Mar 31, 2023
HBL Power Systems Limited,
Hyderabad
REPORT ON THE AUDIT OF THE STANDALONE FINANCIAL STATEMENTS
OPINION
We have audited the accompanying standalone Ind AS financial statements of HBL Power Systems Limited Hyderabad, ("the Company") which comprise the Balance Sheet as at March 31, 2023, the Statement of Profit and Loss, Statement of Changes in Equity and Statement of Cash Flows for the year then ended and notes to the financial statements including a summary of significant accounting policies and other explanatory information. (hereinafter referred to as "the financial statements").
In our opinion and to the best of our information and according to the explanations given to us, the aforesaid financial statements give the information required by the Companies Act, 2013 ("the Act'') in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at March 31,2023 and its profit, changes in equity and its cash flows for the year ended on that date.
We conducted our audit in accordance with the Standards on Auditing (SAs) specified under section 143 (10) of the Companies Act, 2013. Our responsibilities under those Standards are further described in the Auditor''s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the company in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India (ICAI) together with the ethical requirements that are relevant to our audit of the financial statements under the provisions of the Companies Act, 2013 and the Rules thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion on the standalone financial statements.
KEY AUDIT MATTERS
Key audit matters are those matters that in our professional judgment were of most significant in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. We have determined that there are no key audit matters to communicate in our report.
INFORMATION OTHER THAN THE FINANCIAL STATEMENTS AND AUDITOR''S REPORT THEREON
The Company''s Board of Directors is responsible for the other information. The other information comprises the information included in management report and chairman''s statement but does not include the financial statements and our auditor''s report thereon.
Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information; we are required to report that fact. We have nothing to report in this regard.
RESPONSIBILITIES OF MANAGEMENT AND THOSE CHARGED WITH GOVERNANCE FOR THE STANDALONE FINANCIAL STATEMENTS
The Company''s Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 ("the Act") with respect to the preparation of these standalone financial
statements that give a true and fair view of the financial position, financial performance, changes in equity and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Accounting Standards (Ind AS) specified under Section 133 of the Act.
This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the Board of Directors is responsible for assessing the Company''s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Board of Directors either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.
The Board of Directors is also responsible for overseeing the Company''s financial reporting process.
AUDITOR''S RESPONSIBILITIES FOR THE AUDIT OF THE FINANCIAL STATEMENTS
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor''s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:
⢠Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery,
intentional omissions, misrepresentations, or the override of internal control.
⢠Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 143(3)(i) of the Companies Act, 2013, we are also responsible for expressing our opinion on whether the company has adequate internal financial controls system in place and the operating effectiveness of such controls.
⢠Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
⢠Conclude on the appropriateness of management''s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company''s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor''s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor''s report. However, future events or conditions may cause the Company to cease to continue as a going concern.
⢠Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor''s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS
(1) As required by the Companies (Auditor''s Report) Order, 2020 ("the Order") issued by the Central Government of India in terms of sub-section (11) of section 143 of the Act, we give in the "Annexure A" a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.
(2) As required by Section 143 (3) of the Act, we report that:
(a) We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit.
(b) In our opinion, proper books of account as required by law have been kept by the company so far as it appears from our examination of those books.
(c) The Balance Sheet, the Statement of Profit and Loss, Statement of Changes in Equity and the Cash Flow Statement dealt with by this report are in agreement with the books of account.
(d) In our opinion, the aforesaid standalone financial statements comply with the Accounting Standards prescribed under Section 133 of the Act, read with rule 7 of the Companies (Accounts) Rules, 2014.
(e) On the basis of the written representations received from the Directors as on March 31,2023, taken on record by the Board of Directors, none of the Directors is disqualified as on March 31,2023 from being appointed as a Director in terms of Section 164(2) of the Act.
(f) With respect to the adequacy of the internal financial controls over financial reporting of the company and the operating effectiveness of such controls, refer to our separate Report in "Annexure B".
(g) With respect to the other matters to be included in the Auditor''s Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us:
(i) The company has disclosed the impact of pending litigations on its financial position in its financial statements - Refer Note 39.2 to the standalone financial statements.
(ii) The company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses.
(iii) There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the company.
(iv) (a) The respective managements of the Company and its subsidiaries which are companies incorporated in India, whose financial statements have been audited under the Act, have represented to us that, to the best of their knowledge and belief, other than as disclosed in the notes to accounts, no funds (which are material either individually or in the aggregate) have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company or any of such subsidiaries to or in any other person or entity, including foreign entity ("Intermediaries"), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall, directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company or any of such subsidiaries ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the ultimate beneficiaries.
(b) The respective managements of the Company and its subsidiaries which are companies incorporated in India, whose financial statements have been audited under the Act, have represented to us that, to the best of their knowledge and belief, no funds (which are material either individually or in the aggregate) have been received by the Company or any of such subsidiaries from any person or entity, including foreign entity ("Funding Parties"), with the understanding, whether recorded in writing or otherwise, that the Company or any of such subsidiaries shall, directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the ultimate beneficiaries.
(c) Based on the audit procedures that have been considered reasonable and appropriate in the circumstances performed by us on the Company and its subsidiaries which are companies incorporated in India whose financial statements have been audited under the Act, nothing has come to our notice that has caused us to believe that the representations under sub-clause (i) and (ii) of Rule 11(e), as
provided under (a) and (b) above, contain any material misstatement.
(v) (a) The dividend declared and paid by the Company during the year is in accordance with Section 123 of the Act, as applicable.
(b) As stated in Note 39.3 to the standalone financial statements, the Board of Directors of the Company have proposed dividend for the year which is subject to the approval of the members at the ensuing Annual General Meeting. The amount of dividend proposed is in accordance with section 123 of the Act, as applicable.
(vi) As proviso to Rule 3(1) of the Companies (Accounts) Rules, 2014 is applicable to the Company with effect from April 1,2023, reporting on audit trail in pursuance of Rule 11(g) of the Companies (Audit and Auditors) Rule, 2014 is considered inapplicable for the current year.
(h) With respect to the other matters to be included in the Auditor''s Report in accordance with the requirements of section 197(16) of the Act, as amended, in our opinion and to the best of our information and according to the explanations given to us, the remuneration paid by the Company to its directors during the year is in accordance with the provisions of section 197 of the Act.
Mar 31, 2018
Dear Members
The Directors take pleasure in presenting the 32nd Annual Report for the financial year ended on 31st March 2018. The standalone financial performance is presented below prepared in accordance with the Ind AS notified under the Companies (Indian Accounting Standards) Rules 2015 and Companies (Indian Accounting Standards) Amendment Rules, 2016 as amended.
Rs. in lakhs
Sl. |
Particulars |
2017-18 |
2016-17 |
1 |
Revenue from Operations |
1,62,411.26 |
1,52,986.23 |
2 |
Other Income |
2,271.99 |
1,720.51 |
3 |
Total Income |
1,64,683.25 |
1,54,706.74 |
4 |
Total Expenditure |
1,49,825.95 |
1,39,981.36 |
5 |
Earnings before interest, depreciation and tax (EBIDTA) |
14,857.30 |
14,725.38 |
6 |
Finance Costs |
4,054.57 |
4,621.68 |
7 |
Depreciation & Amortization expenses |
4,603.19 |
4,817.75 |
8 |
Profit before Exceptional items and Tax |
6,199.54 |
5,285.95 |
9 |
Exceptional Items - Income / (Expenses) |
(975.77) |
(279.03) |
10 |
Profit before tax (PBT) |
5,223.77 |
5,006.95 |
11 |
Provision for tax & Deferred tax adjustment |
2,258.08 |
1,445.52 |
12 |
Other comprehensive income (net) |
10.10 |
165.68 |
13 |
Total Comprehensive Income for the Period (PAT) |
2,955.59 |
3,220.38 |
14 |
Earnings Per Share (Diluted EPS in Rupees) |
1.07 |
1.16 |
15 |
Proposed Dividend (on share of Re 1 each) |
25% |
25% |
Performance Review 2017-18
Year 2017-18 has been a consistent good year for the Company which focused on sustaining long-term strategies that add value. Revenue from operations showed an increase of 6.2% over last year while Profit before Tax (PBT) showed an increase of 4.3%. Over the past few years we have made sustained efforts to improve competitiveness through a number of initiatives. Most of these have reached maturity. The steady improvement over the past few years and the positive results during the year is a result of these initiatives. Consequent to the introduction of Goods and Services Tax (GST) with effect from July 1, 2017, your Company successfully switched over to the new GST system, notwithstanding initial challenges. Central Excise, Value Added Tax (VAT) etc. have been subsumed into GST in accordance with Indian Accounting Standards.
Current yearâs performance
Your Company is operating in an industry sector that faces price volatility in raw materials and competitive demands of customers. Over the past few years we have undertaken various initiatives resulting in better systems and policies, tighter execution and greater competitiveness. These are structural and internal changes that will strengthen the Company greatly over the medium and long term. Business teams have been retrained to handle the emerging challenges. These transformatory efforts will serve us well in the coming years.
Outlook for 2018-19 remains steady with a continuous domestic economic growth forecast of the Government. Opportunities are expected in the existing and new areas of business which shall enable your Company to embark on growth path barring unforeseen circumstances. Your Company has been preparing itself to gain from the anticipated opportunities in Railways and Defence business segments in the coming future. The Management Discussion and Analysis section of the Annual Report presents a detailed business review of the Company.
Dividend
Your Directors are pleased to recommend a dividend of 25% (ie Rs. 0.25 paise per equity share of Re.l each fully paid up) for the Financial Year 2017-18 subject to the approval of the members at the ensuing Annual General Meeting. The proposed dividend including Dividend Distribution Tax will absorb Rs. 835.44 lakhs.
Subsidiaries, Associate and Joint Venture Companies (as on March 31, 2018)
As per the notification issued by the Ministry of Corporate Affairs on July 27, 2016 with regard to Companies (Accounts) Amendment Rules, 2016, the report of the Board shall contain highlights of performance of subsidiaries, associates and joint venture companies and their contribution on overall performance of the company. Accordingly, we hereby furnish the following:
Subsidiary companies |
HBL America Inc. HBL Germany GmBH, Germany SCIL Infracon Private Limited HBL Suntech LLP |
Associate companies within the meaning of Section 2(6) of the Companies Act, 2013 (âActâ). |
Naval Systems & Technologies Pvt Ltd (NSTL) Kairos Engineering Limited |
Joint Venture Company |
Gulf Batteries Company Ltd in the Kingdom of Saudi Arabia (KSA). |
The Consolidated Financial Statements presented by the Company include the financial results of its subsidiary companies, associates and joint ventures except that of Gulf Batteries Company Ltd, prepared in accordance with the Companies Act, 2013 (Act) and applicable Ind AS notified under the Companies (Indian Accounting Standards) Rules 2015 and Companies (Indian Accounting Standards) Amendment Rules, 2016 as amended.
Pursuant to provisions of section 129(3) of the Act, a statement containing salient features of the financial statements of the Companyâs subsidiaries in Form AOC-1 is attached to the financial statements of the Company and as per the provisions of section 136 of the Act, the standalone financial statements of the Company, consolidated financial statements along with relevant documents and separate audited accounts in respect of subsidiaries, are available on the website of the Company.
There has been no material change in the nature of the businesses of the subsidiaries except as disclosed hereunder.
Highlights of performance of subsidiaries, associates and joint venture companies and their contribution on overall performance of the Company: Subsidiary Companies HBL America Inc. (HBLA)
In fiscal year 2017-18, HBLA focused on improving its sales and marketing team with external recruitment. We received key approvals for our VRLA range allowing wider acceptance and deployment in earthquake prone areas. Revenues were up 11% from the prior year and margins improved. Key qualification work in the railroad market went smoothly. With the rail markets large, long duration tenders, we expect our first contracts in 2018-19. Flight trials continued for the newest long range executive jet and PMA certification for a key passenger aircraft battery was granted by the FAA.
HBL Germany GmbH (HBLG)
Revenues declined 18% from the prior year, but margins improved while operating expenses were reduced. Net income was reduced by provision made for prior yearâs tax audit assessment - the assessment is not final and is being contested. New business has been achieved with key OEMâs in France and Spain which will be long term, and sustainable to re- grow our European business. HBL battery and battery box systems were deployed on new commuter trains in Germany - Made in India, and fully qualified to German standards.
SCIL Infracon Private Limited (SIPL)
Shareholders are already aware that SIPL is not in operation since a few years, except for follow up of old book debts realisation. The net loss of Rs 27.65 lakhs reported in the year was mainly due to payment of customs duty obligation against a Letter of Undertaking for import of capital goods cleared duty free against EPCG authorisation in 2007 and non-fulfilment of export obligation for various reasons. This obligation related to the period before your Company invested in SIPL. In a situation of no business operations since several years SIPL Directors are examining various alternatives about the necessity to continue this Company.
HBL Suntech LLP
HBL Suntech LLP which was incorporated in 2011 for trading of monoblock batteries discontinued operations with effect from 1 April 2014 due to continuous losses and unviable business outlook. The loss of Rs. 13.86 lakhs reported in the year was mainly due to payment of certain statutory obligations like VAT assessments of past years. It is to be noted that due to non-operational reasons, the Registrar of Companies for AP and Telangana, issued letters in April 2018 and May 2018 pursuant to section 75 of the Limited Liability Partnership Act 2008 read with rule 37 of the LLP Rules 2009, to strike off the name of HBL Suntech LLP from their Register after completion of due notice period.
Associate Companies Naval Systems and Technologies Limited (NSTL)
FY 2017-18 was the record best performance year for NSTL with an income of Rs 1772.16 lakhs and a PBT of Rs 514.46 lakhs. NSTL is a service provider to foreign Original Equipment Manufacturers (OEMs) mainly operating in the field of marine equipment in Indian Navy. The services provided include installation, trials and commissioning of various equipment, annual maintenance, specialised technical documentation etc. NSTL has a proven expertise in providing technical support, conducting feasibility studies for complex systems, market research and software support. Your Directors believe that NSTL will continue to grow into different niche areas, and maintain its profitability, barring unforeseen circumstances.
