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HEG Ltd.

BSE: 509631 Sector: Engineering
NSE: HEG ISIN Code: INE545A01016
BSE 00:00 | 25 Jan 1634.55 48.45
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NSE 00:00 | 25 Jan 1626.70 39.50
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OPEN 1565.00
PREVIOUS CLOSE 1586.10
VOLUME 15422
52-Week high 2626.15
52-Week low 910.85
P/E 37.85
Mkt Cap.(Rs cr) 6,309
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 1565.00
CLOSE 1586.10
VOLUME 15422
52-Week high 2626.15
52-Week low 910.85
P/E 37.85
Mkt Cap.(Rs cr) 6,309
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

HEG Ltd. (HEG) - Auditors Report

Company auditors report

To the Members of

HEG Limited

Report on the Audit of the Standalone Financial Statements

Opinion

We have audited the accompanying standalone financial statements of HEG Limited(‘the Company') which comprise the Balance Sheet as at 31 March 2021 the Statementof Profit and Loss (including Other Comprehensive Income) the Statement of Changes inEquity the Statement of Cash flows for the year then ended and notes to the financialstatements including a summary of the significant accounting policies and otherexplanatory information (hereinafter referred to as "the Standalone FinancialStatements").

In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone financial statements give the information requiredby the Companies Act 2013 ("the Act") in the manner so required and give a trueand fair view in conformity with the Indian Accounting Standards prescribed under section133 of the Act read with the Companies (Indian Accounting Standards) Rules 2015 asamended ("Ind AS") and other accounting principles generally accepted in Indiaof the state of affairs of the Company as at 31 March 2021 and the loss and totalcomprehensive income changes in equity and its cash flows for the year ended on thatdate.

Basis for Opinion

We conducted our audit of the standalone financial statements in accordance with theStandards on Auditing (SAs) specified under section 143(10) of the Act. Ourresponsibilities under those Standards are further described in the Auditor'sResponsibilities for the Audit of the Standalone Financial Statements section of ourreport. We are independent of the Company in accordance with the Code of Ethics issued bythe Institute of Chartered Accountants of India together with the ethical requirementsthat are relevant to our audit of the Standalone Financial statements under the provisionsof the Act and the Rules made thereunder and we have fulfilled our other ethicalresponsibilities in accordance with these requirements and the Code of Ethics. We believethat the audit evidence we have obtained is sufficient and appropriate to provide a basisfor our audit opinion on the standalone financial statements.

Key Audit Matters

Key Audit Matters are those matters that in our professional judgment were of mostsignificance in our audit of the Standalone Financial Statements for the year ended March31 2021. These matters were addressed in the context of our audit of the standalonefinancial statements as a whole and in forming our opinion thereon and we do not provide aseparate opinion on these matters. We have determined the matters described below to bethe Key Audit Matters to be communicated in our report.

