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HSIL Ltd.

BSE: 500187 Sector: Consumer
NSE: HSIL ISIN Code: INE415A01038
BSE LIVE 15:58 | 12 Dec 487.80 0.30
(0.06%)
OPEN

493.95

HIGH

494.95

LOW

480.00

NSE 15:23 | 12 Dec 489.00 1.55
(0.32%)
OPEN

491.00

HIGH

496.90

LOW

487.00

OPEN 493.95
PREVIOUS CLOSE 487.50
VOLUME 7797
52-Week high 564.35
52-Week low 271.65
P/E 39.79
Mkt Cap.(Rs cr) 3,527
Buy Price 487.80
Buy Qty 188.00
Sell Price 0.00
Sell Qty 0.00
OPEN 493.95
CLOSE 487.50
VOLUME 7797
52-Week high 564.35
52-Week low 271.65
P/E 39.79
Mkt Cap.(Rs cr) 3,527
Buy Price 487.80
Buy Qty 188.00
Sell Price 0.00
Sell Qty 0.00

HSIL Ltd. (HSIL) - Auditors Report

Company auditors report

To

The Members of

HSIL Limited.

Report on the Standalone Financial Statements

1. We have audited the accompanying standalone financial statements of HSIL Limited(the 'Company') which comprise the Balance Sheet As at 31 March 2017 the Statement ofProfit and Loss (including Other Comprehensive Income) the Cash Flow Statement and theStatement of Changes in Equity for the year then ended and a summary of the significantaccounting policies and other explanatory information.

Management's Responsibility for the Standalone Financial Statements

2. 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 of thesestandalone financial statements that give a true and fair view of the state of affairs(financial position) profit or loss (financial performance including other comprehensiveincome) cash flows and changes in equity of the Company in accordance with the accountingprinciples generally accepted in India including the Indian Accounting Standards ('IndAS') specified under Section 133 of the Act. This responsibility also includes maintenanceof adequate accounting records in accordance with the provisions of the Act forsafeguarding the assets of the Company and for preventing and detecting frauds and otherirregularities selection and application of appropriate accounting policies makingjudgments and estimates that are reasonable and prudent and design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the accuracy and completeness of the accounting records relevant to thepreparation and presentation of the standalone financial statements that give a true andfair view and are free from material misstatement whether due to fraud or error.

Auditor's Responsibility

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

4. 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 thereunder.

5. 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 whetherthese standalone financial statements are free from material misstatement.

6. An audit involves performing procedures to obtain audit evidence about the amountsand the 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 controls 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.

7. We believe that the audit evidence obtained by us and the audit evidence obtained bythe other auditors in terms of their reports referred to in paragraph 10 of the OtherMatters paragraph below is sufficient and appropriate to provide a basis for our auditopinion on these standalone financial statements.

Opinion

8. In our opinion and to the best of our information and according to the explanationsgiven to us and based on the consideration of the reports of the other auditors on theseparate financial statements of the Demerged Undertaking the aforesaid standalonefinancial statements give the information required by the Act in the manner so requiredand give a true and fair view in conformity with the accounting principles generallyaccepted in India including Ind AS specified under Section 133 of the Act of the state ofaffairs (financial position) of the Company As at 31 March 2017 its profit (financialperformance including other comprehensive income) its cash flows and the changes inequity for the year ended on that date.

Emphasis of Matter

9. We draw attention to Note 57(b) to the standalone financial statements regarding theutilisation of the Business Reconstruction Reserve ('BRR') created in accordance with ascheme of arrangement (the 'Scheme') approved by the Hon'ble Calcutta High Court. TheScheme provides that the Board of Directors of the Company can utilise the BRR interalia to recognize write off of old non-moving and slow moving inventory. In accordancewith the Scheme the Board of Directors of the Company have credited an amount ofRs.838.63 lakh to the statement of profit and loss towards write off of old non-moving andslow moving inventory. The applicable accounting standards and accounting principlesgenerally accepted in India do not provide for credit of amounts released from reserves tothe statement of profit and loss. Had the accounting principles generally accepted inIndia been followed the expense in the statement of profit and loss would have beenhigher by Rs.838.63 lakh and the profit after tax (including other comprehensive income)and the balance of other equity would have been lower by Rs.838.63 lakh. Our audit opinionis not qualified in the respect of this matter.