Kairos Engineering Limited (KEL)
KEL was not active since a few years. In a situation of no business operations, in response to an application dated 25th November 2017 made under Section 248 of the Companies Act, 2013 and Companies (Removal of Name of Companies from the Register of Companies) Rules, 2016 KEL name was struck off during the year from the Register of Companies maintained by the Registrar of Companies, Andhra Pradesh and Telangana.
Joint Venture Company
Gulf Batteries Co. Ltd (GBC) in the Kingdom of Saudi Arabia (KSA)
Your Company holds 40% stake in GBC. GBC has an accumulated loss of nearly 75% of its capital. As per Saudi Arabian laws, in a situation like this, such Company is terminated by force of law. Your Company therefore filed a liquidation petition for liquidation (winding up) of GBC after considering legal opinion. The case is pending befor a Commercial Court in Saudi Arabia. In view of the pending liquidation, GBC financials statements have not been available for consolidated financial statements of the Company.
Material Changes and Commitments
No material changes and commitments have occurred after the closure of the FY 2017-18 on March 31, 2018, till the date of this Report, which would affect the financial position of your Company.
Directorsâ Responsibility Statement
Pursuant to Section 134(5) of the Companies Act, 2013, the Board of Directors, to the best of their knowledge and ability, confirm that:
i. in preparation of the annual accounts, the applicable Ind AS accounting standards have been followed and there are no material departures;
ii. they have selected such accounting policies as per Ind AS and applied them consistently 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 of the Company for that period;
iii. they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
iv. they have prepared the annual accounts on a going concern basis;
v. they have laid down internal financial controls to be followed by the Company and such internal financial controls are adequate and operating effectively;
vi. they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems 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, cost, statutory and secretarial auditors and external consultants and the reviews performed by management and the relevant board committees, including the audit committee, the board is of the opinion that the Companyâs internal financial controls were adequate and effective during the financial year 2017-18.
Directors and Key Managerial Personnel (KMP)
Your Directors play a very active role in the Company. They bring in great expertise in business operations and strategy and management. Their advice to the Board over the years consistently helped the Company to deliver strong performance. The following Directors have been appointed:
Name of the appointee |
DIN |
Date of appointment |
Appointed as |
Period of appointment (Five years) |
||
From |
To |
|||||
Mr. K V Sriram |
00073911 |
February 07, 2018 |
Independent Director |
February 07, 2018 |
February 06, 2023 |
|
Mrs. Richa Datta |
08084501 |
March 15, 2018 |
Independent Director (Woman) |
March 15, 2018 |
March 14, 2023 |
|
Mr. M Chandra Mohan |
00633439 |
August 10, 2018 |
Independent Director |
August 10, 2018 |
August 09, 2023 |
|
Mrs. Kavita Prasad |
00319292 |
August 10, 2018 |
Additional Director and CFO |
5 years w.e.f. August 10, 2018 |
||
Mr. Abhishek G Poddar |
07143528 |
August 10, 2018 |
Additional Director |
Not applicable |
||
Mr. Mitin C Jain (DIN 06390954) resigned as a Director with effect from August 10, 2018. Your Board conveys sincere appreciation for the advice and services rendered by him to the Company during his tenure as a Director.
Mr. MSS Srinath (DIN 00319175) retires by rotation and is eligible for re-appointment. Your Board recommends for his reappointment.
All the Directors hold office upto the date of the ensuing Annual General Meeting of the Company. Appointment of Independent Directors and Executive Director shall be for 5 years as placed before the members for their approval. Brief profile and experience of the appointees has been provided elsewhere in the Annual Report.
During the year, the non-executive directors of the Company had no pecuniary relationship or transactions with the Company except for the sitting fee paid for attending the Board meetings.
Number of meetings of the board
Five meetings of the board were held during the year. For details of the meetings of the board, please refer to the Corporate Governance Report, which forms part of this report.
Board evaluation
Pursuant to the provisions of the Companies Act, 2013 and the Corporate Governance requirements prescribed by SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015, the Board has carried out an annual evaluation of its own performance and that of its Committees as well as performance of all the Directors individually during the year. Feedback was sought by way of a structured questionnaire covering various aspects of the Boardâs functioning such as adequacy of the composition of the Board and effectiveness of its Committees, execution and performance of specific duties, governance, meaningful and constructive contribution and inputs in meetings etc. Evaluation was carried out based on responses received from the Directors. A separate meeting of the Independent Directors also was held where in performance of non-Independent Directors, performance of the board as a whole and performance of the Chairman and Managing Director was evaluated. The Directors expressed their satisfaction with the evaluation process.
Policy on Directorsâ appointment and remuneration and other details
The Companyâs policy on Directorsâ 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 the Directorsâ report.
Audit committee
The details pertaining to composition of Audit Committee are included in the Report on Corporate Governance, which forms part of this report. Powers and role of the Audit Committee are included in Corporate Governance Report. The Board of Directors has accepted all the recommendations of the Audit Committee placed at respective meetings. During the year, Mr. KV Sriram and Mrs. Richa Datta who were appointed as Additional Directors (Non-Executive, Independent) were also appointed on the Audit Committee.
Risk Management
The Company has deployed a comprehensive framework to identify, monitor and take all necessary steps towards mitigation of various risk elements which can impact the existence of the Company on a periodic basis. All the identified risks are managed through continuous review of business parameters by the Management and the Board of Directors is also informed of the risks and concerns.
Internal Financial Controls
Pursuant to Section 134 of the Companies Act 2013, the Directors state that the Board, through the operating management has laid down Internal Financial Controls to be followed by the Company and such policies and procedures were adopted by the Company for ensuring the orderly and efficient conduct of its business, including adherence to Companyâs policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information. The Audit Committee evaluates the internal financial control system periodically. To the best of their knowledge and ability and inputs provided by various assurance providers confirm that such financial controls are adequate with reference to the size and operations of the Company and no reportable material weakness or deficiency in the design or operation of internal financial controls was observed.
Particulars of loans, guarantees and investments
The particulars of loans, guarantees and investments have been disclosed in the financial statements.
Transactions with related parties
None of the transactions with related parties falls under the scope of Section 188(1) of the Act. 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 I in Form AOC-2 and the same forms part of this report. Related party transactions are in the ordinary course of business and on armâs length basis.
Corporate social responsibility
The Company has a Board level committee that supervises its Corporate Social Responsibility (CSR) activities. The brief outline of the CSR Policy of the Company and the initiatives undertaken by the Company on CSR activities during the year are set out in Annexure II of this report in the format prescribed in the Companies (Corporate Social Responsibility Policy) Rules, 2014.
Extract of Annual Return
Pursuant to Section 92(3) of the Act, the extract of Annual Return is given in Annexure III in the prescribed Form MGT-9, which forms part of this report.
Information regarding employees and related disclosures
Your Company consistently believes in concerted efforts in talent management and succession planning practices, strong performance management and learning and training initiatives. Rewards and recognition are commensurate with performance and that employees have the opportunity to develop and grow.
There were no complaints relating to child labour, forced labor, involuntary labor, sexual harassment in the last financial year and pending as on the end of the financial year.
S.No |
Category |
No.of complaints filed during the financial year |
No.of complaints pending as on end of the financial year |
1 |
Child labor / forced labor/ involuntary labor |
0 |
0 |
2 |
Sexual harassment |
0 |
0 |
3 |
Discriminatory employment |
0 |
0 |
Disclosure as required under Section 22 of Sexual Harassment of women at workplace (Prevention, Prohibition and Redressal) Act, 2013
Your Company believes in providing a healthy environment to all HBL Employees and does not tolerate any discrimination or harassment in any form. The Company has in place a gender neutral, Prevention of Sexual Harassment (POSH) policy in line with the requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. This policy is frequently communicated in assimilation programs and at regular intervals to all HBL employees. Following are some of the awareness programs imparted to train HBL Employees and Internal complaints committee (ICC).
1. It is mandatory for every new joiner to undergo a program on âPrevention of Sexual Harassment â during induction program.
2. The Internal Complaints Committee is trained by external agency when the committee members are on-boarded to the committee.
3. Policy of âPrevention of Sexual Harassmentâ at workplace is available on internet for HBL employees to access as and when required.
4. The âPrevention of Sexual Harassmentâ policy is placed in conspicuous places for better visibility and communication of the policy. The posters are also displayed in regional languages at all HBL offices.
HBL has setup an Internal Complaints Committee (ICC) both at the Head office / Corporate office and at every major location where it operates in India. ICC has equal representation of men and women. ICC is chaired by a senior woman employee and has an external women representation.
ICC investigates the case(s) and provides its recommendations to the apex authority. The apex authority upon receiving the recommendations from ICC arrives at the conclusion and acts upon such recommendations.
Penal Consequences of Sexual Harassment (âSHâ) and the constitution of the ICC are displayed at conspicuous places.
Particulars of employees
The information required under Section 197 of the Act read with rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are given below:
Employee Name |
Dr. AJ Prasad |
Mr. Suresh Kalyan |
Total remuneration CTC (Rs lakhs) |
Rs 96.00 lakhs and commission Rs. 191.27 lakhs |
Rs. 161.29 lakhs |
Designation and Nature of Duties |
Chairman and Managing Director |
Chief Operating Officer (COO) |
B. Tech from IIT, Khargpur, MS in Management from |
||
Qualification / Experience (years) |
Massachusetts Institute of Technology USA, Doctorate in International Business from Columbia University, USA. |
BSc. Chartered Accountant / 29 |
Date of commencement of employment |
Promoter of the Company |
17.11.2014 |
Age (years) |
73 |
54 |
Last employment held before Joining the Company |
Administrative Staff College of India |
Amara Raja Batteries Limited, Hyderabad, as President -Finance |
a. The ratio of the remuneration of each Non-Executive director to the median remuneration of the employees of the Company for the financial year: Not Applicable as none of the Non- Executive was paid any remuneration.
b. The percentage increase in remuneration of each Director, Chief Executive Officer, Chief Financial Officer, Company Secretary in the financial year:
Directors, Chief Executive Officer, Chief Financial Officer and Company Secretary |
% increase in remuneration in the financial year |
Dr. A J Prasad, Chairman and Managing Director |
No change |
Mr. MSS Srinath, Whole-Time Director |
No change |
Mrs. A Kavita Prasad - CFO |
No change |
Mr. MVSS Kumar, Company Secretary |
4.75% |
c. The percentage increase in the median remuneration of employees in the financial year: 5- 15 %
d. The number of permanent employees on the rolls of Company: 1989 (as at 31 March 2018)
e. Comparison of the remuneration of the key managerial personnel against the performance of the Company:
Aggregate remuneration of key managerial personnel (KMP) in 2017-18 |
Rs lakhs |
212.86 |
Commission on profits to CMD |
191.27 |
|
Revenue |
Rs lakhs |
1,62,411.26 |
Remuneration of KMPs |
As % of revenue |
0.25 |
Remuneration of KMP |
As % of PBT |
7.73 |
f. Comparison of each remuneration of the key managerial personnel against the performance of the Company:
Particulars |
Dr. AJ Prasad |
MSS Srinath |
Kavita Prasad |
MVSS Kumar |
K Mahidhar (upto 31.8.2017) |
Designation |
CMD |
Executive Director |
CFO |
Company Secretary |
Vice President Finance |
Remuneration in 2017-18 |
96.00 |
50.40 |
26.25 |
25.13 |
15.08 |
Commission on profit |
191.27 |
- |
- |
- |
|
Revenue (net) |
1,62,411.26 |
||||
Profit before Tax (PBT) |
5,223.77 |
||||
Remuneration as % of Revenue |
0.25 |
||||
Remuneration (as % of PBT) |
7.73 |
g. The key parameters for any variable component of remuneration availed by the directors:
Only commission on net profits was paid to Chairman and Managing Director in addition to the monthly remuneration.
h. 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.
Disclosure requirements
As per listing Regulations, , corporate governance report with auditorsâ certificate thereon and management discussion and analysis are attached, which form part of this report.
Vigil Mechanism / Whistle blower policy
The Company has formulated a vigil mechanism /whistle blower policy to provide a vigil mechanism for employees including directors of the Company to report genuine concerns. The provisions of this policy are in line with the provisions of the Section 177(9) of the Act and the Regulation 22 of the SEBI (LODR) Regulations, 2015\.
Deposits from public
The Company has not accepted any deposits from public and as such, no amount on account of principal or interest on deposits from public was outstanding as on the date of the balance sheet.
Conservation of Energy, Technology Absorption and Foreign Exchange Earnings & Outgo
Information relating to conservation of energy, technology absorption and foreign exchange earnings and outgo, as required under Section 134(3)(m) read with Rule 8(3) of the Companies (Accounts) Rules, 2014 is given in the Annexure hereto.
Corporate Governance
Pursuant to Schedule V of the SEBI (Listing Obligations and Disclosure Requirements), Regulations 2015, a separate section titled âReport on Corporate Governanceâ is attached to the Annual Report.
Statutory Auditors
M/s Rao & Kumar, Chartered Accountants (FRN 03089S) Visakhapatnam who are the Statutory Auditors of the Company have been appointed by the members at the 31st Annual General Meeting (AGM) of the Company held on 26th September 2017 for a period of five years to hold office till the conclusion of AGM in 2022 subject to ratification of members at every year AGM. Accordingly, they retire at the conclusion of the ensuing AGM and are eligible for reappointment. Your Directors recommend for their reappointment at the AGM.
The Report given by M/s. s Rao & Kumar, Chartered Accountants on the financial statements of the Company for the year 2017-18 is part of the Annual Report. There has been no qualification, reservation or adverse remark or disclaimer in their Report. During the year under review, the Auditors had not reported any matter under Section 143 (12) of the Act. Therefore no detail is required to be disclosed under Section 134 (3)(ca) of the Companies Act, 2013.
Cost Auditors
Your Board has appointed M/s K. Narashima Murthy & Co., Hyderabad, Cost Accountants (FRN 000042) as Cost Auditors of the Company for conducting the audit of cost records of the Company for the financial year 2017-18. Your Board, on recommendation of the Audit Committee, proposes to reappoint them as Cost Auditors for 2018-19, subject to the approval from Central Government.