S. No. Key audit matters Auditor's Response
1. Valuation of inventory as at the year end March 31 2021 Our audit procedures involved the following:
The inventories are valued at the lower of cost and net realizable value in accordance with applicable accounting standard. There is a risk that inventories may be stated at values that are more than their net realizable values (NRV). • Reviewing the accounting policy followed for valuation of inventory and appropriateness thereof with respect to relevant accounting standards in this respect.
We identified the valuation of inventories as a key audit matter because the Company held significant inventories at the reporting date and significant degree of management judgement and estimation was involved in valuing the inventories. • Understanding and testing the design and operating effectiveness of controls as established by the management in determination of cost and net realizable value of inventory.
• Obtaining an understanding of determination of cost as well as net realizable value and assessing testing and evaluating the reasonableness keeping in view the significant judgements applied by the management for such valuation.
• Reviewing of the selling price of finished goods at the year end and in subsequent period.
2. Assessment of Provisions and Contingent liabilities in respect of litigations including Direct and Indirect Taxes various claims filed by other parties not acknowledged as debt Our audit procedures involved the following:
There is high level of judgement required in estimating the level of provisioning. Accordingly unexpected adverse outcomes may significantly impact the Company's reported profit and state of affairs presented in the Balance Sheet. • Obtaining an understanding of the process of identification of claims litigations arbitrations and contingent liabilities and internal control relevant to the audit in order to design our audit procedures that are appropriate in the circumstances.
We determined the above area as a Key Audit Matter in view of associated uncertainty relating to the outcome of these matters which requires application of judgment in interpretation of law. • Discussing and analysing material legal cases with the Company's legal department.
Accordingly our audit was focused on analysing the facts of subject matter under consideration and judgments/ interpretation of law involved. • Examining recent orders and/or communication received from various tax authorities/ judicial forums and follow up action thereon.
• Evaluating the merit of the subject matter under consideration with reference to the grounds presented therein and available independent legal / tax advice including opinion of internal tax experts.
• Evaluating management's assumptions and estimates relating to the recognition of the provisions for disputes and disclosures of contingent liabilities in the financial statements.
• Assessing the adequacy of the disclosures with regard to facts and circumstances of the legal matters.

Information Other than the Standalone Financial Statements and Auditor's Report Thereon

The Company's Board of Directors is responsible for the other information. The otherinformation comprises the Corporate Governance report (but does not include the standalonefinancial statements and our auditor's report thereon) which we obtained at the time ofissue of this auditors' report and the Directors' Report including annexures if anythereon which is expected to be made available to us after that date.

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

In connection with our audit of the financial statements our responsibility is to readthe other information identified above and in doing so consider whether the otherinformation is materially inconsistent with the financial statements or our knowledgeobtained in the audit or otherwise appears to be materially misstated.

If based on the work we have performed on the other information that we obtained priorto the date of this auditor's report we conclude that there is a material misstatement ofthis other information we are required to report that fact. We have nothing to report inthis regard.

When we read the Director's report including annexures if any thereon if we concludethat there is a material misstatement therein we are required to communicate the matterto those charged with governance.

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 total comprehensive income changes in equity and cashflows of the Company in accordance with the Indian Accounting Standards (Ind AS) and otheraccounting principles generally accepted in India including the accounting Standardsspecified under section 133 of the Act. This responsibility also includes maintenance ofadequate accounting records in accordance with the provisions of the Act for safeguardingthe 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 the design implementationand maintenance of adequate internal financial controls that were operating effectivelyfor ensuring 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.

In preparing the standalone financial statements the management 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 management either intends to liquidate the Company or to cease operations or has norealistic alternative but to do so.

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

Auditor's Responsibilities for the Audit of the Standalone Financial Statements

Our objectives are to obtain reasonable assurance about whether the standalonefinancial statements as a whole are free from material misstatement whether due to fraudor error and to issue an auditor's report that includes our opinion. Reasonable assuranceis a high level of assurance but is not a guarantee that an audit conducted in accordancewith SAs will always detect a material misstatement when it exists. Misstatements canarise from fraud or error and are considered material if individually or in theaggregate they could reasonably be expected to influence the economic decisions of userstaken on the basis of these standalone financial statements.

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

• Identify and assess the risks of material misstatement of the standalonefinancial statements whether due to fraud or error design and perform audit proceduresresponsive to those risks and obtain audit evidence that is sufficient and appropriate toprovide a basis for our opinion. The risk of not detecting a material misstatementresulting from fraud is higher than for one resulting from error as fraud may involvecollusion forgery intentional omissions misrepresentations or the override of internalcontrol.

• Obtain an understanding of internal financial controls relevant to the audit inorder to design audit procedures that are appropriate in the circumstances. Under section143(3)(i) of the Act 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 used and the reasonablenessof accounting estimates and related disclosures made by management.

• Conclude on the appropriateness of management's use of the going concern basisof accounting 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 standalone financial statements or if such disclosures are inadequate to modify ouropinion. Our conclusions are based on the audit evidence obtained up to the date of ourauditor's report. However future events or conditions may cause the Company to cease tocontinue as a going concern.

