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HBL Power Systems Ltd.

BSE: 517271 Sector: Consumer
NSE: HBLPOWER ISIN Code: INE292B01021
BSE 00:00 | 21 Jan 70.10 -0.10
(-0.14%)
OPEN

69.60

HIGH

73.35

LOW

68.80

NSE 00:00 | 21 Jan 70.10 -0.15
(-0.21%)
OPEN

69.45

HIGH

73.45

LOW

68.65

OPEN 69.60
PREVIOUS CLOSE 70.20
VOLUME 430030
52-Week high 73.35
52-Week low 29.55
P/E 46.12
Mkt Cap.(Rs cr) 1,943
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 69.60
CLOSE 70.20
VOLUME 430030
52-Week high 73.35
52-Week low 29.55
P/E 46.12
Mkt Cap.(Rs cr) 1,943
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

HBL Power Systems Ltd. (HBLPOWER) - Director Report

Company director report

Dear Members

Your Directors take pleasure in presenting the 35th Annual Report for the financialyear ended on March 31 2021. The standalone financial performance is presented belowprepared in accordance with the Ind AS notified under the Companies (Indian AccountingStandards) as amended.

( Rs in Lakhs)
Sl. Particulars 2020-21 2019-20
1 Revenue from Operations 90894.59 107709.15
2 Other Income 948.47 1643.57
3 Total Income 91843.06 109352.72
4 Total Expenditure depreciation 89358.96 106080.08
5 Earnings before interest and tax (EBIDTA) 7775.51 9484.24
6 Finance Costs 1448.59 2187.06
7 Depreciation & Amortization expenses 3842.82 4024.54
8 Profit before Exceptional items and Tax 2484.10 3272.64
9 Exceptional Items Income / (Expenses) 538.95 (490.28)
10 Profit before tax (PBT) 1945.15 3763.46
11 Provision for tax & Deferred tax adjustment 487.19 1356.19
12 Other comprehensive income (net) (145.99) (168.69)
13 Total Comprehensive Income for the Period (PAT) 1311.98 2238.58
14 Earnings Per Share (Diluted EPS of Rupees) 0.47 0.81
15 Interim dividend declared and paid - 20%
16 Proposed Dividend for the FY 2020-21 (on share of Rs 1 each) 35% 10%

Performance Review 2020-21

Performance during the year was muted due to continued challenges in the market placein telecom segment both on volumes and prices impacting the sales and profitability.Further preventive lockdown measures were imposed during the first quarter of the year tocurb spread of Covid-19; and this lead to complete stoppage of operations and shipments tocustomers. These reasons collectively had a bearing on the sales revenue which was nearly15% lower than previous year. The Company took measures for conservation cash and costreduction to maintain adequate liquidity with reduced borrowings leading to lower financecosts. These measures helped to sustain a decent level of profit despite registering lowersales. The Company continued to monetize non-productive assets which helped to augmentcash flows.

Impact of Covid-19

Commencing from middle of March 2020 the Covid-19 pandemic has had an impact on theentire business environment in the country and the world over including affecting thepersonal lives of the people. The pandemic in India caused significant disturbances andslow-down of the normal activity resulting in interruptions in production supply chainand sales. Adhering to the Central and State Govt guidelines our Factories and Officeswere completely shut down from the beginning of the financial year until mid May 2020.Operations resumed with strict adherence to Govt guidelines on preventive healthcaremeasures in mid May. We continued to face challenges in mobilising the manpowerrequirements and operations could only be gradually ramped up. The operations of theCompany like many others have been severely impacted by the various Covid-19 pandemicrelated developments. The effect was felt in the financial year 2020-21 more specificallyin the April-June 2020 quarter. We had taken austerity measures as necessary to effectcost reductions in these difficult times and maintained a healthy financial condition forthe rest of the year.

Dividend

Your Directors are pleased to recommend a final dividend of 35% (i.e. I 0.35 paise perequity share of I 1 each fully paid up) for the Financial Year 2020-21 subject to theapproval of the members at the ensuing annual general meeting. The proposed final dividendwill absorb I 970.18 Lakhs.