Other Matters

10. We draw attention to Note 56 to the financial statements of the Company pertainingto the demerger of the retail business undertaking of Hindware Home Retail Private Limited('Demerged Undertaking') into the Company. We did not audit the financial statements ofthe Demerged Undertaking whose financial statements reflect total assets of Rs.4916.75lakh and net assets of Rs.938.52 lakh As at 31 March 2017 total revenues of Rs.9592.68lakh and net cash outflows amounting to Rs.40.72 lakh for the year ended on that date. Thefinancial statements related to the Demerged Undertaking have been audited by another firmof chartered accountants whose report has been furnished to us by the management and ouropinion on standalone financial statements in so far as it relates to the amounts anddisclosures included in respect of this Demerged Undertaking and our report in terms onsub-section (3) of Section 143 of the Act in so far as it relates to the aforesaidDemerged Undertaking is based solely on the reports of the other auditor.

Our opinion above on the standalone financial statements and our report on other legaland regulatory requirements below are not modified in respect of the above matters withrespect to our reliance on the work done by and the reports of the other auditor.

11. The Company had prepared separate sets of statutory financial statements for theyear ended 31 March 2016 and 31 March 2015 in accordance with the Accounting Standardsprescribed under Section 133 of the Act read with Rule 7 of the Companies (Accounts)Rules 2014 (as amended) on which we issued auditor's reports to the shareholders of theCompany dated 23 May 2016 and 18 May 2015 respectively.

These financial statements have been adjusted for the differences in the accountingprinciples adopted by the Company on transition to Ind AS which have also been audited byus. Our opinion is not modified in respect of this matter.

Report on Other Legal and Regulatory Requirements

12. As required by the Companies (Auditor's Report) Order 2016 (the 'Order') issued bythe Central Government of India in terms of Section 143(11) of the Act we give in theAnnexure I a statement on the matters specified in paragraphs 3 and 4 of the Order.

13. Further to our comments in Annexure I based on our audit and on the considerationof the report of the other auditor on the separate financial statements of the DemergedUndertaking 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 purpose 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 standalone financial statements dealt with by this report are in agreement withthe books of account

d) in our opinion the aforesaid standalone financial statements comply with Ind ASspecified under Section 133 of the Act

e) on the basis of the written representations received from the directors and taken onrecord by the Board of Directors none of the directors of the Company are disqualified ason 31 March 2017 from being appointed as a director in terms of Section 164(2) of the Act;

f) with respect to the adequacy of the internal financial controls over financialreporting of the Company and the Demerged Undertaking and the operating effectiveness ofsuch controls refer to our separate report in Annexure II; 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 and based on the consideration of the report of the other auditor on the separatefinancial statements of the Demerged Undertaking

i. the Company as detailed in Note 50 to the standalone financial statements hasdisclosed the impact of pending litigations on its financial position;

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

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

iv. the Company has provided disclosures in Note 58 to the financial statementsregarding holdings as well as dealings in Specified Bank Notes during the period from 8November 2016 to 30 December 2016. Based on the audit procedures performed and taking intoconsideration the information and explanations given to us in our opinion the totalreceipts total payments and total amount deposited in banks are in accordance with thebooks of account maintained by the Company. However in the absence of sufficientappropriate audit evidence we are unable to comment upon the appropriateness ofclassification between Specified Bank Notes and other denomination notes of 'Permittedreceipts' 'Non-permitted receipts' 'Permitted payments' and 'Amount deposited in banks'as disclosed under such Note.

For Walker Chandiok & Co LLP
Chartered Accountants
Firm's Registration No.001076N/N500013
per Lalit Kumar
Place Gurugram Partner
Date 18 May 2017 Membership No.095256

Annexure I

Annexure I to the Independent Auditor's Report of even date to the members of HSILLimited on the standalone financial statements for the year ended 31 March 2017

Based on the audit procedures performed for the purpose of reporting a true and fairview on the financial statements of the Company and taking into consideration theinformation and explanations given to us and the books of account and other recordsexamined by us in the normal course of audit and based on the report of the other auditorof the Demerged Undertaking and to the best of our knowledge and belief we report that

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

(b) The Company has a regular program of physical verification of its fixed assetsunder which fixed assets are verified in a phased manner over a period of three yearswhich in our opinion is reasonable having regard to the size of the Company and thenature of its assets. In accordance with this program certain fixed assets were verifiedduring the year and no material discrepancies were noticed on such verification.

(c) The title deeds of all the immovable properties (which are included under the head'Property plant and equipment') are held in the name of the Company.