• Evaluate the overall presentation structure and content of the standalonefinancial statements including the disclosures and whether the standalone financialstatements represent the underlying transactions and events in a manner that achieves fairpresentation.

• Materiality is the magnitude of misstatements in the financial statements thatindividually or in aggregate makes it probable that the economic decisions of areasonably knowledgeable user of the financial statements may be influenced. We considerquantitative materiality and qualitative factors in (i) planning the scope of our auditwork and in evaluating the results of our work; and (ii) to evaluate the effect of anyidentified misstatements in the financial statements.

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 withthose charged with governance we determine those matters that were of most significancein the audit of the financial statements of the current period and are therefore the keyaudit matters. We describe these matters in our auditor's report unless law or regulationprecludes public disclosure about the matter or when in extremely rare circumstances wedetermine that a matter should not be communicated in our report because the adverseconsequences of doing so would reasonably be expected to outweigh the public interestbenefits of such communication.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor's Report) Order2016 ("the Order")issued by the Central Government in terms of sub section (11) of section 143 of the Actwe give in "Annexure A" a statement on the matters specified in paragraphs 3 and4 of the Order.

2. As required by Section 143(3) of the Act based on our audit 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 Statement of Changes in Equity and the Statement of Cash Flows dealt with by thisReport are in agreement with the books of account.

(d) In our opinion the aforesaid standalone financial statements comply with theIndian Accounting Standards specified under Section 133 of the Act read with theCompanies (Indian Accounting Standards) Rules 2015 as amended.

(e) On the basis of the written representations received from the Directors as on 31stMarch 2021 taken on record by the Board of Directors none of the Directors isdisqualified as on 31st March 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". Our report expresses an unmodified opinion onthe adequacy and operating effectiveness of the internal financial control over financialreporting of the Company.

(g) 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 opinion and to the best of our information and according to the explanationsgiven to us the remuneration paid by the Company to its directors during the year is inaccordance with the provisions of section 197 of the Act.

(h) 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:

i. The Company has disclosed the impact of pending litigations on its financialposition in its standalone financial statements. Refer Note 38 to the standalone financialstatements.

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

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

For SCV & Co. LLP
Chartered Accountants
Firm Reg. No.000235N/N500089
Sanjiv Mohan
Partner
Place: Ludhiana M. No. 086066
Date: 27th May 2021 UDIN: 21086066AAAAJN9499

Annexure – "A" to the Independent Auditors' Report

(Referred to in paragraph 1 under ‘Report on Other Legal and RegulatoryRequirements' section of our report to the Members of HEG Limited of even date)

(i) In respect of the Company's fixed assets:-

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

(b) According to the information and explanations given to us a Company has adopted apolicy of physical verification of all the items of fixed assets once in block of threeyears. Pursuant to said policy the company has physically verified all fixed assetsduring financial year 2018-19 and 2019-20 in a phased manner. Accordingly no physicalverification of fixed assets has been carried out during the current year as per policy ofthe Company. In our opinion the periodicity of physical verification is reasonable havingregard to the size of the Company and the nature of its business.

(c) According to the information and explanations given to us and on the basis of ourexamination of the records of the Company title deed of the immovable property is held inthe name of the Company.

(ii) According to the information and explanations given to us the inventorieshave been physically verified by the management during the year at all its locationsexcept stocks located outside India lying with third parties and materials-in-transitwhich have been verified with reference to correspondence of third parties or subsequentreceipt of goods. In our opinion the frequency of verification is reasonable. Thediscrepancies noticed on such verification between the physical stocks and the bookrecords were not material and have been properly dealt with in the books of account.Inventories lying with third parties have been confirmed by them as at year end and nomaterial discrepancies were noticed in respect of such confirmations.

