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HBL Power Systems Ltd.

BSE: 517271 Sector: Consumer
NSE: HBLPOWER ISIN Code: INE292B01021
BSE LIVE 15:50 | 14 Dec 66.80 0.50
(0.75%)
OPEN

67.25

HIGH

67.60

LOW

65.15

NSE 15:51 | 14 Dec 66.80 0.40
(0.60%)
OPEN

67.00

HIGH

67.90

LOW

65.10

OPEN 67.25
PREVIOUS CLOSE 66.30
VOLUME 323809
52-Week high 73.20
52-Week low 34.60
P/E 38.61
Mkt Cap.(Rs cr) 1,690
Buy Price 66.80
Buy Qty 139.00
Sell Price 0.00
Sell Qty 0.00
OPEN 67.25
CLOSE 66.30
VOLUME 323809
52-Week high 73.20
52-Week low 34.60
P/E 38.61
Mkt Cap.(Rs cr) 1,690
Buy Price 66.80
Buy Qty 139.00
Sell Price 0.00
Sell Qty 0.00

HBL Power Systems Ltd. (HBLPOWER) - Auditors Report

Company auditors report

To

The Members of

HBL Power Systems Limited Hyderabad

Report on the Standalone Ind AS Financial Statements

We have audited the accompanying standalone Ind AS financial statements of HBL PowerSystems Limited Hyderabad ("the company") which comprise the Balance Sheetas at March 31 2017 the Statement of Profit and Loss (including other comprehensiveincome) the Statement of Cash Flows and the Statement of changes in Equity for the yearended on that date and a summary of the significant accounting policies and otherexplanatory information (herein after referred to as "standalone Ind AS financialstatements").

Management's Responsibility for the Standalone Ind AS Financial Statements

The company's Board of Directors is responsible for the matters stated in sub-section 5of Section 134 of the Companies Act 2013 ("the Act") with respect to thepreparation of these standalone Ind AS financial statements that give a true and fair viewof the financial position financial performance including other comprehensive incomecash flows and changes in equity of the company in accordance with the accountingprinciples generally accepted in India including the Indian Accounting Standards("Ind AS") prescribed under Section 133 of the Act read with relevant rulesissued thereunder.

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 standalone IndAS financial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.

Auditor's Responsibility

Our responsibility is to express an opinion on these standalone Ind AS financialstatements based on our audit. We have taken into account the provisions of the Act theaccounting and auditing standards and matters which are required to be included in theaudit report under the provisions of the Act and the Rules made thereunder. We conductedour audit in accordance with the Standards on Auditing specified under sub-section 10 ofSection 143 of the Act. Those Standards require that we comply with ethical requirementsand plan and perform the audit to obtain reasonable assurance about whether the standaloneInd AS financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts andthe disclosures in the standalone Ind AS financial statements. The procedures selecteddepend on the auditor's judgment including the assessment of the risks of materialmisstatement of the standalone Ind AS financial statements whether due to fraud or error.In making those risk assessments the auditor considers internal financial controlsrelevant to the company's preparation of the standalone Ind AS financial statements thatgive a true and fair view in order to design audit procedures that are appropriate in thecircumstances. An audit also includes evaluating the appropriateness of the accountingpolicies used and the reasonableness of the accounting estimates made by the company'sDirectors as well as evaluating the overall presentation of the standalone Ind ASfinancial statements. We believe that the audit evidence we have obtained is sufficientand appropriate to provide a basis for our audit opinion on the standalone Ind ASfinancial statements.

Opinion

In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone Ind AS financial statements give the informationrequired by the Act in the manner so required and give a true and fair view in conformitywith the accounting principles generally accepted in India including the Ind AS of thefinancial position of the company as at March 31 2017 and its financial performanceincluding other comprehensive income its cash flows and the changes in equity for theyear ended on that date.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor's Report) Order 2016 ('the Order') issued bythe Central Government of India in exercise of powers conferred by sub-section 11 ofsection 143 of the Act we enclose in "Annexure A" a statement on the mattersspecified in paragraphs 3 and 4 of the Order.

2. As required by sub-section 3 of Section 143 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 (including other comprehensiveincome) the Statement of Cash Flows and the Statement of changes in Equity dealt with bythis Report are in agreement with the books of account;

(d) In our opinion the aforesaid standalone Ind AS financial statements comply withthe Indian Accounting Standards prescribed under Section 133 of the Act read withrelevant rules issued thereunder;

(e) On the basis of the written representations received from the Directors as on March31 2017 and taken on record by the Board of Directors none of the Directors aredisqualified as on March 31 2017 from being appointed as a Director in terms ofsub-section 2 of Section 164 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" and

(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 as amended inour opinion and to the best of our information and according to the explanations given tous:

1. The company has disclosed the impact of pending litigations on its financialposition in its standalone Ind AS financial statements-Refer Note 38.2 to the standaloneInd AS financial statements;

2. The company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses;

3. There has been no delay in transferring amounts required to be transferred to theInvestor Education and Protection Fund by the company; and

4. The company has provided requisite disclosures in the standalone Ind AS financialstatements as to holdings as well as dealings in Specified Bank Notes during the periodfrom November 8 2016 to December 30 2016. Based on audit procedures and relying on themanagement representation we report that the disclosures are in accordance with books ofaccount maintained by the company and as produced to us by the Management-Refer Note 44 tothe standalone Ind AS financial statements.

