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Notes to Accounts of HBL Power Systems Ltd.

Mar 31, 2023

*HBL Tonbo Private Limited (HTPL) was incorporated by HBL Power Systems Limited and Tonbo Imaging India Private Limited on

September 12, 2022 with a sharing ratio of 51:49. There were no commercial operations since inception of HTPL. Subsequently, it was decided to explore other opportunities to carry on the intended business. The Board of Directors of HTPL in their meeting held on March 08, 2023, resolved to apply for voluntary striking off the name of the Company from the register of the Registrar of Companies under Section 248(2) of the Companies Act, 2013 read with rules made thereunder. In view of the decision of the Board of Directors HTPL, a provision for diminution of 100% value of investment in equity shares of HTPL of D51,000 (being 51%) has been made during the reporting period.

9.4 ** In the previous years, the investment in Gulf Batteries Company Limited was fully provided. An amount of D5.05 lakhs was realized towards full and final settlement against sale/transfer of stake in JV in the financial year 2021-22. During reporting financial year, necessary regulatory approvals were received and therefore, the unrealized value of investment has been written off against the provisions made earlier.

Current maturities of long term debt

Instalments due within 12 months from the date of balance sheet classified as current as shown above are disclosed in borrowings.

Term loans :

The particulars of loans drawn, nature of security, terms of repayment, rate of interest, instalments due and loan wise outstanding are as under.

a) Term loan from ICICI and Axis :

ICICI Bank sanctioned term loan of D4,500.00 lakhs for Li-ion & Electronic drive train project. 1) The loan is secured by a first Pari-passu charge on present and future assets (movable or immovable) of the company alongwith other term lenders ; 2) All the loans are guaranteed by some of the promoters in their personal capacity.

AXIS Bank sanctioned term loan of D7,500.00 lakhs for refinancing the capital expenditure of the Company. The loan is secured by a first Pari-passu charge on present and future assets (movable or immovable) of the company alongwith other term lenders.

b) HDFC Bank - vehicle loan

The term loans are secured by exclusive hypothecation of vehicles acquired through execution of demand promissory notes and are repayable by equated monthly installments as per the loan schedule sanctioned by the bank.

19.6 As on the balance sheet date, there were no continuing defaults in repayment of borrowings and interest.

22.1 Working capital loans

The demand loans from Banks are secured by a first charge on all the chargeable current assets and by a second charge on the property, plant and equipment (both present and future) of the Company. All the loans are guaranteed by some of the promoters in their personal capacity.

22.2 Purchase bill discounting from Kotak Mahindra Bank Ltd. is guaranteed by some of the promoters of the Company in their personal capacity and undated cheque of the Company for the limit value. Purchase bill discounting from Axis Bank Ltd. is guaranteed by some of the promoters in their personal capacity and undated cheque of the Company equivalent to limit/standing instructions for making payment on due date.

Note: The above information has been given only in respect of those suppliers who have informed the Company that they are registered under MSMED Act 2006. Some of these vendors were associated with the Company for long periods of time and do maintain a harmonious continuous business relationship. The Company is normally prompt in servicing these vendors'' claims as per mutually agreed terms of payment. The company had not received any claim towards interest from any of the vendors and in view of the said long standing business relationship, does not expect or foresee any claims in future as well. The company does not have any claims for interest remaining due and payable.

39.2 Contingent liabilities not provided for and commitments:

All known and undisputed claims and liabilities, where there is a present obligation as a result of past events and it is probable that there will be an outflow of resources, have been duly provided for. The contingent liabilities and commitments are as under:

Nature of contingent liability	March 31, 2023	March 31, 2022
i) Contingent liabilities not provided for:
a) Claims against the Company not acknowledged as debts towards :
Excise duty	2,472.78	2,585.23
Sales tax	669.76	673.98
Custom duty	488.70	488.70
Service Tax	194.90	194.90
Goods and service tax	16.98	16.98
Property tax	242.03	242.03
Fuel surcharge adjustment	224.61	231.95
Erstwhile promoters of SCIL Infracon Private Limited *	542.04	188.31
Others	394.80	361.84

b) Un-expired guarantees issued on behalf of the Company by banks for which the Company gave counter guarantees	14,646.68	13,156.49
Corporate guarantee given to bank on behalf of stepdown subsidiary in respect of loan taken by them	1,271.00	-
ii) Commitments:
a) Estimated amount of contracts remaining to be executed on capital account and not provided for	983.75	1,269.91
b) Other Commitments:
Legal undertakings (LUTs) given to custom''s authorities for clearing the imports at Nil / concessinal rate of duty	-	84.68

The erstwhile promoters of M/s. SCIL Infracon Private Limited filed a petition with the sole arbitrator making several new claims against the Company and others. The arbitration award allowed, only one claim of theirs, relating to unsecured loans of D2.08 cr to be paid along with interest of 12% p.a., effective from 31.01.2011 till the date of the payment. On an appeal preferred by the Company against the arbitral award, the Hon''ble Civil Court granted stay on the operation of the award on condition of depositing 50% of the amount awarded with interest till date of the order. The Company deposited the 50% amount along with interest amounting to D2.71 cr on 17^th April 2023 in compliance of the Hon''ble Civil Court''s order as modified by the Hon''ble High Court. However, the appeal against the arbitral award is yet to be decided by the Hon''ble Civil Court and the matter is still sub-judice. The company''s legal counsel, based on the facts of the case, opined that the claim is not admissible and is likely to be dismissed by the Hon''ble City Civil Court. Based on the above facts, the claim is not acknowledged as debt against the company and is appropriately reported as a contingent liability.

The Company has other commitments, for purchase / sale orders which are issued after considering requirements per operating cycle for purchase / sale of goods and services, employee benefits in the normal course of business. The company does not have any long term committments or material non-cancellable contractual committments / contracts, which might have material impact on the financial statements.

39.3 Commitment towards dividend

The Board in its meeting held on May 25, 2023 has recommended a dividend of ? 0.45 ps per Equity Share of ? 1/- each for the financial year ended March 31, 2023. The proposal is subject to the approval of shareholders at the annual general meeting to be held, and if approved would result in a cash outflow of ? 1,247.38 lakhs towards dividend.

39.4 Contingent assets:

During the year 2011, some assets at one of the plants of the Company, were damaged due to heavy rains. The Company''s claim for the loss was repudiated by the insurers. A case was filed for recovery of the claim of ? 234.60 lakhs towards loss sufferred apart from interest thereon. The matter is sub judice.

During the year 2014, there was a heavy damage to the assets and inventory at two plants of the Company, due to hud-hud cyclone. The Company''s claim for the resultant losses was partly allowed by the Insurers and the balance claims were repudiated. The matter relating to the claim of ? 400 lakhs towards damage to assets and inventory and ? 921.75 lakhs towards loss of profits, apart from interest thereon, on being referred to arbitration was partly awarded infavour of the company. Subsequently on an appeal by the insurer further proceedings of arbitration were stayed by the commercial Court. The matter is sub judice.

Note : 40Income tax and Sales tax assessments:40.1 Income tax:

Taxes were paid in accordance with income tax returns filed and were charged off to revenue. In respect of pending assessments, the liability, if any, that may arise upon completion of assessments is not ascertainable at this stage. During the year, in the income tax assessments, there were no transactions that were not recorded in the books of accounts but have been surrenderd or disclosed as income.

40.2 Sales tax:

The Company has paid/provided for VAT/CST as per the records and returns filed upto September 30, 2017 after considering the input VAT on purchases and also on the basis of concessional forms expected to be received from customers. The related assessments for various years are pending at various stages in different states. The liability, if any, in respect of such pending assessments is not ascertainable at this stage.

Note : 41

Confirmation of balances

The Company had sent letters seeking confirmation of balances to various parties under trade payables, trade receivables, advance to suppliers and others and advance from customers. Based on the confirmations received and upon proper review, corrective actions have been initiated and the amounts have been trued up, accounting adjustments have been made wherever found necessary. Such confirmations are awaited from some parties, comprising of government departments and public sector undertakings.

Note : 42

42.1 In the opinion of the board, assets other than fixed assets and non-current investments have a value, on realisation in the ordinary course of business, which is at least equal to the amount at which they are stated in the financial statements.

42.2 The company has utilized the borrowings from banks and financial institutions for the specific purpose for which it was taken.

42.3 In respect of borrowings from banks and financial institutions, the quarterly returns or statements of current assets filed by the company are in agreement with the books of accounts.

42.4 Relationship with struck-off Companies:

The Company has attempted machine matching of the names of its active customers/vendors with the list of "Struck Off companies" hosted in the MCA website. Since no matches were found during this exercise, there are no transactions / relationships to report.

There are no significant items of revenue to be recognised against performance obligation satisfied in previous year due to change in transaction price.

Timing of satisfaction of performance obligations

For each performance obligation satisfied over time the company recognises revenue over time by measuring the progress towards complete satisfaction of that performance obligation. The objective when measuring progress is to depict the company''s performance in transferring control of goods or services promised to a customer (ie the satisfaction of an entity''s performance obligation).

The right to payment for performance completed to date does not need to be for a fixed amount. However, at all times throughout the duration of the contract, the company is entitled to an amount that at least compensates for performance completed to date if the contract is terminated by the customer or another party for reasons other than the company''s failure to perform as promised.

Output method is used for measurement where the units produced or units delivered faithfully depict the company''s performance in satisfying a performance obligation and, at the end of the reporting period, the companie''s performance has produced work in progress or finished goods that are not controlled by the customer.

Input method is used to recognise revenue where the company''s efforts or inputs in satisfaction of a performance obligation (for example, resources consumed, labour hours expended, costs incurred, time elapsed or machine hours used) is relative to the total expected inputs to the satisfaction of that performance obligation and depict the company''s performance in transferring control of goods or services to the customer.

43.5Disclosure as per Ind AS-116 - Leases (i) Transition from Ind AS 17

a) The Company has adopted Ind AS 116, effective annual reporting period beginning April 1,2019 and applied the standard to its leases, retrospectively, with the cumulative effect of initially applying the standard, recognised on the date of initial application (April 1,2019).

b) The Company has also used the practical expedient provided by the standard when applying Ind AS 116 to leases previously classified as operating leases under Ind AS 17 and therefore, has not reassessed whether a contract, is or contains a lease, at the date of initial application, relied on its assessment of whether leases are onerous, applying Ind AS 37 immediately before the date of initial application. The Company has used a single discount rate to a portfolio of leases with similar characteristics.

c) On transition, the Company recognised a lease liability measured at the present value of the remaining lease payments. The right-of-use asset is recognised at an amount equal to the lease liability, adjusted by the amount of any prepaid or accrued lease payments relating to that lease recognised in the balance sheet immediately before the date of initial application using the practical expedient provided by the standard.

(iv) The company incurred ? 172.81 lakhs for the year ended March 31,2023 (Previous year ? 161.04 lakhs) towards expenses relating to short-term leases and leases of low-value assets. The total cash outflow for leases is ? 401.32 lakhs for the year ended March 31, 2023 (Previous year ? 368.54 lakhs) , including cash outflow for short term and low value leases.

(v) Lease contracts for land & building entered by the company are primarily to conduct its business in the ordinary course.

b) Defined benefit plan:

(i) Gratuity obligation of the Company :

To cover the employer''s obligation towards gratuity, under the Payment of Gratuity Act, the Company has obtained actuarial valuation of the said liability. As per the valuation made under Projected Unit Credit (PUC) method by the Actuary, the fund required to be maintained, to cover the present value of past service benefit and current service cost, is fully funded/provided for by the Company. To meet the actual liability, the company has taken a group gratuity policy of the LIC of India and to keep the policy alive, the Company also paid the annual risk premium and recognised it as expense for the year.

43.10 Disclosure as per Ind AS-108 - Operating segments

This financial report contains both the consolidated financial statements of parent, that is within the scope of this Ind AS, as well as the parent''s separate financial statements. Therefore, in accordance with Para 4 of Ind AS 108, segment information is given in the consolidated financial statements.

43.11 FINANCIAL INSTRUMENTS A) Capital management

The Company manages its capital structure and make adjustments to it, in light of changes in economic condition. To mainintain or adjust the capital structure, the Company may adjust the dividend payment to shareholders, return capital to shareholder, or issue new shares. No changes were made in the objectives, policies and procedures in the past three years.

The Company monitors capital using a gearing ratio, which is net debt divided by total capital plus net debt. The Company includes within net debt, borrowings, trade and other payables, other liabilities, less cash and cash equivalents. Capital includes Issued equity capital, securities premium and all other equity reserves attributable to the equity holders.

43.11 FINANCIAL INSTRUMENTS B) Financial risk management Financial risk factors

The Company is exposed to financial risks arising from its operations and the use of financial instruments. The key financial risks include market risk, credit risk and liquidity risk. The management reviews and designs policies and procedures to minimise potential adverse effects on its financial performance. The primary market risk to the company is foreign exchange risk. The companies exposure to credit risk is influenced mainly by the customers repayments. The companies exposure to liquidity risks are on account of interest rate risk on borrowings. The following sections provide details regarding the companies exposure to the above mentioned financial risks and the management thereof.

Market risk

The Company operates internationally and a portion of the business is transacted in several currencies and consequently the Company is exposed to foreign exchange risk through its sales and services in those countires. The exchange rate between the rupee and foreign currencies has changed substantially in recent years and may fluctuate substantially in the future. Consequently, the results of the Company''s operations are affected as the rupee appreciates/ depreciates against these currencies. The company leaves exchange rate risk with regard to foreign exposures unhedged when the local currency is depreciating against the foreign currency and hedges this risk when the local currency is appreciating against the foreign currency. Currently the foreign exchange risk of the company is covered through natural hedge and the Company uses the foreign currency denominated accounts to mitigate the exchange rate variation.

For the year ended March 31,2023 and March 31,2022, the depreciation / appreciation in the exchange rate between the Indian rupee and respective unhedged foreign currency exposures, has resulted in incremental operating margins by approximate ? 885.83 lakhs and ? 571.27 lakhs respectively.

Credit risk

Credit risk refers to the risk of default on its obligation by the counterparty resulting in a financial loss. The maximum exposure to the credit risk at the reporting date is primarily from trade receivables amounting to ? 32,353.60 lakhs and ? 30,765.85 lakhs as of March 31, 2023 and March 31,2022, respectively . Trade receivables are typically unsecured and are derived from revenue earned from customers primarily located in India and overseas. Credit risk has always been managed by the company through credit approvals, establishing credit limits and continuously monitoring the creditworthiness of customers to which the company grants credit terms in the normal course of business. On account of adoption of Ind AS 109, the company uses expected credit loss model to assess the impairment loss or gain. The company uses a provision matrix to compute the expected credit loss allowance for trade receivables. The provision matrix takes into account available external and internal credit risk factors and the companie''s historical experience for customers.

Credit risk on cash and cash equivalents is limited as the company generally invest in deposits with banks and financial institutions with high credit ratings assigned by international and domestic credit rating agencies with no history of default.

Liquidity risk

The company''s principal sources of liquidity are cash and cash equivalents and the cash flow that is generated from operations. The company also has long term and short term borrowings from banks and financial institutions. Term loans are project specific and for refinancing of capital expenditures. Short term loans repayable on demand from banks are obtained for the working capital requirements of the company.