Disclosure under Section 148(1) of the Companies Act, 2013
The Company has been maintaining required cost records as specified under Section 148(1) of the Companies Act, 2013 read with Companies (Accounts) Rules, 2014 as mended from time to time.
Secretarial Auditors
Your Board has appointed Mr. CN Kranthi Kumar (CP No: 13889), Practicing Company Secretary as a Secretarial Auditor for the financial year 2017-18 and his secretarial audit report is attached to this Report. There are no qualifications, adverse comments and observations in the secretarial audit report for the year 2017-18.
Cautionary Statement
Statements in this Annual Report, particularly those that relate to Management Discussion and Analysis, describing the Companyâs objectives, projections, estimates and expectations, may constitute âforward-looking statementsâ within the meaning of applicable laws and regulations to enable shareholders and investors to comprehend our prospects. Although the expectations are based on reasonable assumptions, the actual results might differ materially from those expressed in the statement. Important factors that could influence the Companyâs operations include global and domestic demand and supply conditions affecting selling prices of finished goods, input availability and prices, changes in government regulations, tax laws, economic developments within the country and other factors such as plant breakdowns, industrial relations etc.
Acknowledgements
Your Directors place on record sincere appreciation towards the Companyâs valued customers and esteemed shareholders for the support and confidence reposed by them in the management of the company and look forward to the continuance of this mutually supportive relationship in future and remain committed to delivering and enhancing shareholder value.
Your Directors take this opportunity to thank all the Companyâs Bankers, concerned Central and State Government Departments, Agencies for their support and co-operation to the Company. The Board has special appreciation for the employees for their dedicated services and their ability to deliver good results in the future.
For and on behalf of the Board
Place: Hyderabad Dr. A J Prasad
Date : August 10, 2018 Chairman and Managing Director
Mar 31, 2017
To Dear Members,
The directors take pleasure in presenting the 31st annual report for the financial year ended on March 31, 2017. The financial performance is presented below (standalone basis as per Ind AS).
Rs, in Lakhs
S No. |
Particulars |
2016-17 |
2015-16 |
1 |
Revenue from operations |
152,986.23 |
139,570.67 |
2 |
Other income |
1,720.51 |
1,263.97 |
3 |
Total income |
154,706.74 |
140,834.64 |
4 |
Total expenditure |
139,981.36 |
126,047.87 |
5 |
Earnings before interest, depreciation and tax (EBIDTA) |
14725.38 |
14786.77 |
6 |
Finance costs |
4,621.68 |
6,835.66 |
7 |
Depreciation and amortization expenses |
4,817.75 |
5,035.40 |
8 |
Profit before exceptional items and tax |
5,285.95 |
2,915.71 |
9 |
Exceptional items - income / (expenses) |
(279.03) |
(896.16) |
10 |
Profit before tax (PBT) |
5,006.95 |
2,019.55 |
11 |
Provision for tax and deferred tax adjustment |
1,445.52 |
1,237.57 |
12 |
Total comprehensive income for the period (PAT) |
3,220.38 |
405.19 |
13 |
Earnings per share (basic and diluted EPS of C1/- each) |
1.16 |
0.16 |
14 |
Proposed dividend (on share of C1 each) |
25% |
25% |
Adoption of Indian Accounting Standards (Ind AS)
As notified by the Ministry of Corporate Affairs, your company adopted Indian Accounting Standards (Ind AS) with effect from April 1, 2016. The financial statements of the company for the year have been prepared in accordance with the Ind AS notified under the Companies (Indian Accounting Standards) Rules 2015 and Companies (Indian Accounting Standards) Amendment Rules, 2016 (as amended). For all the periods up to and including the year ended March 31, 2016, the company prepared its financial statements in accordance with requirement of previous GAAP which includes Accounting Standards notified under section 133 of the Companies Act, 2013 read together with Companies (Accounting Standards) Rules, 2006. These financial statements for the year ended March 31, 2017 are company''s first Ind AS financial statements. Accordingly, the financial statements have been prepared based on Ind AS 101- First time adoption of Indian Accounting Standards with a date of transition to Ind AS as April 1, 2015. Previous yearâs figures have been regrouped and presented according to Ind AS requirement.
Performance review 2016-17
FY 2016-17 has been a fruitful year for the company. Revenue from operations showed an increase of 9.6% over last year while Profit before Tax (PBT) showed an increase of 247%. Efforts were directed towards strengthening our capabilities as markets became competitively challenging. Improved operational efficiencies coupled with cost savings and reduction in cost of borrowings have resulted in considerable growth in gross margins and profit after tax (PAT). Your company is well prepared to address the challenges posed and is geared up to maintain growth momentum.
Current year''s performance
During the year a constitutional amendment paved the way for the long-awaited and transformational Goods and Services Tax (GST). The outlook for 2017-18 remains positive with a favorable domestic economic growth recovery forecast of the Government. Opportunities are expected in both traditional as well as new areas of business which shall enable your company to embark on a growth path. As a leading manufacturer of a variety of industrial batteries and electronics products your company has been adept at transforming itself to address the opportunities in railways and defense business segments. The management discussion and analysis (MDA) section of the annual report presents a detailed business review of the Company.
Dividend
Your directors are pleased to recommend 25% dividend (i.e. Rs,0.25 paise per equity share of Rs,1 fully paid up share) for the financial year 2016-17 as in the previous year, subject to the approval of the members at the ensuing annual general meeting. The proposed dividend including Dividend Tax will absorb Rs,834.07 lakhs.
Subsidiary companies:
The consolidated financial statements of the company and its subsidiaries prepared in accordance with the Companies Act, 2013 and applicable accounting standards, forms part of this annual report. The consolidated financial statements presented by the company include the financial results of its subsidiary companies, associates and joint ventures. (As on March 31, 2017)
Subsidiaries |
1. HBL America Inc. |
2. HBL Germany GmbH, Germany |
|
3. SCIL Infracon Private Limited |
|
4. HBL Suntech LLP |
|
Associate companies (within the meaning of Section 2(6) of the Companies Act, 2013) |
Naval Systems and Technologies Private Limited (NSTL) |
Kairos Engineering Limited (KEL) |
|
Joint Venture Company |
Gulf Batteries Co. Ltd (JV in the Kingdom of Saudi Arabia - KSA). |
There has been no material change in the nature of the business of the subsidiaries. As per provisions of section 129(3) of the Act, a table containing salient features of the financial statements of the companyâs subsidiaries in Form AOC-1 is attached.
Pursuant to the provisions of section 136 of the Act, the financial statements of the company, consolidated financial statements along with relevant documents and separate audited accounts in respect of subsidiaries, are placed on the website of the company.
Highlights of performance of subsidiaries, associates and joint venture companies and their contribution on overall performance of the company.
As per the notification issued by the Ministry of Corporate Affairs on July 27, 2016 with regard to Companies (Accounts) Amendment Rules, 2016, the report of the board shall contain highlights of performance of subsidiaries, associates and joint venture companies and their contribution on overall performance of the company. Accordingly we hereby furnish the following:
SUBSIDIARIES HBL America Inc. (HBLA)
HBL America continues to face challenges in its main sectors of oil and gas. South America continues to face economic and political uncertainty. New approvals in the rail and aviation sector in particular are progressing and will lead to increased future sales. New products are being introduced targeting the data center market.
HBL Germany GmbH (HBLG)
HBL Germany continues to strengthen our base for selling in Europe. The company has seen a steady revenue growth YoY after a lean year in FY 15. While there has been almost a 3 fold increase in revenue from FY 15 to FY 16, there has been a 20% revenue growth from FY 16 to FY 17. The sales team has been enhanced and HBLG is targeting a growth of 10% for FY 18 as compared to FY 17.
SCIL Infracon Private Limited (SIPL)
Shareholders are already aware that SIPL is not in operation since a few years. Some of the assets of SIPL were disposed off during 2015-16 to pay off the liabilities. The loss reported in the year was mainly due to write off of assets not in saleable condition. In a situation of no business operations, SIPL directors are examining various alternatives about the continuity of the company
HBL Suntech LLP
HBL Suntech LLP was incorporated in 2011 to take up trading and sale of monoblock batteries. However, due to continuous losses and unviable business outlook, operations of HBL Suntech LLP were discontinued with effect from April 1, 2014. Only administrative works related to closure of business, follow up on certain statutory matters and realization of old book debts were conducted in the year under review. The loss reported in the year was mainly due to write off of unrealized receivables.
ASSOCIATE COMPANIES
Naval Systems and Technologies Limited (NSTL)
NSTL is a service provider to foreign original equipment manufacturers (OEMs) mainly operating in the field of marine equipment in Indian Navy. The services provided include installation, trials and commissioning of various equipment, annual maintenance, specialized documentation etc. NSTL has proven expertise in providing technical support, conducting feasibility studies for complex systems, market research and software support. FY 2016-17 was a good performance year for NSTL with an income of C638.71 lakhs and a PBT of C160.50 lakhs. Barring unforeseen reasons, year 2017-18 may possibly be a very good performance year for NSTL. Your directors believe that NSTL will continue to grow into different niche areas, and maintain its profitability.
Kairos Engineering Limited (KEL)
KEL was primarily engaged in software solutions for railway signaling controls. Some of the products developed earlier are yet to get due recognition from railways for commercial implementation. As result of such delays during the year KEL did not receive any new orders and there was no operational income from sales or service. In a situation of no business operations, KEL directors are examining various alternatives about the continuity of the company.
JOINT VENTURE
Gulf Batteries Co. Ltd (GBC) in the Kingdom of Saudi Arabia (KSA)
Your company holds 40% stake in GBC. Due to low oil prices influencing the economic and business scenario in the KSA operations were below breakeven level and resulted in a loss.
Overall contribution on the performance of the Company
Pursuant to provisions of section 129(3) of the Act, highlights of financial performance and impact of the contribution of subsidiaries, associates and joint venture companies on overall performance of your company are presented in the consolidated financial statements in Form AOC-1 in Notes to accounts.
Scheme of arrangement and amalgamation between Beaver Engineering & Holdings Private Limited and the company
The board of directors of your company at a meeting held on March 23, 2016 have approved a scheme of arrangement and Amalgamation of Beaver Engineering & Holdings Private Limited (''Beaverâ or ''Transferor Companyâ) with HBL Power Systems Limited (''HBLâ or ''the Transferee Companyâ). Beaver is a holding company of HBL. The honorable bench of National company Law Tribunal (NCLT) at Hyderabad formally approved the scheme on May 9, 2017. A certified copy of the order of NCLT dated July 7, 2017 was since received by the company on July 13, 2017 and allotment of shares as per exchange ratio approved in the scheme was made at a meeting of the board of directors on July 19, 2017. Necessary steps have been taken to list these shares in BSE and NSE. These shares shall rank pari-passu in all respects with the existing shares including dividend if any declared
Material changes and commitments
No material changes and commitments have occurred after the closure of the FY 2016-17 till the date of this report, which would affect the financial position of your company.
Directors'' responsibility statement
Pursuant to section 134(5) of the Companies Act, 2013, the board of directors, to the best of their knowledge and ability, confirm that:
i. in preparation of the annual accounts, the applicable Ind AS accounting standards have been followed and there are no material departures;
ii. they have selected such accounting policies as per Ind AS and applied them consistently 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 of the company for that period;
iii. they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;
iv. they have prepared the annual accounts on a going concern basis;
v. they have laid down internal financial controls to be followed by the company and such internal financial controls are adequate and operating effectively;
vi. they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
The board wishes to inform that subsequent to approval of the standalone financial statements for the financial year 201617 at the board meeting held on May 26, 2017 and submitted to the stock exchanges and published in press subsequently, it was opined by the board of directors to reclassify / regroup certain items in the final print version of standalone financial statements circulated in this annual report.
Such reclassification / regrouping of the figures constitute an overall change of approximately 0.18% of the balance sheet total between that presented at the Board meeting held on May 26, 2017 and the figures in these standalone financial statements. Therefore, as a matter of corporate governance, the board felt it necessary to inform the members and the stakeholders to make note of the same. Adequate disclosure has been made in note no. 45 to accounts in respect of the effect of such reclassification / regrouping.
Directors and key managerial personnel (KMP)
There is no change in the board of the company during the year. Mrs. Kavita Prasad has been appointed as a chief financial officer (CFO) and a KMP with effect from August 11, 2016.
During the year, the non-executive directors of the company had no pecuniary relationship or transactions with the company.
Mr. Ajay Bhaskar Limaye retires by rotation and is eligible for re-appointment. Your board recommends for his reappointment.
Number of meetings of the board
Five meetings of the board were held during the year. For details of the meetings of the board, please refer to the corporate governance report, which forms part of this report.
Board evaluation
During the year under review as per the guidance note on board evaluation issued by Securities and Exchange Board of India, vide its circular dated 5th January 2017 pursuant to the provisions of the Companies Act and the corporate governance requirements prescribed by SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015, the board has carried out an annual evaluation of its own performance and that of its committees as well as performance of all the directors individually. Feedback was sought by way of a structured questionnaire covering various aspects of the boardâs functioning such as adequacy of the composition of the board and effectiveness of its committees, execution and performance of specific duties, governance, meaningful and constructive contribution and inputs in meetings etc. Evaluation was carried out based on responses received from the directors. A separate meeting of the independent directors also was held where in performance of nonindependent directors, performance of the board as a whole and performance of the chairman and managing director was evaluated. The directors expressed their satisfaction with the evaluation process.
Policy on directors'' appointment and remuneration and other details
The companyâs policy on directorsâ 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 the directorsâ report.
Audit committee
The details pertaining to composition of audit committee are included in the report on corporate governance, which forms part of this report. The board of directors has accepted all the recommendations of the audit committee placed at respective meetings.
Statutory auditors
M/s Rao & Kumar, Chartered Accountants (FRN 03089S) Visakhapatnam who are the statutory auditors of the company retire at the conclusion of the ensuing annual general meeting (AGM) and are eligible for reappointment for a further period of five years to hold office from the conclusion of the ensuing AGM till the conclusion of the 36th AGM of the company to be held in the year 2022, subject to ratification by the members at every annual general meeting. Your directors recommend for their reappointment at the AGM.
