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HBL Power Systems Ltd.

BSE: 517271 Sector: Consumer
NSE: HBLPOWER ISIN Code: INE292B01021
BSE LIVE 15:52 | 19 Sep 64.20 4.00
(6.64%)
OPEN

60.85

HIGH

65.30

LOW

58.85

NSE 15:58 | 19 Sep 64.00 3.70
(6.14%)
OPEN

60.70

HIGH

65.15

LOW

58.80

OPEN 60.85
PREVIOUS CLOSE 60.20
VOLUME 1100753
52-Week high 65.30
52-Week low 29.70
P/E 41.69
Mkt Cap.(Rs cr) 1,624
Buy Price 0.00
Buy Qty 0.00
Sell Price 63.95
Sell Qty 802.00
OPEN 60.85
CLOSE 60.20
VOLUME 1100753
52-Week high 65.30
52-Week low 29.70
P/E 41.69
Mkt Cap.(Rs cr) 1,624
Buy Price 0.00
Buy Qty 0.00
Sell Price 63.95
Sell Qty 802.00

HBL Power Systems Ltd. (HBLPOWER) - Auditors Report

Company auditors report

To

The Members of

HBL Power Systems Limited Hyderabad

Report on the Standalone Financial Statements

We have audited the accompanying standalone financial statements of HBL PowerSystems Limited ("the Company") which comprise the Balance Sheet as at31st March 2016 the Statement of Profit and Loss the Cash Flow Statement for theyear then ended and a summary of the significant accounting policies and otherexplanatory information.

Management's Responsibility for the Standalone Financial Statements

The Company's Board of Directors is responsible for the matters stated in Section134(5) of the Companies Act 2013 ("the Act") with respect to the preparation ofthese standalone financial statements that give a true and fair view of the financialposition financial performance and cash flows of the Company in accordance with theaccounting principles generally accepted in India including the Accounting Standardsspecified under Section 133 of the Act read with Rule 7 of the Companies(Accounts) Rules2014. This responsibility also includes maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding the assets of the Company andfor preventing and detecting frauds and other irregularities; selection and application ofappropriate accounting policies; making judgments and estimates that are reasonable andprudent; and design implementation and maintenance of adequate internal financialcontrols that were operating effectively for ensuring the accuracy and completeness ofthe accounting records relevant to the preparation and presentation of the financialstatements that give a true and fair view and are free from material misstatement whetherdue to fraud or error.

Auditors' Responsibility

Our responsibility is to express an opinion on these standalone financial statementsbased on our audit.

We have taken into account the provisions of the Act the accounting and auditingstandards and matters which are required to be included in the audit report under theprovisions of the Act and the Rules made there under.

We conducted our audit in accordance with the Standards on Auditing specified underSection 143(10) of the Act. Those Standards require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetherthe financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts andthe disclosures in the financial statements. The procedures selected depend on theauditor's judgment including the assessment of the risks of material misstatement of thefinancial statements whether due to fraud or error. In making those risk assessments theauditor considers internal financial control relevant to the Company's preparation of thefinancial statements that give a true and fair view in order to design audit proceduresthat are appropriate in the circumstances. An audit also includes evaluating theappropriateness of the accounting policies used and the reasonableness of the accountingestimates made by the Company's Directors as well as evaluating the overall presentationof the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the standalone financial statements.

Opinion

In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone financial statements give the information requiredby the Act in the manner so required and give a true and fair view in conformity with theaccounting principles generally accepted in India of the state of affairs of the Companyas at 31st March 2016 and its profit and its cash flows for the year ended on that date.

Emphasis of Matters

1) We draw attention to Note 8.1 to Financial Statements which states that interest ondelayed payments to parties registered as MSME under the MSMED Act 2006 is not providedfor as in the absence of any claim from the said parties they are reckoned as 'not due'by the company.

2) We draw attention to Note 15.3 to Financial Statements in respect of repudiation bythe Insurers of a claim made by the company in respect of which the company hadinitiated legal action for recovery the outcome of which is uncertain at this stage.

3) Reference is drawn to Note No.31 Some of the year end balances appearing under theheads referred to therein are subject to confirmation/reconciliation and consequentialadjustments.

4) Our opinion is not qualified in respect of the above matters.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government of India in terms of subsection (11) of section 143 ofthe Act we give in the Annexure -A a statement on the matters specified in the paragraph3 and 4 of the Order to the extent applicable.

2. As required by Section 143 (3) of the Act we report that:

(a) We have sought and obtained all the information and explanations which to the bestof our knowledge and belief were necessary for the purposes of our audit.

(b) In our opinion proper books of account as required by law have been kept by theCompany so far as it appears from our examination of those books.