As of March 31,2023, the Company had a working capital of ? 59,144.82 lakhs including cash and cash equivalents of ? 12,995.77 lakhs. As of March 31,2022, the Company had a working capital of ? 54,147.85 lakhs including cash and cash equivalents of ? 4,779.73 lakhs

As of March 31,2023 and March 31,2022, the outstanding gratuity and compensated absences were ? 538.37 lakhs and ? 474.11 lakhs, respectively, which have been substantially funded. Accordingly, no liquidity risk is perceived.

Interest rate risk

The interest rate risk is the risk that the fair value or the future cash flows of the companies financial instruments will fluctuate because of the change in market interest rates. The company is exposed to interest rate risks as it has significant interest bearing loans from banks and financial institutions. These fluctuations are managed through negotiated and prefixed interest rates on term loans enabling the management to plan its future financial commitments and exposures. Short term and Working capital loans repayable on demand are a subject to prevailing market rate fluctuations and sanctioned facilities are availed on a need to borrow basis to ensure minimun exposure to interest rate fluctuations.

Note : 44

Disclosures relating to Corporate Social Responsibility (CSR)

As per section 135 of the Companies Act, 2013, a company, meeting the applicability threshold, needs to spend atleast two percent of its average net profits for the immediately preceding three financial years, on Corporate Social Responsibility (CSR ) activities. The areas for CSR activities are eradication of hunger and malnutrition, promotion of education, art and culture, health care, destitute care and rehabilitation, environment sustainability, disaster relief and rural development projects. A CSR committee has been formed by the Company as per the Act. The funds were utilized through the year on these activities which are specified in schedule VII of the Companies Act, 2013.

a) Gross amount required to be spent by the Company during the year ? 119.75 Lakhs (Previous year ? 63.01 Lakhs).

Previous year''s figures have been regrouped / reclassified wherever necessary to correspond with the current year''s classification / disclosure.

Mar 31, 2018

1 Company overview

HBL Power Systems Limited (âHBLâ or âthe Companyâ) is a public limited company incorporated and domiciled in India and has its registered office at Hyderabad, Telangana State, India. The Company has its primary listings on the BSE and National Stock Exchange in India. The financial statements were authorized for issuance by the Companyâs board of directors and audit committee on May 28, 2018.

The principal activities of the Company comprises of manufacturing of different types of batteries including lead acid, nickel cadmium, silver zinc and lithium, railway and defence electronics, solar photovoltaic modules and other products. The Company is also engaged in service activities related to the above products.

2 Basis of preparation and measurement

2.1 Statement of compliance

The financial statements as at and for the year ended March 31, 2018 have been prepared in accordance with Indian Accounting Standards (âInd ASâ) notified under the Companies (Indian Accounting Standards) Rules, 2015 as amended from time to time.

2.2 Accounting convention and basis of measurement

The financial statements have been prepared on the historical cost convention and on an accrual basis, except for the following material items that have been measured at fair value as required by relevant Ind AS:

i) Certain financial assets and liabilities (refer accounting policy on financial instruments);

ii) Defined benefit and other long-term employee benefits

iii) Provision for warranties

2.3 Functional and presentation currency

The financial statements are presented in Indian rupee, which is the functional currency of the Company and the currency of the primary economic environment in which the Company operates. All financial information presented in Indian rupee has been rounded off to the nearest lakh of rupees except share and per share data.

2.4 Use of judgments, estimates and assumptions

The preparation of financial statements in conformity with Ind AS requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amount of assets, liabilities, income and expenses and the disclosure of contingent liabilities and contingent assets. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on a periodic basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any affected future periods.

Information about critical judgments in applying accounting policies, as well as estimates and assumptions in respect of the following areas, that have most significant effect to the carrying amounts within the next financial year are included in the relevant notes.

i) Useful lives of property, plant, equipment and intangibles.

ii) Measurement of defined benefit obligations

iii) Measurement and likelihood of occurence of provisions and contingencies.

iv) Recognition of deferred tax assets/liabilities.

v) Impairment of intangibles

vi) Expenditure relating to research and development activities.

2.5 Operating cycle:

Based on the nature of products / activities of the Company and the normal time between acquisition of assets and their realization in cash or cash equivalents, the Company has determined its operating cycle as 12 months for the purpose of classification of its assets and liabilities as current and non-current.

3.1 During the year 2011-12, certain assets of the Company were damaged due to heavy rainfall. The Company had incurred Rs. 95.16 lakhs towards repairing the damages caused and was accounted for as claim recoverable. The cost of new assets acquired is capitalised. However, the claim is made for total cost of repairs and acquisition of assets, as the loss is covered under re-instatement Policy which was in force. The total claim was repudiated by the Insurer and the company filed a suit for recovery. The matter is still sub-judice.

4.1 Terms/rights attached to equity shares

The Company has only one class of equity shares having a par value of Re.1 per share. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividends in indian rupee. The dividend proposed by the board of directors is subject to the approval of the shareholders in the ensuing annual general meeting.

5.1 Current maturities of long term debt

instalments due within 12 months from the date of balance sheet classified as current as shown above are disclosed under â other current liabilitiesâ

5.2 Term loans :

The particulars of loans drawn, nature of security, terms of repayment, rate of interest, instalments due and loan wise outstanding are as under.

5.3 Term loan from IDBI and HDFC :

a) The capex term loan of Rs. 2,500 lakhs is sanctioned by IDBI Bank Ltd for setting up of spun concrete poles unit with a project cost of Rs. 3,350 lakhs with a capacity of 1,00,000 poles p.a. at Narsaraopet, Guntur District, Andhra Pradesh. The loan is secured by pari passu first charge on the entire property, plant and equipment of the Company both present and future. This loan is also guaranteed by CMD, spouse of CMD, whole time director and CFO in their personal capacity.

b) HDFC term loan II of Rs. 2,000 lakhs is towards refinancing of capital expenditure of the Company. The loan is secured by a first charge on the entire property, plant and equipment of the Company both present and future. This loan is also guaranteed by CMD, whole time director and CFO in their personal capacity.

c) HDFC Bank Ltd - vehicle loan

The term loans are secured by exclusive hypothecation of vehicles acquired through execution of demand promissory notes and are repayable by equated monthly instalments (EMIsâ) as per the loan schedule sanctioned by the bank.

5.4 Unsecured loans

a) Deferred payment liability - Interest Free Sales Tax Loan (IFST):

IFST loan represents the sales tax payable by the Company given as loan by state government under a scheme and is to be repaid without interest after 14 years from the date of availment. The loan requires creation of a charge on the assets of the Company. Pending creation of charge, the amount is shown as âunsecured loanâ to be regrouped as secured loan as and when the charge is created. Pursuant to requirement under Ind AS - 109 on financial Instruments and in view of the option exercised under Ind AS - 101 on first time adoption of Ind AS, un-winding of interest using effective interest rate was made and the deferred government grant carved out, from the said loan, is being amortized in equal instalments over the remaining repayment period of the IFST loan.

5.5 As on the balance sheet date, there were no continuing defaults in repayment of borrowings and interest.

6.1 Working capital loans

The demand loans from banks are secured by a first charge on all the chargeable current assets and by a second charge on the property, plant and equipment (both present and future) of the Company. All the loans are also guaranteed by CMD, spouse of CMD, whole time director and CFO in their personal capacity.

6.2 Purchase bill discounting from Kotak Mahindra Bank Ltd. is guaranteed by CMD and whole time director of the Company in their personal capacity and purchase bill discounting from IDBI Bank Ltd. is secured by accepted bill of exchange and post dated cheque/standing instructions for making payment on due date.

6.3 Loan from directors is repayable on demand with interest.

Note: The information has been given in respect of those suppliers who have intimated the Company that they are registered as micro enterprises and small enterprises. 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 the Company. The Company expects that there will be no claims in future also for interest.

7.1 Does not include any amount outstanding which is required to be credited to Investor Education and Protection Fund (IEPF).

Unused amounts of provision for warranties represent provision reversed from the opening balance (after warranty period). It is expected that provision for warranties will be incurred in the next 12 to 24 months. Actual expenditure incurred during warranty period towards replacements etc. are charged off under respective heads of expenditure.

8.1 Contingent liabilities not provided for and commitments:

All known and undisputed claims and liabilities where there is a present obligation as a result of past events and it is probable that there will be an outflow of resources, have been duly provided for. The contingent liabilities and commitments are as under:

The Company has other commitments, for purchase / sale orders which are issued after considering requirements per operating cycle for purchase / sale of goods and services, employee benefits in the normal course of business. The Company does not have any long term commitments or material non-cancellable contractual commitments / contracts, which might have material impact on the financial statements.

8.2 Commitment towards dividend and dividend distribution tax

The board in its meeting held on May 28, 2018 has recommended a dividend of Re. 0.25 per equity share of Re. 1/- each for the financial year ended March 31, 2018. The proposal is subject to the approval of share holders at the annual general meeting to be held, and if approved would result in a cash outflow of Rs. 692.99 lakhs towards dividend and Rs. 142.45 lakhs towards corporate dividend distribution tax.

8.3 Contingent assets:

During the year 2011, some assets at one of the plants of the Company, were damaged due to heavy rains. The Companyâs claim for the loss was repudiated by the insurers. A case was filed for recovery of the claim of Rs.234.60 lakhs towards loss sufferred apart from interest thereon. The matter is sub judice.

During the year 2014, there was a heavy damage to the assets and inventory at two plants of the Company, due to hud-hud cyclone. The Companyâs claim for the resultant losses was partly allowed by the Insurers and the balance claims were repudiated. The matter relating to the claim of Rs. 400 lakhs towards damages to assets and inventory and Rs. 921.75 lakhs towards loss of profits, apart from interest thereon, was referred to arbitration. The matter is sub judice.

9 Income tax and sales tax assessments:

9.1 Income tax:

The Companyâs income tax assessments were completed upto financial year 2014-15 and the tax dues, as per orders, were paid and charged off to revenue, except for disputed issues under appeal. Tax assessments for the financial years 2015-16 and 2016-17 are pending and the tax dues, as per returns filed, have been fully paid. In respect of such pending assessments, the liability, if any, that may arise upon completion of assessments is not ascertainable at this stage.

9.2 Sales tax:

The Company has paid/provided for VAT/CST as per the records and returns filed upto June 30, 2017 after considering the input VAT on purchases and also on the basis of concessional forms expected to be received from customers. The related assessments for various years are pending at various stages in different states. The liability, if any, in respect of such pending assessments is not ascertainable at this stage.

10 Confirmation of balances

In the opinion of the board, assets other than fixed assets and non-current investments have a value, on realisation in the ordinary course of business, which is at least equal to the amount at which they are stated in the financial statements.

11Disclosures as prescribed by Indian Accounting Standard ( Ind AS )

11.1 Disclosure as per Ind AS - 2 - Inventories

During the year ended March 31, 2018, Rs. 151.37 lakhs (March 31, 2017, Rs. 22.64 lakhs) was recognised as an expense in respect of inventories carried at net realisable value in the statement of profit and loss.

11.2 Disclosure as per Ind AS - 7

Statement of reconciliation for changes in liabilities arraising from financing activities.

11.3 Disclosure as per Ind AS -11 - Construction Contracts

A) The Company recognised revenue based on percentage completion method whereby stage of completion of a contract is determined with reference to the proportion that contract costs incurred (for work performed up to the reporting date) bear to the estimated total contract cost and wherever applicable after completion of inspection/certification of the work performed by the customers as stipulated in the contract.

b) Operating lease

The Company had taken office, residential facilities and equipment under cancellable operating leases. The rental expenses under such cancellable operating lease for the year ended March 31, 2018 was Rs. 294.42 lakhs ( previous year Rs. 276.63 lakhs)

b) Defined benefit plan:

(i) Gratuity obligation of the Company :

To cover the employerâs obligation towards gratuity, under the Payment of Gratuity Act, the Company has taken a group gratuity policy of LIC of India. As per the valuation made under Projected Unit Credit method and demanded by LIC of India, the fund required to be maintained, to cover the present value of past service benefit and current service cost, is fully funded/provided for by the Company. Apart from the said funding, to keep the policy alive, the Company also paid the annual risk premium and recognised it as expense for the year.

Characteristics of defined benefit plan and risks associated with it Actuarial Valuation Method

The valuation has been carried out using the Projected Unit Credit method as per Ind AS 19 to determine the present value of defined benefit obligations and the related current service cost and, where applicable, past service cost.

Description of regulatory framework in which plan operates

The payment of gratuity is required by the Payment of Gratuity Act, 1972.

Description of risk exposures

Valuations are performed on certain basic set of pre-determined assumptions and other regulatory framework which may vary over time. Thus, the Company is exposed to various risks in providing the above gratuity benefit which are as follows:

Interest rate risk: The plan exposes the Company to the risk of fall in interest rates. A fall in interest rate will result in an increase in the ultimate cost of providing the above benefit and will thus result in an increase in the value of the liability (as shown in financial statements).

Liquidity risk: This is the risk that the Company is not able to meet the short-term gratuity payouts. This may arise due to non availabilty of enough cash / cash equivalent to meet the liabilities or holding of liquid assets not being sold in time.

Salary escalation risk: The present value of the defined benefit plan is calculated with the assumption of salary increase rate of plan participants in future. Deviation in the rate of increase of salary in future for plan participants from the rate of increase in salary used to determine the present value of obligation will have a bearing on the planâs liability.

Demographic risk: The Company has used certain mortality and attrition assumptions in valuation of the liability. The Company is exposed to the risk of actual experience turning out to be worse compared to the assumption.

Regulatory Risk: Gratuity benefit is paid in accordance with the requirements of the Payment of Gratuity Act, 1972 (as amended from time to time). There is a risk of change in regulations requiring higher gratuity payouts (e.g. increase in the maximum limit on gratuity of Rs. 20,00,000).

Asset liability mismatching or market risk: The duration of the liabilty is longer compared to duration of assets, exposing the Company to market risk for volatilities/fall in interest rate.

Investment risk: The probability or likelihood of occurrence of losses relative to the expected return on any particular investment.

The sensitivity analysis presented above may not be representative of the actual change in the defined benefit obligation as it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumptions may be correlated. There is no change in the method of valuation for the prior period.

Asset liability matching strategies

The Company has purchased insurance policy, which is basically a year-on-year cash accumulation plan in which the interest rate is declared on yearly basis and is guaranteed for a period of one year. The insurance Company, as part of the policy rules, makes payment of all gratuity outgoes happening during the year (subject to sufficiency of funds under the policy). The policy, thus, mitigates the liquidity risk. However, being a cash accumulation plan, the duration of assets is shorter compared to the duration of liabilities. Thus, the Company is exposed to movement in interest rate (in particular, the significant fall in interest rates, which should result in a increase in liability without corresponding increase in the asset).

Effect of plan on entityâs future cash flows Funding arrangements and funding policy

The Company has purchased an insurance policy to provide for payment of gratuity to the employees. Every year, the insurance Company carries out a funding valuation based on the latest employee data provided by the Company. Any deficit in the assets arising as a result of such valuation is funded by the Company.