(iii) According to the information and explanations given to us we report that theCompany has not granted any loans secured or unsecured to companies firms limitedliability partnership or other parties covered in the register maintained under section189 of the Companies Act 2013. Therefore the provisions of paragraph 3(iii) of the Orderare not applicable to the Company.

(iv) In our opinion and according to the information and explanations given to usthe Company has complied with the provisions of Section 185 and 186 of the Act in respectof guarantee provided jointly with another Company to a financial institution for loantaken by subsidiary of associate from the financial institution the terms and conditionsof which are not prime facie prejudicial to the interest of the Company.

(v) According to the information and explanations given to us the Company has notaccepted any deposits covered under the provisions of sections 73 to 76 and any otherrelevant provision of the Companies Act 2013 and the rules framed there under andtherefore the provisions of the clause 3(v) of the order are not applicable to theCompany.

(vi) We have broadly reviewed the cost records maintained by the Company pursuantto the rules made by the Central Government for the maintenance of cost records undersection 148(1) of the Act and are of the opinion that prima facie the prescribed costrecords have been made and maintained. We have however not made a detailed examinationof such records with a view to determine whether they are accurate or complete.

(vii) (a) According to the information and explanations given to us and on thebasis of the records of the Company examined by us in our opinion the Company has beenregular in depositing undisputed statutory dues including provident fund employees' stateinsurance income tax goods and service tax duty of custom cess and other statutorydues applicable to it with the appropriate authorities.

(b) According to the information and explanations given to us no undisputed amounts inrespect of statutory dues payable were outstanding as on the last day of the financialyear concerned for a period of more than six months from the date they became payable asat 31st March 2021.

(c) According to the information and explanations given to us and based on ourexamination of records of the Company the following dues of service tax value added taxsales tax duty of excise and income tax which have not been deposited by the Company withthe appropriate authorities on account of dispute.

S. No Name of Statute Nature of Dues Amount unpaid (Rs. in Lakhs) Period to which the amount relates Forum where the dispute is pending
1. Central Excise Act 1944 Excise Duty 248.34 FY 2002-03 2004-05 2005-06 2006-07 CESTAT New Delhi
Excise duty 1.42 FY 2004-05 Hon'ble High Court Jabalpur
2. Income Tax Act 1961 Income Tax 100.00 AY 2000-01 CIT (Appeals) Bhopal
Income Tax 516.00 AY 2003-04 2004-05 Hon'ble High Court Jabalpur
Income Tax 40.00 AY 2010-11 2011-12 Income tax Appellant Tribunal
Income Tax 1064.05 AY 2013-14 2014-15 CIT (Appeals) Delhi
Tax deducted at source 279.43 AY 2015-16 2016-17 2017-18 CIT (Appeals) Ahmedabad
3. Finance Act 1994 Service Tax and penalty 104.17 FY_2012-13 2013-14 _CESTAT New Delhi
4. Central Sales Tax Act 1956 Central Sales Tax 21.30 FY 2003-04 Hon'ble High Court Jabalpur
Central Sales Tax 244.16 FY 2016-17 Commissioner (Appeals) Bhopal
5. Madhya Pradesh Parvesh Kar Adhiniyam 1976 Entry Tax 2.36 FY 2014-15 Commissioner (Appeal) Bhopal
Entry Tax 341.01 FY 2009-102010-11 2011-12 2012-13 Appellate Tribunal Bhopal
Entry Tax 28.98 FY 1997-98 2003-04 2007-08 2008-09 Hon'ble High Court Jabalpur
6. Chhattisgarh Commercial Tax VAT 3.04 FY 2006-07 Commissioner (Appeals) Raipur
VAT 1.51 FY 1992-93 Appellate Tribunal Raipur
Entry Tax 9.79 FY 2005-06 Appellate Tribunal Raipur
Entry Tax 12.00 FY 2007-08 Commissioner (Appeals) Raipur

(viii) According to the information and explanations given to us and based on ourexamination of records of the Company the Company has not defaulted in repayment of loansor borrowings to a financial institution bank or government. The Company has not issuedany debentures during the year or in the preceding year.

