shares. Director & Sponsor are holding 37,38,813 nos. of shares (except independent Director).

Financial Reporting and Transperency

Financial statements have been prepared in line with the International Financial Reporting Standards (IFRS) / Bangladesh Financial Reporting Standards (BFRS). Financial data is circulated as appropriate within and outside the organization. The timely publication of quarterly, half yearly and annual financial statements with comprehensive details beyond the statutory requirements has been a salient feature of the financial reporting system. Chief Financial Officer and Company Secretary is responsible for instituting a system of internal controls to ensure the effective implementation of all policies and decisions of the Board. The Board ensures that the CFO and Company Secretary maintain full and effective control of all significant strategic, financial, organizational and compliance issues.

Subsequent Events:

The following significant events have occurred subsequently between the Balance Sheet dates, the date when the financial statements were authorized for issue by the Board of Directors:

Name of the Institute where Investment made	Dividend Earned
Bank Asia Ltd.	13,031
Eastern Bnak Ltd.	22,767
Exim Bank Ltd.	272,197
Standard Bank Ltd.	166,679
National Bank Ltd.	549,373
Prime Insurance Co.Ltd.	239,120
BSCCL	2,381
EBL 1st MF	150,103
Fractional Bonus	13
Total	14,15,664

All the earnings as mentioned above will be reflected in the accounts of 2021-2022 of the Company.

Relation and communication with share holders:

The Company has been arranging Annual General Meeting regularly from its inception as per Companies Act and has been publishing all the information like suppliers, price sensitive information to the shareholders, Securities and Exchange Commission and Stock Exchanges through the daily newspapers. As a result, the shareholders, concerned organization and people get required information about the Company in due time.

Un-distributed dividend and NRC Report:

Un-distributed Dividend Report, Page No: 83 NRC Report, Page No: 51 is disclosed of this report.

Respectfulness to law:

The Company is not involved in any work contrary to rules and regulations and relevant laws of the land. All rules and regulations are duly followed.

Conclusions:

The Board of Directors record with deep appreciation the contribution made, support & co-operation given by the Officers, Staff, Workers, Customers, Creditors, Banks, Insurance Companies, Utility Providers, Bangladesh Securities and Exchange Commission, Dhaka Stock Exchange, Chittagong Stock Exchange, Central Depository Bangladesh Ltd. and all the shareholders for their continued support and confidence.

Allah Hafiz.

On behalf of the Board of Directors.

Salma Huq

Chairperson.