Expected contribution during the next annual reporting period

The Companyâs best estimate of contribution during the next year remains similar to current year.

(ii) Long term compensated absences - leave encashment:

The present value of obligation for long term compensated absences is determined on actuarial valuation using Projected Unit Credit method (PUC) and is charged to Profit and Loss account. The obligation is not funded.

Characteristics of defined benefit plan and risks associated with it Actuarial valuation method

The valuation has been carried out using the projected unit credit method as per Ind AS 19 to determine the present value of defined benefit obligations and the related current service cost and, where applicable, past service cost.

Description of regulatory framework in which plan operates

The payment of leave encashment benefit is required as per Companyâs scheme.

Description of risk exposures

Liquidity risk: This is the risk that the Company is not able to meet the short-term benefit payouts. This may arise due to non availabilty of enough cash / cash equivalent to meet the liabilities or holding of illiquid assets not being sold in time.

Regulatory/contractual risk: Benefit is paid in accordance with the requirements of the enterpriseâs scheme (as amended from time to time). There is a risk of change in regulations /rules requiring higher benefit payouts (e.g. increase in the maximum limit on benefit amount).

Asset liability mismatching or market risk: The duration of the liabilty is longer compared to duration of assets, exposing the Company to market risk for volatilities/fall in interest rate.

Investment risk: The probability or likelihood of occurrence of losses relative to the expected return on any particular investment.

Actuarial assumptions The valuation has been carried out using the Projected Unit Credit method as per Ind AS 19 to determine the present value of defined benefit obligations and the related current service cost and, where applicable, past service cost.

The results are particularly sensitive to some assumptions, such as the discount rate, level of salary inflation, level of assumed price inflation and mortality. A decrease in the discount rate assumed or an increase in salary inflation will lead to an increase in reported cost.

11.4 Disclosure as per Ind AS-108 - Operating Segments

The companyâs operations include batteries of different types, electronics, railway signalling contracts etc. Except for batteries and electronics, the segment revenue, segment results and segment assets and liabilities of other activities are individually below the threshold limit set out in paragraph 27 of Ind AS 108. Accordingly batteries and electronics segments are shown separately as reportable segments and others are included in un-allocated segment.

1) Business segments: Batteries and Electronics segments have been considered as primary business segements for reporting under Ind AS 108 - Operating Segments issued by Ministry of Corporate Affairs. .

2) In the opinion of the management, the other segments such as railway signalling contracts and others are not reportable business segments of the Company as per paragraph 27 of Ind AS 108 - Operating Segments

11.05Financial instruments

A) Capital management

The Company manages its capital structure and makes adjustments to it, in light of changes in economic condition. To maintain or adjust the capital structure, the Company may adjust the dividend payment to shareholders, return capital to shareholders, or issue new shares. No changes were made in the objectives, policies and procedures in the past three years.

The Company monitors capital using a gearing ratio, which is net debt divided by total capital plus net debt. The Company includes within net debt, borrowings, trade and other payables, other liabilities, less cash and cash equivalents. Capital includes issued equity capital, share premium and all other equity reserves attributable to the equity holders.

B) Financial risk management Financial risk factors

The Company is exposed to financial risks arising from its operations and the use of financial instruments. The key financial risks include market risk, credit risk and liquidity risk. The management reviews and designs policies and procedures to minimise potential adverse effects on its financial performance. The primary market risk to the Company is foreign exchange risk. The Companyâs exposure to credit risk is influenced mainly by the customer repayments. The Companyâs exposure to liquidity risks are on account of interest rate risk on borrowings. The following sections provide details regarding the Companyâs exposure to the above mentioned financial risks and the management thereof.

Market risk

The Company operates internationally and a portion of the business is transacted in several currencies and consequently the Company is exposed to foreign exchange risk through its sales and services in those countires. The exchange rate between the rupee and foreign currencies has changed substantially in recent years and may fluctuate substantially in the future. Consequently, the results of the Companyâs operations are affected as the rupee appreciates/ depreciates against these currencies. The Company leaves exchange rate risk with regard to foreign exposures unhedged when the local currency is depreciating against the foreign currency and hedges this risk when the local currency is appreciating against the foreign currency. Currently the foreign exchange risk of the Company is covered through natural hedge and the company uses the foreign currency denominated accounts to mitigate the exchange rate variation.

For the year ended March 31, 2018 and March 31, 2017, the depreciation / appreciation in the exchange rate between the Indian rupee and respective unhedged foreign currency exposures, has resulted in incremental operating margins by approximate Rs. 843.38 lakhs and Rs. 590.21 lakhs respectively.

Credit risk

Credit risk refers to the risk of default on its obligation by the counterparty resulting in a financial loss. The maximum exposure to the credit risk at the reporting date is primarily from trade receivables amounting to Rs. 46,650.99 lakhs and Rs. 48,866.87 lakhs as of March 31, 2018 and March 31, 2017, respectively . Trade receivables are typically unsecured and are derived from revenue earned from customers primarily located in India and overseas. Credit risk has always been managed by the Company through credit approvals, establishing credit limits and continuously monitoring the creditworthiness of customers to which the Company grants credit terms in the normal course of business. On account of adoption of Ind AS 109, the Company uses expected credit loss model to assess the impairment loss or gain. The Company uses a provision matrix to compute the expected credit loss allowance for trade receivables. The provision matrix takes into account available external and internal credit risk factors and the Companyâs historical experience with customers.

Credit risk exposure

The allowance for lifetime expected credit loss on customer balances for the year ended March 31, 2018 was Rs. 150.17 Lakhs. The allowance for lifetime expected credit loss on customer balances for the year ended March 31, 2017 was Rs. 350 Lakhs.

Credit risk on cash and cash equivalents is limited as the Company generally invests in deposits with banks and financial institutions with high credit ratings assigned by international and domestic credit rating agencies with no history of default.

Liquidity risk

The Companyâs principal sources of liquidity are cash and cash equivalents and the cash flow that is generated from operations. The Company also has long term and short term borrowings from banks and financial institutions. Term loans are project specific and for refinancing of capital expenditures. Short term loans repayable on demand from banks are obtained for the working capital requirements of the Company.

As of March 31, 2018, the Company had a working capital of Rs. 33,398.24 lakhs including cash and cash equivalents of Rs. 532.20 lakhs . As of March 31, 2017, the Company had a working capital of Rs. 29,275.04 lakhs including cash and cash equivalents of Rs. 303.15 lakhs

As of March 31, 2018 and March 31, 2017, the outstanding gratuity and compensated absences were Rs. 313.69 lakhs and Rs. 533.06 lakhs, respectively, which have been substantially funded. Accordingly, no liquidity risk is perceived.

Interest Rate risk

The interest rate risk is the risk that the fair value or the future cash flows of the companyâs financial instruments will fluctuate because of the change in market ineterest rates. The Company is exposed to interest rate risks as it has significant interest bearing loans from banks and financial institutions. These fluctuations are managed through negotiated and prefixed interest rates on term loans enabling the management to plan its future financial commitments and exposures. Short term loans repayable on demand are subject to prevailing market rate fluctuations and sanctioned facilities are availed on a need to borrow basis to ensure minimum exposure to interest rate fluctuations.

12 Disclosures relating to Corporate Social Responsibility (CSR)

As per section 135 of the Companies Act, 2013, a company, meeting the applicability threshold, needs to spend atleast two percent of its average net profits for the immediately preceding three years, on Corporate Social Responsibility (CSR ) activities. The areas for CSR activities are eradication of hunger and malnutrition, promotion of education, art and culture, health care, destitute care and rehabilitation, environment sustainability, disaster relief and rural development projects. A CSR committee has been formed by the Company as per the Act. The funds were utilized through the year on these activities which are specified in schedule VII of the Companies Act, 2013.

a) Gross amount required to be spent by the Company during the year Rs. 88.76 lakhs

Previous yearâs figures have been regrouped / reclassified wherever necessary to correspond with the current yearâs classification / disclosure.

Mar 31, 2017

Note : 1

2 Income tax:

The companyâs income tax assessments were completed up to financial year 2013-14 and the tax dues, as per orders, were paid and charged off to revenue, except for disputed issues under appeal. Tax assessments for the financial years 2014-15 and 201516 are pending and the tax dues, as per returns filed, have been fully paid. in respect of such pending assessments, The liability, if any, that may arise upon completion of assessment is not ascertainable at this stage.

3 Sales tax:

The company has paid/provided for VAT/CST as per the records and returns filed up to March 31, 2017 after considering the Input VAT on purchases and also on the basis of concessional forms expected to be received from customers. The liability, if any, in respect of pending assessments including those relating to non-submission of concessional forms (''Câ forms etc.) is not ascertainable at this stage. The company is in the process of collecting concessional Forms from customers for submission before the assessments are concluded.

Note : 4

The company had sent letters seeking confirmation of balances to various parties under trade payables, trade receivables, advance to suppliers and others, advance from customers. Based on the confirmations received and upon proper review, corrective actions have been initiated and the amounts have been trued up, accounting adjustments have been made wherever found necessary. Such confirmations are awaited from some parties, comprising of government departments and public sector undertakings, mainly.

Note : 5

In the opinion of the board, assets other than fixed assets and non-current investments have a value, on realization in the ordinary course of business, which is at least equal to the amount at which they are stated in the financial statements.

6 Disclosure as per Ind AS - 2 - inventories

During the year ended March 31, 2017, RS,22.64 lakhs was recognized as an expense in respect of inventories carried at net realizable value and an amount RS,76.58 lakhs representing carrying value of obsolete inventories, was recognized as an expense in the statement of profit & loss.

7 Disclosure as per Ind AS -11- construction contracts

A) The company recognized revenue based on percentage completion method whereby stage of completion of a contract is determined with reference to the proportion that contract costs incurred (for work performed up to the reporting date) bear to the estimated total contract cost and wherever applicable after completion of inspection/certification of the work performed by the customers as stipulated in the contract.

b) Operating lease

The company had taken office and residential facilities under cancellable operating leases. The rental expenses under such cancellable operating lease for the year ended March 31, 2017 was RS,276.63 lakhs (Previous year RS,261.79 lakhs)

8 Disclosure as per Ind AS-19 - employee benefits

a) Defined contribution plan:

Contribution to defined contribution plan, recognized as expense for the year are as under:

b) Defined benefit plan:

(i) Gratuity obligation of the company :

To cover the employerâs obligation towards gratuity, under the payment of gratuity act, the company has taken a group gratuity policy of LIC of India. As per the valuation made under projected unit credit method and demanded by LIC of India, the fund required to be maintained, to cover the present value of past service benefit and current service cost, is fully funded/provided for by the company. Apart from the said funding, to keep the policy alive, the company also paid the annual risk premium and recognized it as expense for the year.

* The liability as at March 31, 2016 is the provisional amount, which has been taken from AS 15 certificate as advised by the company.

Characteristics of defined benefit plan and risks associated with it Actuarial valuation method

Description of regulatory framework in which plan operates

The payment of gratuity is required by the payment of gratuity act, 1972.

Description of risk exposures

Valuations are performed on certain basic set of pre-determined assumptions and other regulatory framework which may vary over time. Thus, the company is exposed to various risks in providing the above gratuity benefit which are as follows:

Interest rate risk: The plan exposes the company to the risk of fall in interest rates. A fall in interest rates will result in an increase in the ultimate cost of providing the above benefit and will thus result in an increase in the value of the liability (as shown in financial statements).

Liquidity risk: This is the risk that the company is not able to meet the short-term gratuity payouts. This may arise due to non availability of enough cash / cash equivalent to meet the liabilities or holding of illiquid assets not being sold in time.

Demographic risk: The company has used certain mortality and attrition assumptions in valuation of the liability. The company is exposed to the risk of actual experience turning out to be worse compared to the assumption.

Regulatory risk: Gratuity benefit is paid in accordance with the requirements of the Payment of Gratuity Act, 1972 (as amended from time to time). There is a risk of change in regulations requiring higher gratuity payouts (e.g. Increase in the maximum limit on gratuity of RS,10,00,000).

Asset liability mismatching or market risk: The duration of the liability is longer compared to duration of assets, exposing the company to market risk for volatilities/fall in interest rate.

Investment risk: The probability or likelihood of occurrence of losses relative to the expected return on any particular investment. Effect of any amendments, curtailments and settlements - Not applicable in this case.

Explanation of amounts in financial statements

The valuation results for the defined benefit gratuity plan as at March 31, 2016 are produced in the tables below:

Number of completed years valued

Decrement adjusted remaining working life (years) 16.07 Amount, timing and uncertainly of future cash flows Sensitivity analysis

Significant actuarial assumptions for the determination of the defined benefit obligation are discount rate, expected salary increase and mortality. The sensitivity analysis below have been determined based on reasonably possible changes of the assumptions occurring at the end of the reporting period, while holding all other assumptions constant.

Please note that the sensitivity analysis presented above may not be representative of the actual change in the defined benefit obligation as it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumptions may be correlated.

There is no change in the method of valuation for the prior period. For change in assumptions please refer to section 5 above, where assumptions for prior period, if applicable, are given.

Asset liability matching strategies

The company has purchased insurance policy, which is basically a year-on-year cash accumulation plan in which the interest rate is declared on yearly basis and is guaranteed for a period of one year. The insurance company, as part of the policy rules, makes payment of all gratuity outgoes happening during the year (subject to sufficiency of funds under the policy). The policy, thus, mitigates the liquidity risk. However, being a cash accumulation plan, the duration of assets is shorter compared to the duration of liabilities. Thus, the company is exposed to movement in interest rate (in particular, the significant fall in interest rates, which should result in a increase in liability without corresponding increase in the asset).

Effect of plan on entity''s future cash flows

Funding arrangements and funding policy

The company has purchased an insurance policy to provide for payment of gratuity to the employees. Every year, the insurance company carries out a funding valuation based on the latest employee data provided by the company. Any deficit in the assets arising as a result of such valuation is funded by the company.

Expected contribution during the next annual reporting period

The company''s best estimate of contribution during the next year.

(ii) Long term compensated absences - leave encashment:

The present value of obligation for long term compensated absences is determined on actuarial valuation using project unit credit method (PUC) and is charged to profit & loss account. The obligation is not funded.

Characteristics of defined benefit plan and risks associated with it Actuarial valuation method

The benefits valued

The benefit valued in this report are summarized below:

Type of plan__Long term benefit_

Employer''s contribution__100%_

Employee''s contribution__Nil_

Salary for calculation of leave encashment benefit__Last drawn salary_

Normal retirement age__58_

Vesting period__Not applicable_

Benefit on normal retirement__Leave salary [gross salary) subject to a maximum of 30 days'' salary

Benefit on early retirement / termination / resignation As above

/ withdrawal__

Benefit on death in service__As above_

Limit__Yes_

Benefit formula _No. of days''leave encashable x last drawn salary

Description of regulatory framework in which plan operates

The payment of leave encashment benefit is required as per company''s scheme.

Description of risk exposures

Liquidity risk: This is the risk that the company is not able to meet the short-term benefit payouts. This may arise due to non availability of enough cash / cash equivalent to meet the liabilities or holding of illiquid assets not being sold in time.

