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HBL Power Systems Ltd.

BSE: 517271 Sector: Consumer
NSE: HBLPOWER ISIN Code: INE292B01021
BSE 00:00 | 17 Jan 67.55 4.25
(6.71%)
OPEN

63.75

HIGH

69.55

LOW

63.40

NSE 00:00 | 17 Jan 67.60 4.30
(6.79%)
OPEN

63.55

HIGH

69.70

LOW

63.40

OPEN 63.75
PREVIOUS CLOSE 63.30
VOLUME 563249
52-Week high 69.55
52-Week low 29.55
P/E 44.44
Mkt Cap.(Rs cr) 1,872
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 63.75
CLOSE 63.30
VOLUME 563249
52-Week high 69.55
52-Week low 29.55
P/E 44.44
Mkt Cap.(Rs cr) 1,872
Buy Price 0.00
Buy Qty 0.00
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 audit of the standalone financial statements

Opinion

We have audited the accompanying standalone Ind AS financial statements of HBL PowerSystems Limited Hyderabad (“the Company”) which comprise the Balance Sheet asat March 31 2021 the Statement of Profit and Loss Statement of Changes in Equity andStatement of Cash Flows for the year then ended and notes to the financial statementsincluding a summary of significant accounting policies and other explanatory information.(hereinafter referred to as “the financial statements”).

In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid financial statements give the information required by theCompanies Act 2013 (“the Act') in the manner so required and give a true and fairview in conformity with the accounting principles generally accepted in India of thestate of affairs of the Company as at March 31 2021 and its profit changes in equity andits cash flows for the year ended on that date.

Basis for Opinion

We conducted our audit in accordance with the Standards on Auditing (SAs) specifiedunder section 143 (10) of the Companies Act 2013. Our responsibilities under thoseStandards are further described in the Auditor's Responsibilities for the Audit of theFinancial Statements section of our report. We are independent of the company inaccordance with the Code of Ethics issued by the Institute of Chartered Accountants ofIndia together with the ethical requirements that are relevant to our audit of thefinancial statements under the provisions of the Companies Act 2013 and the Rulesthereunder and we have fulfilled our other ethical responsibilities in accordance withthese requirements and the Code of ethics. We believe that the audit evidence we haveobtained is sufficient and appropriate to provide a basis for our opinion on thestandalone financial statements.

Key audit matters

Key audit matters are those matters that in our professional judgment were of mostsignificant in our audit of the financial statements of the current period. These matterswere addressed in the context of our audit of the financial statements as a whole and informing our opinion thereon and we do not provide a separate opinion on these matters. Wehave determined the matters described below to be the key audit matters to be communicatedin our report.

Key audit matter Auditor's response
Impact of COVID-19 : Principal audit procedure:
The COVID-19 pandemic has caused disruptions in the operations of business units severe restrictions on travel meetings and access to client locations and other practical difficulties resulting in distance audit / remote audit / online audit. Further certain relief measures were announced by regulatory authorities to mitigate the burden of meeting timelines and compliance requirements brought about by disruptions and to ensure the continuity of viable businesses. Though the methodology of conducting audit is likely to undergo a change the objective of the audit does not change which requires the auditor to ensure that sufficient and appropriate audit evidence is available with the auditor based on which he is able to express his opinion.
Considering the nature of the restrictions limitations regulatory requirements existing business environment materiality and their possible impact on the operative effectiveness on the critical control systems and risk of material misstatement the audit requires significant efforts in verification planning and performing alternative procedures and exercise of more professional skepticism to mitigate identified risks / weakness and ensure compliance with standards on auditing. Further this is a matter of high importance for the intended users of the financial statement. In identifying and assessing the risks of material misstatement and operating effectiveness of critical controls through understanding the unit and its environment the following issues had been considered:
Operational disruption resulting in any changes to the business model.
Employees' absence or work from home.
Restrictions on travel.
Physical Access to Systems Data Documents Officials. Inability to physically verify relevant information items and records.
Considering these aspects we have considered this as a key audit matter. Specific Considerations adopted while conducting Distance Audit / Remote Audit / Online Audit of the unit under current Covid-19 situation :
Obtaining the data / documents required for the purpose of conducting the audit in soft copy / scanned format. Seeking information and representations from the management about the current and possible future impact of disruptions to business operations.
Requesting for online presence of requisite unit officials. Communications by email and video conference instead of physical mode wherever necessary.
Adopting the SOPs under Covid-19 situation and strictly complying with the government regulatory guidelines issued.