Risk management
The company has deployed a comprehensive framework to identify, monitor and take all necessary steps towards mitigation of various risk elements which can impact the existence of the company on a periodic basis. All the identified risks are managed through continuous review of business parameters by the management and the board of directors is also informed of the risks and concerns.
Internal financial controls
Pursuant to section 134 of the Companies Act 2013, the directors state that the board, through the operating management has laid down internal financial controls to be followed by the company. Such financial controls are adequate with reference to the size and operations of the company. The internal controls have been assessed during the year under review taking into consideration the essential components of internal controls stated in the guidance note on audit of internal financial controls over financial reporting issued by the Institute of Chartered Accountants of India. Based on the results of such assessments carried out by management, no reportable material weakness or significant deficiencies in the design or operation of internal financial controls was observed. However, the existing controls have further scope for improvement for which necessary steps are being taken to strengthen the scope of internal audit and reviewing SoPâs from time to time.
Particulars of loans, guarantees and investments
The particulars of loans, guarantees and investments have been disclosed in the financial statements.
Transactions with related parties
None of the transactions with related parties falls under the scope of section 188(1) of the Act. 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 I in Form AOC-2 and the same forms part of this report. Related party transactions are in the ordinary course of business and on armâs length basis.
Corporate social responsibility
The company has a board level committee that supervises its corporate social responsibility (CSR) activities. The brief outline of the CSR Policy of the company and the initiatives undertaken by the company on CSR activities during the year are set out in Annexure II of this report in the format prescribed in the Companies (Corporate Social Responsibility Policy) Rules, 2014.
Extract of annual return
Pursuant to section 92(3) of the act, the extract of annual return is given in Annexure III in the prescribed Form MGT-9, which forms part of this report.
Particulars of employees
The information required under section 197 of the act read with rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are given below:
Employee Name |
Mr. Suresh Kalyan |
Total remuneration Rs,TC (C lakhs) |
Rs,122.38 lakhs |
Designation and Nature of Duties |
Chief Operating Officer (COO) |
Qualification / Exp.(Yrs) |
B.Sc., Chartered Accountant / 26 yrs |
Date of commencement of employment |
17.11.2014 |
Age |
53 |
Last employment held before Joining the Company |
Amara Raja Batteries Limited, Hyderabad, as President - Finance |
a. The ratio of the remuneration of each non-executive director to the median remuneration of the employees of the company for the financial year: Not Applicable as none of the non-executive directors was paid any remuneration.
g. Variations in the market capitalization of the company, price earnings ratio as at the closing date of the current financial year and previous financial year:
Particulars |
March 31, 2017 |
March 31, 2016 |
% Change |
Market capitalization (Rs, crores) |
1077.27 |
919.65 |
17.88 |
Price earnings ratio |
36.94 |
47.20 |
(21.74) |
b. The percentage increase in remuneration of each director, chief executive officer, chief financial officer, company secretary in the financial year:
Directors, chief executive officer, chief financial officer and company secretary |
% increase in remuneration in the financial year |
Dr. A J Prasad, Chairman and Managing |
42.86 |
Director |
|
Mr. MSS Srinath, Whole-time Director |
38.27 |
Mrs. Kavita Prasad, Chief Financial Officer |
Nil |
Mr. MVSS Kumar, Company Secretary |
4.30 |
c. The percentage increase in the median remuneration of employees in the financial year: 8.91%
d. The number of permanent employees on the rolls of company: 2118 (as at March 31, 2017)
e. The explanation on the relationship between average increase in remuneration and company performance:
On an average, employees received an annual increase of 8.91%. The individual increments varied from 8% to 30%, based on individual performance. As per the remuneration policy of the company, employees are compensated broadly in comparison with the median of the comparator basket, on the basis of performance, potential and criticality for achieving competitive advantage in the business. Salary increases during the year were in line with your companyâs performance as well as inflation and motivational factors.
f. Comparison of the remuneration of the key managerial personnel against the performance of the company:
Aggregate remuneration of key managerial personnel (KMP) in 2016-17 (RS, lakhs) including commission on profits to CMD |
378.71 |
Revenue (Rs, lakhs) |
1,52,986.23 |
Profit before tax (PBT) (Rs, lakhs) |
5,006.95 |
Remuneration of KMPs (as % of revenue) |
0.25 |
Remuneration of KMP (as % of PBT) |
7.56 |
i. The key parameters for any variable component of remuneration availed by the directors:
h. Comparison of each remuneration of the key managerial personnel against the performance of the company: Rs, in Lakhs
Particulars |
Dr. AJ Prasad |
Mr. MSS Srinath |
Mrs. Kavita Prasad |
Mr. MVSS Kumar |
Mr.K Mahidhar |
Designation |
CMD |
Executive |
CFO |
Company |
Vice president, |
director |
(wef August 11, 2016) |
secretary |
finance |
||
Remuneration in 2016-17 |
96.00 |
50.40 |
16.92 |
23.99 |
34.87 |
Commission on profit |
156.53 |
- |
- |
- |
- |
Revenue (net) |
152986.23 |
152986.23 |
152986.23 |
152986.23 |
152986.23 |
Profit before tax (PBT) |
5006.95 |
5006.95 |
5006.95 |
5006.95 |
5006.95 |
Remuneration as % of revenue |
0.17 |
0.03 |
0.01 |
0.02 |
0.02 |
Remuneration |
|||||
(as % of PBT) |
5.04 |
1.01 |
0.34 |
0.48 |
0.70 |
Only commission on net profits was paid to chairman and managing director in addition to the monthly remuneration.
j. 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.
Disclosure requirements
The applicable disclosures under chapter IV of the SEBI (LODR) Regulations, 2015, with regard to corporate governance report with auditorsâ certificate thereon and management discussion and analysis are attached, which form part of this report.
Vigil mechanism / whistle blower policy
The company has formulated a vigil mechanism /whistle blower policy to provide a vigil mechanism for employees including directors of the company to report genuine concerns. The provisions of this policy are in line with the provisions of the section 177(9) of the act and the regulation 22 of the SEBI (LODR) Regulations, 2015.
Deposits from public
The company has not accepted any deposits from public and as such, no amount on account of principal or interest on deposits from public was outstanding as on the date of the balance sheet.
Conservation of energy, technology absorption and foreign exchange earnings and outgo
Information relating to conservation of energy, technology absorption and foreign exchange earnings and outgo, as required under section 134(3)(m) read with rule 8(3) of the Companies (Accounts) Rules, 2014 is given in the Annexure hereto.
Corporate governance
Pursuant to Schedule V of the SEBI (Listing Obligations and Disclosure Requirements), Regulations 2015, a separate section titled "Report on Corporate Governance" is attached to the annual report.
Cost auditors
Your board has appointed M/s K. Narashima Murthy & Co., Hyderabad, cost accountants as cost auditors of the company for conducting the audit of cost records of the company for the financial year 2016-17. Your board proposes to re-appoint them as cost Auditors for 2017-18 subject to the approval from Central Government.
Secretarial auditors
Your board has appointed Mr. CN Kranthi Kumar (CP No: 13889), practicing company secretary as a secretarial auditor for the financial year 2016-17 and his secretarial audit report is attached to this report. There are no qualifications, adverse comments and observations in the secretarial audit report for the year 2016-17.
Acknowledgements:
Your directors place on record its sincere appreciation towards the companyâs valued customers, vendors and esteemed shareholders for the support and confidence reposed by them in the management of the company and look forward to the continuance of this mutually supportive relationship in future.
Your directors take this opportunity to thank all the companyâs bankers and financial Institutions, the concerned Central and State Government Departments and Agencies for their support and co-operation to the company. The board has special appreciation for the employees for their dedicated services and their ability to deliver good results in the future.
For on and behalf of the board
Place : Hyderabad Dr A J Prasad
Date : August 11, 2017 Chairman & Managing Director
Mar 31, 2015
Dear Members
The Board of Directors take pleasure in presenting the 29th Annual
Report for the financial year ended on 31st March 2015. The financial
performance is presented below (stand-alone basis).
(Rs,In Lacs)
S
No. Particulars 2014-15 2013-14
1 Net Sales 133007.03 128079.35
2 Other Income 1660.52 1001.53
3 Total Income 134667.55 129080.88
4 Total Expenditure 118462.23 118099.59
5 Profit before interest,
depreciation and tax (PBIDT) 16205.32 10981.29
6 Finance Cost 7066.02 7573.87
7 Depreciation & Amortization
expenses 5103.85 3850.95
8 Profit/(loss) before
Exceptional and Extra-ordinary
items and Tax 4035.45 (443.53)
9 Exceptional Items  Income /
(expenses) (1503.82) 5653.98
10 Profit before tax (PBT) 2531.62 5210.45
11 Provision for tax & tax
adjustment 1069.55 709.40
12 Net Profit after Tax (PAT)
for the year 1462.07 4501.05
13 Transfer to General Reserve 500.00 500.00
14 Earnings Per Share (Diluted
EPS of Rupees) 0.58 1.78
15 Proposed Dividend (on share of
Re 1 each face value) 20% 20%
Performance Review 2014-15:
While the regulatory and procedural reforms undertaken by the new
Government since taking office in June last year did help improve the
business climate prevailing in the country, weak demand continued to
constrain the private sector activity. Economic activity witnessed a
steady, albeit slow recovery through the year. Even amidst this
scenario, your Company demonstrated resilience to economic cycles.
Sales during the year showed a marginal improvement. Greater emphasis
was laid on cost control measures and operational efficiencies. This
yielded a profit of Rs.4035.45 lacs during the year, compared to a loss
of Rs.443.53 lacs in the previous year. After providing for Rs.1503.82 lacs
towards exceptional items (compared to Rs.5653.98 lacs income in the
previous year), and a suitable provision for depreciation as per rates
in Schedule II of the Companies Act 2013 and amortization of expenses,
Profit Before Tax (PBT) was Rs.2531.62 lacs as compared to Rs.5210.45 lacs
in the previous year. Net Profit after Tax (PAT) tax and adjustments
for the year was Rs.1462.07 lacs as compared to Rs.4501.05 lacs in the
previous year.
During the year severe damage was caused by Hudhud cycione to stocks,
assets and operations in the Company's Lead Acid Plant at Vizianagaram
and Nickel and PE Plants at SEZ. Visakhapatnam. The impact of the
cyclose was so serve, it resulted in a loss of production for about 30
days and another 30 days partially during restoration. The Company had
lodged a claim with the Insurers towards recovery of the losses and
also for loss of profit. A suitable provision was made for loss
incurred due to damages to Inventory and repairs and restoration
expenses including interim settlement in the accounts of the year.
Final settlement of the claim is pending with the Insurers.
Current year's performance:
On the whole overall markets have not shown significant growth. Telecom
market demand (which constitutes your Company's prime business segment)
continues to be stagnant with a modest growth. Delays in Railway and
Defence business segments also have an affect on Company's operations.
Your Directors have taken necessary corrective steps and barring
unforeseen circumstances, performance of the Company in the coming
years is expected to be encouraging. The Management Discussion and
Analysis section of the Annual Report presents a detailed business
review of the Company.
Dividends:
Your Directors are pleased to recommend 20% dividend (ie Re.0.20/- per
equity share of Re.1 fully paid up share ) (Previous Year 20%) for the
Financial Year 2014-15, subject to the approval of the members at the
ensuing Annual General Meeting. The proposed dividend including
Corporate Dividend Tax will absorb Rs. 609.01 lacs.
Transfer to reserves
The Company proposes to transfer Rs. 500 lacs to the General reserve
out of the amount available for appropriation from current year
profits.
Subsidiary Companies:
The Consolidated Financial Statements of the Company and its
subsidiaries, prepared in accordance with the Companies Act, 2013 and
applicable Accounting Standards form part of this Annual Report. The
Consolidated Financial Statements presented by the Company include the
financial results of its subsidiary companies, associates and joint
ventures.
The Company has four subsidiaries as on March 31, 2015, namely,
1. SCIL Infracon Private Limited
2. HBL Suntech LLP
3. HBL America Inc.
4. HBL Germany GmBH, Germany
There is one associate Company namely Naval Systems & Technologies Pvt
Ltd (NSTL) within the meaning of Section 2(6) of the Companies Act,
2013 ("Act"). The Company having one Joint Venture Company namely Gulf
Batteries Co. Ltd (JV in the Kingdom of Saudi Arabia -KSA).
There has been no material change in the nature of the business of the
subsidiaries. Pursuant to provisions of Section 129(3) of the Act, a
statement containing salient features of the financial statements of
the Company's subsidiaries in Form AOC-1 is attached to the financial
statements of the Company.
Pursuant to the provisions of section 136 of the Act, the financial
statements of the Company, consolidated financial statements along with
relevant documents and separate audited accounts in respect of
subsidiaries, are available on the website of the Company.
During the year, operations of following subsidiaries were reviewed:
SCIL Infracon Private Limited (SIPL):
Considering various alternative options, a proposal was in principle
approved for merger of SIPL with its holding company (HBL) to harness
business synergy and operational growth, subject to usual procedures
and approvals Necessary clearances were obtained from BSE and NSE
respectively by way of observation letter for a draft scheme of
amalgamation in the nature of merger. Approval of the Hon'ble High
Court of Judicature at Hyderabad for AP and Telangana is yet to be
obtained.
HBL Suntech LLP
Due to unviable business outlook, the designated partners of HBL
Suntech LLP proposed to discontinue further operations of HBL Suntech
LLP from April 2014 onwards. Matters related to existing business are
being looked at in order to conclude various pending issues.
MATERIAL CHANGES AND COMMITMENTS:
No material changes and commitments have occurred after the closure of
the Financial Year 2014-15 till the date of this Report which would
affect the financial position of your Company.