Regulatory/contractual risk: The benefit is paid in accordance with the requirements of the enterprise''s scheme (as amended from time to time). There is a risk of change in regulations /rules requiring higher benefit payouts (e.g. Increase in the maximum limit on benefit amount).

Asset liability mismatching or market risk: The duration of the liability is longer compared to duration of assets, exposing the company to market risk for volatilities/fall in interest rate.

Investment risk: The probability or likelihood of occurrence of losses relative to the expected return on any particular investment. Explanation of amounts in financial statements

The valuation results for the defined benefit gratuity plan as at 31-3-2016 are produced in the tables below:

Actuarial assumptions valuation has been carried out using the projected unit credit method as per Ind AS 19 to determine the present value of defined benefit obligations and the related current service cost and, where applicable, past service cost

Disability: No explicit allowance

9 Disclosure as per Ind AS- 24 - related party disclosures

1 Subsidiaries SCIL InfracÂ°n Pvt Ltd

HBL Germany, GMBH HBL America HBL Suntech LLP

2 J_oi_nt _vent_ure Gulf Batteries Company Ltd, Kingdom of Saudi Arabia

3 Controlled companies Kairos Engineering Limited, Hyderabad

4 A_ssociate Naval Systems & Technologies Pvt Ltd

Guided Missile Engineering India Pvt Ltd

5 Key management personnel Dr A J Prasad Chairman & managing director

M S S Srinath Whole time director

Kavita Prasad Chief financial officer

K Mahidhar Vice-president (F&A)

M V S S Kumar Company secretary

Non-executive directors

P. Ganapathi Rao Independent director

Preeti Khandelwal Independent director

Ajay Bhaskar Limaye Non- executive director

Mitin Jain Non- executive director

10. Disclosure as per Ind AS - 103 - business combinations

A) Beaver Engineering & Holdings Private Limited (BEHPL, the combining entity) is the holding company of HBL Power Systems Limited (HBL, the combined entity) and was carrying on the activities relating to trading of goods and investing in other entities. As per the approved scheme of arrangement and amalgamation, the appointed dated for obtaining control of the combining entity by the combined entity is April 1, 2016.

B) HBL had issued a total of 17,40,94,389 equity shares of C1/- each to the members of BEHPL in proportion to their holding. The percentage of equity shares exchanged by the combined entity, to effect the business combination, to the combined total issued and paid up share capital is 62.80%.

11. Financial instruments

A) Capital management

The company manages its capital structure and make adjustments to it, in light of changes in economic condition. To mainintain or adjust the capital structure, the company may adjust the dividend payment to shareholders, return capital to shareholder, or issue new shares. No changes were made in the objectives, policies and procedures in the past three years.

The company monitors capital using a gearing ratio, which is net debt divided by total capital plus net debt. The company includes within net debt, borrowings, trade and other payables, other liabilities, less cash and cash equivalents. Capital includes issued equity capital, share premium and all other equity reserves attributable to the equity holders.

B) Financial risk management Financial risk factors

The company is exposed to financial risks arising from its operations and the use of financial instruments. The key financial risks include market risk, credit risk and liquidity risk. The management reviews and designs policies and procedures to minimize potential adverse effects on its financial performance. The primary market risk to the company is foreign exchange risk. The companyâs exposure to credit risk is influenced mainly by the customers repayments. The companyâs exposure to liquidity risks are on account of interest rate risk on borrowings. The following sections provide details regarding the companyâs exposure to the above mentioned financial risks and the management thereof.

Market risk

The company operates internationally and a portion of the business is transacted in several currencies and consequently the company is exposed to foreign exchange risk through its sales and services in those countries. The exchange rate between the rupee and foreign currencies has changed substantially in recent years and may fluctuate substantially in the future. Consequently, the results of the companyâs operations are affected as the rupee appreciates/ depreciates against these currencies. The company leaves exchange rate risk with regard to foreign exposures unhedged when the local currency is depreciating against the foreign currency and hedges this risk when the local currency is appreciating against the foreign currency. Currently the foreign exchange risk of the company is covered through natural hedge and the company uses the foreign currency denominated accounts to mitigate the exchange rate variation.

For the year ended March 31, 2017 and March 31, 2016, the depreciation / appreciation in the exchange rate between the Indian rupee and respective unhedged foreign currency exposures, has resulted in incremental operating margins by approximate RS,590.21 lakhs and RS,504.85 lakhs respectively.

Credit risk

Credit risk refers to the risk of default on its obligation by the counterparty resulting in a financial loss. The maximum exposure to the credit risk at the reporting date is primarily from trade receivables amounting to RS,48,866.87 lakhs and RS,44,176.37 lakhs as of March 31, 2017 and March 31, 2016, respectively . Trade receivables are typically unsecured and are derived from revenue earned from customers primarily located in India and overseas. Credit risk has always been managed by the company through credit approvals, establishing credit limits and continuously monitoring the creditworthiness of customers to which the company grants credit terms in the normal course of business. On account of adoption of Ind AS 109, the company uses expected credit loss model to assess the impairment loss or gain. The company uses a provision matrix to compute the expected credit loss allowance for trade receivables. The provision matrix takes into account available external and internal credit risk factors and the companiesâ historical experience for customers.

Credit risk exposure

The allowance for lifetime expected credit loss on customer balances for the year ended March 31, 2017 was RS,350 lakhs. The allowance for lifetime expected credit loss on customer balances for the year ended March 31, 2016 was RS,20 lakhs.

Liquidity risk

As of March 31, 2017, the company had a working capital of RS,29,275.04 lakhs including cash and cash equivalents of RS,303.15 lakhs. As of March 31, 2016, the company had a working capital of RS,23,926.65 lakhs including cash and cash equivalents of RS,1,379.30 lakhs .

As of March 31, 2017 and March 31, 2016, the outstanding gratuity and compensated absences were RS,533.06 lakhs and RS,470.76 lakhs, respectively, which have been substantially funded. Accordingly, no liquidity risk is perceived.

Interest rate risk

The interest rate risk is the risk that the fair value or the future cash flows of the companyâs financial instruments will fluctuate because of the change in market interest rates. The company is exposed to interest rate risks as it has significant interest bearing loans from banks and financial institutions. These fluctuations are managed through negotiated and prefixed interest rates on term loans enabling the management to plan its future financial commitments and exposures. Short term loans repayable on demand are a subject to prevailing market rate fluctuations and sanctioned facilities are availed on a need to borrow basis to ensure minimum exposure to interest rate fluctuations.

The table below provides details regarding the contractual maturities of significant financial liabilities as of March 31, 2017:

Note : 12

As per Section 135 of the Companies Act, 2013, a company, meeting the applicability threshold, needs to spend at least two percent of its average net profits for the immediately preceding three years, on corporate social responsibility (CSR) activities. The areas for CSR activities are eradication of hunger and malnutrition, promotion of education, art and culture, health care, destitute care and rehabilitation, environment sustainability, disaster relief and rural development projects. A CSR committee has been formed by the company, as per the Act. The funds were utilized through the year on these activities which are specified in schedule VII of the Companies Act, 2013.

Note : 13

Subsequent to publishing of âFinancial Results" and âStatement of Assets and Liabilities" under SEBI (Listing Obligation and Disclosure Requirements) Regulation 2015, the company has reclassified and regrouped certain items in the standalone financial statements for better and appropriate presentation. Such changes have no impact on either the "profits" or on âother equity â. However, current tax liability to the extent of RS,264.26 lakhs which was netted from assets has since been disclosed under "Current Liabilities".

Note : 14

Previous yearsâ figures as per previous GAAP have been regrouped / reclassified wherever necessary to correspond with the current year classifications / disclosures.

Mar 31, 2016

1. Terms / rights attached to equity shares

The company has only one class of equity shares having a par value of Rs,1 per share. Each holder of equity shares is entitled to one vote per share. The company declares and pays dividends in Indian Rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

2. Current Maturities of Long Term Loans installments due within 12 months from the date of Balance Sheet classified as current as shown above are disclosed under " Other Current Liabilitiesâ

3. Term Loans :

The particulars of loans drawn, nature of security, terms of repayment, rate of interest, instilments due and loan wise outstanding are as under.

4. Term Loan from IDBI and HDFC :

The capex term loan of Rs,2500 lakhs is sanctioned by IDBI Bank for setting up of Spun Concrete Poles unit with a project cost of Rs,3350 lakhs with a capacity of 100,000 poles p.a. at Narsaraopet, Guntur District, Andhra Pradesh. The loan is secured by pari passu first charge on the entire fixed assets of the company both present and future. This loan is also guaranteed by Managing Director, another Director, Smt. A. Umadevi and Smt. Kavita Prasad in their personal capacities.

Term Loan I of Rs,7200 lakhs is to refinance the existing debt and Term Loan II of Rs,2000 lakhs is towards the refinancing of capital expenditure of the Company. Both the loans are secured by a first charge on the entire fixed assets of the Company both present and future. These loans are also guaranteed by Managing Director, another Director and Kavita Prasad in their personal capacities. &

5. Other Loans :

(a) HDFC Bank

The Term Loans for acquiring vehicles are secured by exclusive hypothecation of vehicles acquired through execution of D.P. Note.

6. Unsecured Loans

(a) Interest Free Sales Tax Loan (IFST):

IFST Loan of Rs, 849.75 lakhs shown under unsecured loan represents the Sales tax payable by the Company given as Loan by A.P State Government under a scheme, to be repaid without interest after 14 years from the date of a ailment. The loan requires creation of a charge on the assets of the Company. Pending creation of charge, the amount is shown as ''Unsecured Loan'' to be regrouped as Secured Loan as and when the charge is created.

(b) Term Loan from Hewlett-Packard Financial Services India Pvt Ltd (HPFSIPL) towards implementation of SAP Project is repayable in 20 quarterly instilments from the date of loan with interest at the rate ranging between 11% and 13%. The loan is also guaranteed by a Director of the Company.

(c) Finance Lease of Assets from Hewlett-Packard Financial Services India Pvt Ltd (HPFSIPL) for Implementation of SAP Project is repayable by way of lease rentals over a period of 5 years and is also guaranteed by a Director of the Company.

(d) Outstanding Balance of Loan from Holding Company is Interest free and is repayable on or after 01.04.2017 in one or more instilments.

7. Working Capital Loans

The Working Capital Loans from the State Bank of India, State Bank of Hyderabad, IDBI Bank Ltd , ICICI Bank Ltd and Axis Bank are secured by a first charge on all the chargeable current assets and by a second charge on the fixed assets (both present and future) of the Company. IDBI Bank Ltd allowed interchangeability from non fund based limits to fund based limits to an extent of Rs,23.75 cr, is repayable within 90 days with interest @ 12.50% p.a. All the loans are also guaranteed by Managing Director, two other Directors of the Company, and Smt. A. Uma Devi in their personal capacities.

8. Purchase Bill Discounting from Kotak Mahindra Bank Ltd. is guaranteed by CMD and a Director of the Company in their personal capacity.

Purchase Bill Discounting from IDBI Bank Ltd. is secured by accepted bill of exchange and post dated cheque/standing instructions for making payment on due date

9. Working Capital Short Term Loan from HDFC Bank is secured by personal guarantee of CMD and is repayable within 90 days with interest @ 10.25% p.a.

10. Inter Corporate Deposit from Holding Company is repayable on demand with interest @ 11% p.a

11. Loan from Directors is repayable on demand with interest @ 11% p.a

Note:

The information has been given in respect of those suppliers who have intimated the Company that they are registered as micro, small and medium enterprises. 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 the Company. The Company expects that there will be no claims in future also for interest.

12. Includes Rs,264.20 lakhs towards additional provision on account of amendment to Payment of Bonus Act, 1965 with retrospective effect.

13. In respect of Dies & Moulds and Secure Land Filling included in Plant & Machinery group, the Management had, in the past, technically estimated their useful lives at 5 years and 10 years respectively and the company had continued to charge such higher depreciation ( as compared to Schedule II ) on the same basis.

14. Disclosure in respect of title deeds of immovable properties:

1 Freehold Land:

a) The Gross Block of Freehold Land comprises of actual acquisition cost of Rs, 3672.82 lakhs and Land Development Charges Capitalized of Rs,93.13 lakhs.

2 Non - Factory Buildings:

a) The gross block of Non-Factory Buildings of Rs,734.24 lakhs, comprise of actual cost of building constructed on factory lands of value of Rs, 509.05 lakhs, and cost of acquisition of buildings, (situated on other than factory lands) purchased from the third parties, is Rs, 225.19 lakhs.

15. In pursuance of MOU entered by the company, M/s.HBL Miltrade Pte Ltd, Singapore, allotted one share (Face value - One Singapore Dollar) to the company. The company is yet to pay for the same. Pending remittance, Investment is not disclosed in the above investments.

16. The diminution in the value of the Investments, wherever considered to be permanent, in nature, has been recognized.

17. During the year 2011-12, certain assets of the company were damaged due to a heavy rainfall. The company had incurred Rs,95.16 lakhs towards repairing the damages caused and was accounted for as claim recoverable. The cost of new assets acquired is capitalized. However, the claim is made for total cost of repairs and acquisition of assets, as the loss is covered under Re-instatement Policy which was in force. The total claim was repudiated by the Insurer and the company filed a suit for recovery. The matter is still sub-juice.

18. Income tax:

The Company''s Income Tax assessments were completed up to Financial Year 2011-12 and the tax dues as per orders were paid and charged to revenue except for disputed issues under Appeal. Tax assessments for the years 2012-13, 2013-14 and 2014-15 are pending and the tax dues as per returns filed have been fully paid. The liability, if any, in respect of such pending assessments, that may arise upon completion is not ascertainable at this stage.

ii) Defined benefit plan

a) Gratuity obligation of the Company:

The Company has taken a Group Gratuity Policy of LIC of India to cover the employer''s obligation towards Gratuity under the payment of Gratuity Act and the fund required to be maintained to cover the Present Value of past service benefit and current service cost is fully funded/provided for by the Company as per the valuation made under Projected Unit Credit method and demanded by LIC of India. Apart from the said funding, the company also paid the annual risk premium to keep the policy active and recognized it as expense for the year.

Notes:

(a) The company''s operations include Batteries of different types, Electronics, Railway Signaling contracts etc. Except for Batteries and Electronics, the segment revenue, the segments results and the segments assets and liabilities of other activities are individually below the threshold limit of 10% as provided in AS-17 "Segment Reportingâ Accordingly, Batteries and Electronics segments are shown separately as reportable segments and others are included in Unallocated segments.

(b) Batteries and Electronics segment comprises of various types of products for defense , aviation , telecom and industrial application.