For Rao & Kumar
Chartered Accountants
Firm's Registration Number 03089S
Anirban Pal
Place : Hyderabad Partner
Date : May 26 2017 Membership Number 214919

Annexure-A

(Referred to in Paragraph 1 of 'Report on Other Legal and Regulatory Requirements' inour report of even date)

(i) (a) The company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.

(b) The management has carried out physical verification of assets in accordance with adesigned programme. In our opinion the periodicity of the physical verification isreasonable. No material discrepancies were noticed on such verification.

(c) According to the information and explanations furnished to us and on the basis ofour examination of the records of the company and read together with Note no. 5.2 of theFinancial Statements the details of title deeds of immovable properties not held in thename of the company for the reasons stated therein the said note are as follows:

Rs. in lakhs
Fixed Asset No. of Cases Gross Block as at 31-03-2017 Net Block as at 31-03-2017
Freehold Land 8 508.83 508.83
Non-Factory

Buildings

3 260.62 204.60
Total 11 769.45 713.43

(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. As there are nooutstanding loans as at March 31 2017 Paragraph 3 (iii) (a) to (c) of the Order areconsidered inapplicable.

(iv) In our opinion and according to the information and explanations given to us thecompany has complied with the provisions of Section 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 insurance income-tax sales-tax service tax duty of customs duty of excise value added tax cess andother statutory dues with the appropriate authorities.

(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 D lakhs

Forum where the Dispute is pending as at March 31 2017
Excise Act Duty Interest and Penalty for the period from 1994- 95 to 1998-99.

94.85

Departmental Appeal before High Court Mumbai
Excise Act Duty Interest and Penalty for the period 2010-11 Feb-Sept 2012 Oct 12-May 2013 Dec-08 to Mar 14.

411.32

Appeal Before CESTAT Bengaluru.
Excise Act Dispute relating to irregular availment of benefit for the period Feb-Dec 2014 2012-15.

9.64

Appeal before Commissioner Appeals Hyderabad
Excise Act Irregular Availment of CENVAT Credit for 2014-15

116.78

Appeal before Commissioner Appeals Visakhapatnam
Customs Act Dispute relating to alleged evasion of duty by claiming wrong classification and exemption and equal amount levied as penalty.

470.37

Appeal before Tribunal Chennai.
Customs Act Dispute relating to alleged evasion of duty by claiming wrong classification and exemption and equal amount levied as penalty.

2.38

Appeal before Tribunal Hyderabad.
Service Tax Act Dispute with regard to Penalty levied on excess Input availed between April 2008 and December 2010. 7.66 Pending before CESTAT Hyderabad
CST Act Dispute in Taxable Turnover relating to 3rd party exports for the year 2005-06 2007-08. 45.07 Case pending before TVATAT Hyderabad.
KVAT Act Dispute with regard to Penalty for stock difference & Turnover during the year 2010-112011-12. 34.01 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. 30.69 Appeal filed before Appellate Deputy Commissioner(C) Chennai
AP VAT Act Dispute relating to disallowance of input credit on purchase of LPG for the year 2014-15 62.33 Appeal filed before Appellate Deputy Commissioner Visakhapatnam
CST VAT and Entry tax Acts Dispute relating to interest demand for alleged non- payment of assessed tax 9.42 Appeal pending before Joint Commissioner of Commercial Taxes Appeals Patna
KVAT Act Dispute relating to tax demanded on alleged wrong Invoice raised for 201 1-12 2016-17 1.29 Appeal filed before Appellate Deputy Commissioner Appeals CT Ernakulum.
CST Act Dispute relating to tax demanded for alleged non- submission of forms for the year 2010-112011-12 2.32 Appeal pending before Commissioner Appeals Lucknow

(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

(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 26 2017 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 31 2017 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 2017 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 described below on the achievement of the objectives of thecontrol criteria the company's internal financial controls over financial reporting wereoperating effectively as of March 31 2017.

a) The company's internal financial controls implemented through Information TechnologyControls and General IT Controls have further scope for improvement absence of which maylead to a failure of the company's control procedures to prevent or detect a misstatementof an account balance or disclosure.

b) Control Documents evidencing the operating effectiveness of controls have furtherscope for improvement absence of which may result in non-identification of deviationsfrom the approved delegation of authority & responsibility company's controls &procedures. In as much they effect the assessment of risks associated and determinationof the effect of the deviations of the control being tested and the evidence to beobtained as well as forming an 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 31 2017financial 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 26 2017 Membership Number 214919