Subsidiaries Associate and Joint Venture Companies (as on March 31 2021)

As per the notification issued by the Ministry of Corporate Affairs on July 27 2016with regard to Companies (Accounts) Amendment Rules 2016 the report of the Board shallcontain highlights of performance of subsidiaries associates and joint venture companiesand their contribution on overall performance of the company. Accordingly we herebyfurnish the following:

Subsidiary companies HBL America Inc.
HBL Germany GmBH Germany SCIL Infracon Private Limited dormant Company.
Associate companies within the meaning of Section 2(6) of the Companies Act 2013 (“Act”). Naval Systems & Technologies Pvt Ltd (NSTL)
Joint Venture Company Gulf Batteries Company Ltd in the Kingdom of Saudi Arabia (KSA).

The Consolidated Financial Statements presented by the Company include the financialresults of its subsidiary companies associates and joint ventures except that of GulfBatteries Company Ltd prepared in accordance with the Companies Act 2013 (Act) andapplicable Ind AS notified under the Companies (Indian Accounting Standards)

Rules 2015 and Companies (Indian Accounting Standards) Amendment Rules 2016 asamended.

Pursuant to provisions of section 129(3) of the Act a statement containing salientfeatures of the financial statements of the Company's subsidiaries in Form AOC-1 isattached to the financial statements of the Company and as per the provisions of section136 of the Act the standalone financial statements of the Company consolidated financialstatements along with relevant documents and separate audited accounts in respect ofsubsidiaries are available on the website of the Company. There has been no materialchange in the nature of the businesses of the subsidiaries except as disclosed hereunder.

Highlights of performance of subsidiaries associates and joint venture companies andtheir contribution on overall performance of the

Company:

Operational and financial performance of the subsidiaries associates and joint ventureshall be provided as and when the same is made available.

Joint Venture Company

Gulf Batteries Co. Ltd (GBC) in the Kingdom of Saudi Arabia (KSA)

Your Company holds a 40% stake in GBC. GBC financial statements have not been availablefor including them in the consolidated financial statements of the Company. Accumulatedlosses of GBC are over 75% of its Capital. As per Saudi Arabian laws in a situation likethis such Company is terminated by force of law. We have made provision in our books fordiminution of 100% value of these investments. A negotiated settlement agreement has beenarrived at with a Saudi national who is in-charge of GBC for transfer of Company'sshareholding. Your Company benefits by gaining direct access to the Saudi market infuture.

Material Changes and Commitments

No material changes and commitments have occurred after the closure of the FY 2020-21on March 31 2021 till the date of this report which would affect the financial positionof your Company except due to Covid-19 pandemic related lockdown restrictions andconsequent financial impact on Company's operations.

Directors' Responsibility Statement

Pursuant to Section 134(5) of the Companies Act 2013 the

Board of Directors to the best of their knowledge and ability that: i. in preparationof the annual accounts the applicable Ind AS accounting standards have been followed andthere are no material departures; ii. they have selected such accounting policies as perInd AS and applied them consistently and made judgments and estimates that are reasonableand prudent so as to give a true and fair view of the state of affairs of the Company atthe end of the financial year and of the profit of the Company for that period; iii. theyhave taken proper and sufficient care for the maintenance of adequate accounting recordsin accordance with the provisions of the Act for safeguarding the assets of the Companyand for preventing and detecting fraud and other irregularities; iv. they have preparedthe annual accounts on a going concern basis; v. they have laid down internal financialcontrols to be followed by the Company and such internal financial controls are adequateand operating effectively; vi. they have devised proper systems to ensure compliance withthe provisions of all applicable laws and that such systems were adequate and operatingeffectively.

Based on the framework of internal financial controls and compliance systemsestablished and maintained by the Company work performed by the internal cost statutoryand secretarial auditors and external consultants and the reviews performed by managementand the relevant board committees including the audit committee the board is of theopinion that the Company's internal financial controls were adequate and effective duringthe financial year 2020-21.

Directors and Key Managerial Personnel (KMP)

Pursuant to the provisions of Section 152 of the Companies Act 2013 and the Articlesof Association of the Company Mrs. Kavita Prasad Aluru (DIN: 00319292) will retire byrotation at the 35th AGM and being eligible has offered herself for re-appointment.

Pursuant to the recommendation of Nomination and Remuneration Committee the Board hasapproved the appointment of Mr. Advay Bhagirath Mikkileneni (DIN 09207003) as anAdditional Director (Non-Executive Non-Independent Director) with effect from June 212021 and appointment of Dr. Ramanujulu Nandakumar Ramnath (DIN

03639492) as an Additional Director in the capacity of Non-Executive IndependentDirector. Dr. Ramanujulu Nandakumar Ramnath will hold office for a term of 5 years witheffect from August 13 2021 subject to approval of the shareholders of the Company at theensuing AGM. Necessary resolutions for their appointments are being placed for theapproval of shareholders as part of the notice of the 35th AGM. Brief profile andexperience of the appointees has been provided elsewhere in the annual report.