19. Disclosure as per AS-18 "Related Party Disclosure";

1. Holding Company Beaver Engineering & Holdings Private Limited, Hyderabad

2 Subsidiaries SCIL Infracon Pvt Ltd

HBL Germany, GmbH HBL America Inc HBL Suntech LLP

3 Joint venture Gulf Batteries Company Ltd, Kingdom of Saudi Arabia

4 Controlled companies Kairos Engineering Limited, Hyderabad

5 Associate Naval Systems & Technologies Private Limited

Guided Missile Engineering India Private Limited

6 Key management personnel Dr A J Prasad, Chairman & Managing Director

M S S Srinath, Whole Time Director Kavita Prasad, Executive Director (Non Board)

K Mahidhar, Vice President - Finance M V S S Kumar, Company Secretary

a) The Company''s interest in the above company is reported under the head Investment (Note-14) and is stated at Cost.

b) Pending receipt of Audited/Unaudited financial statements of JV company for the year ending 31-03-2016, the disclosure of the company''s share of the Assets, Liabilities, Income and Expenditure is not made as required under AS-27

It is expected that these costs will be incurred in the next 12 to 24 months. Actual expenditure incurred during warranty period towards replacements etc. is charged off under respective heads of expenditure.

Mar 31, 2015

1 Current Maturities of Long Term Loans

instalments due within 12 months from the date of Balance Sheet classified as current as shown above are disclosed under " Other Current Liabilities"

2 Term Loans :

The particulars of loans drawn, nature of security, terms of repayment, rate of interest, instalments due and loan wise outstanding are as under.

3 Term Loan from IDBI and HDFC :

The capex term loan of Rs.2500 lakhs is sanctioned by IDBI Bank for setting up of Spun Concrete Poles unit with a project cost of Rs.3350 lakhs with a capacity of 100,000 poles p.a. at Narsaraopet, Guntur District, Andhra Pradesh. The loan is secured by pari passu first charge on the entire fixed assets of the company both present and future. This loan is also guaranteed by Managing Director, another Director, Smt. A. Umadevi and Smt. Kavita Prasad in their personal capacities.

4 Other Loans :

(a) HDFC Bank

The Term Loans for acquiring vehicles are secured by exclusive hypothecation of vehicles acquired through execution of D.P. Note.

5 Unsecured Loans

(a) Interest Free Sales Tax Loan (IFST):

IFST Loan of Rs. 1171.62 lakhs shown under unsecured loan represents the Sales tax payable by the Company given as Loan by A.P State Government under a scheme, to be repaid without interest after 14 years from the date of availment. The loan requires creation of a charge on the assets of the Company. Pending creation of charge, the amount is shown as 'Unsecured Loan' to be regrouped as Secured Loan as and when the charge is created.

(b) Term Loan from Hewlett-Packard Financial Services India Pvt Ltd (HPFSIPL) towards implementation of SAP Project is repayable in 20 quarterly instalments from the date of loan with interest at the rate ranging between 11% and 13%. The loan is also guaranteed by a Director of the Company.

(c) Finance Lease of Assets from Hewlett-Packard Financial Services India Pvt Ltd (HPFSIPL) for Implementation of SAP Project is repayable by way of lease rentals over a period of 5 years and is also guaranteed by a Director of the Company.

(d) Loan from Holding Company is Interest free and is repayable after a moratorium period of 10 years from the date of first with drawl.

6. There were no continuing defaults as on the Balance Sheet date in repayment of loan instalments and interest.

7 Working Capital Loans

The Working Capital Loans from the State Bank of India, State Bank of Hyderabad, IDBI Bank Ltd , ICICI Bank Ltd and Axis Bank are secured by a first charge on all the chargeable current assets and by a second charge on the fixed assets (both present and future) of the Company. Short term loan (Adhoc Cash Credit) from IDBI Bank Ltd is repayable within 90 days with interest @ 13%. All the loans are also guaranteed by Managing Director, two other Directors of the Company, and Smt. A. Uma Devi in their personal capacities.

8. Purchase Bill Discounting from Kotak Mahindra Bank Ltd. Is guaranteed by CMD and a Director of the Company in their personal capacity.

Purchase Bill Discounting from IDBI Bank Ltd. Is secured by accepted bill of exchange and post dated cheque/ standing instructions for making payment on due date

9. The facilities extended by YES Bank are secured by subservient charge on all the current and movable fixed assets of the company. Further the facilities are guaranteed by Managing Director and one other promoter director of the Company.

10. Working Capital Short Term Loan from HDFC Bank is secured by personal guarantee of CMD and is repayable within 90 days with interest @ 10.50% p.a.

11. Inter corporate deposit from holding company is repayable on demand with Interest @ 12% p.a.

12 Loan from Directors is repayable on demand with interest @ 12% p.a.

13. In pursuance of MOU entered by the company, M/s.HBL Miltrade Pte Ltd, Singapore, allotted one share (Face value Â One Singapore Dollar) to the company. The company is yet to pay for the same. Pending remittance, Investment is not disclosed in the above investments.

14. The diminution in the value of the Investments, wherever considered to be permanent, in nature, has been recognised. In respect of Gulf Battery Company Limited, there has been erosion in its net-worth which is in excess of 50%. Various measures are afoot to improve its performance and thereby the net-worth, which are expected to yield positive results in the next two years. In view of this, the company is of the opinion that the said diminution is purely temporary.

15. During the financial year 2011-12, due to heavy rainfall, there was a damage to one of the factory buildings and incidental damage to Plant & Machinery and stocks in process. The assets were insured under reinstatement value policy which was in force as on the date of incident. The total cost for repairing, rebuilding the factory shed/acquiring related machinery and damaged inventory is estimated at Rs. 264.00 Lakhs. The company is in the process of restoring the damaged assets and the cost incurred in this regard upto 31.03.2015 was Rs. 95.16 Lakhs, which is included in Claims & Other Receivables. The Company has received repudiation letter from the Insurer and the company has filed a case against the Insurer. The case is expected to come up for hearing shortly.

16. During the year, severe damage was caused by Hud Hud Cyclone to stocks and assets in the Company's units at Vizianagaram and SEZ, Visakhapatnam. The Company had lodged a final claim with the Insurers towards recovery of the losses. Pending final settlement of the claim by the Insurers, actual loss incurred due to damages to Inventory (net of Salvage Value) amounting to Rs. 522.81 lakhs was expensed under exceptional item and repairs and restoration expenses on assets damaged amounting to Rs. 553.85 lakhs had been expensed in their natural heads of account. The total admissible loss assessed and recommended for payment by the Surveyors, provisionally confirmed by the Management, amounting to Rs. 738.97 lakhs is recognized as other income.

Note : 17

Contingent Liabilities not provided for and commitments:

All known and undisputed claims and liabilities where there is a present obligation as a result of past events and it is probable that there will be an outflow of resources, have been duly provided for.

18. Contingent liabilities not provided for: (Rs. In Lakhs)

Nature of Contingent Liability As on 31.03.2015 As on 31.03.2014

a) Un-expired guarantees issued on behalf of the Company by banks for which the Company gave counter guarantees 14381.47 15502.65

b) Legal undertakings (LUTs) given to Custom's Authorities for clearing the imports at Nil / Concessinal rate of duty pending fulfilment of export obligations, (net of the export obligations fulfilled of Rs. 9647.96 Lakhs (previous year Rs. 9739.41 Lakhs) for which the process of discharging the LUTs by the concerned authorities is at various stages). 2448.63 3609.72

c) Claims against the Company not acknowledged as debts towards :

Excise duty 733.76 357.84

Sales Tax 496.50 317.41

Custom duty 488.70 -

Service Tax 8.51 10.68

Income Tax Dispute for Assessment Year 2009-10 65.08 65.08

Property Tax of VSEZ unit 27.64 27.64

Fuel surcharge adjustment (FSA) to the extent billed and disputed 134.38 356.40 Enhancement of Land Cost by Haryana State Industrial

& Infrastructure Development Corporation Ltd, Manesar 168.44 108.82

Erstwhile promoters of SCIL Infracon Pvt Ltd 188.31 188.31

Others 11.50 11.50

(Rs,In Lakhs)

31 March 2015 31 March 2014

19.2Estimated amount of contracts remaining to be executed on Capital account and not provided for 122.47 184.48

20.Investments committed by the Company in other Companies: In M/s. HBL Suntech,LLP against 60% Share in LLP (net of Rs. 18.30 Lakhs contributed as on 31-03-2015) 101.70 101.70

Note : 21 Incometax and Sales Tax Assessments:

22. Income Tax:

The Company's Income Tax assessments were completed upto Financial Year 2010-11 and the tax dues as per orders were paid and charged to revenue except for disputed issues under Appeal. Tax assessments for the years 2011-12, 2012-13 and 2013-14 are pending and the tax dues as per returns filed have been fully paid. The liability, if any, in respect of such pending assessments, that may arise upon completion is not ascertainable at this stage.

23. Sales Tax:

The Company has paid/provided for VAT/CST as per the records and returns filed upto 31.03.2015 after considering the Input VAT on purchases and also on the basis of concessional Forms expected to be received from customers. The liability, if any, in respect of pending assessments including those relating to non-submission of concessional Forms ('C' Forms etc.) is not ascertainable at this stage. The company is in the process of collecting concessional Forms from customers for submission before the assessments are completed/finalised.

Note : 24 Confirmation of Balances

The Company has sent letters seeking confirmation of balances to various parties under Trade payables, Trade Receivables, Advance to suppliers and others, advance from customers. Based on the confirmations received and upon proper review, corrective actions have been initiated and accounting adjustments have been made wherever found necessary. Such confirmations are awaited from some parties most of whom are Government Departments and Public Sector Undertakings.

Note : 25

In the opinion of the Board, assets other than fixed assets and non-current investments have a value, on realisation in the ordinary course of business, which is at least equal to the amount at which they are stated in the financial statements.

Note : 26

The Board of Directors in its meeting held on 14th November 2014 approved a Scheme of Amalgamation to merge a wholly owned subsidiary, SCIL Infracon Private Limited (SIPL), with the Company in terms of the provisions of Sections 391 to 394 of the Companies Act, 1956 read with other applicable provisions of the Companies Act, 1956 and the Companies Act, 2013. The Scheme is subject to requisite regulatory and other approvals, inter-alia from the Shareholders and Creditors of the Company and sanction of the Scheme by the Honourable High Court of Judicature at Hyderabad for AP and Telangana. The Scheme, upon approval, will be effective from 1-4-2014.

Note : 27 Disclosures required to be made as per Accounting Standard (AS)

28. Disclosure as per AS-7 "Construction Contract"(for contracts in progress at the reporting date)

29. The Company recognised revenue based on Percentage completion method whereby stage of completion of a contract is determined with reference to the proportion that contract costs incurred (for work performed up to the reporting date) bear to the estimated total contract cost and wherever applicable after completion of inspection/certification of the work performed by the customers as stipulated in the contract.

(a) Gratuity obligation of the Company :

The Company has taken a Group Gratuity Policy of LIC of India to cover the employer's obligation towards Gratuity under the payment of Gratuity Act and the fund required to be maintained to cover the Present Value of past service benefit and current service cost is fully funded/provided for by the Company as per the valuation made under Projected Unit Credit method and demanded by LIC of India. Apart from the said funding, the company also paid the annual risk premium to keep the policy active and recognised it as expense for the year.

Note : 30

Previous years figures have been regrouped wherever necessary.

Mar 31, 2014

1.1 Terms/rights attached to equity shares

The company has only one class of equity shares having a par value of '' 1 per share. Each holder of equity shares is entitled to one vote per share. The company declares and pays dividends in indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

2.1 Term Loans :

The particulars of loans drawn, nature of security, terms of repayment, rate of interest, instalments due and loan wise outstanding are as under.

2.1.1 Current Maturities of Long Term Loans

Instalments due within 12 months from the date of Balance Sheet classified as current as shown above are disclosed under " Other Current Liabilities"

2.1.2 Term Loan from IDBI, SBI & SBH :

The Term Loans from IDBI, State Bank of Hyderabad and State Bank of India are secured by a first charge on the movable and immovable assets (both present and future) of the company, (save and except exclusive charges already created if any) situated (a) at Lalgadi Malakpet and Aliabad Villages, Shameerpet Mandal, Ranga Reddy Dist, (b) at Nandigaon Village, Mahbubnagar Dist, (c) at Bhootpur Village, Mahaboobnagar Dist, (d) at Kandivalasa Village, Vijayanagaram Dist, and (e) at VSEZ, Visakhapatnam Dist. The loans are also secured by a second charge on the current assets of the company. These loans are also guaranteed by Managing Director and a Director in their personal capacity.

2.1.3 Term Loan from ICICI Bank :

The term loan of Rs. 6,000 lakhs for Capex and Rs. 4,000 lakhs for working capital is secured by subservient / residual charge on all current and moveable assets of the Company both present and future. The charge is subservient to the existing lenders to the extent of all drawn and undrawn limits of term loans and working capital only. The loan is guaranteed by the Managing Director and a Director in their personal capacity.

2.2 Other Loans :

2.2.1 HDFC Bank

The Term Loans for acquiring vehicles are secured by exclusive hypothecation of vehicles acquired through execution of D.P. Note.

2.3 Unsecured Loans

2.3.1 Interest Free Sales Tax Loan (IFST):

IFST Loan of Rs. 1,491.00 lakhs shown under unsecured loan represents the Sales tax payable by the Company given as Loan by A.P State Government under a scheme, to be repaid without interest after 14 years from the date of availment. The loan requires creation of a charge on the assets of the Company. Pending creation of charge, the amount is shown as ''Unsecured Loan'' to be regrouped as Secured Loan as and when the charge is created.

2.3.2 Term Loan from Hewlett-Packard Financial Services India Pvt Ltd (HPFSIPL) towards implementation of SAP Project is repayable in 20 quarterly instalments from the date of loan with interest at the rate ranging between 11% and 13%. The loan is also guaranteed by a Director of the Company.

2.3.3 Finance Lease of Assets from Hewlett-Packard Financial Services India Pvt Ltd (HPFSIPL) for Implementation of SAP Project is repayable by way of lease rentals over a period of 5 years and is also guaranteed by a Director of the Company.

2.3.4 Loan from Holding Company is Interest free and is repayable after a moratorium period of 10 years from the date of first drawl.

2.4 There were no continuing defaults as on the Balance Sheet date in repayment of loan instalments and interest

3.1 Working Capital Loans

The Working Capital Loans from the State Bank of India, State Bank of Hyderabad, IDBI Bank Ltd , ICICI Bank Ltd and Axis Bank are secured by a first charge on all the chargeable current assets and by a second charge on the fixed assets (both present and future) of the Company. All the loans are also guaranteed by Managing Director, two other Directors of the Company, and Smt. A. Uma Devi in their personal capacities.

3.2 Purchase Bill Discounting from Kotak Mahindra Bank Ltd. is guaranteed by CMD and a Director of the Company in their personal capacity. Purchase Bill Discounting from IDBI Bank Ltd. is secured by accepted bill of exchange and post dated cheque/standing instructions for making payment on due date

3.3 The facilities extended by YES Bank are secured by subservient charge on all the current and movable fixed assets of the company. Further the facilities are guaranteed by Managing Director and one other promoter director of the Company.

3.4 Working Capital Short Term Loan from HDFC Bank is secured by personal guarantee of CMD and is repayable within 90 days with interest @10.50% p.a.

3.5 Inter Corporate Deposit from Holding Company is repayble on demand with interest @ 12% p.a.

3.6 Loan from Directors is repayable on demand with interest @ 12% p.a.

3.7 There were delays in clearing the Purchase bills discounted with IDBI Bank Limited and Kotak Mahindra Bank to the extent of Rs.355.21 Lakhs for a period of 7 days as on the Balance Sheet date (since cleared).