Information other and auditor's report thereon

The Company's Board of Directors is responsible for the other information. The otherinformation comprises the information included in management report and chairman'sstatement but does not include the financial statements and our auditor's report thereon.

Our opinion on the financial statements does not cover the other information and we donot express any form of assurance conclusion thereon.

In connection with our audit of the financial statements our responsibility is to readthe other information and in doing so consider whether the other information ismaterially statements inconsistent with the financial statements or our knowledgeobtained in the audit or otherwise appears to be materially misstated. If based on thework we have performed we conclude that there is a material misstatement of this otherinformation; we are required to report that fact. We have nothing to report in thisregard.

Responsibilities of management and those charged with governance for the standalonefinancial 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 changes in equity and cash flows of the company inaccordance with the accounting principles generally accepted in India including theAccounting Standards (Ind AS) specified under Section 133 of the Act.

This responsibility also includes maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding of the assets of the companyand for preventing and detecting frauds and other irregularities; selection andapplication of appropriate accounting policies; making judgments and estimates that arereasonable and prudent; and design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the accuracy andcompleteness of the accounting records relevant to the preparation and presentation ofthe financial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.

In preparing the financial statements the Board of Directors is responsible forassessing the Company's ability to continue as a going concern disclosing as applicablematters related to going concern and using the going concern basis of accounting unlessthe Board of Directors either intends to liquidate the Company or to cease operations orhas no realistic alternative but to do so.

The Board of Directors is also responsible for overseeing the Company's financialreporting process.

Auditor's responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financialstatements as a whole are free from material misstatement whether due to fraud or errorand to issue an auditor's report that includes our opinion. Reasonable assurance is a highlevel of assurance but is not a guarantee that an audit conducted in accordance with SAswill always detect a material misstatement when it exists. Misstatements can arise fromfraud or error and are considered material if individually or in the aggregate theycould reasonably be expected to influence the economic decisions of users taken on thebasis of these financial statements.

As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional skepticism throughout the audit. We also:

Identify and assess the risks of material misstatement of the financial statementswhether due to fraud or error design and perform audit procedures responsive to thoserisks and obtain audit evidence that is sufficient and appropriate to provide a basis forour opinion. The risk of not detecting a material misstatement resulting from fraud ishigher than for one resulting from error as fraud may involve collusion forgeryintentional omissions misrepresentations or the override of internal control. Obtain anunderstanding of internal control relevant to the audit in order to design auditprocedures that are appropriate in the circumstances. Under section 143(3) (i) of theCompanies Act 2013 we are also responsible for expressing our opinion on whether thecompany has adequate internal financial controls system in place and the operatingeffectiveness of such controls. Evaluate the appropriateness of accounting policies usedand the reasonableness of accounting estimates and related disclosures made by management.Conclude on the appropriateness of management's use of the going concern basis ofaccounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the Company'sability to continue as a going concern. If we conclude that a material uncertainty existswe are required to draw attention in our auditor's report to the related disclosures inthe financial statements or if such disclosures are inadequate to modify our opinion.Our conclusions are based on the audit evidence obtained up to the date of our auditor'sreport. However future events or conditions may cause the Company to cease to continue asa going concern. Evaluate the overall presentation structure and content of the financialstatements including the disclosures and whether the financial statements represent theunderlying transactions and events in a manner that achieves fair presentation.