(c) The Balance Sheet the Statement of Profit and Loss and the Cash Flow Statementdealt with by this Report are in agreement with the books of account.

(d) In our opinion the aforesaid standalone financial statements comply with theAccounting Standards specified under Section 133 of the Act read with Rule 7 of theCompanies (Accounts) Rules 2014 except for the disclosure to be made in pursuance ofAccounting Standard AS-27 for the reasons detailed in Note No. 34.8.

(e) On the basis of the written representations received from the directors as on 31stMarch 2016 taken on record by the Board of Directors none of the directors isdisqualified as on 31st March 2016 from being appointed as a director in terms of Section164 (2) of the Act.

(f) With respect to the adequacy of the Internal Financial Controls over financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate report in Annexure - B.

(g) With respect to the other matters to be included in the Auditor's Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 and amendmentsthere to in our opinion and to the best of our information and according to theexplanations given to us:

i. The Company has disclosed the impact of pending litigations on its financialposition in its financial statements - Refer Note No: 29 to the financial statements;

ii. The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses.

iii. There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company.

For Rao & Kumar
Chartered Accountants
Firm's Registration Number 03089S
Anirban Pal
Place: Hyderabad Partner
Date: May 30 2016 Membership Number 214919

(ii) The inventories within the factory premises/stores and at branches have beenphysically verified by the management during the year and also at the year end. Formaterials lying with ancillary parties confirmations have been obtained in some cases. Inour opinion the frequency of verification is reasonable. The discrepancies noticed uponverification between physical stocks and book records were not material and suchdifferences have been properly dealt with in the books of account.

(iii) As at the year end there are no outstanding loans granted by the Company toparties covered in the Register maintained under Section 189 of the Act. The Company hadin the previous years granted unsecured loans to one of its subsidiaries the details ofwhich are as under:

Sl No. Name of the subsidiary company Balance as at March 31 2016 (' in Lakhs) Balance as at March 31 2015 (' in Lakhs) Maximum amount outstanding at any time during the year 2015
(1) SCIL Infracon (P) Ltd. (SIPL) Nil 424.37 424.37

As there are no outstanding loans as at 31-3-2016 Paragraphs 3 (iii) (a) to (c) of theOrder are considered inapplicable.

(iv) In our opinion and according to the information and explanations given to us theCompany has complied with the provisions of Sections 185 and 186 of the Act with respectto the loans investments guarantees and security.

(v) The company has not accepted any deposits to which provisions of Sections 73 to 76and other relevant provisions of the Act are applicable.

(vi) We have broadly reviewed the books of account maintained by the Company pursuantto the rules made by the Central Government for the maintenance of cost records underSection 148 of the Act and are of the opinion that prima-facie the prescribed accounts andrecords have been made and maintained. We have not however made a detailed examinationof the same.

(vii) (a) According to the information and explanations given to us and on the basis ofour examination of the records of the Company the Company is regular in depositing theundisputed statutory dues including provident fund employees' state insuranceincome-tax sales-tax service tax duty of customs duty of excise value added tax cessand other statutory dues with the appropriate authorities. No such undisputed amountspayable were in arrears as at March 312016 for a period more than six months from thedate they became payable.

(b) According to the information and explanations given to us the following demandshave not been deposited on account of disputes.

Name of the Statute Nature of the dues and Period to which it relates Amount in ' lakhs Forum where the Dispute is pending as at 31-3-16
Excise Act Duty Interest and Penalty on Intermediate goods emerged out of job works and used in the manufacture of exempted finished goods for the period from 1994-95 to 1998-99 94.85 Departmental Appeal before High Court Mumbai
Excise Act Penalty levied on Cenvat Credit disallowed for the year 2010-11. 5.00 Appeal Before CESTAT Bengaluru.
Excise Act Duty Interest and Penalty for non-maintenance of separate CENVAT Account with respect to Input Services during April 2006 to March 2009. 186.28 Pending before Commissioner Hyderabad.
Excise Act Dispute relating to Departmental Order on Refund alleged to be wrongly granted in 2012-13. 24.37 Appeal Before CESTAT Hyderabad
Excise Act Duty on Job Work Charges Feb-Sept 2012. 20.31 Appeal Before CESTAT Hyderabad
Excise Act Duty on Job Work Charges Oct 12 - May 2013 27.03 Appeal Before CESTAT Hyderabad
Excise Act Dispute relating to alleged Irregular availment of Cenvat Credit for the period Dec-08 to Mar 14 and equal amount levied as penalty 375.92 Appeal Before CESTAT Hyderabad
Excise Act Dispute relating to irregular availment of benefit on Job work between February 2014 to December 2014 9.77 Appeal before Commissioner Appeals Hyderabad
Customs Act Dispute relating to alleged evasion of duty by claiming wrong classification and exemption and equal amount levied as penalty between May 2012 and October 2013. 488.70 Appeal before Tribunal Chennai.