The outstanding balance in YES Bank Ltd current account represents facility reckoned as Cash Credit.

4.1 Investments :

4.1.1 During the year, the company had sold the entire holding of 2,73,75,200 shares in Agile Electric Sub Assembly Pvt Ltd for a sale consideration of Rs. 17506.14 Lakhs

4.2.2 During the year, the company had sold the entire holding of 20,60,482 shares in Sankhya Infotech Ltd for a sale consideration of Rs. 148.35 Lakhs

4.2.3 In pursuance of MOU entered by the company, M/s.HBL Miltrade Pte Ltd, Singapore, allotted one share (Face value - One Singapore Dollar) to the company. The company is yet to pay for the same. Pending remittance, Investment is not disclosed in the Balance Sheet.

5.1 Claims & Other Receivables

During the financial year 2011-12, due to heavy rainfall, there was a damage to one of the factory buildings and incidental damage to Plant & Machinery and stocks in process. The assets were insured under reinstatement value policy which was in force as on the date of incident. The total cost for repairing, rebuilding the factory shed/acquiring related machinery and damaged inventory is estimated at Rs. 264.00 Lakhs. The company is in the process of restoring the damaged assets and the cost incurred in this regard upto 31.03.2014 was Rs. 102.70 Lakhs, which is included in Claims & Other Receivables. The Company has received repudiation letter from the Insurer and the company is preferring to proceed legally against the Insurance company.

Note : 6 Contingent Liabilities not provided for and commitments:

All known and undisputed claims and liabilities where there is a present obligation as a result of past events and it is probable that there will be an outflow of resources, have been duly provided for.

6.1 Contingent liabilities not provided for: Nature of Contingent Liability

As on 31.03.2014 As on 31.03.2013

a) Un-expired guarantees issued on behalf of the Company by banks for which the Company gave counter guarantees 15,502.65 12,310.47

b) Corporate Guarantee issued to ICICI Bank on behalf of Igarshi Motors India Ltd (a step down subsidiary of the company) for the loan facilities sanctioned to them. - 7,600.00

c) Legal undertakings (LUTs) given to Custom''s Authorities for clearing the imports at Nil / Concessinal rate of duty pending fulfilment of export obligations, (net of the export obligations fulfilled of Rs. 9739.42 Lakhs (previous year Rs. 9780.12 Lakhs) for which the process of discharging the LUTs by the concerned authorities is at various stages). 3,609.72 4,597.14

d) Claims against the Company not acknowledged as debts towards :

Excise duty 357.84 310.50

Sales Tax 317.41 98.42

Custom duty - 33.85

Service Tax 10.68 10.68

Income Tax Dispute for Assessment Year 2009-10 65.08 65.08

Property Tax of VSEZ unit 27.64 27.64

Fuel surcharge adjustment (FSA) to the extent billed and disputed 356.40 374.73

Enhancement of Land Cost by Haryana State Industrial & Infrastructure Development Corporation Ltd, Manesar 108.82 108.82

Erstwhile promoters of SCIL Infracon Pvt Ltd 188.31 188.31

Others 11.50 17.67

6.2 Estimated amount of contracts remaining to be executed on Capital account and not provided for. 184.48 375.10

6.3 Investments committed by the Company in other Companies:

In M/s. HBL Suntech,LLP against 60% Share in LLP (net of Rs. 18.30 Lakhs contributed as on 31-03-2014) 101.70 101.70

Note : 7 Incometax and Sales Tax Assessments:

7.1 Income Tax:

The Company''s assessments were completed upto Financial Year 2010-11 and the tax dues as per orders were paid and charged to revenue except for disputed issues under Appeal. Tax assessments for the years 2011-12 and 2012-13 are pending and the tax dues as per returns filed have been fully paid. The liability, if any, in respect of such pending assessments, that may arise upon completion is not ascertainable at this stage.

7.2 Sales Tax:

The Company has paid/provided for VAT/CST as per the records and returns filed upto 31.03.2014 after considering the Input VAT on purchases and also on the basis of concessional Forms expected to be received from customers. The liability, if any, in respect of pending assessments including those relating to non-submission of concessional Forms (''C'' Forms etc.) is not ascertainable at this stage. The company is in the process of collecting concessional Forms from customers for submission before the assessments are completed/finalised.

Note :8 Confirmation of Balances

The Company has sent letters seeking confirmation of balances to various parties under Trade payables, Trade Receivables, Advance to suppliers and others, advance from customers. Based on the confirmations received and upon proper review, corrective actions have been initiated and accounting adjustments have been made wherever found necessary. Such confirmations are awaited from some parties most of whom are Government Departments and Public Sector Undertakings.

Note :9 Disclosures required to be made as per Accounting Standard (AS)

9.1 Disclosure as per AS-7 "Construction Contract"(for contracts in progress at the reporting date)

9.1.1 The Company recognised revenue based on Percentage completion method whereby stage of completion of a contract is determined with reference to the proportion that contract costs incurred (for work performed up to the reporting date) bear to the estimated total contract cost and wherever applicable after completion of inspection/certification of the work performed by the customers as stipulated in the contract.

ii) Defined Benefit Plan:

(a) Gratuity obligation of the Company :

The Company has taken a Group Gratuity Policy of LIC of India to cover the employer''s obligation towards Gratuity under the payment of Gratuity Act and the fund required to be maintained to cover the Present Value of past service benefit and current service cost is fully funded/provided for by the Company as per the valuation made under Projected Unit Credit method and demanded by LIC of India. Apart from the said funding, the company also paid the annual risk premium to keep the policy active

10.1 Disclosure as per AS-18 "Related Party Disclosure";

1 Holding Company Beaver Engineering & Holdings Pvt Ltd, Hyderabad

2 Subsidiaries

Agile Electric Sub Assembly (P) Ltd SCIL Infracon Pvt Ltd HBL Germany, GMBH HBL America

3 Joint Venture Gulf Batteries Company Ltd, Kingdom of Saudi Arabia

4 Controlled Companies Kairos Engineering Limited, Hyderabad

5 Associate

Naval Systems & Technologies Pvt Ltd Guided Missile Engineering India Pvt Ltd VARP Power Pvt Ltd

6 Companies which Directors are Interested Sankhya Infotech Ltd

7 Key Management Personnel Dr A J Prasad Chairman & Managing Director

M S S Srinath Whole Time Director Kavita Prasad Whole Time Director Ashok Nagarkatti

10.2 Disclosure as per AS-27 "Financial Reporting of Interests in Joint Ventures":

a) The Company''s interest in the above company is reported under the head Investment (Note-14) and stated at Cost.

b) Pending receipt of Audited/Unaudited financial statements of JV company for the year ending 31-03-2014, the disclosure of the company''s share of the Assets, Liabilities, Income and Expenditure is not made as required under AS-27

Note : 11

Various measures are ongoing to improve the performance of M/s.Gulf Batteries Company, M/s.SCIL Infracon Pvt Ltd and M/s.HBL Suntech LLP which would yield positive results in next two years. In view of these steps, management is of the view that no provision is warranted for (a) dimunition in value of investment or (b) dues as they are considered good and recoverable.

Note : 12

Previous years figures have been regrouped wherever necessary.

Mar 31, 2013

1.1 Investments :

1.1.1 In previous years, the Company (HBL) acquired 7,20,40,000 shares of -10/- each in the equity of M/s. Agile Electric Drives Technologies & Holdings (P) Ltd (Agile Holdings) at a cost of -11288.04 Lakhs and at the relevant time, Agile Holdings had 3 subsidiares namely Igarashi Motors India Ltd (IMIL), Agile Electric Sub Assembly (P) Ltd(AESAPL) and Igarashi Motor Sales (P) Ltd (IMSPL). During the year 2011-12, Agile Holdings was amalgamated with its subsidiary AESAPL. Pursuant to the scheme of amalgamation with was approved by Hon''ble High Court of Madras on 20.07.2012, the erstwhile Agile Holdings merged with AESAPL retrospective effect from 01.04.2011. As per the scheme of merger, against 7,20,40,000 shares held by the Comapny (HBL), 2,73,75,200 shares were issued to HBL (at a swap ratio of 38 shares for every 100 shares held by the share holders of Agile Holdings.

1.1.2 The Equity shares held by the company in Gulf Batteries Company Ltd (a Joint Venture) are pledged to Exim

Bank by way of Security for the loan to part-finance in the Equity contribution in the Joint Venture.

1.1.3 In pursuance of MOU entered by the company, M/s.HBL Miltrade Pte Ltd, Singapore, allotted one share (Face value - One Singapore Dollar) to the company. The company is yet to pay for the same. Pending remittance, Investment is not disclosed in the Balance Sheet.

Note : 2 Contingent Liabilities not provided for and commitments:

All known and undisputed claims and liabilities where there is a present obligation as a result of past events and it is probable that there will be an outflow of resources, have been duly provided for.

2.1 Contingent liabilities not provided for:

Nature of Contingent Liability 31 March 2013 31 March 2012

a) Un-expired guarantees issued on behalf of the Company by banks 12,310.47 12,241.86 for which the Company gave counter guarantees

b) Bills Discounted with Banks but not matured 3,714.24 4,061.26

c) Corporate Guarantee issued to ICICI Bank on behalf of Igarshi 7,600.00 7,600.00 Motors India Ltd (a step down subsidiary of the company) for the loan facilities sanctioned to them.

d) Legal undertakings (LUTs) given to Custom''s Authorities for 4,597.14 4,586.53 clearing the imports at Nil / Concessinal rate of duty pending fulfilment of export obligations, (net of the export obligations fulfilled of Rs. 9780.12 Lakhs (previous year Rs. 3509.74 Lakhs) for which the process of discharging the LUTs by the concerned authorities is at various stages).

3.1 Income Tax

The Company''s assessments were completed upto Financial Year 2009-10 and the tax dues as per orders were paid and charged to revenue except for disputed issues under Appeal. Tax assessments for the years 2010-11 and 2011-12 are pending and the tax dues as per returns filed have been fully paid. The liability, if any, in respect of such pending assessments, that may arise upon completion is not ascertainable at this stage.

3.2 Sales Tax:

The Company has paid/provided for VAT/CST as per the records and returns filed upto 31.03.2013 after considering the Input VAT on purchases and also on the basis of concessional Forms expected to be received from customers. The liability, if any, in respect of pending assessments including those relating to non- submission of concessional Forms (''C Forms etc.) is not ascertainable at this stage. The company is in the process of collecting concessional Forms from customers for submission before the assessments are completed/finalised.

Note : 4 Confirmation of Balances

The Company has sent letters seeking confirmation of balances to various parties under Trade payables, Trade Receivables, Advance to suppliers and others, advance from customers. Based on the confirmations received and upon proper review, corrective actions have been initiated and accounting adjustments have been made wherever found necessary. Such confirmations are awaited from few parties.

Note : 5 Disclosures required to be made as per Accounting Standard (AS)

5.1 Disclosure as per AS-7 "Construction Contract"

5.1.1 The Company recognised revenue based on Percentage completion method whereby stage of completion of a contract is determined with reference to the proportion that contract costs incurred (for work performed up to the reporting date) bear to the estimated total contract cost and wherever applicable after completion of inspection/certification of the work performed by the customers as stipulated in the contract.

5.2 Disclosure as per AS-18 "Related Party Disclosure" :

1 Holding Company : Beaver Engineering & Holdings Ltd, Hyderabad

2 Subsidiaries Agile Electric Sub Assembly (P) Ltd

SCIL Infracon Pvt Ltd HBL Germany, GMBH HBL America HBL Suntech-LLP

3 Step Down Subsidiaries of Subsidiary : Igarshi Motors India Ltd

Igarshi Motors Sales (P) Ltd

4 Joint Venture : Gulf Batteries Company Ltd, Kingdom of Saudi Arabia

5 Controlled Companies : Kairos Engineering Limited, Hyderabad

6 Associate Naval Systems & Technologies Pvt Ltd

Guided Missile Engineering India Pvt Ltd

7 Companies which Directors are Interested : Sankhya Infotech Ltd

8 Key Management Personnel : Dr A J Prasad Chairman & Managing Director

M S S Srinath Whole Time Director

Kavita Prasad Whole Time Director

Ashok Nagarkatti

Note : 6 Previous years figures have been regrouped wherever necessary.

Mar 31, 2011

1. Share Capital:

(i) Out Of 25,30,00,000 shares issued by the Company as at 31.03.2011,14,03,94,050 shares are held by the holding Company - M/s. Beaver Engineering & Holdings Ltd.

(ii) During the year 2009-10, the Company raised Equity of Rs. 3,469.51 lakhs on preferential basis including a share premium of Rs. 3,367.47 lakhs.The issue was made to finance the general corporate investments in related companies and for other general corporate purposes.

2. (i) Term Loans:

a) Term Loan from IDBI, SBI, SBH and SB Indore :

The Term Loans from IDBI, State Bank of Hyderabad, State Bank of India and State Bank of Indore (since merged with SBI), are secured by a first charge on the movable and immovable assets (both present and future of the company, (save and except book debts and exclusive charges already created if any) situated (a) at Lalgadi Malakpet and Aliabad Villages, Shameerpet Mandal, Reddy Dist, (b) at Nandigaon Village, Mahbubnagar Dist, (c) at Bhootpur Village,Mahaboobnagar Dist, (d) at Kandivalasa Village, Vizianagaram Dist, and (e) at VSEZ, Visakhapatnam Dist. The loans are also secured by a second charge on the current assets of the company. These loans are also guaranteed by Managing Director and one Director in their personal capacity.

b) Term Loan from Axis Bank (Balance on 31.03.2(311 Rs. 4,441.49 Lkahs):

TheTerm Loans from Axis Bank are secured by exclusive charge on the movable and immovable assets of the Company situated (a) at Tumkunta Village, Ranga Reddy Dist, (b) at IMT Manesar, Gurgoan, Haryana, (c) at Goverdhanpuri Colony, Yapral, GHMC, (d) at IIE, Ranipur, BHEL, Haridwar (Uttaranchal), (e) at Selaqui, Dehradun (Uttaranchal). and (Rs.) at MIDC, Navi Mumbai.These loans are also guaranteed by Managing Director and one Director in their personal capacity.

c) Term Loan from Axis Bank (Balance on 31.03.2011 Rs. 5,032.53 Lakhs):

TheTerm Loan is secured by first pari passu charge on Fixed Assets (excluding vehicles and assets exclusively charged to other term lenders) and second charge on Current Assets. Also guaranteed by the Managing Director and one Director in their personal capacity.

d) Term Loan from EXIM Bank of India:

TheTerm Loan to part finance Equity contribution in Gulf Batteries Company, a Joint Venture in Kingdom of Saudi Arabia (KSA) is secured by first pari passu charge on the entire fixed assets of the company excluding exclusive charges, if any, and pledge of Company's share holding in Joint Venture and also guaranteed by the Managing Director of the Company in his personal capacity.

e) Term Loan from ICICI Bank:

The term loan of Rs. 6,000 lakhs for Capex and Rs. 4,000 lakhs for working capital is secured by subservient/ residual charge on all current and moveable assets of the Company both present and future. The charge is subservient to the existing lenders to the extent of all drawn and undrawn limits of term loans and working capital only and the loan is guaranteed by the Managing Director and one Director in their personal capacity.

f) Short Term Loans from IDBI:

Short Term Loans from IDBI Bank for acquisition of land for setting up new facility at Mahaboobnagar District is secured by D.P Note, post dated cheques for the entire loan and undertaking to create first charge on the Assets in the event of default.

g) Term loans from HDFC:

(i) The Term Loans for acquiring Flats are secured by an exclusive charge on the Fiats acquired and also guaranteed by the Managing Director of the Company in his personal capacity.