We communicate with those charged with governance regarding among other matters theplanned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have compliedwith relevant ethical requirements regarding independence and to communicate with themall relationships and other matters that may reasonably be thought to bear on ourindependence and where applicable related safeguards.

From the matters communicated with those charged with governance we determine thosematters that were of most significance in the audit of the financial statements of thecurrent period and are therefore the key audit matters. We describe these matters in ourauditor's report unless law or regulation precludes public disclosure about the matter orwhen in extremely rare circumstances we determine that a matter should not becommunicated in our report because the adverse consequences of doing so would reasonablybe expected to outweigh the public interest benefits of such communication.

Report on other legal and regulatory requirements

(1) As required by the Companies (Auditor's Report) Order 2016 (“the Order”)issued by the Central Government of India in terms of sub-section (11) of section 143 ofthe Act we give in the “Annexure A” a statement on the matters specified inparagraphs 3 and 4 of the Order to the extent applicable.

(2) As required by Section 143 (3) of the Act we report that: (a) We have sought andobtained all the information and explanations which to the best of our knowledge andbelief 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 Sheetthe Statement of Profit and Loss Statement of Changes in Equity and the Cash FlowStatement dealt with by this Report are in agreement with the books of account. (d) In ouropinion the aforesaid standalone financial statements comply with the AccountingStandards prescribed under Section 133 of the Act read with rule 7 of the Companies(Accounts) Rules 2014. (e) On the basis of the written representations received from theDirectors as on March 31 2021 taken on record by the Board of Directors none of theDirectors is disqualified as on March 31 2021 from being appointed as a Director in termsof Section 164(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” and (g) With respect to the other matters to beincluded in the Auditor's Report in accordance with Rule 11 of the Companies (Audit andAuditors) Rules 2014 in our opinion and to the best of our information and according tothe explanations given to us: (i) The company has disclosed the impact of pendinglitigations on its financial position in its financial statements Refer Note 38.2 to thestandalone financial statements.

(ii) The company did not have any long-term contracts including derivative contractsfor which there were any material foreseeable losses. (iii) There has been no delay intransferring amounts required to be transferred to the Investor Education and ProtectionFund by the company.

(h) With respect to the other matters to be included in the Auditor's Report inaccordance with the requirements of section 197(16) of the Act as amended in our opinionand to the best of our information and according to the explanations given to us theremuneration paid by the Company to its directors during the year is in accordance withthe provisions of section 197 of the Act.

For Rao & Kumar
Chartered Accountants
FRN: 03089S
Anirban Pal
Partner
Place: Visakhapatnam M.No. 214919
Date: June 21 2021 UDIN: 21214919AAAABW2487

Annexure – “A”

to the Independent Auditors Report

(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 furnished to us and on the basis of ourexamination of the records of the company and read together with Note no. 4.2 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 March 31 2021 Net block as at March 31 2021
Freehold land 8 492.36 492.36
Non-factory buildings 2 118.44 73.77
Total 10 610.80 566.13

(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 2021 Paragraphs 3 (iii) (a) to (c) of the Order isconsidered 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 InsuranceIncome-Tax Sales-Tax Service Tax Duty of Customs Duty of Excise Value Added TaxCess Goods and Services Tax (GST) and other statutory dues with the appropriateauthorities

