Baba Arts Ltd carries a clean regulatory record and a stable, unpledged promoter holding, but the board has asked shareholders to approve up to ₹300 crore a year in IPR deals with a promoter-owned firm that has no transaction history, while related-party receivables have nearly tripled. A ₹7.65 crore service-tax demand from 2018 remains under appeal.
Key findings
- Shareholders asked to approve ₹300 crore in IPR deals with a promoter firm that has no prior transactions
Major- The company sought approval for material related-party transactions with M/s Baba Films, owned by the promoter, to acquire film IPR worth up to ₹300 crore annually over five years from June 2022, despite completing no transactions under a prior 2018 approval. Related-party trade receivables nearly tripled from ₹13.64 lakhs in FY2022 to ₹65.10 lakhs in FY2024. A separate approval covered up to ₹100 crore a year in profit-sharing, IPR acquisition, and IPR sales with Graceland New Media LLP, where the promoter’s son holds 34%. - A ₹7.65 crore service-tax demand from 2018 remains under appeal
Minor- The Commissioner of Service Tax Mumbai VI confirmed a demand of Rs. 7,64,70,058 plus interest and penalty for FY 2011-12 to 2014-15 via an order dated 28 February 2018. The company filed an appeal before CESTAT, Mumbai and deposited Rs. 57,35,255 at the time of filing. Two smaller MVAT demands of Rs. 18,84,486 and Rs. 2,853 have been fully deposited. - Promoter family holds 74.68% and controls the board with near-unanimous votes
Minor- Promoter shareholding stayed at 74.68-74.69% from FY2021 to FY2026 with zero pledge. Mr. Gordhan P. Tanwani served as Chairman & MD drawing nil remuneration until his resignation on 31 October 2024, while his son Mr. Nikhil G. Tanwani was appointed Whole Time Director in June 2022 and elevated to Chairman & MD from 1 November 2024. All director appointments across FY2021-FY2025 received 99.99%-100% votes in favour. - Revenue is shifting from IPR trading to digital monetisation, with customer concentration rising
Minor- Income from trading in IPR fell 86% from ₹17.95 crore in FY2022 to ₹2.52 crore in FY2023, while a new line “monetization and sale of Digital Media content” contributed ₹7.34 crore in FY2024. Three customers each exceeded 10% of revenue in FY2023, up from one in FY2022 and none in FY2021. The company changed its IPR revenue model from commission to principal trading in FY2021, with the principal model continuing at ₹17.95 crore in FY2022. - Deferred tax swung between asset and liability, while prior-period adjustments recurred
Minor- The company elected the new lower 22% tax rate under Section 115BAA from FY2024. Deferred tax swung from an asset of ₹2.94 lakhs in FY2020 to a liability of ₹6.78 lakhs in FY2021, an asset of ₹6.78 lakhs in FY2022, a liability of ₹0.44 lakhs in FY2023, and an asset of ₹1.15 lakhs in FY2024. Prior-period tax adjustments recurred, including a charge of ₹7.75 lakhs in FY2024 and a write-back of ₹5.44 lakhs in FY2023. - One legacy SEBI penalty paid in 2017; no other regulator actions across seven years
Clean- SEBI levied a penalty of Rs. 3,00,000 on 7 August 2017 for a listing-agreement disclosure violation; the company paid it on 16 August 2017. Every Board’s Report from FY2020 through FY2024 states no penalties, punishments, or compounding of offences occurred during the year. A Practicing Company Secretary certificate dated 25 May 2023 confirmed no director had been debarred or disqualified by SEBI or MCA as of 31 March 2023.
What to watch
- Service-tax appeal. The appeal against the confirmed demand of Rs. 7,64,70,058 (order dated 28 February 2018) remained pending before CESTAT, Mumbai as of the FY2024 reporting period.
- RPT approvals. Shareholder approval for material related-party transactions with Graceland New Media LLP, Baba Films, and Bhagwati Media Private Limited was obtained at the AGM on 18 September 2025; actual transaction values will be reported in subsequent periods.
Bottom line: This is a disclosed record with a clean seven-year regulatory history and a stable, unpledged promoter holding. The risk sits in the scale of the proposed IPR transactions with a promoter-owned firm that has no track record, set against receivables from related parties that have already nearly tripled. Watch whether the ₹300 crore annual approvals translate into actual transactions, and whether the 2018 service-tax appeal reaches a conclusion.