(ii) The Term Loans for acquiring vehicles are secured by exclusive hypothecation of vehicles acquired through execution of D.P. Note.

h) Equipment Loan from First Leasing Company of India Ltd.:

The loan is secured by exclusive charge on the Equipment procured and also guaranteed by one Director in his personal capacity.

2. (ii). Working Capital Loans:

(a) The Working Capital Loans from the State Bank of India, State Bank of Hyderabad, IDBI Bank Ltd and State Bank of Indore (since merged with SBI) are secured by a first charge on all the chargeable current assets and by a second charge on the fixed assets (both present and future) of the Company. All the ioans are also guaranteed by Managing Director, two other Directors of the Company, and Smt. A. Uma Devi in their persona! capacities.

(b) Short Term Loan from Kotak Mahindra Bank Ltd:

The Short Term Working Capital Loan is secured by D.P Note and post dated cheques.

2.(iii) Term Loan Instalments and Short Term Loans due and repayable within one year from the date of Balance sheet is Rs. 9,080.00 lakhs.

3. Interest Free Sales Tax Loan (1FST):

IFST Loan of Rs. 1,678.81 lakhs shown under unsecured loan represents the Sales tax payable by the Company given as Loan by A.P State Government under a scheme, to be repaid without interest after 14 years from the date of availment. Earliest repayment is due from the year 2013-14. The loan requires creation of a charge on the assets of the Company. Pending creation of charge, the amount is shown as 'Unsecured Loan' to be regrouped as Secured Loan as and when the charge is created.

4. Contingent Liabilities not provided for:

All known and undisputed claims and liabilities where there is present obligation as a result of past events and it is probable that there will be an outflow of resources, have been duly provided for.

(i) Contingent liabilities not provided for: Nature of Contingent Liability As on As on 31.03.2011 31.03.2010 (Rs. in (Rs. in lakhs) lakhs)

a) Un-executed portion of letters of credit opened by Bank 3,975.13 4,146.49

b) Un-expired guarantees issued on behalf of the Company by banks for which the *15,521.22 14,601.19 by banks for which the Company gave counter guarantees

* includes Bank Guarantees issued to others on behalf of a Subsidiary Company Rs. 900 Lakhs

c) Legal undertakings (LUTs) given to Custom's Authorities for 2,736.36 2,534.00 clearing the imports at Nil / Concessinal rate of duty pending for fulfilment of export obligations, (net of the export obligations fulfilled of Rs. 2,302.49 lakhs (previous year Rs. 1,737.70 lakhs) for which the process of discharging the LUTs by the concerned authorities is at various stages).

d) Claims against the Company not acknowledged as debt:

- Excise duty claim 94.85 94.85

- Sales Tax claim 4.84 -

- Custom duty claim 36.67 36.67

- Property Tax claim of VSEZ unit 27.64 27.64

- Fuel surcharge adjustment (FSA) claim to the extent billed by power 97.34 - Distribution Companies of A.P

- Other claims 34.42 26.25

(iv) Income tax and Sales tax Assessments:

a. Income Tax:

The Company's assessments were completed upto Financial Year 2007-08 and the tax dues as per orders were paid and charged to revenue.

Tax assessments for the year 2008-09 and 2009-10 are pending and the tax dues as per returns filed have been fully paid. The liability, if any, in respect of such pending assessments that may arise upon completion is not ascertainable at this stage.

The Company has no taxable income for the year 2010-11 in view of the eligible exemptions and deductions as per the provisions of IT Act, 1961 including the applicable provisions for Minimum Alternate Tax (MAT) under section 115JB. Hence, no provision for current tax has been made for the year.

b. Sales Tax:

The Company has paid/provided VAT/CST as per the records and returns filed upto 31.03.2011 after considering the Input VAT on purchases and also on the basis of concessional Forms expected to be received from customers. The liability, if any, in respect of pending assessments including those relating to non-submission of concessional Forms ('C Forms etc.) is not ascertainable at this stage. The company is in the process of collecting concessional Forms from customers for submission before the assessments are completed/finalised.

5. Intangible Assets:

a) In respect of Intangible Assets where commercial activity is started, the expenditure incurred amounting to Rs. 512.81 lakhs is amortised over a period of 5 years and accordingly 3rd instalment of Rs. 102.56 lakhs is amortised and charged to profit & loss account.

b) In respect of Intangible Assets where development is completed and commercial operation are expected to be started after acceptance / approval by the customers, the expenditure incurred is carried in the books. The value of such assets as on 31.03.2011 to be amortised upon commercial operations is Rs. 393.30 lakhs (previous year Rs. 393.30 Lakhs).

6. Investments/Advance for Investments:

a) The investment of ? 225.00 lakhs held on 31.03.2010 in the Joint Venture Company, HBL Elta Avionic Systems (P) Ltd has been disposed off during the year for Rs. 1,366.22 lakhs and the resultant profit of Rs. 1,141.22 lakhs is shown as exceptional income.

b) During the year, the Company acquired 63.91% of Equity in Agile Electric Drives Technologies and Holdings (P) Ltd., Chennai for Rs. 11,288.05 lakhs and the said Company has become subsidiary of the Company.

c) During the year, the Company acquired 50% of Equity in SCIL Infracon (P) Ltd, Hyderabad for Rs. 651.63 lakhs. Further, the Company has made an advance of Rs. 117.79 lakhs to a share holder of the said company for acquiring additional 10% of Equity in the said Company and obtained shares before 31 - 03-2011. Pending transfer of shares in the name of the Company, the amount so paid is shown under Advances. The said company is considered as subsidiary company in view of controlling shares held by the company as at 31-03-2011.

d) During the year, the Company acquired 9.89% of equity in Sankhya Infotech Ltd. (a Listed Company) for Rs. 331.04 lakhs. Further, the said Company issued Share Warrants against which the Company contributed Rs. 195.38 lakhs being 50% of the issue price and the said amount is shown as advance pending conversion of warrants into Equity.

e) The Company incorporated a wholly owned subsidiary, HBL Germany GmBH, in Germany and the Company invested Rs. 14.92 lakhs as capital in the wholly owned subsidiary.

f) The Company's wholly owned subsidiary in Nepal, Bhagirath Energy Systems Ltd., Nepal, is under voluntary winding up. Against the equity of Rs. 107.60 lakhs in the wholly owned subsidiary, a provision of Rs. 29.48 lakhs was made towards fall in the value of investment which is considered adequate.

g) Based on MOU entered by the company, M/s.HBL Miltrade Pte Ltd, Singapore, allotted one share (Face value - One Singapore Dollar) to the company. The company is yet to remit the same. Pending remittance. Investment is not disclosed in the Balance Sheet.

All the Investments held by the Company as at 31-03-2011 are classified as' Permanent' and no provision is required to be made for the fall in the value of investments except in wholly owned subsidiary as stated in (f) above, as the Losses in other companies are considered to be temporary.

7. Confirmation of Balances:

The balances appearing under Sundry Debtors, Creditors for supplies/expenses, Advance to suppliers/others, advances from customers are subject to confirmation/reconciliation and consequential adjustments. The Company has sent letters to customers/vendors seeking confirmation of balances and in some cases replies have been received and the differences noticed which are not significant, are being reconciled).

8. Subsidies received from Government of A.P:

a) The Company claimed and received Rs. 118.84 lakhs towards Power Subsidy which is netted from Power Charges as the expenditure when incurred was fully charged to revenue.

b) The Company made claim for Sales Tax subsidy by way of reimbursement of VAT paid and during the year received ? 365.78 lakhs and the same is considered as Exceptional Income.

9. Fixed Deposits with Banks include Rs. 470.00 lakhs against which the Company authorised the Bank to mark lien on the deposits as security for the facility sanctioned by the Bank to M/s. Sankhya Infotech Ltd., an associate Company.

10. In the absence of eligible profits under section 349 read with section 198 of the Companies Act, 1956, for the year 2010-11 no commission is payable to the Chairman & Managing Director on the profits and the remuneration paid to him for the year 2010-11 amounting to Rs. 25.80 lakhs is subject to the approval of the members by way of special resolution as required under Schedule XIII of the Companies Act, 1956.

11. The Company has amounts dues to Micro and Small Enterprises under The Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act) as at March 31, 2011.

Note: The information has been given in respect of only those suppliers who have intimated the Company that they are registered as micro, small and medium enterprises. The interest payable will be accounted as and when claimed / paid.

12. Disclosures required to be made as per Accounting Standards (AS), to the applicable, are as under:

(B) Disclosure as per AS-15 "Employee Benefits";

ii) Defined Benefit Plan:

(a) Gratuity obligation of the Company:

The Company has taken Group Gratuity Policy of LIC of India to cover the employer's obligation towards Gratuity under the payment of Gratuity Act and the fund required to be maintained to cover the P.V of past service benefit and current service cost is fully funded by the Company as per the valuation made under PUC method and demanded by LIC of India. Besides the funding, the company also paid the annual risk premium to keep the policy active and recognised as expenses for the year.

The increase in the present value is on account of increase in Gratuity Ceiling to Rs. 10.00 lakhs from Rs. 3.50 lakhs.

Representing Current service cost charged by LIC and interest credited to fund by LIC, not recognised as asset

(b) Long Term Compensated Absences:

The present value of obligation for long term compensated absences is determined on acturial valuation using Project Unit Credit method (PUC) and is charged to profit & loss account. The obligation is not funded.

Notes: (a) The Company's operations include Batteries of different types, Electronics, Railway Signalling contracts etc. Except for Batteries, the segment revenue, the segments results and the segments assets and liabilities of other activities are individually below the threshold limit of 10% as provided in AS-17 "Segment Reporting". Accordingly, Batteries segment is shown separately as reportable segment and others are included in Unallocated segments.

(b) Batteries segment consists of various types of batteries for defence , aviation , telecom and industrial application.

(c) Inter segment revenue is measured at the market prices at which the products are sold to external Customers

(D) Disclosure as per AS-18"Related Party Disclosure";

1 Holding Company Beaver Engineering & Holdings Ltd.

2 Subsidiaries Bhagirath Energy Systems Pvt Limited, Nepal

HBL Power Systems (M) SDN BHD, Malaysia

Agile Electric Drives Technologies & Holdings Pvt Ltd

HBL Germany, GMBH

SCIL Infracon Pvt Ltd

3 Joint Venture Gulf Batteries Company Ltd, Kingdom of Saudi Arabia

4 Controlled Compan Kairos Engineering Limited, Hyderabad -ies

5 Associate Naval Systems & Technologies Pvt Ltd

Guided Missile Engineering India Pvt Ltd

Auto TEC Systems (P) Ltd,

Bangalore Sankhya Infotech Ltd

6 Key Management Dr A J Prasad Chairman & Managing Director Persnnel M S S Srinath Whole Time Director

Kavita Prasad Whole Time Director J.K.Verma WholeTime Director (Up to 09th July 2010)

Ashok Nagarkatti

P Satish Kumar

(I) Disclosure as per AS-27 "Financial Reporting of Interests in Joint Ventures": (Also refer Note 6(a) above]

The Company's interest in the above company is reported under the head Investment (Schedule-8) and stated at Cost.

Pending receipt of Audited/Unaudited financial statements of JV company for the year ending 31-03-2011, the disclosure of the company's share of the Assets/Liabilities, Income and Expenses is not made as required under AS-27.

(J) Disclosure as per AS-29 "Provisions, Contingent Liabilities, Contingent Assets";

It is expected that these costs will be incurred in the next 12 to 24 months. Actual expenditure incurred during warranty period towards replacements etc is charged to revenue under respective head of expenditure.

13. Additional Information Pursuant to the requirements under Part-ll of Schedule VI of the Companies Act, 1956.

(Quantitative Information in A, B, C and D are certified by the management and relied upon by the Auditors being a technical matter)

A. Licenced and Installed Capacities

i) Installed Capacity (Qty)

Lead Acid Batteries 1640 Mil Ah

Nickel Cadmium Batteries 85 Mil Ah

Chargers / Rectifiers 3500 Nos

Lithium Thionyl Chloride Cells 11000 Nos

Others Inview of the items being manufactured as per the customers orders it is not possible to ascerrtain installed capacity

Note: In view of number of individual items of smaller value quantitative details are not furnished for certain items.

14 Previous Year's figures have been regrouped wherever necessary.

Mar 31, 2010

1. Share Capital:

a) Preferential issue: As approved in the Extra ordinary General Meeting held on 20.10.2009, the Company has issued 10,20,445 Equity Shares of Rs.10/- each on Preferential basis to M/s. Citigroup Global Markets Maritius Pvt Ltd at Rs.340/- each (including a premium of Rs.330 per share) resulting in increase of the paid up capital and share premium by Rs.102.04 lakhs and Rs.3367.47 lakhs respectively. The shares so issued are ranking pari passu in all respects with existing equity shares of the company and are subject to Lock-in period of one year from the date of allotment, i.e. 28.10.2009.

b) Sub-division of shares: The companys existing equity shares of Rs.10/- each as on the record date of 25.11.2009 have been sub-divided into 10 shares of Re.1/- each, w.e.f. 26.11.2009.

c) Purpose of preferential issue and utilisation thereof:

2. Secured Loans :

a) Secured Loans include Rs. 3360.00 Lakhs which are repayable within one year from the date of Balance sheet.

b) Term Loans from IDBI, SBI, SBH and SB Indore

Term Loans from IDBI, State Bank of Indore, State Bank of Hyderabad and State Bank of India are secured by a first charge on the movable and immovable assets (both present and future) of the company, (save and except book debts and exclusive charges already created if any) situated (a) at Lalgadi Malakpet and Aliabad Villages, Shameerpet Mandal, Ranga Reddy Dist, (b) at Nandigaon Village, Mahbubnagar Dist, (c) at Bhootpur Village, Mahaboob Nagar Dist, (d) at Kandivalasa Village, Vijayanagaram Dist, and (e) at VSEZ, Visakhapatnam Dist. The loans are also secured by a second charge on the current assets of the company. These loans are also guaranteed by Managing Director and one Director in their personal capacity.

c) Term Loan from Axis Bank

Term Loans from Axis Bank are secured by exclusive charge on the movable and immovable assets of the Company situated (a) at Tumkunta Village, Ranga Reddy Dist, (b) at IMT Manesar, Gurgoan, Haryana, (c) at Goverdhanpuri Colony, Yapral, GHMC, (d) at IIE, Ranipur, BHEL, Haridwar (Uttaranchal), (e) at Selaqui, Dehradun (Uttaranchal), (f) at MIDC, Navi Mumbai and in Projects at Kolkata. These loans are also guaranteed by Managing Director and one Director in their personal capacity.

d) Term Loan from HDFC Ltd

Term Loans from HDFC, Hyderabad are secured by an exclusive charge on the Flats at Hyderabad , Vishakhapatnam and Kolkatta. These loans are also guaranteed by the Managing Director of the Company in his personal capacity

e) Working Capital Loans from SBI, SBH, SB Indore and IDBI

The Working Capital Loans from the State Bank of India, State Bank of Hyderabad, IDBI Bank Ltd and State Bank of Indore are secured by a first charge on all the chargeable current assets and by a second charge on the fixed assets (both present and future) of the company. All the loans are also guaranteed by Managing Director, two other Directors of the Company, Sri M.S.S. Srinath, and Smt. A. Uma Devi in their personal capacities

f) Vehicle Loans from HDFC Bank

The loans are secured by exclusive hypothecation of Vehicles acquired through execution of Demand Promissory Note.

g) Equipment Loan from First Leasing Company of India Ltd.:

The loan is secured by exclusive charge on the Equipment acquired and also guaranteed by one Director of the Company in his personal capacity.