In the opinion of the Board all the Independent Directors possess requisitequalifications experience expertise and integrity for the purpose of Rule 8(5)(iiia) ofthe Companies (Accounts) Rules 2014.

During the year none of the non-executive directors of the Company had any pecuniaryrelationship or transactions with the Company except for the sitting fee paid forattending the Board meetings.

Number of meetings of the board

Four meetings of the board were held during the year. For details of the meetings ofthe board please refer to the Corporate Governance Report which forms part of thisreport.

Board evaluation

Pursuant to the provisions of the Companies Act 2013 and the Corporate Governancerequirements prescribed by SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 the Board has carried out an annual evaluation of its own performanceand that of its Committees as well as performance of all the Directors individually duringthe year. Feedback was sought by way of a structured questionnaire covering variousaspects of the Board's functioning such as adequacy of the composition of the Board andeffectiveness of its Committees execution and performance of specific duties governancemeaningful and constructive contribution and inputs in meetings etc. Evaluation wascarried out based on responses received from the Directors. A separate meeting of theIndependent Directors also was held where in performance of non-Independent Directorsperformance of the board as a whole and performance of the Chairman and Managing Directorwas evaluated. The Directors expressed their satisfaction with the evaluation process.

Policy on Directors' appointment and remuneration and other

The Company's policy on Directors' appointment and remuneration and other mattersprovided in Section 178(3) of the Act has been disclosed in the Corporate GovernanceReport which forms part of the Directors' report.

Audit committee

The details pertaining to composition of Audit Committee are included in the Report onCorporate Governance which forms part of this report. Powers and role of the AuditCommittee are included in Corporate Governance Report. The Board of Directors has acceptedall the recommendations of the Audit Committee placed at respective meetings.

Risk Management

The Company has deployed a comprehensive framework to identify monitor and take allnecessary steps towards mitigation of various risk elements which can impact the existenceof the Company on a periodic basis. All the identified risks are managed throughcontinuous review of business parameters by the Management and the Board of Directors isalso informed of the risks and concerns.

Internal financial controls

Pursuant to Section 134 of the Companies Act 2013 the Directors state that the Boardthrough the operating management has laid down Internal Financial Controls to be followedby the Company and such policies and procedures were adopted by the Company for ensuringthe orderly and efficient conduct of its 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. The Audit Committee evaluates the internalfinancial control system periodically. To the best of their knowledge and ability andinputs provided by various assurance providers confirm that such financial controls areadequate with reference to the size and operations of the Company and no reportablematerial weakness or deficiency in the design or operation of internal financial controlswas observed.

Particulars of loans

The particulars of loans guarantees and investments have been disclosed in thefinancial statements.

Transactions with related parties

None of the transactions with related parties falls under the scope of Section 188(1)of the Act. Information on transactions with related parties pursuant to Section 134(3)(h) of the Act read with rule 8(2) of the Companies (Accounts) Rules 2014 are given inAnnexure I in Form AOC-2 and the same forms part of this report. Related partytransactions are in the ordinary course of business and on arm's length basis.

Corporate social responsibility

The Company has a Board level committee that supervises its Corporate SocialResponsibility (CSR) activities The brief outline of the CSR Policy of the Company and theinitiatives undertaken by the Company on CSR activities during the year are set out inAnnexure II of this report in the format prescribed in the Companies (Corporate SocialResponsibility Policy) Rules 2014.

Extract of Annual Return

Pursuant to Section 92(3) and Section 134(3)(a) of the Companies Act 2013 the extractof Annual Return is given in Annexure III in the prescribed Form MGT-9 which forms partof this report.

Information regarding disclosures

Your Company consistently believes in concerted efforts in talent management andsuccession planning practices strong performance management and learning and traininginitiatives. Rewards and recognition are commensurate with performance and that employeeshave the opportunity to develop and grow. During the year there were no complaintsrelating to child labour forced labor involuntary labor sexual harassment in the lastfinancial year and pending as on the end of the financial year.