Directors' Responsibility Statement:
Pursuant to Section 134(5) of the Companies Act, 2013, the board of
directors, to the best of their knowledge and ability, confirm that:
i. in the preparation of the annual accounts, the applicable accounting
standards have been followed and there are no material departures;
ii. they have selected such accounting policies and applied them
consistently 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 of the
Company for that period;
iii. they have taken proper and sufficient care for the maintenance of
adequate accounting records in accordance with the provisions of the
Act for safeguarding the assets of the Company and for preventing and
detecting fraud and other irregularities;
iv. they have prepared the annual accounts on a going concern basis;
v. they have laid down internal financial controls to be followed by
the Company and such internal financial controls are adequate and
operating effectively;
vi. they have devised proper systems to ensure compliance with the
provisions of all applicable laws and that such systems 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 and the reviews performed by management and the relevant
board committees, including the audit committee, the board is of the
opinion that the Company's internal financial controls were adequate
and effective during the financial year 2014-15.
Directors and key managerial personnel
Dr. A J Prasad has been continuing as Chairman and Managing Director of
the Company. He is attaining the age of 70 in the next few months and
his term of appointment would expire on 30th September, 2015. The
Board, in view of his significant contribution in the development of
the Company from inception, recommends for his re-appointment as
Chairman and Managing Director of the Company after Complying with the
necessary provisions of the Companies Act 2013 and rules made
thereunder.
During the year Mrs. Kavita Prasad resigned from the Board and IDBI
Bank Limited replaced its nominee Mr. VVS Ravindra with Mr. J Vidya
Shankar w.e.f. 14th November, 2014. Subsequent to the date of Balance
Sheet, IDBI Bank Limited, at the request of the Company has withdrawn
its nomination of Mr. J Vidyashankar also w.e.f. 5th June 2015. Your
Board conveys sincere appreciation for their service during their
tenure as Directors.
During the year, the non-executive directors of the Company had no
pecuniary relationship or transactions with the Company.
Number of meetings of the board
Four meetings of the board were held during the year. For details of
the meetings of the board, please refer to the corporate governance
report, which forms part of this report.
Board evaluation
The performance of the Board was evaluated by the Board after seeking
inputs from all the directors on the basis of the 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 ("NRC")
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 a separate meeting 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.
Policy on Directors' appointment and remuneration and other details
The Company's 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 the directors'
report.
Audit committee
The details pertaining to composition of Audit Committee are included
in the Corporate Governance Report, which forms part of this report.
The Board of Directors has accepted all the recommendations of the
Audit Committee.
Statutory Auditors
At the 28th AGM held on 27 December 2014 shareholders have appointed,
M/s Satyanarayana & Co and M/s. Rao & Kumar Chartered Accountants, as
'Joint Statutory Auditors' (JSA) to hold office until conclusion of
next AGM to be held in 2015.
One of the Joint Statutory Auditors, M/s. Satyanarayana & Co, Chartered
Accountants (FRN 03680S), after a distinguished service for over 29
years, expressed their unwillingness to seek reappointment at the next
Annual General Meeting. Due to certain unavoidable reasons, M/s
Satyanarayana & Co expressed their inability to carry out the audit and
subsequent certification of the Consolidated Financial Statements and
Financial Results for First Quarter ending June 2015. The standalone
financial statements of the Company for the year ended on 31 March 2015
were duly approved at the Board meeting held on 29 May 2015 and were
then jointly certified by both the auditors.
In this situation, the Management requested M/s. Rao & Kumar, Chartered
Accountants to take up the function that would otherwise have to be
carried out jointly by both Joint Statutory Auditors, which they have
accepted.
In view of this, your Board, while conveying its sincere appreciation
for the services rendered by M/s. Satyanarayana & Co. Chartered
Accountants on recommendation of the Audit Committee and pursuant to
the provisions of section 139 of the Companies Act, 2013 and the Rules
made thereunder, proposes to appoint M/s Rao & Kumar, Chartered
Accountants (FRN 03089S) Visakhapatnam who are Joint Statutory Auditors
of the Company to be re-appointed as Independent Statutory Auditors
from the conclusion of the Annual General Meeting (AGM) till the
conclusion of the thirty-first AGM to be held in the year 2017, subject
to ratification of their appointment at every AGM.
EXPLANATION OR COMMENTS ON QUALIFICATIONS, RESERVATIONS OR ADVERSE
REMARKS OR DISCLAIMERS MADE BY THE AUDITORS AND PRACTICING COMPANY
SECRETARY IN THEIR REPORTS:
The Board has considered the observations/ queries as raised by the
Statutory Auditors and the explanations are as under. Report of the
secretarial auditor is given as an annexure which forms part of this
report.
Comments of the Auditors Board's reply
Basis for Qualified Opinion There is a regular practice of
circulating balance
Reference is drawn to Note
No.31. Some of the year end confirmation letters every year. Some
of the parties,
balances appearing under the
heads referred to therein mostly Government department customers
are confirmation / reconcilia- have not
tion and consequential responded in time. Such letter says
that the balance is
adjustments. In the absence
of (a) Confirmation of deemed confirmed or accepted if the
reply is not received
Balances; (b) Cause wise
analysis of such balances and in a stipulated time. The Company
believes there will
(c) details of counter
claims, if any, from the
customers, not be any material impact of such
balances or claims
we are not in a position to
ascertain the quantum and even if the letters are received.
its consequential overall
impact on the financial
statements.
Emphasis of Matters
Some of the vendors who come under
the purview of
1) We draw attention to Note
8.1 to Financial statements MSMED Act 2006 have a continuous
which states that interest on business.
delayed payments to parties, relationship with the Company for a long
time. No claims
registered as MSME under
the MSMED Act, 2006, is not were received by the Company for
interest. If any such
provided for, as in the
absence of any claim from
the said claims are received, they will be
treated on cash basis.
parties, they are reckoned
as 'not due' by the company.
2) We draw attention to Note
15.3 to Financial Statements The Company has already taken a
suitable legal recourse
in respect of repudiation,
by the Insurers, of a claim in this matter and the outcome is
made awaited.
by the company, in respect
of which the company had
initiated legal action for
recovery, the outcome of
which is uncertain at this
stage.
Our opinion is not qualified
in respect of the above
matters.
Report on other legal and
regulatory requirements Gulf Batteries Co Ltd is a JV in the
KSA in which the Company holds 40%
shareholding. The JV Company has
2(d)In our opinion, the
aforesaid standalone
financial since given the audited financial
statements for the year
statements comply with the
Accounting Standards
specified ended 31 December 2014 (which is
the financial year of
under Section 133 of the
Act, read with Rule 7 of theJV Company in that country) and
unaudited financial
Companies (Accounts) Rules,
2014 except for the
disclosure reports for the quarter ended 31
March 2015. These
to be made in pursuance of
Accounting Standard AS-27, reports have been used to prepare
the Consolidated
for the reasons detailed in
Note No. 34.8. Financial Statements,
iii) As on the date of the
Balance Sheet, there was a This was since transferred by the
Company in April 2015.
delay in transferring Un-
claimed / Un- paid Dividend
amount. The amount of Rs.
2.15 lakhs relating to
Financial Year 2006-07 which
is required to be transferred,
to the Investor Education
Protection Fund in November
2014 was actually transferred
by the Company in April 2015.
INTERNAL FINANCIAL CONTROLS
Pursuant to Section 134 of the Companies Act 2013, the Directors state
that the Board, through the operating management has laid down Internal
Financial Controls to be followed by the Company. To the best of their
knowledge and ability and inputs provided by various assurance
providers confirm that such financial controls are adequate and were
operating effectively.
Particulars of loans, guarantees and investments
The particulars of loans, guarantees and investments have been
disclosed in the financial statements.
Transactions with related parties
None of the transactions with related parties falls under the scope of
Section 188(1) of the Act. 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 I in Form
AOC-2 and the same forms part of this report. Related party
transactions are in the ordinary course of business and on arm's length
basis.
Corporate social responsibility
The Company has a Board-level committee that supervises its Corporate
Social Responsibility (CSR) activities. The brief outline of the CSR
Policy of the Company and the initiatives undertaken by the Company on
CSR activities during the year are set out in Annexure II of this
report in the format prescribed in the Companies (Corporate Social
Responsibility Policy) Rules, 2014.
Extract of annual return
As provided under Section 92(3) of the Act, the extract of annual
return is given in Annexure III in the prescribed Form MGT-9, which
forms part of this report.
Particulars of employees
The information required under Section 197 of the Act read with rule
5(1) of the Companies (Appointment and Remuneration of Managerial
Personnel) Rules, 2014 are given below:
1. Employee Name Mr. Suresh Kalyan
2. Total CTC Paid (Rs,lacs) Rs. 37.50 lacs
3. Designation and
Nature of Duties Chief Operating Officer (COO)
4. Qualification BSc., Chartered Accountant
5. Exp.(Yrs.) 26
6. Date of commencement
of employment 17.11.2014
7. Age 51
8. Last employment held
before Joining the Company Amara Raja Batteries Limited,
Hyderabad, as President  Finance
a. The ratio of the remuneration of each Non-Executive director to the
median remuneration of the employees of the Company for the financial
year: Not Applicable as none of the Non-Executive was paid any
remuneration.
b. The percentage increase in remuneration of each Director, Chief
Executive Officer, Chief Financial Officer, Company Secretary in the
financial year:
Please refer para (h) below
c. The percentage increase in the median remuneration of employees in
the financial year: 16 %
d. The number of permanent employees on the rolls of Company: 2458 (as
at 31 March 2015)
e. The explanation on the relationship between average increase in
remuneration and Company performance:
On an average, employees received an annual increase of 16%. The
individual increments varied from 4% to 25%, based on individual
performance. As per the remuneration policy of your Company, employees
are compensated broadly in comparison with the median of the comparator
basket, on the basis of performance, potential and criticality for
achieving competitive advantage in the business. Salary increases
during the year were in line with your Company's performance as well as
per inflation and motivational factors.
f. Comparison of the remuneration of the key managerial personnel
against the performance of the Company:
Aggregate remuneration of key managerial
personnel (KMP) in FY2014-15 (Rs,lacs) 242.83
Revenue ( lacs)) 134667.55
Remuneration of KMPs (as % of revenue) 0.18
Remuneration of KMP (as % of PBT) 9.59
g. Variations in the market capitalisation of the Company, price
earnings ratio as at the closing date of the current financial year and
previous financial year:
Particulars March 31, 2015 March 31, 2014 % Change
Market Capitalisation
(Rs. crores) 1209.30 247.18 489.24
Price Earnings Ratio 87.93 5.49 1601.64
h. Comparison of each remuneration of the key managerial personnel
against the performance of the Company:
Amount in Rs. lacs.
Particulars Dr. AJ Prasad Mr. MSS Mrs. Kavita
Srinath Prasad
Designation CMD Executive Executive
Director Director
(upto 14 Feb 2015)
Remuneration in FY 41.28 18.36 15.30
2014-15
Commission on profit 113.14 - -
Revenue 134667.55 134667.55 134667.55
Profit before
Tax (PBT) 2531.62 2531.62 2531.62
Remuneration as % 0.11 0.01 0.01
of Revenue
Remuneration 6.09 0.72 0.60
(as % of PBT)
Particulars Mr. MVSS Mr.K Mahidhar
Kumar
Designation Company Vice President
Secretary Finance
Remuneration FY 24.75 30.00
2014-15
cOMMISSION on Profit - -
Revenue 134667.55 134667.55
Profit before Tax (PBT) 2531.62 2531.62
REMUNERATION as % 0.01 0.02
of Revenue
Remuneration (as % of 0.97 1.18
PBT)
j. 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: 41%
Disclosure requirements
As per Clause 49 of the listing agreements entered into with the stock
exchanges, corporate governance report with auditors' certificate
thereon and management discussion and analysis are attached, which form
part of this report.
The Company has formulated and published a Whistle Blower Policy to
provide Vigil Mechanism for employees including directors of the
Company to report genuine concerns. The provisions of this policy are
in line with the provisions of the Section 177(9) of the Act and the
revised Clause 49 of the Listing Agreements with stock exchanges.
Deposits from public
The Company has not accepted any deposits from public and as such, no
amount on account of principal or interest on deposits from public was
outstanding as on the date of the balance sheet.
Conservation of Energy, Technology Absorption and Foreign Exchange
Earnings & Outgo:
Information relating to conservation of energy, technology absorption
and foreign exchange earnings and outgo, as required under Section
134(3)(m) read with Rule 8(3) of the Companies (Accounts) Rules, 2014
is given in the Annexure hereto.
Corporate Governance:
Pursuant to Clause 49 of the Listing Agreement with the Stock
Exchanges, a separate section titled "Report on Corporate Governance"
is attached to the Annual Report.
Cost Auditors:
Your Board has appointed M/s K. Narashima Murthy & Co., Hyderabad, Cost
Accountants as Cost Auditors of the Company for conducting the audit of
cost records of the Company for the financial year 2014-15. Your Board
proposes to re-appoint them as Cost Auditors for 2015-16 subject to the
approval from Central Government.
Secretarial Auditors:
Your Board has appointed Mr. Naresh Kumar Chanda (MS No.6094 and CP
No.8153)) Practicing Company Secretary as a Secretarial Auditors for
the financial year 2014-15.
Acknowledgements:
Your Directors take this opportunity to thank all the Company's Bankers
and Financial Institutions, the concerned Central and State Government
Departments, Agencies for their support and co-operation to the
Company. The Board has special appreciation for the employees for their
dedicated services.
The Board of Directors also thanks all its Shareholders for the
confidence reposed in the Management.
For and on behalf of the Board
Dr. A J Prasad
Place :Hyderabad Chairman and Managing Director
Date : 14th August, 2015
Mar 31, 2014
Dear Members
The Board of Directors take pleasure in presenting the 28th Annual
Report for the financial year ended on 31st March 2014. The financial
performance is presented below (stand-alone basis).