(ii) In our opinion the management has conducted physical verification of inventory atreasonable intervals during the year except for goods-in-transit. No materialdiscrepancies were noticed on the aforesaid verification.

(iii) The Company has not granted any loan secured or unsecured to companies firmsLimited Liability Partnerships (LLPs) or other parties covered in the register maintainedunder Section 189 of the Act. Accordingly the provisions of clauses 3(iii)(a) 3(iii)(b)and 3(iii)(c) of the Order are not applicable.

(iv) In our opinion the Company has complied with the provisions of Sections 185 and186 of the Act in respect of loans investments guarantees and security.

(v) In our opinion the Company has not accepted any deposits within the meaning ofSections 73 to 76 of the Act and the Companies (Acceptance of Deposits) Rules 2014 (asamended). Accordingly the provisions of clause 3(v) of the Order are not applicable.

(vi) The Central Government has not specified maintenance of cost records undersub-section (1) of Section 148 of the Act in respect of Company's products and services.Accordingly the provisions of clause 3(vi) of the Order are not applicable.

(vii) (a) The Company is regular in depositing undisputed statutory dues includingprovident fund employees' state insurance income-tax sales tax service tax duty ofcustoms duty of excise value added tax cess and other material statutory dues asapplicable to the appropriate authorities. Further no undisputed amounts payable inrespect thereof were outstanding at the year-end for a period of more than six months fromthe date they become payable.

(b) The dues outstanding in respect of income-tax sales-tax service-tax duty ofcustoms duty of excise and value added tax on account of any dispute are as follows

Statement of Disputed Dues

Name of the statute Nature of dues Amount ( Rs. lakh) Amount paid under protest ( Rs. lakh) Period to which the amount relates Forum where dispute is pending
The Central Excise Act 1944 Central Excise 27.81 - FY 1987-89 Commissioner of Central Excise Rohtak
The Central Excise Act 1944 Central Excise 103.98 10.74 FY 2005-06 Customs Excise and Service tax Appellate Tribunal
The Central Excise Act 1944 Central Excise 166.12 40.00 FY 2009-10 Customs Excise and Service tax Appellate Tribunal
The Central Excise Act 1944 Central Excise 53.29 3.81 FY 2005-07 Customs Excise and Service tax Appellate Tribunal
The Central Excise Act 1944 Central excise 6.22 - FY 2008-10 Commissioner Manglore
The Central Excise Act 1944 Central excise 7.98 - FY 2004-05 To 2005-06 Assistant Commissioner of Central Excise Navanagar
The Central Excise Act 1944 Central excise 8.19 - January 2015 to December 2015 Assistant Commissioner of Central Excise Hyderabad
Delhi Sales Tax Act 1975 Sales tax 232.08 37.25 FY 2004-05 to 2011-12 Commissioner (Appeals) Sales-tax.
Karnataka Value Added Tax Act Sales tax 5.93 - FY 2012-13 Commissioner (Appeals) Sales-tax.
Andhra Pradesh Value Added Tax Act Sales tax 6.94 3.19 FY 2011-12 and 2012-13 Appellate Deputy Commissioner Rural Division Hyderabad.
Finance Act 1994 Service tax 3.02 1.40 March 2006 to September 2006 Customs Excise and Service tax Appellate Tribunal Bangalore
Finance Act 1994 Service tax 2.57 2.57 July 2005 to March 2006 Customs Excise and Service tax Appellate Tribunal Bangalore
Finance Act 1994 Service tax

7777

40.20 FY 2010-11 and 2011-12 The Hon'ble Supreme Court of India
Income-tax Act 1961 Income-tax 3.84 - Assessment year 2011-12 Commissioner Income-tax (Appeals) Calcutta

(viii) The Company has not defaulted in repayment of loans or borrowings to any bank orfinancial institution or government during the year. The Company did not have anyoutstanding debentures during the year.

(ix) The Company did not raise moneys by way of initial public offer or further publicoffer (including debt instruments). In our opinion the term loans were applied for thepurposes for which the loans were obtained.

(x) No fraud by the Company or on the Company by its officers or employees has beennoticed or reported during the period covered by our audit.

(xi) Managerial remuneration has been paid and provided by the Company in accordancewith the requisite approvals mandated by the provisions of Section 197 of the Act readwith Schedule V to the Act.

(xii) In our opinion the Company is not a Nidhi Company. Accordingly provisions ofclause 3(xii) of the Order are not applicable.