S. Category No No.of complaints filed during the financial year No.of complaints pending as on end of the financial year
1 Child labor / forced labor/ involuntary labor 0 0
2 Sexual harassment 0 0
3 Discriminatory employment 0 0

guarantees and investments Disclosure as required under Section 22 of Sexual Harassmentof womenatworkplace(Prevention Prohibition and Redressal) Act

Your Company believes in providing a healthy environment to all HBL Employees and doesnot tolerate any discrimination or harassment in any form. The Company has in place agender neutral Prevention of Sexual Harassment (POSH) policy in line with therequirements of the Sexual Harassment of Women at Workplace (Prevention Prohibition andRedressal) Act 2013. This policy is frequently communicated in assimilation programs andat regular intervals to all HBL employees. Following are some of the awareness programsimparted to train HBL Employees and Internal complaints committee (ICC).

1. It is mandatory for every new joiner to undergo a program on ‘Prevention ofSexual Harassment ‘ during induction program.

2. The Internal Complaints Committee is trained by external agency when the committeemembers are on-boarded to the committee.

3. Policy of ‘Prevention of Sexual Harassment' at workplace is available oninternet for HBL employees to access as and when required.

4. The ‘Prevention of Sexual Harassment' policy is placed in conspicuous placesfor better visibility and communication of the policy. The posters are also displayed inregional languages at all HBL offices.

HBL has setup an Internal Complaints Committee(ICC) both at the Head office / Corporateoffice and at every major location where it operates in India. ICC has equal of men andwomen. ICC is chaired by a senior woman employee and has an external women representation.

ICC investigates the case(s) and provides its recommendations to the apex authority .The apex authority upon receiving the recommendations from ICC arrives at the conclusionand acts upon such recommendations.

Penal Consequences of Sexual Harassment (“SH”) and the constitution of theICC is displayed at conspicuous places.

Particulars of employees

The information required under Section 197 of the Act read with rule 5(1) of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 are givenbelow:

Employee Name Dr. AJ Prasad Mr. Suresh Kalyan Mr. MVV Vidyasagar
Total remuneration CTC ( I Lakhs) Rs 69.59 Lakhs and commission Rs 71.93 Lakhs Rs 118.06 Lakhs Rs 58.42 Lakhs
Designation and Nature of Duties Chairman and Managing Director Chief Operating Officer (COO) President Electronics Group
Qualification / Experience (years) B. Tech from IIT Khargpur MS in Management from Massachusetts Institute of Technology USA Doctorate in International Business from Columbia University USA. BSc. Chartered Accountant 31 BE (Electrical & Electronics) 35
Date of commencement of employment Promoter of the Company 17.11.2014 01.04.2011
Age (years) 75 57 57
Last employment held before Joining the Company Administrative Staff College of India Amara Raja Batteries Limited Hyderabad as President Finance Director(Operations) at Axiom Consulting Ltd.

a. The ratio of the remuneration of each Non-Executive director to the medianremuneration of the employees of the Company for the financial year: Not Applicable asnone of the Non-Executive was paid any remuneration. b. The percentage increase inremuneration of each Director Chief Executive Officer Chief Financial Officer CompanySecretary in the financial year:

Directors Chief Executive Officer Chief Financial Officer and Company Secretary%increase in remuneration in the financial year

Dr. A J Prasad Chairman and Managing Director No change
Mr. MSS Srinath Whole-Time Director No change
Mrs. A Kavita Prasad Whole-Time Director No change
Mr. MVSS Kumar Company Secretary No change
Mr. K Sridharan No change

c. The percentage increase in the median remuneration of employees in the financialyear: 10-15 % d. The number of permanent employees on the rolls of Company: 1625 (as atMarch 31 2021) e. Comparison of the remuneration of the key managerialpersonnel against the performance of the Company:

Aggregate remuneration of key managerial personnel (KMP) in 2020-21 I Lakhs 136.65
Commission on profits to CMD 71.93
Revenue I Lakhs 90894.59
Remuneration of KMPs as % of revenue 0.23
Remuneration of KMP as % of PBT 10.72

f. Comparison of remuneration of each the key managerial personnel (March 312021):

Name of the KMP Designation Remuneration Commission on profit Total
Dr. AJ Prasad Chairman and Managing Director 69.59 71.93 141.52
Kavita Prasad Executive Director 23.41 - 23.41
K Sridharan Chief Financial Officer 28.75 - 28.75
MVSS Kumar Company Secretary 14.90 - 14.90
Total 136.65 71.93 208.58

g. The key parameters for any variable component of remuneration availed by thedirectors:

Commission on net profits was paid to Chairman and Managing Director only in additionto the monthly remuneration as disclosed elsewhere in this report. h. The ratio of theremuneration of the highest paid director to that of the employees who are not directorsbut receive remuneration in excess of the highest paid director during the year: Notapplicable.