(Rs. In Lacs)
S
No. Particulars 2013-14 2012-13
1 Net Sales 1,28,079.35 1,19,741.69
2 Other Income 1,001.53 913.19
3 Total Income 1,29,080.88 1,20,654.88
4 Total Expenditure 1,18,099.59 1,04,773.27
5 Profit before interest,
depreciation and tax (PBIDT) 10,981.29 15,881.61
6 Finance Cost 7,573.87 9,339.84
7 Depreciation & Amortization
expenses 3,850.95 4,008.50
8 Profit/(loss) before
Exceptional and Extra-ordinary
items and Tax (443.53) 1,754.70
9 Exceptional Items - Income 5,653.98 778.56
10 Profit before tax (PBT) 5,210.45 2,533.26
11 Provision for tax & tax
adjustment 709.40 488.84
12 Net Profit after Tax (PAT) 4,501.05 2,044.42
13 Transfer to General Reserve 500.00 500.00
14 Earnings Per Share
(Diluted EPS of Rupees) 1.78 0.81
15 Proposed Dividend (on face value
of share Re 1 each) 20% 15%
Performance Review 2013-14:
The total operating income for the year was Rs.1,29,80.88 lacs
representing a growth of approximately 7% as compared to previous year
income of Rs.1,20,654.88 lacs. However due to various predominant reasons
attributed to the industry concerned particularly cost of raw material,
the expenditure was also increased by 12.7%. This has resulted in
deceased PBIDT for the year which stood at Rs. 10,981.29 lacs compared to
Rs. 15,881.61 lacs in the previous year. After suitable provision for
depreciation and amortization of expenses, PBT for the year was Rs.
5,210.45 lacs compared to Rs. 2,533.26 lacs in the previous year and
after making a provision of Rs. 709.40 lacs for tax and tax adjustments
for the year; the net profit (PAT) for the year was Rs. 4,501.05 lacs as
compared to Rs. 2,044.42 lacs in the previous year.
Current year''s performance:
Due to macro economic factors overall markets have not shown
significant growth. Telecom market demand (which constitutes Company''s
prime business segment) continued to be stagnant. Delays in Railway and
Defence business also have an affect on Company''s operations. The
combined factors have put pressure on Company''s performance during
2014-15. Your Directors have taken necessary corrective steps and
barring unforeseen circumstances, performance of the Company in the
coming years is expected to be encouraging.
Dividends:
Your Directors are pleased to recommend a dividend of Rs. 0.20/- per
equity share of Rs. 1/-fully paid up share @20% (Previous Year 15%) for
the Financial Year 2013-14, subject to the approval of the members at
the ensuing Annual General Meeting. The proposed dividend including
Corporate Dividend Tax will absorb Rs. 591.99 lacs.
Investment/divestments in Subsidiary/ Joint Venture/Associate Companies
and LLP:
Divestments:
During the year your Company divested its entire stake in Agile
Electric Sub-assembly Private Limited and Sankhya Infotech Limited.
This fetched an extraordinary income by way of profit from sale of
investments, amounting to Rs. 5,644.64 lacs.
SCIL Infracon Private Limited (SIPL):
Members are aware that from October 2012 performance was affected by an
unjustified stoppage by workmen of the company. This continued
throughout the year 2013-14. After exhausting all means of fair
discussion and negotiations, the matter was referred to Labour
Department, Government of Andhra Pradesh. A final settlement was
reached on 28 March 2014 in the presence of Additional Commissioner of
Labour, Hyderabad and Joint Commissioner of Labour, RR Zone. The issue
was closed after full and final settlement was since made by the
Company.
As a result, financial results for the year showed a down trend.
Considering various alternative options, a proposal was in principle
approved for merger of SIPL with its holding company HBL to harness
business synergy and operational growth, subject to usual procedures
and approval of the Hon''ble High Court of Judicature at Hyderabad for
AP and Telangana. A legal suite and an arbitration petition filed by
former promoter of Shakti Concrete Industries Limited (SCIL) is pending
before the Hon''ble Court.
HBL Germany GmbH
Due to unethical behavior of some local employees, there were some
disruptions and losses in this Subsidiary. Necessary corrective steps
have been taken by the Company. This has led to the delay in finalizing
the Consolidated Financial Statements of the Company.
HBL Suntech LLP
Due to unviable business outlook, the designated partners of HBL
Suntech LLP proposed to discontinue further operations of HBL Suntech
LLP from April 2014 onwards. Matters related to existing business are
being looked at in order to conclude various pending issues.
Events after Balance Sheet date
During October 2014, a very severe cyclonic storm Hudhud caused
extensive damage to the city of Visakhapatnam and the neighbouring
districts of Vizianagaram and Srikakulam in Andhra Pradesh with wind
speeds of over 200 kmph. This resulted in damages to Company''s
factories in VSEZ and at Vizianagaram. Production operations at
Vizianagaram were since partially restored after a gap of three weeks,
while production at VSEZ is expected to be recommenced shortly after
restoration of assets into their working condition. The incident was
reported to the insurers. The value of damage caused and impact due to
stoppage of production is in the process of ascertainment by the
Company, which would be apprised by the insurance surveyors and loss
adjusters appointed by the insurance company. The Company has in place
suitable all risk insurance policies to cover the risks.
Directors'' Responsibility Statement:
In Compliance with the Provisions of Section 217(2AA) of the Companies
Act, 1956, your Directors wish to place on record -
1. That in preparing the Annual Accounts, all applicable Accounting
Standards have been followed;
2. That the Accounting Policies adopted are consistently followed and
the judgments and estimates made 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 the Statement of Profit and Loss of the
Company for the Financial Year under review:
3. That the Directors have taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of the Act for safeguarding the assets of the Company and
for preventing / detecting fraud and other irregularities; and
4. That the Annual Accounts have been prepared on a Going Concern
basis.
Corporate Governance:
Pursuant to Clause 49 of the Listing Agreement with the Stock
Exchanges, a separate section titled "Report on Corporate Governance"
is attached to the Annual Report.
Consolidation of Accounts
In accordance with the requirements of Accounting Standards AS 21 read
with AS 27 prescribed by the Institute of Chartered Accountants of
India, the Consolidated Accounts of the company and its Subsidiaries/
JVs are annexed in this Annual Report.
In view of general exemption granted by the Ministry of Corporate
Affairs under Section 212(8) of the Companies Act, 1956 vide its
General Circular No.2/2011 dated 8th February 2011, companies are
exempted from the provisions of section 212 of the Companies Act 1956
subject to fulfillment of conditions therein. Accordingly, the Board
has passed required resolution in respect thereof for not attaching the
Balance sheets of the following subsidiary companies:
1. SCIL Infracon Private Limited
2. HBL Suntech LLP
3. HBL America Inc.
4. HBL Germany GmBH, Germany
5. Gulf Batteries Company Ltd (JV company in KSA)
Hence, in this annual report, the audited financial statements
(standalone and consolidated) prepared in compliance with the
applicable Accounting Standards, Listing Agreements prescribed by SEBI,
have been attached and no individual Balance sheet or other information
of subsidiaries is attached or disclosed except to the extent of the
information as required to be disclosed under the condition (iv) of the
Circular No.2/2011 dated 8th February 2011.
The Company undertakes that the Annual Accounts of the subsidiary
Companies and the related detailed information will be made available
to any member of the Company who may be interested in obtaining the
same. The Annual Accounts of the subsidiary companies will also be kept
open for inspection during business hours at the registered office of
the Company.
Auditors'' Report:
The Board has considered the observations/ queries as raised by the
Statutory Auditors and the explanations are as under.
Our comments on the financial statements for the year are as under
(Stand-alone Financial Statements):
Reference is drawn to Note No.30. Some of the year end balances
appearing under the heads referred to therein are subject to
confirmation/ reconciliation and consequential adjustment, the impact
of which is not quantifiable by us.
Our reply: The Company has a practice of sending confirmatory letters
every year to all parties. The company has circulated confirmatory
letters to various parties during the year. Some of them have not
responded in time. Such letter says that the balance is deemed accepted
or confirmed if no reply was received in stipulated time.
Our comments on the financial statements for the year are as under
(Consolidated Financial Statements):
As per paragraph 26 of AS 21 on Consolidated Financial Statements, the
excess and further losses attributable to Minority are to be adjusted
against the Majority Interest except to the extent that the Minority
has binding obligation and is able to make good the losses. Pending any
Contribution from the Minority Partner, we are unable to comment on the
treatment accorded (refer note 4.1) in the financial statements.
Our reply: The Company and an individual are designated partners in a
Limited Liability Partnership (LLP) Firm. The Minority partner in LLP
agreed to contribute 40% towards Capital as per LLP Agreement which is
yet to be contributed. Proportionate share of loss in LLP was
allocated to the Partner as per LLP Agreement signed by both parties.
This is considered as due and recoverable and accordingly shown as
minority interest.
Reference is invited to Note No. 37.3, regarding non-provision of
depreciation to the tune of Rs.138.22 lakhs in variance to the
prescription laid down by the Accounting StandardAS-6 on Depreciation
Accounting resulting in overstatement of Profit before tax for the year
with a corresponding overstatement of Reserves and Fixed Assets as at
31-3-2014.
Our reply: The Company''s wholly owned subsidiary SCIL Infracon Private
Limited (SIPL) operations were affected from October 2012 due to
unjustified stoppage of work by workmen. This continued throughout the
year 2013-14. A final settlement was reached on 28 March 2014 in the
presence of Additional Commissioner of Labour, Hyderabad and Joint
Commissioner of Labour, Government of Andhra Pradesh. Depreciation was
provided on the basis of actual usage of plant during this period in
the individual Company''s financial statements. However in line with
Accounting Standard AS-6 on Depreciation Accounting, for the year
2012-13 and 2013-14, Rs.46.85 lacs and Rs. 91.37 lacs were respectively
required to be provided for. Had this been provided for, the individual
Company''s losses would have been higher to that extent when actually
the factory was not in operation during that period.
Directors:
Mrs. Kavita Prasad, Director retires by rotation at the ensuing Annual
General Meeting and is eligible for re-appointment. Mr. J Vidya
Shankar was nominated by IDBI Bank Limited in place of Mr. VVS Ravindra
who was co-opted with effect from 14th November, 2014. The Board
conveys appreciation for the advice and guidance of VVS Ravindra during
his tenure.
Pursuant to the provisions of the Companies Act, 2013 and rules made
thereunder, Mr. J Vidya Shankar holds office upto the date of ensuing
Annual General Meeting of the Company. The Board recommends his name
for appointment as a Director at ensuing Annual General Meeting of the
Company in accordance with the provisions of the Companies Act, 2013.
As per section 149(4) of the Companies Act, 2013 (Act), which came into
effect from April 1,2014, every listed public company is required to
have at least one-third of the total number of directors as Independent
Directors. In accordance with the provisions of section 149 of the Act,
Mr. P Ganapathi Rao and Mrs. Preeti Khandelwal, Directors are proposed
to be appointed as Independent Directors to hold office as per their
tenure of appointment mentioned in the Notice of the forthcoming Annual
General Meeting (AGM) of the Company.
Auditors:
Statutory Auditors:
Joint Statutory Auditors M/s Satyanarayana & Co., Chartered
Accountants, Secunderabad and M/s. Rao & Kumar Chartered Accountants,
Visakhapatnam, hold office till the conclusion of the forthcoming AGM
and are eligible for re- appointment. Pursuant to the provisions of
section 139 of the Companies Act, 2013 and the Rules made thereunder,
it is proposed to appoint M/s Satyanarayana & Co., Chartered
Accountants, Secunderabad and M/s. Rao & Kumar Chartered Accountants,
Visakhapatnam as Joint Statutory Auditors of the Company from the
conclusion of the forthcoming AGM till the conclusion of the
thirty-first AGM to be held in the year 2017, subject to ratification
of their appointment at every AGM.
Cost Auditors:
Your company proposes to re-appoint the cost auditors M/s K. Narashima
Murthy & Co., Hyderabad, subject to the approval from Central
Government.
Personnel & Industrial Relations:
Your Company continues to enjoy cordial relations with the employees.
No employee of the Company was in receipt of remuneration during the
financial year 2013-14 in excess of the sum prescribed under Section
217(2A) of the Companies Act, 1956 read with the Companies (Particulars
of Employees) Rules 1975 as amended from time to time.
Conservation of Energy, Technology Absorption and Foreign Exchange
Earnings & Outgo:
Information relating to conservation of energy, technology absorption
and foreign exchange earnings and outgo, as required under Section
217(1)(e) read with the Companies (Disclosure of Particulars in the
Report of Board of Directors) Rules, 1988 is given in the Annexure
hereto.
Acknowledgements:
Your Directors take this opportunity to thank all the Company''s Bankers
and Financial Institutions, the concerned Central and State Government
Departments, Agencies for their support and co-operation to the
Company. The Board has special appreciation for the employees for their
dedicated services.
The Board of Directors also thanks all its Shareholders for the
confidence reposed in the Management.
For and on behalf of the Board
Place : Hyderabad Dr. A J Prasad
Date : 14th November 2014. Chairman and Managing Director
Mar 31, 2013
Dear Members
The Board of Directors take pleasure in presenting the 27th Annual
Report for the financial year ended on 31st March 2013. The financial
performance is presented below (stand-alone basis).
(Rs. In Lacs)
S.
No.Particulars 2012-13 2011-12
1 Net Sales 1,19,741.69 1,08,952.93
2 Other Income 913.19 1,647.21
3 Total Income 1,20,654.8 1,10,600.15
4 Total Expenditure 1.04,773.27 96,013.28
5 Profit before interest,
depreciation and tax (PBIDT) 15,881.61 14,586.87
6 Finance Cost 9,339.84 8,980.87
7 Depreciation &
Amortisation expenses 4,008.50 3,436.12
8 Profit before tax (PBT) 2,533.26 2,169.88
9 Provision for tax & tax adjustment 488.84 1,209.73
10 Net Profit after Tax (PAT) 2,044.42 960.15
11 Transfer to General Reserve 500.00 500.00
12 Earnings Per Share (Diluted
EPS of Rupees) 0.81 0.38
13 Proposed Dividend (on face value
of share Re 1 each) 15% 15%
Performance Review 2012-13:
Overall Income of the Company for the year 2012-13 was recorded at Rs.
120654.88 lacs as compared to previous year income of Rs.110600.15 lacs
showing an increase of 9.09% compared to previous year. This has
resulted in an increase in PBIDT for the year which stood at
Rs.15881.61 lacs compared to Rs. 14586.89 lacs in the previous year. In
spite of an increase in finance cost, after suitable provision for
depreciation and amortization expenses, PBT for the year was Rs.2533.26
lacs compared to Rs. 2169.90 lacs in the previous year. This showed a
marginal growth. However, after making a provision of Rs. 488.84 lacs
for tax and tax adjustments for the year; the net profit (PAT) for the
year was Rs.2044.42 lacs as compared to Rs.960.17 lacs in the previous
year.