(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 involved Rs in Lakhs Forum where the Dispute is pending as at March 31 2021
Excise Act Duty on Irregular availment of CENVAT Credit for 2008- 09 to 2013-14 and equivalent amount of penalty. 302.86 CESTAT Hyderabad
Finance Act Duty on disproportionate availment & distribution of CENVAT credit & Duty under Works Contract for 2013- 14 to 2016-17. 132.48 Commissioner Appeals Service Tax New Delhi
GST Act Transitional Tax Credit in the State of Bihar. 15.41 Commissioner GST Patna
Central Excise Act Tax and Penalty on disputed reversal of input due to Cyclone Damage for the year 2014-15. 112.45 Commissioner Appeals Visakhapatnam
Customs Act Duty and Penalty on alleged wrong classification and claim for exemption 488.70 Tribunal Chennai.
CST Act Tax on Deemed Exports for the year 2005-06 and 2007-08 71.91 TSVATAT Hyderabad
CST Act Tax on Sale-in-Transit for the year 2015-16 1.27 ADC Panjagutta
CST Act Tax Demand due to Non-submission of forms for the years 2010-11 and 2011-12 3.85 CT Appeals Lucknow
TS VAT Act Tax on disallowance of Input Tax Credit for the years 2011-12 and 2012-13 5.79 TSAVATAT Hyderabad
TNVAT Act Tax alleged ineligible claim for the month of February 2011 46.05 TN Tribunal Chennai
Haryana VAT Act Tax on disallowance of Input Tax Credit for the year 2011-12 16.22 JETC Appeals Faridabad
Jharkhand VAT Act Free of Cost Supplies for the year 2015-16 10.61 Commissioner of CT Jharkhand
Entry Tax Telangana Levy of tax on inter-state movement of goods used in manufacturing for the years from 2012-13 to 2017-18 218.76 ADC Hyderabad
Entry Tax Andhra Pradesh Levy of tax on inter-state movement of goods used in manufacturing for the years from 2015-16 & 2017-18 63.68 ADC Vijayawada
CST Act Tax on disallowance of exempted Exports from 2014-15 to 2017-18 175.68 ADC Hyderabad
KVAT Act Tax and penalty demanded for defects in documents of transport 3.02 DCCT Appeals Ernakulam
KVAT Act Tax and penalty demanded for defects in documents of transport 3.39 DC Appeals Thiruvananthapuram
UP VAT Act Tax and penalty demanded for defects in documents of transport 20.94 High Court Lucknow
UP VAT Act Tax and penalty demanded for defects in documents of transport 2.20 DCCT Kanpur
UP VAT Act Tax Demand on sale of Exempt Solar Batteries for the year 2016-17 65.78 Appellate Authority UP
J&K VAT ACT Levy of Tax Interest and Penalty on Free Supplies for the year 2015-16 19.25 AA Jammu Circle
Income Tax Tax on disallowance of Warranty expenditure for the year 2015-16 Department Second Appeal Pending. 190.57 ITAT Hyderabad

(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 performedfor the purpose of reporting true and fair view of the financial statements and as per theinformation and explanations given by the management we report that no fraud by theCompany or on the Company by its Officers or employees has been noticed or reported duringthe 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 theinformation and explanations given to us the Company is not a Nidhi Company. AccordinglyParagraph 3 (xii) of the Order is not applicable.

(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. information (xv) According to the and explanations given examination tous and based our of the records of the Company the Company has not entered into Non-Cashtransactions with Directors or persons connected with them. Accordingly Paragraph 3 of theOrder is not applicable. (xvi) The Company is not required to be registered under Section45-IA of the Reserve Bank of India Act 1934.

For Rao & Kumar
Chartered Accountants
FRN: 03089S
Anirban Pal
Partner
Place: Visakhapatnam M.No. 214919
Date: June 21 2021 UDIN: 21214919AAAABW2487

Annexure – “B”

to the Independent Auditors Report

(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-section3 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 2021 in conjunction with ouraudit of the standalone financial statements of the Company for the year ended on thatdate.

Management's responsibility for internal financialcontrols

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 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.

Opinion

In our opinion the unit has in all material respects an adequate internal financialcontrol system over financial reporting and such internal financial controls overfinancial reporting were operating effectively as at March 31 2021 based on the internalcontrol over financial reporting criteria established by the Company considering theessential components of internal control stated in the Guidance Note on Audit of InternalFinancial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India.

For Rao & Kumar
Chartered Accountants
FRN: 03089S
Anirban Pal
Partner
Place: Visakhapatnam M.No. 214919
Date: June 21 2021 UDIN: 21214919AAAABW2487

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