Disclosure requirements

As per listing Regulations corporate governance report with auditors' certificatethereon and management discussion and analysis are attached which form part of thisreport.

Vigil Mechanism / Whistle blower policy

The Company has formulated a vigil mechanism /whistle blower policy to provide a vigilmechanism for employees including directors of the Company to report genuine concerns. Theprovisions of this policy are in line with the provisions of the Section 177(9) of the Actand the Regulation 22 of the SEBI (LODR) Regulations 2015.

Deposits from public

The Company has not accepted any deposits from public and as such no amount on accountof principal or interest on deposits from public was outstanding as on the date of thebalance sheet.

Conservation of Energy Technology Absorption and Foreign Exchange Earnings & Outgo

Information relating to conservation of energy technology absorption and foreignexchange earnings and outgo as required under Section 134(3)(m) read with Rule 8(3) ofthe Companies (Accounts) Rules 2014 is given in the Annexure hereto.

Corporate Governance

Pursuant to Schedule V of the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 a separate section titled “Report on Corporate Governance” isattached to the Annual Report.

Statutory Auditors

M/s Rao & Kumar Chartered Accountants (FRN 03089S) Visakhapatnam who are theStatutory Auditors of the Company have been appointed by the members at the 31st AnnualGeneral Meeting (AGM) of the Company held on 26th September 2017 for a period of fiveyears to hold office till the conclusion of AGM in 2022 subject to ratification of membersat every year AGM. Accordingly they retire at the conclusion of the ensuing AGM and areeligible for reappointment. Your Directors recommend for their reappointment at the AGM.

The Report given by M/s. s Rao & Kumar Chartered Accountants on the financialstatements of the Company for the year 2020-21 is part of the Annual Report. There hasbeen no qualification reservation or adverse remark or disclaimer in their Report. Duringthe year under review the Auditors had not reported any matter under Section 143 (12) ofthe Act. Therefore no detail is required to be disclosed under Section 134 (3)(ca) of theCompanies Act 2013.

Cost Auditors

Your Board has appointed M/s K. Narashima Murthy & Co. Hyderabad Cost Accountants(FRN 000042) as Cost Auditors of the Company for conducting the audit of cost records ofthe Company. Your Board on recommendation of the Audit Committee proposes to re-appointthem as Cost Auditors for 2020-21 subject to the approval from Central Government.

Disclosure under Section 148(1) of the Companies Act 2013

The Company has been maintaining required cost records as specified under Section148(1) of the Companies Act 2013 read with Companies (Accounts) Rules 2014 as mendedfrom time to time.

Secretarial Auditors

CS Vinay Babu Gade Practicing Company Secretary issued a Secretarial Auditor for thefinancial year 2020-21 and his secretarial audit report is attached to this report inAnnexure IV. There are no qualifications adverse comments and observations in thesecretarial audit report for the year 2020-21.

Cautionary Statement

Statements in this Annual Report particularly those that relate to ManagementDiscussion and Analysis describing the Company's objectives projections estimates andexpectations may constitute ‘forward-looking statements' within the meaning ofapplicable laws and regulations to enable shareholders and investors to comprehend ourprospects. Although the expectations are based on reasonable assumptions the actualresults might differ materially from those expressed in the statement. Important factorsthat could influence the Company's operations include global and domestic demand andsupply conditions affecting selling prices of finished goods input availability andprices changes in government regulations tax laws economic developments within thecountry and other factors such as plant breakdowns industrial relations etc.

Acknowledgements

Your Directors place on record their sincere appreciation towards the Company's valuedcustomers and shareholders for the support and the confidence reposed by them in themanagement of the company and look forward to the continuance of this mutually supportiverelationship in future.

Your Directors take this opportunity to thank all the Company's Bankers concernedCentral and State Government Departments Agencies for their support and co-operation tothe Company. The Board has special appreciation for the employees for their dedicatedservices and their ability to deliver good results in the future.

For and on behalf of the Board
Place: Hyderabad Dr. A J Prasad
Date : August 13 2021 Chairman and Managing Director

.