Current year''s performance:
Though demand from telecom sector increased marginally, due to macro
economic factors overall markets have not shown a significant growth.
Your Board has taken necessary safe guards to increase sales from other
non-telecom areas. The efforts are giving returns and barring
unforeseen circumstances, it is believed that the current year''s
operations will be satisfactory. The Management Discussion and Analysis
section of the Annual Report envisages future areas of business growth.
Dividends:
Your Directors are pleased to recommend a dividend of Rs.0.15/- per
equity share of Re.1/-fully paid up share @15% (Previous Year 15%) for
the Financial Year 2012-13, subject to the approval of the members at
the ensuing Annual General Meeting. The proposed dividend including
Corporate Dividend Tax will absorb Rs.441.06 lacs.
Investment/divestments in Subsidiary/ Joint Venture/Associate
Companies/LLP''s:
Agile Electric Sub-Assembly Private Limited:
During the year your Company continued to hold its shares in Agile
Electric Sub-assembly Private Limited during 2012- 13. However, since
the date of Balance sheet, the Board of the Company decided to sell the
entire stake held by the Company in its subsidiary, Agile Electric Sub
Assembly Private Limited to certain Private Equity investors in order
to I mobilize cash resources for its core operations. The transaction
is expected to be completed shortly.
HBL America Inc:
-1 During the year, your company has invested an amount of Rs. 28.11
lacs (USD 50,000) in its Wholly Owned Subsidiary in USA under the name
HBL America Inc. and the total investment was Rs.223.99 lacs.
SCIL Infracon Private Limited (SIPL):
During the financial year 2012-13 the performance of the company was
affected by an unjustified stoppage of workmen of the company from
October 2012. After exhausting all means of fair discussion and
negotiations, the matter was referred to Labour Department, Government
of Andhra Pradesh. The conciliation proceedings convened by the Deputy
Labour Commissioner and Joint Commissioner have failed. The matter is
pending before the Authorities.
Operations in 2012-13 reflected only first six months compared to a
full year in 2011-12. Even during the first six months, severe power
shortages in the state, order availability on time resulted in
production and supply below break-even. As a result, financial results
for the year showed a down trend. Presently there are no operations in
SIPL and the Board of SIPL is considering various alternative options.
A legal suit was filed by Mr. K Gyan Sagar (Promoter of SCIL) and
Shakti Concrete Industries Limited (SCIL) against HBL and Others in
City Civil Court, Hyderabad for an arbitration petition. Claim of
Petitioners is non-receipt of a consideration of Rs 188.30 lacs for
shares sold by them. As informed by HBL''s legal counsel, the claim
prima facie is not tenable as the petitioners are making a claim for
consideration already received. The case is pending before the
Honourable Court.
Autotec Systems Private Limited
During the year, your company disinvested its shareholding of 171216
shares in Autotec Systems Private Ltd (ATS), Bangalore, bought back by
its (ATS) promoters.
Interest Free Unsecured Loan from Holding Company, Beaver Engineering &
Holdings Ltd. (BEHL)
During the year, the Holding Company (BEHL) raised Equity and
Preference Shares aggregating to Rs.150 crore including a premium of
Rs.149.74 crore. The Company requested its Holding Company to make an
Inter Corporate Loan of Rs. 120 crore for the purpose of Working
Capital/repayment of Term Loans. As the funds raised by BEHL are non
interest bearing, the Holding Company placed Rs.120 crore with the
Company as Interest Free Inter Corporate Loan for a period of 5 years.
Events after Balance Sheet date
Subsequent to the date of Balance Sheet, on 7-4-2013, there was a fire
accident in one of the factories of the company resulting in immense
damage to Factory Building, Plant & Machinery and loss of property in
the nature of Furniture & Fixtures, Inventories etc., and also the
records relating to Production/Finance & Accounts. The loss was
provisionally estimated at Rs.393 lacs. However, the risk is fully
covered by Industrial All Risks Policy and the claim was lodged and the
insurance company made an ''on account'' payment of Rs.100 lacs. In the
opinion of the Management, this accident has no impact on the financial
position as on 31.3.2013 as it had occurred subsequent to the Balance
Sheet date.
Directors'' Responsibility Statement:
In compliance with the Provisions of Section 217(2AA) of the Companies
Act, 1956, your Directors wish,to place on record -
1. That in preparing the Annual Accounts, all applicable Accounting
Standards have been followed;
2. That the Accounting Policies adopted are consistently followed and
the judgments and estimates made 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 the Profit and Loss Account of the
Company for the Financial Year under review:
3. That the Directors have taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of the Act for safeguarding the assets of the Company and
for preventing / detecting fraud and other irregularities; and
4. That the Annual Accounts have been prepared on a Going Concern
basis.
Corporate Governance:
Pursuant to Clause 49 of the Listing Agreement with the Stock
Exchanges, a separate section titled "Report on Corporate Governance"
is attached to the Annual Report.
Consolidation of Accounts
In accordance with the requirements of Accounting Standards AS 21 read
with AS 27 prescribed by the Institute of Chartered Accountants of
India, the Consolidated Accounts of the company and its Subsidiaries/
JVs are annexed in this Annual Report.
In view of general exemption granted by the Ministry of Corporate
Affairs under Section 212(8) of the Companies Act, 1956 vide its
General Circular No.2/2011 dated 8th February 2011, companies are
exempted from the provisions of section 212 of the Companies Act 1956
subject to fulfillment of conditions therein. Accordingly, the Board
has passed required resolution in respect thereof for not attaching the
Balance sheets of the following subsidiary companies:
1. Agile Electric Sub-Assembly Private Limited
2. SCIL Infracon Private Limited
3. HBL Suntech LLP
4. HBL America Inc.
5. HBL Germany GmBH, Germany
Hence, in this annual report, the audited financial statements
(standalone and consolidated) prepared in compliance with the
applicable Accounting Standards, Listing Agreements prescribed by SEBI,
have been attached and no individual Balance sheet or other information
of subsidiaries is attached or disclosed except to the extent of the
information as required to be disclosed under the condition (iv) of the
Circular No.2/2011 dated 8th February 2011.
The Company undertakes that the Annual Accounts of the subsidiary
Companies and the related detailed information will be made available
to any member of the Company who may be interested in obtaining the
same. The Annual Accounts of the subsidiary companies will also be kept
open for inspection during business hours at the registered office of
the Company.
Auditors'' Report:
The Board has considered the observations/ queries as raised by the
Statutory Auditors and the explanations are as under.
Our comments on the financial statements for the year are as under:
Reference is drawn to Note No.30. The year end balances appearing under
the heads referred to therein are subject to confirmation /
reconciliation and consequential adjustments, the impact of which is
not quantifiable by us.
Our reply: The Company has a practice of sending confirmatory letters
every year to all parties. The company has circulated confirmatory
letters to various parties during the year. Some of them have not
responded in time. Such letter says that the balance is deemed
accepted or confirmed if no reply was received in stipulated time.
Reference is drawn to Note No.8.1 regarding disclosure made under
section 22 of the MSMED Act, 2006 which is as compiled by the
management. Further, the company has neither paid nor provided the
applicable interest on such dues from the date the MSMED Act came into
force and the amount of which is not ascertained.
Our reply: Some of the vendors who come under the MSMED Act 2006 have
been associated with the company for a long time and have a continuous
business relationship. The company is usually prompt in servicing these
vendors as per mutually agreed payment terms. In view of such
longstanding relationship, no claims were received by Company. Interest
payment if any will be treated on cash basis. We believe there will not
be any impact of this non-provision.
Reference is drawn to Note No. 31.9. The Company has not complied with
the requirement of disclosures to be made in terms of the Accounting
Standard - AS-27 in respect of Company''s interest in Assets,
Liabilities, Income and Expenditure in the Joint Venture Company
Our reply: The JV Company has since given audited balance sheet for the
year ended 31 December 2012 (which is financial year of the company in
that country) and unaudited financial reports for quarter ended 31
March 2013. These reports have been used to prepared Consolidated
Financial Statements.
Directors:
Mr. MSS Srinath, Director retires by rotation at the ensuing Annual
General Meeting and is eligible for re-appointment.
Mr. Ajay Bhaskar Limaye was appointed as Additional Director with
effect from 14th February, 2013.
Pursuant to the provisions of the Companies Act, 1956 Mr. Ajay Bhaskar
Limaye holds office upto the date of ensuing Annual General Meeting of
the Company. The Board recommends his name for appointment as a
Director at ensuing Annual General Meeting of the Company in accordance
with the provisions of the Companies Act, 1956.
Auditors:
Statutory Auditors:
Joint Statutory Auditors M/s Satyanarayana & Co., Chartered
Accountants, Secunderabad and M/s. Rao & Kumar Chartered Accountants,
Visakhapatnam, retire at the forthcoming Annual General Meeting and are
eligible for re- appointment. Audit Committee has recommended for the
re-appointment of Joint Statutory Auditors at the ensuing Annual
General Meeting. The Company has received a letter from the respective
auditors to the effect that their appointment, if made, by the Company
for the year 2013-14 will be within the limit prescribed under Section
224(1-B) of the Companies Act, 1956.
The Board of Directors recommends their re-appointment.
Cost Auditors:
Your company proposes to re-appoint the cost auditors M/s K. Narashima
Murthy & Co., Hyderabad, subject to the approval from Central
Government.
Personnel & Industrial Relations:
Your Company continues to enjoy cordial relations with the employees.
No employee of the Company was in receipt of remuneration during the
financial year 2012-13 in excess of the sum prescribed under Section
217(2A) of the Companies Act, 1956 read with the Companies (Particulars
of Employees) Rules 1975 as amended from time to time.
Conservation of Energy, Technology Absorption and Foreign Exchange
Earnings & Outgo:
Information relating to conservation of energy, technology absorption
and foreign exchange earnings and outgo, as required under Section
217(1)(e) read with the Companies (Disclosure of Particulars in the
Report of Board of Directors) Rules, 1988 is given in the Annexure
hereto.
Acknowledgements:
Your Directors take this opportunity to thank all the Company''s Bankers
and Financial Institutions, the concerned Central and State Government
Departments, Agencies for their support and co-operation to the
Company. The Board has special appreciation for the employees for their
dedicated services.
The Board of Directors also thanks all its Shareholders for the
confidence reposed in the Management.
For and on behalf of the Board
Place: Hyderabad Dr. A J Prasad
Date : 14th August 2013 Chairman and Managing Director
Mar 31, 2011
Dear Members
The Board of Directors take pleasure in presenting the 25th Annual
Report for the financial year ended on 31st March 2011. The financial
performance on Standalone basis is presented below.
(Rs. In Lacs)
SNo. Particulars 2010-11 2009-10
1 Net Sales 99494 110951
2 Other Income 2297 654
3 Total Income 101791 111606
4 Total Expenditure 93306 90569
5 Profit before interest,
depreciation and tax 8485 21037
6 Finance Cost 4934 3831
7 Depreciation 3030 2807
8 Profit before tax 521 14399
9 Provision for tax & tax adjustment (145) 4117
10 Deferred tax liability (989) 240
11 Net Profit 1645 10042
12 Transfer to General Reserve - 8000
13 Earnings Per Share (Diluted EPS
of Rupees) 0.650 4.065
14 Dividend (on face value of share
Re 1 each) 10% 30%
Performance Review 2010-11:
Overall Sales of the Company for the year 2010-11 were recorded at Rs.
99494 Lacs as compared to previous year sales of Rs. 110,951 lacs. This
decrease is primarily on account of a reduction in lead acid battery
market, due to various macro factors affecting telecom business in the
country. The company passed on the reduction in the average cost of
lead. This impact was reinforced by lower demand from the telecom
sector due to macro economic factors. Profit after tax was Rs. 1645
Lacs for the year 2010-11 as compared to previous year of Rs. 10042
Lacs.
Expansion plans:
For details of expansion plans, please seethe Management Discussion and
Analysis section of the Annual Report
Utilization of proceeds of Preferential Issue:
The preferential issue was made to finance the General Corporate
Investments in related companies and for other General Corporate
purposes.The total Proceeds of preferential issue of capital including
share premium was Rs. 3469.51 lacs.
Details of utilisation upto 31.03.2011:
S. Particulars Amount
No. Rs. in Lacs
1 Investment in the Equity of M/s. Autotec
Systems Pvt. Ltd, Bangalore. 300.34
2 Investment in the Equity of M/s. SCIL
Infracon Pvt. Ltd. 651.63
3 Investment in the Equity of M/s. Sankhya
Infotech Ltd. 331.04
4 Advance for Equity in M/s. SCIL Infracon
Pvt. Ltd. 117.80
5 Advance for Equity in M/s. Sankhya
Infotech Ltd 195.38
6 ICD to M/s. Sankhya Infotech Limited 1300.00
7 ICD to M/s. SCIL Infracon Pvt. Ltd. 292.86
Total 3189.06
Unutilised Balance 280.45
Unutilised balance Parked in CC loan
account of the Company 279.95
Balance in Current Account 0.50
Dividends:
Your Directors are pleased to recommend a dividend of Rs. 0.10/- per
equity share of Re.1/-fully paid up share @10% (Previous Year 30%) for
the Financial Year 2010-11, subject to the approval of the members at
the ensuing Annual General Meeting. The proposed dividend including
Corporate Dividend Tax will absorb Rs. 294.04 lacs.
Investment/divestments in Subsidiary/Joint Venture/associate Companies:
Investments in Subsidiary:
Agile Electric Drives Technologies and Holdings Private Limited
(Agile): Rs. 112.88 Crores was invested in the Company during the year
for acquisition of 63.91 % equity shares in the Company. Agile is
subsidiary of the Company and engaged in manufacturing of motor
subassemblies and precision components and providing motors technology.
The Company through its subsidiary Agile acquired 62.94% of the equity
in Igarashi Motors India Limited (Igarashi), which is subsidiary of
Agile and listed on BSE and NSE. Igarashi is currently engaged in the
business of assembling of DC motors and actuation system for various
automotive and non-automotive applications and manufacturing sub
assemblies that go into DC motors.