3. Interest Free Sales Tax Loan (IFST):

IFST Loan of Rs.1716.36 Lakhs shown under unsecured loan represents the Sales tax payable by the Company given as Loan by A.P. State Government under a scheme, to be repaid without interest after 14 years from the date of availment. Earliest repayment is due from the year 2013-14. The loan requires creation of a charge on the assets of the Company. Pending creation of charge, the amount is shown as ÃUnsecured Loan to be regrouped as Secured Loan as and when the charge is created.

4. Contingent Liabilities not provided for:

All known and undisputed claims and liabilities where there is present obligation as a result of past events and it is probable that there will be an outflow of resources, have been duly provided for.

(i) The contingent liabilities not provided for as under:

a) Un-executed portion of letters of credit opened by Bank; Rs. 4146.49 Lakhs (Previous year Rs.3344.72 Lakhs).

b) Guarantees issued on behalf of the company by Bankers for which the company gave counter guarantee: Rs. 14601.19 Lakhs (previous year Rs.13536.67 Lakhs).

c) Legal undertakings given to Customs Authorities for clearing the Imports at Nil or concessinal rate of duty pending fulfilment of export obligations: Rs. 4271.70 Lakhs (Prevous year Rs.3778.49 Lakhs) against which the export obligations have been fulfilled to the extent of Rs. 1737.70 Lakhs (Previous year Rs.1534.32 Lakhs) and the process of discharging the Legal undertakings by the concerned authorities is at various stages.

d) Claims against the Company not acknowledged as debt:

- Excise duty claim : Rs. 94.85 Lakhs (Previous year Rs.94.85 Lakhs)

- CST claim : Rs. Nil (Previous year Rs.9.77 Lakhs)

- Custom duty claim : Rs. 36.67 Lakhs (Previous year Rs.36.67 Lakhs)

- Property tax of VSEZ Unit Rs. 27.64 Lakhs (Previous year Rs.Nil Lakhs)

- Other claims : Rs. 26.25 Lakhs (Previous year Rs.26.25 Lakhs)

e) SAFT AB (earlier known as SAB Nife AB) has initiated legal proceedings for infringement of its trademark against the companyÃs subsidiary HBL Nife (UK) Limited in the Royal Court of Chancery Division, London and where in the Holding company HBL Power Systems Ltd., (formerly known as HBL Nife Power Systems Ltd) was mentioned as 2nd defendant. On February 8, 2006 the Royal Court of Chancery Division, London passed an order against the companyÃs subsidiary and the company, restraining the defendants against infringement of UK trademark and claimed a damage of 200000 Pounds. The wholly owned subsidiary company in UK has been liquidated and wound up. In the opinion of the management, the claim is not likely to be devolved on the Company and hence no provision is considered necessary for the said claim.

(ii) Corporate guarantees given by the Company on behalf of M/s. HBL Elta Avionics Systems (P). Ltd. (HELA) a Joint Venture Company:

a) to a Bank for the loans sanctioned to M/s. HELA; Rs.927.13 Lakhs (Previous year Rs.927.13 Lakhs) valid till the loan is repaid by them. Present dues to Bank by HELA Rs.421.67 Lakhs.

b) to M/s. IAI Elta Systems Ltd., Israel for US$ 1079100 Equivalent to Rs. 484.52 Lakhs valid upto 30.10.2010 and for US$ 107708 equivalent to Rs. 48.36 Lakhs, valid upto 31.07.2010, towards Trade advances made by them to M/s. HELA on 25.11.2008 and 29.04.2009 respectively. (Previous year US$ 1079100 equivalent to Rs.546.46 Lakhs).

(iii) Estimated amount of contracts remaining to be executed on Capital account and not provided for:

Rs. 3186.50 Lakhs (Previous year Rs.3399.29 Lakhs)

(iv) Companys commitment for Investments in other companies:

The company has committed to invest Rs.650.00 Lakhs and Rs.936.30 Lakhs in the Equity of M/s. SCIL Infracon (P) Ltd and M/s. Autotec Systems (P) Ltd. respectively by way of purchase of shares from the share holders of the said companies at a determined rate. As on 31.03.2010, the company has invested a sum of Rs.300.34 Lakhs in M/s. Autotec Systems (P) Ltd leaving a balance of Rs.635.96 lakhs to be invested as and when shares are transferred to the company. Similarly the company made an advance of Rs.397.98 Lakhs to M/s. SCIL Infracon (P) Ltd for the share to be transferred and further amount to be invested is Rs.252.02 Lakhs. Thus the aggregate pending commitment on 31.03.10 was Rs.887.98 Lakhs. As and when the shares are purchased and transferred to HBL, it will be holding 50% of the Equity in SCIL Infracon (P) Ltd and 26% of the Equity of M/s. Autotec Systems (P) Ltd.

(v) Income Tax and Sales Tax Assessments:

a) The Companys Income tax assessments were completed upto Financial Year 2006-07 and the tax dues as per orders were paid and charged to revenue, though certain issues were taken up before the Appellate Authorities. Refunds if any, out of such taxes charged off will be accounted as and when the issues are settled / refunds received. Assessments for Financial Years 2007-08 and 2008-09 are pending and the taxes due as per returns filed have been fully paid. The liability, if any, in respect of such pending assessments will be accounted after completion / finalisation of assessments. Current tax for the Financial Year 2009-10 is paid / provided considering the eligible deductions / exemptions available as per the provisions of IT Act, 1961.

b) The Company has paid or provided VAT/CST as per the returns / revised returns filed upto 31.03.2010 after considering Input VAT available and also on the basis of Concessional Forms expected to be received from customers. The liability, if any, in respect of pending assessments including that relating to non submission of Concessional Forms (C Forms etc) is not ascertainable at this stage and will be accounted as and when assessments are completed / finalised. The Company is in the process of collecting ÃC Forms etc. for submission before the Assessments are finalised.

5. New Projects / Expansion:

The Companys new projects under expansion to the extent completed / put to use have been capitalised and shown as additions to Fixed Assets and those under progress are shown as ÃCapital Works in Progress (CWIP). CWIP includes stagewise payments towards ÃTechnology Transfer FeeÃ, pending completion of absorption of Technology and commercialisation of related products.

6. Intangible Assets:

a) In respect of Intangible Assets where commercial activity is started, the expenditure incurred amounting to Rs.512.81 lakhs is amortised over a period of 5 years and accordingly 2nd instalment of Rs.102.56 lakhs is amortised and charged to profit & loss account.

b) In respect of Intangible Assets where development is completed and commercial operation are expected to be started after acceptance / approval by the customers, the expenditure incurred is carried in the books. The value of such assets as on 31.03.2010 is Rs.393.30 lakhs and will be amortised upon commercial operations (previous year Rs.393.30 Lakhs).

7. Investments:

a) The wholly owned subsidiary, HBL (UK) Ltd has been liquidated and wound up and the investment of Rs.72.28 lakhs is written off after obtaining necessary approvals from RBI.

b) M/s Bhagirath Energy Systems Private Limited, (BES) a wholly owned Subsidiary Company 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 31.03.2010.

c) During the year the Company has invested Rs.1424.51 Lakhs in M/s. Gulf Batteries Co. Ltd. (Kingdom of Saudi Arabia), a Joint Venture Company, wherein the company hold 40% of the Equity. The Joint Venture Company is in the process of setting up and starting commercial activity as on 31.03.2010.

8. Advance for Investments:

Advance for Investments include (a) Rs.16.24 Lakhs in HBL Power Systems (M) SDN BHD, Malaysia, a subsidiary Company for which shares are yet to allotted (previous year Rs.16.24 Lakhs); and (b) Rs.397.98 Lakhs being the advance made for transfer of shares of M/s. SCIL Infracon Pvt Ltd from the share holders of the said company.

9. Confirmation of Balances:

a) The Company has sent letters to customers / vendors seeking confirmation of balances and in some cases replies have been received and thus the balances appearing under Sundry Debtors, Creditors for supplies / expenses, Advance to suppliers / others, advances from customers are subject to confirmation / reconciliation and consequential adjustments.

b) During the year Debtors / Advances to suppliers have been reviewed case by case resulting in write off of irrecoverable dues and advances of Rs.461.44 Lakhs and Rs.34.71 Lakhs respectively. Similarly long outstanding credit balances in suppliers / service providers accounts have been reviewed resulting in a write back of Rs.128.32 Lakhs which in the opinion of the Company are no longer required to be continued in the books.

10. Sundry Debtors include Rs. 527.07 Lakhs (Previous year Rs. 339.33 Lakhs) due from the following group Companies.

(i) Subsidiary Companies: Rs. in Lakhs

HBL Power Systems (M) SDN, BHD, Malaysia 67.20 (Previous year Rs.137.65 Lakhs)

HBL (UK) Ltd. (Fully provided for) 14.40 (Previous year Rs.14.40 Lakhs)

(ii) Joint Venture Companies:

Gulf Batteries Co. Ltd (KSA) 253.48 (Previous year Rs. Nil)

HBL Elta Avionics Systems (P) Ltd. 191.66 (Previous year Rs.187.28 Lakhs)

(iii) Associate Companies:

Kairos Engineering Ltd. 0.33 (Previous year Rs. Nil)

527.07 (Previous year Rs.339.33 Lakhs)

10. The Company has made an application seeking approval of the Central Government u/sec.314(B) of the Companies Act, for holding an Office or place of profit by a relative of Directors for the period from 01.10.2007 to 30.09.2012. However approval was received for remuneration for the period from 21.08.2009 to 30.09.2012 with a condition that remuneration paid for the period prior to approval shall be recovered from the appointee. Such excess remuneration for the period from 01.10.2007 to 20.08.2009 to be recovered was Rs.24,47,264/-. The Company made a representation to Central Govt for waiver of recovery of the said amount. Pending final approval / ratification the recovery is kept in abeyance.

Note: The information has been given in respect of only those suppliers who have intimated the Company that they are registered as micro, small and medium enterprises. The interest payable will be accounted as and when claimed / paid.

11. Changes in Accounting Policies:

a) Issue expenses: Hitherto Issue expenses were treated as preliminary expenses to be amortised in 5 equal instalments as per earlier Accounting Policy. It has been decided to change the policy to write off unamortised portion and to charge off such expenses to revenue, in future to fall in line with Accounting Standard (AS- 26). This change in the policy has resulted in reduction of the profit for the year by Rs.20.11 Lakhs.

b) Depreciation on Assets costing Rs.5,000/- or below:

Hitherto Depreciation on assets costing Rs.5000/- or below was charged at the respective rates of Depreciation prescribed in Schedule XIV to the Companies Act, 1956 depending on the classification of Assets. It has been decided to charge deprecation at 100% on all such assets with retrospective effect to comply with Schedule XIV. This has resulted in additional deprecation for the year by Rs.189.97 Lakhs including prior period charge of Rs.151.50 Lakhs.

Notes: (a) The companys operations include Batteries of different types, Electronics, Railway Signalling contracts etc. Except for Batteries, the segment revenue, the segments results and the segments assets and liabilities of other activities are individually below the threshold limit of 10% as provided in AS-17 ÃSegment ReportingÃ. Accordingly, Batteries segment is shown separately as reportable segment and others are included in Unallocated segments.

(b) Batteries segment consists of various types of batteries for defence , aviation , telecom and industrial application.

(c) Inter segment revenue is measured at the market prices at which the products are sold to external Customers

(D) Disclosure as per ASÃ18 ÃRelated Party DisclosureÃ;

1 Holding Company Beaver Engineering Limited

2 Subsidiaries Bhagirath Energy Systems Pvt Limited, Nepal

HBL (UK) Limited, UK

HBL POWER SYSTEMS (M) SDN BHD, Malaysia

3 Joint Venture HBL Elta Avionics Systems P Ltd, Hyderabad

Gulf Batteries Company Ltd, Kingdom of Saudi Arabia

4 Controlled Companies Kairos Engineering Limited, Hyderabad

5 Associate Naval Systems & Technologies Pvt Ltd

Guided Missile Engineering India Pvt Ltd Autotec Systems Pvt Ltd, Bangalore

6 Key Management Personnel Dr A J Prasad Chairman & Managing Director M S S Srinath President (Marketing)

Kavita Prasad Director Ashok Nagarkatti Director

J.K.Verma Director

P.Satish Kumar CFO

(E) Disclosure as per AS-19 ÃLeasesÃ;

Finance Leases Nil

Operating Leases:

Future lease Rents Payable:

- Not Later than one year. Rs. 11.73 Lakhs

- Later than one year and non later than five year. Rs. 23.46 Lakhs

- Later than five year Rs. Nil

Lease Rents for the year recognised in the Profit & Loss a/c (under Maintenance-Office Equipment) Rs. 8.19 Lakhs

(F) Disclosure as per AS-20 ÃEarnings per shareÃ;

The equity shares of Rs.10/- each of the company have been sub-divided into 10 equity shares of Re.1/- each with effect from 26th November 2009.

The EPS for the year is stated for a face value of Re.1/- each and for comparison purposes, the number of shares for the period before 26th November 2009 are also reported as sub-divided for a face value of Re.1/- each.

Computation of EPS (Basic & Diluted)

For the year 2008-09

Net Profit (Rs.) 90,95,56,492

No. of shares 24,27,95,550

EPS (Basic & Diluted) 3.746

The Companys interest in the above companies is reported under the head Investment (Schedule-8) and stated at Cost.

In the absence of Audited/Unaudited financial statements of JV companies for the year ending 31-03-2010, the disclosure of the companys share of the Assets/Liabilities, Income and Expenses is not made as required under AS-27.

It is expected that these costs will be incurred in the next 12 to 24 months. Actual expenditure incurred during warranty period towards replacements etc is charged to revenue under respective head of expenditure.

13. Additional Information Pursuant to the requirements under Part-II of Schedule VI of the Companies Act, 1956.

(Quantitative Information in A, B, C and D are certified by the management and relied upon by the Auditors being a technical matter)

14 Previous Years figures have been regrouped wherever necessary.

15 Additional information required under Part-IV of Schedule VI to the Companies Act, 1956 is annexed.

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