(ix) In our opinion and according to the information and explanations given to us theCompany has not raised any money by way of initial public offer or further public offer(including debt instruments) and term loans during the year. Accordingly clause 3 (ix) ofthe Order is not applicable to the Company.

(x) According to the information and explanations given to us no fraud by the Companyor on the Company by its officers or employees has been noticed or reported during thecourse of our audit.

(xi) According to the information and explanations given to us and based on the recordsof the Company the Company has paid / provided for the managerial remuneration inaccordance with the requisite approvals mandated by the provisions of section 197 readwith Schedule V to the Act.

(xii) According to the information and explanation given to us the Company is not aNidhi Company. Therefore the provisions of paragraph 3(xii) of the Order are notapplicable to the Company.

(xiii) According to the information and explanations given to us and based on ourexamination of the records of the Company transactions with the related parties are incompliance with section 177 and 188 of the Act where applicable and the details of thetransactions have been disclosed in the standalone financial statements as required by theapplicable accounting standards.

(xiv) According to the information and explanations given to us the Company has notmade preferential allotment or private placement of shares or fully or partly convertibledebentures during the year under audit. Thus the provisions of paragraph 3(xiv) of theOrder are not applicable to the Company.

(xv) According to 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 person connected with them. Accordingly provisions ofparagraph 3 (xv) of the Order are not applicable to the Company.

(xvi) According to the information and explanations given to us the Company is notrequired to be registered under section 45-IA of the Reserve Bank of India Act 1934 andhence reporting under clause 3(xvi) of the order is not applicable to the Company.

For SCV & Co. LLP
Chartered Accountants
Firm Reg. No.000235N/N500089
Sanjiv Mohan
Partner
Place: Ludhiana M. No. 086066
Date: 27th May 2021 UDIN: 21086066AAAAJN9499

Annexure – "B" to the Independent Auditors' Report

(Referred to in paragraph 2(f) under ‘Report on Other Legal and RegulatoryRequirements' section of our report to the members of HEG Limited of even date)

Report on the Internal Financial Controls Over Financial Reporting under Clause (i) ofSub-section 3 of Section 143 of the Companies Act 2013 ("the Act")

We have audited the internal financial control over financial reporting of HEG Limited("the Company") as of 31st March 2021 in conjunction with our auditof standalone financial statements of Company for the year ended on that date.

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 the Company's policies the safeguarding of its assets theprevention and detection of frauds and errors the accuracy and completeness of theaccounting records and the timely preparation of reliable financial information asrequired under the 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 prescribed under section143(10) of the Companies Act 2013 to the extent applicable to an audit of internalfinancial controls both issued by the Institute of Chartered Accountants of India. ThoseStandards and the Guidance Note require that we comply with ethical requirements and planand perform the audit to obtain reasonable assurance about whether adequate internalfinancial controls over financial reporting were established and maintained and if suchcontrols 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 judgment including the assessment of the risks ofmaterial misstatement of the standalone financial statements whether due to fraud orerror.

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Company's internal financial controls systemover 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 of records that in reasonable detail accurately andfairly reflect the transactions and dispositions of the assets of the Company.

(2) provide reasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally accepted accountingprinciples and that receipts and expenditures of the Company are being made only inaccordance with authorizations of management and directors of the Company; and

(3) provide reasonable assurance regarding prevention or timely detection ofunauthorized acquisition use or disposition of the Company's assets that could have amaterial 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.

Opinion

In our opinion the Company has in all material respects an adequate internalfinancial controls system over financial reporting and such internal financial controlsover financial reporting were operating effectively as at 31 March 2021 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.

For SCV & Co. LLP
Chartered Accountants
Firm Reg. No.000235N/N500089
Sanjiv Mohan
Partner
Place: Ludhiana M. No. 086066
Date: 27th May 2021 UDIN: 21086066AAAAJN9499

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