SCIL Infracon Private Limited: Rs. 6.52 Crores was invested in the
Company as upto 31st March, 2011 for acquiring 50% of the equity
holding in the Company. Subsequently negotiation took place with the
Investing Company to acquire their remaining 30% holding for Rs. 3
crores. The former promoter also expressed interest to sell his 20%
shareholding. After completing these transactions for acquiring
additional equity, SCIL Infracon P Ltd will be poised to become a 100%
subsidiary of HBL.The Company is engaged in manufacturing of concrete
polls, primarily for telecom sector and roof slabs and has increased
product range to cover special pile foundation piles, high mast
lighting poles with a hydraulic arrangement to lower the lights, 40 and
50 mtr towers for telecom and power transmission. The products are
being received well by the customers.
HBL Germany GmBH, Germany: An amount of 25,000 Euros (Rs. 14.91 lacs)
was invested in the equity of wholly owned subsidiary in Germany.
HBL Power Systems (M) SDN BHD: There was no further investment in the
Company.
Bhagirath Energy Systems Private Ltd (BES) a wholly owned subsidiary in
Nepal is in the process of winding up. Provision for diminution in the
value of investment has been made based on Official Liquidators
certificate of cash available as on 31.03.2005. No further provision is
considered necessary, as there is no reduction in cash balance as on
31.03.2011.
Associate Company
Sankhya Infotech Limited (Sankhya): 8,40,482 equity shares being 9.89%
of the equity of Sankhya were acquired through open market for an
aggregate value of Rs. 3.31 Crores. The Company has also subscribed for
allotment of 12,20,000 convertible warrants for an issue price of Rs.
32.03 per warrant aggregating to Rs. 3.91 crores, of which Rs. 1.95
Crores being 50% of the issue price was paid upfront.These warrants
will be converted into equal number of equity shares of Rs. 10/- each
upon payment of balance 50% of the issue price within 18 months from
the date of allotment of such warrants and thereby, post conversion,
the Company will hold 14.97% of the equity in Sankhya.
Joint Ventures
HBL ELTA Avionics Systems Pvt. Ltd - During the year, the investment of
Rs. 2.25 Crores in joint venture has been divested for a total
consideration of Rs.13.66 Crores.
Directors' Responsibility Statement:
In Compliance with the Provisions of Section 217(2AA) of the Companies
Act, 1956, your Directors wish to place on record -
1. That in preparing the Annual Accounts, all applicable Accounting
Standards have been followed;
2. That the Accounting Policies adopted are consistently followed and
the judgments and estimates made 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 the Profit and Loss Account of the
Company forthe Financial Year under review:
3. That the Directors have taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of the Act for safeguarding the assets of the Company and
for preventing /detecting fraud and other irregularities; and
4. That the Annual Accounts have been prepared on a Going Concern
basis.
Corporate Governance:
Pursuant to Clause 49 of the Listing Agreement with the Stock
Exchanges, a separate section titled "Report on Corporate Governance"
is attached to the Annual Report.
CONSOLIDATION OF ACCOUNTS
In accordance with the requirements of Accounting Standards AS 21 read
with AS 27 prescribed by the Institute of Chartered Accountants of
India, the Consolidated Accounts of the company and its Subsidiaries/
JVs are annexed in this Annual Report.
In view of general exemption granted by the Ministry of Corporate
Affairs under Section 212(8) of the Companies Act, 1956 vide its
General Circular No.2/2011 dated 8th February 2011, companies are
exempted from the provisions of section 212 of the Companies Act 1956
subject to fulfillment of conditions therein. Accordingly, the Board
has passed required resolution in respect thereof for not attaching the
Balance sheets of the following subsidiary companies:
1. HBL Power Systems (M) SDN BHD, Malaysia,
2. Bhagirath Energy Systems Pvt. Ltd., Nepal,
3. SCIL Infracon Private Limited
4. Agile Electric Drives Technologies and Holdings Private Limited
5. HBL Germany GmBH, Germany
Hence, in this annual report the audited financial statements,
(Standalone and Consolidated) prepared in compliance with the
applicable Accounting Standards, Listing Agreements prescribed by SEBI,
have been attached and no individual Balance sheet or other information
of subsidiaries is attached or disclosed except to the extent of the
information as required to be disclosed under the condition (iv) of the
Circular No.2/ 2011 dated 8th February 2011, which is disclosed in note
10 of the Notes on Accounts of Consolidated Financial Statements.
The Company undertakes that the Annual Accounts of the subsidiary
Companies and the related detailed information will be made available
to any member of the Company who may be interested in obtaining the
same. The Annual Accounts of the subsidiary companies will also be
kept open for inspection during business hours at the Registered office
of the Company.
Auditors' Report:
The Board noted the contents of the Auditors report. It is observed
that some of the comments of the auditors have been continuing in the
past also. The necessary rectification (e.g. Capital asset register)
has not been fully satisfactory being lack of attention at the Board
level.
The Board has, therefore, decided that Mr. M S S Srinath, Director of
Accounts-and administration will now spend enough time to ensure that
these comments do not repeat in future.
The Board has considered the observations/ queries as raised by the
Statutory Auditors and the explanations are as under:
a) Point 4 (a) Reference is invited to Note: 7 of Schedule 20(B)
regarding balances appearing under debtors, creditors, advance
received/paid which are subject to confirmation / reconciliation and
consequential adjustments, the impact of which on these financial
statements is not quantifiable by us.
Our Reply: The Company has circulated confirmatory letters to various
parties. Some of them have not responded in time, although the letter
stipulates that the balance is deemed accepted or confirmed if no reply
was received. During the year, we shall endeavour to send interim
confirmation letters and upon reply, suitable reconciliation will be
undertaken.
b) Point 4 (b) Reference is invited to Note 12 of Schedule 20(B)
Managerial remuneration: Based on the approval of the members in the
AGM held on 27.09.2010, a remuneration ofRs.25.80 lacs was paid to the
Chairman & Managing Director for the year 2010-11. Due to inadequacy of
the profits computed under section 349 read with section 198 of the
Companies Act, 1956 and in accordance with the Provisions of Schedule
XIII of the Act, the remuneration so paid is subject to the approval /
ratification by the members by way of special resolution.
Our Reply: This is being placed in the ensuing Annual General Meeting
for approval and ratification of members. The resolution passed at the
previous Annual General Meeting was an ordinary resolution. In view of
the provisions of Schedule XIII of the Companies Act 1956, whenever
there is any inadequacy of profits as computed under section 349 read
with section 198 of the Companies Act, a special resolution is
necessary.
c) Point 4 (c) Reference is invited to Note 13 of Schedule 20(B)
regarding disclosure made under section 22 of the MSMED Act, 2006 which
is as compiled by the management and relied upon by us. Further, the
company has neither paid nor provided the applicable interest on such
dues from the date the Act came into force and the amount of which is
not ascertained. According to the Company there is no accrued
liability, which requires provision.
Our Reply: Some of the vendors who come under the MSMED Act 2006 have
been associated with the company for a long time and have a continuous
business relationship. The company is usually
prompt in servicing these vendors as per mutually agreed payment terms.
In view of such longstanding relationship, no separate interest
provision has been made, as there are no such claims. Interest payment
if any will be treated on cash basis.
d) Point 4 (d) Reference is invited to Note 14(1) of Schedule 20(B)
regarding non compliance with the disclosure requirements required
under A.S.27 relating to Company's interests in Assets & Liabilities
and Income & Expenses in the Joint Venture Company.
Our Reply: These reports have since come and the Consolidated Audited
Balance sheet was prepared accordingly.
Annexure referred to in Paragraph 3 of Auditors'report
(under CARO Report)::
(a) The Company has maintained year wise details of fixed assets
acquired by the divisions showing the relevant particulars including
original cost at the time of acquisition and there have been instances
of shifting and inter divisional transfer of certain assets after
acquisition. However the Company is yet to maintain and update the
division wise asset register showing the relevant particulars including
the original cost, deprecation provided and the written down value of
each asset duly reconciled with financial records and also the
identification particulars to facilitate physical verification.
Our Reply: Physical verification of assets has been taken up in all the
divisions. Steps are being initiated as suggested by auditor to
reconcile and update the division-wise register.
(b) According to the information and explanation given to us physical
verification of fixed assets except at branches was carried out during
the year by the management and the process of reconciliation including
identification of differences / discrepancies is reported to be in
progress. In the absence of reconciliation, identification of the
differences / discrepancies and quantification thereof, we are not in a
position to comment on the amount involved and its impact on the
financial statements as on 31.03.2011.
Our Reply:This will be initiated as stated above.The company believes
that such discrepancies if any may not be very material in nature.
(iv) In our opinion and according to the information and explanations
given to us, there are adequate internal control procedures
commensurate with the size of the company and the nature of its
business, for purchase of inventory and fixed assets and for the sale
of goods and services. During the course of our audit, no major
weaknesses have been noticed in the internal control in respect of
these areas. However, the internal control procedures with regard to
(a) review of customers and vendors balances including obtaining
balance confirmations to identify the differences and (b)
capitalization of assets procured including linking of various
components of an identifiable asset and linking of additions the assets
already in existence needs to be strengthened.
Our Reply: This will be strengthened as suggested by the Auditors.
(vii) The company has appointed three firms of chartered accountants to
carry out the internal audit function of the transactions of the
company and the scope and coverage of which is generally found to be
adequate. We suggest that' systems audit' of the Company's accounting
package be carried out and also suggest that proper internal audit
system be introduced to cover increasing number of activities and
transactions at branches. Further,
our opinion, the scope and
coverage of internal audit in the areas of review and reconciliation of
vendors/ customers accounts and accounting of different components of
fixed assets needs to be strengthened to be commensurate with the size
of the company and nature of its business.
Our Reply: This will be initiated as suggested by the Auditors.
(xvi) Based on our review of the records, sources and application of
funds and term loan drawn and utilization thereof on an overall basis,
the loan funds to the extent utilized were prima-facie applied for
acquiring fixed assets and unutilized amount of Rs.49.43 crores was
kept in current account with the banks. Our review revealed that out of
the term loans drawn, a sum of Rs. 69.88 crores was transferred to
working capital loan accounts and a sum of Rs. 20.60 crores was
utilized for payment of interest on certain old term loans. Thus, in
our opinion, Rs. 90.48 crores was utilized for the purposes which were
outside the scope of term loans.
(xvii) During the accounting period covered by our report, the Company
raised term loans to the extent of Rs.146.10 crores (Net of Rs. 90.48
crores referred to above and increase in unutilized funds of Rs. 28.30
crores kept in current accounts on 31.03.2011) and also generated
internal accruals of Rs. 37.89 crores considered as long term sources,
aggregating to Rs. 183.99 crores. The Company utilized Rs. 241.56
crores for fixed assets and long term investments and also repaid term
loan installments of Rs. 45.20 crores, aggregating to Rs. 286.56
crores. We are of the opinion that the Company has applied Rs.102.77
crores being the difference between sources and utilization from out of
short term funds of the Company.
Our Reply: The Company availed a term loan of Rs 60 crores primarily
obtained against margin money for meeting capital expenditure incurred.
This was initially met from company's internal accruals for ongoing
projects and as per intended purpose of term loan. Since it was to
recoup the margin money already spent from internal resources, it was
transferred to company's cash credit account for overall utilization.
The interest on term loans was on ongoing projects, which have not yet
been completed, which is in the nature of pre-operative expenditure
pending capitalization.
The company generated substantial internal accruals in the past and for
the last four years alone such generation was to the extent of ? 341.42
crores, which were kept in cash credit account and some portion was
utilized for long term use in the past. The company recognized such
internal accruals, which had been deposited in cash credit account and
were being utilised partly for working capital and also spent for
capital expenditure purposes during the year. Therefore there has been
no utilisation of short-term funds for capital purposes.
The Board:
Mrs. Preeti Khandelwal, Director retiring by rotation and being
eligible, offer herself for re-appointment. The following Directors
have resigned from the Board of the Company. Your Board appreciates
their advice during the tenure as a Director of the company.
S. Name of the Director Date of
No. resignation
1 Mr. M. S. Ramakrishna 29.05.2010
2 Mr. J. K. Varma 09.07.2010
3 Mr.VivekMundra 14.02.2011
Auditors:
Statutory Auditors:
M/s. Satyanarayana & Co., Chartered Accountants, Auditors of the
Company retires at the forthcoming Annual General Meeting and is
eligible for re-appointment. Audit Committee has recommended for the
re-appointment of M/s Satyanarayana & Co., Chartered Accountants as
Auditors at the ensuing Annual General Meeting. The Board of Directors
recommends their re-appointment. The Company has received a letter from
them to the effect that their appointment, if made, by the Company for
the year 2010-11 will be within the limit prescribed under Section
224(1-B) of the Companies Act, 1956.
Cost Auditors:
Your company proposes to re-appoint the cost auditors M/s. K. Narashima
Murhty & Co., Hyderabad, subject to the approval from Central
Government.
Personnel & Industrial Relations:
Your Company continues to enjoy cordial relations with the employees.
No employee of the Company was in receipt of remuneration during the
financial year 2010-11 in excess of the sum prescribed under Section
217(2A) of the Companies Act, 1956 read with the Companies (Particulars
of Employees) Rules, 1975.
Conservation of Energy, Technology Absorption and Foreign Exchange
Earnings & Outgo:
Information relating to conservation of energy, technology absorption
and foreign exchange earnings and outgo, as required under Section
217(1 )(e) read with the Companies (Disclosure of Particulars in the
Report of Board of Directors) Rules, 1988 is given in the Annexure
hereto.
Acknowledgements:
Your Directors take this opportunity to thank all the Company's Bankers
and Financial Institutions, the concerned Central and State Government
Departments, Agencies for their support and co-operation to the
Company. The Board has special appreciation for the employees for their
dedicated services.
The Board of Directors also thanks all its Shareholders for the
confidence reposed in the Management.
For and on behalf of the Board
Dr. A J Prasad
Chairman and Managing Director
Place: Hyderabad
Date: 27 July 2011
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