(xiii) In our opinion all transactions with the related parties are in compliance withSections 177 and 188 of Act where applicable and the requisite details have beendisclosed in the financial statements etc. as required by the applicable Ind AS.

(xiv) During the year the Company has not made any preferential allotment or privateplacement of shares or fully or partly convertible debentures.

(xv) In our opinion the Company has not entered into any non-cash transactions withthe directors or persons connected with them covered under Section 192 of the Act.

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

For Walker Chandiok & Co LLP
Chartered Accountants
Firm's Registration No.001076N/N500013
per Lalit Kumar
Place: Gurugram Partner
Date 18 May 2017 Membership No.095256

Annexure II

Independent Auditor's report on the Internal Financial Controls under Clause (i) ofSub-section 3 of Section 143 of the Companies Act 2013 (the 'Act')

1. In conjunction with our audit of the standalone financial statements of HSIL Limited(the 'Company') as of and for the year ended 31 March 2017 we have audited the internalfinancial controls over financial reporting (IFCoFR) of the Company as of that date.

Management's Responsibility for Internal Financial Controls

2. The Company's Board of Directors is responsible for establishing and maintaininginternal financial controls based on the internal control over financial reportingcriteria established by the Company considering the essential components of internalcontrol stated in the Guidance Note on Audit of Internal Financial Controls over FinancialReporting (the 'Guidance Note') issued by the Institute of Chartered Accountants of India('ICAI'). These responsibilities include the design implementation and maintenance ofadequate internal financial controls that were operating effectively for ensuring theorderly and efficient conduct of the company's business including adherence to company'spolicies the safeguarding of its assets the prevention and detection of frauds anderrors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information as required under the Act.

Auditors' Responsibility

3. Our responsibility is to express an opinion on the Company's IFCoFR based on ouraudit. We conducted our audit in accordance with the Standards on Auditing issued by theICAI and deemed to be prescribed under section 143(10) of the Act to the extentapplicable to an audit of IFCoFR and the Guidance Note issued by the ICAI. Those Standardsand the Guidance Note require that we comply with ethical requirements and plan andperform the audit to obtain reasonable assurance about whether adequate IFCoFR wereestablished and maintained and if such controls operated effectively in all materialrespects.

4. Our audit involves performing procedures to obtain audit evidence about the adequacyof the IFCoFR and their operating effectiveness. Our audit of IFCoFR included obtaining anunderstanding of IFCoFR assessing the risk that a material weakness exists and testingand evaluating the design and operating effectiveness of internal control based on theassessed risk. The procedures selected depend on the auditor's judgement including theassessment of the risks of material misstatement of the financial statements whether dueto fraud or error.

5. We believe that the audit evidence we have obtained and the audit evidence obtainedby the other auditor in terms of their report referred to in the Other Matter paragraphbelow is sufficient and appropriate to provide a basis for our audit opinion on theCompany's IFCoFR.

Meaning of Internal Financial Controls over Financial Reporting

6. A company's IFCoFR is a process designed to provide reasonable assurance regardingthe reliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles. A company'sIFCoFR 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

7. Because of the inherent limitations of IFCoFR including the possibility ofcollusion or improper management override of controls material misstatements due to erroror fraud may occur and not be detected. Also projections of any evaluation of the IFCoFRto future periods are subject to the risk that IFCoFR may become inadequate because ofchanges in conditions or that the degree of compliance with the policies or proceduresmay deteriorate.

Opinion

8. In our opinion the Company has in all material respects adequate internalfinancial controls over financial reporting and such internal financial controls overfinancial reporting were operating effectively As at 31 March 2017 based on the internalcontrol over financial reporting criteria established by the Company considering theessential components of internal control stated in the Guidance Note issued by ICAI.

Other Matter

9. We did not audit the IFCoFR of the Demerged Undertaking whose financial statementsreflect total assets of Rs.491675 lakh As at 31 March 2017 total revenues ofRs.9592.68 lakh and net cash out flows amounting to Rs.40.72 lakh for the year ended onthat date. Our report on the adequacy and operating effectiveness of the IFCoFR for theCompany under Section 143(3)(i) of the Act in so far as it relates to the IFCoFR of theDemerged Undertaking is solely based on the report of the auditor of the DemergerUndertaking. Our opinion is not modified in respect of the above matter with respect toour reliance on the work done by and the reports of the other auditors.

For Walker Chandiok & Co LLP
Chartered Accountants
Firm's Registration No.001076N/N500013
per Lalit Kumar
Place: Gurugram Partner
Date 18 May 2017 Membership No.095256