 

Service Tax Act Dispute with regard to Penalty levied on excess Input availed between April 2008 and December 2010. 8.51 Pending before CESTAT Hyderabad
CST Act Dispute in Taxable Turnover relating to 3rd party exports for the year 2005-06. 35.49 Case pending before TVATAT Hyderabad.
KVAT Act Dispute with regard to Penalty for stock difference during the year 2010-11. 12.04 Remanded back to Intelligence Officer for modification of order.
TN VAT Act Dispute regarding Input VAT availed and penalty on Capital Goods which were sold during February 2011. 46.05 Appeal filed before Appellate Deputy Commissioner(C) Chennai
AP VAT Act Dispute regarding Input availed on LPG - during 2009-10 64.47 Appeal filed before Appellate Deputy Commissioner Hyderabad
AP VAT Act Dispute regarding Input availed on LPG- during 2010-11 65.19 Appeal filed before Appellate Deputy Commissioner Hyderabad
AP VAT Act Dispute regarding Input availed on LPG- during 2011-12 80.18 Appeal filed before Appellate Deputy Commissioner Hyderabad
AP VAT Act Dispute relating to disallowance of input credit on purchase of LPG for the year 2012-13 107.76 Appeal filed before Appellate Deputy Commissioner Hyderabad
CST Act Dispute in Taxable Turnover relating to 3rd party exports for the year 2007-08. 36.42 Case pending before TVATAT Hyderabad
CST VAT and Entry tax Acts Dispute relating to interest demand for alleged non-payment of assessed tax 18.85 Appeal pending before Joint Commissioner of Commercial Taxes Appeals Patna
KVAT Act Dispute relating to tax demanded on alleged undisclosed turnover for the year 2011-12 29.49 Remanded back to Intelligence Officer for modification of order.
CST Act Dispute relating to tax demanded for alleged non-submission of forms for the year 2010-11 0.56 Appeal pending before Commissioner Appeals Lucknow.
CST Act Dispute relating to penalty levied on late remittance ofTax. 18.70 Appeal before Appellate Deputy Commissioner Hyderabad
AP VAT Dispute relating to disallowance of input tax credit on LPG. 71.23 Case Remanded back to Assistant Commissioner Intelligence Vizianagaram.
CST Act Dispute relating to demand raised for non-submission of C and TDS Certificates. 3.29 Appeal before Commissioner Appeals Lucknow.
Income Tax Act For Asst. Year 2009-10 disallowance made and demand raised 65.08 Appeal before Commissioner of Income Tax (Appeals). Pending Dispute total tax was paid.

(viii) In our opinion and according to the information and explanations given to usthe company has not defaulted in repayment of loans or borrowings to a financialinstitution Bank or Government. The company had not issued any Debentures.

(ix) The Company had not raised any money by way of Initial Public Offer or furtherPublic Offer (including Debt Instruments). Based on review of the records of the term loandrawn and utilization thereof on an overall basis the term loans have been applied forthe purposes for which the loans were raised. However unapplied funds are kept in FixedDeposit.

(x) Based upon the audit procedures performed for the purpose of reporting true andfair view of the financial statements and as per the information and explanations given bythe management we report that no fraud by the Company or on the Company by its Officersor employees has been noticed or reported during the year.

(xi) According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has paid/provided for ManagerialRemuneration in accordance with the requisite approvals mandated by the provisions ofSection 197 read with Schedule V to the Act.

(xii) In our opinion and according to the information and explanations given to us theCompany is not a Nidhi Company. Accordingly Paragraph 3 (xii) of the Order is notapplicable.

(xiii) According to the information and explanations given to us and based on ourexamination of the records of the Company the transactions with related parties are incompliance with Section 177 and 188 of the Act where applicable and details of suchtransactions have been disclosed in the Financial Statements as required by the applicableAccounting Standards.

(xiv) According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not made any preferentialallotment or private placement of shares or fully or partly convertible debentures duringthe year.

(xv) According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not entered into Non-Cashtransactions with Directors or persons connected with them. Accordingly Paragraph 3(xv) ofthe Order is not applicable.

(xvi) The Company is not required to be registered under Section 45-IA of the ReserveBank of India Act 1934.

For Rao & Kumar
Chartered Accountants
Firm's Registration Number 03089S
Anirban Pal
Place: Hyderabad Partner
Date: May 30 2016 Membership Number 214919

Annexure - B

(Referred to in Paragraph 2(f) of 'Report on Other Legal and Regulatory Requirements'in our report of even date)

Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Companies Act 2013 ("the Act")

We have audited the internal financial controls over financial reporting of HBL PowerSystems Limited ("the Company") as of March 312016 in conjunction with ouraudit of the standalone financial statements of the Company for the year ended on thatdate.

Management's Responsibility for Internal Financial Controls

The Company's management is responsible for establishing and maintaining internalfinancial controls based on the internal control over financial reporting criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note on Audit of Internal Financial Controls Over Financial Reportingissued by the Institute of Chartered Accountants of India. These responsibilities includethe design implementation and maintenance of adequate internal financial controls thatwere operating effectively for ensuring the orderly and efficient conduct of its businessincluding adherence to company's policies the safeguarding of its assets the preventionand detection of frauds and errors the accuracy and completeness of the accountingrecords and the timely preparation of reliable financial information as required underthe Companies Act 2013.

Auditors' Responsibility

Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting based on our audit. We conducted our audit in accordancewith the Guidance Note on Audit of Internal Financial Controls over Financial Reporting(the "Guidance Note") and the Standards on Auditing to the extent applicable toan audit of internal financial controls both issued by the Institute of CharteredAccountants of India. Those Standards and the Guidance Note require that we comply withethical requirements and plan and perform the audit to obtain reasonable assurance aboutwhether adequate internal financial controls over financial reporting was established andmaintained and if such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system over financial reporting and their operatingeffectiveness. Our audit of internal financial controls over financial reporting includedobtaining an understanding of internal financial controls over financial reportingassessing the risk that a material weakness exists and testing and evaluating the designand operating effectiveness of Internal control based on the assessed risk. The proceduresselected depend on the auditor's judgement including the assessment of the risks ofmaterial misstatement of the financial statements whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our qualified audit opinion on the Company's internal financialcontrols system over financial reporting.

Meaning of Internal Financial Controls over Financial Reporting

A company's internal financial control over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance with generallyaccepted accounting principles. A company's internal financial control over financialreporting includes those policies and procedures that (1) pertain to the maintenance ofrecords that in reasonable detail accurately and fairly reflect the transactions anddispositions of the assets of the company; (2) provide reasonable assurance thattransactions are recorded as necessary to permit preparation of financial statements inaccordance with generally accepted accounting principles and that receipts andexpenditures of the company are being made only in accordance with authorisations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorised acquisition use or disposition of thecompany's assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls over Financial Reporting

Because of the inherent limitations of internal financial controls over financialreporting including the possibility of collusion or improper management override ofcontrols material misstatements due to error or fraud may occur and not be detected.Also projections of any evaluation of the internal financial controls over financialreporting to future periods are subject to the risk that the internal financial controlover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.

Qualified Opinion

According to the information and explanations given to us and based on our audit we areof the opinion that the Company has in all material respects maintained adequateinternal financial controls over financial reporting as of March 31 2016 based on theinternal control over financial reporting criteria established by the Company consideringthe essential components of internal control stated in the Guidance Note on Audit ofInternal Financial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India and except for the possible effects of the material weaknesses inthe operating effectiveness of controls described below on the achievement of theobjectives of the control criteria the Company's internal financial controls overfinancial reporting were operating effectively as of March 312016.

a) During the year the Company had migrated from its existing ERP package to SAP whichis in its final implementation stage. The Company's internal financial controlsimplemented through Information Technology Controls and General IT Controls are yet to befully implemented which may lead to a failure of the Company's control procedures toprevent or detect a misstatement of an account balance or disclosure.

b) Control documents evidencing the operating effectiveness of controls are not signedoff appropriately resulting in nonidentification of deviations from the approveddelegation of authority & responsibility company's controls & procedures. In asmuch effecting the assessment of risks associated and determining the effect of thedeviations of the control being tested and the evidence to be obtained as well as formingan opinion on the operating effectiveness of the controls.

A 'material weakness' is a deficiency or a combination of deficiencies in internalfinancial control over financial reporting such that there is a reasonable possibilitythat a material misstatement of the company's annual or interim financial statements willnot be prevented or detected on a timely basis.

We have considered the material weaknesses identified and reported above in determiningthe nature timing and extent of audit tests applied in our audit of the March 312016financial statements of the Company and these material weaknesses do not affect ouropinion on the standalone financial statements of the Company.

For Rao & Kumar
Chartered Accountants
Firm's Registration Number 03089S
Anirban Pal
Place: Hyderabad Partner
Date: May 30 2016 Membership Number 214919