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High Energy Batteries (India) Ltd.

BSE: 504176 Sector: Engineering
NSE: N.A. ISIN Code: INE783E01015
BSE 00:00 | 16 Apr 774.65 -4.35
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NSE 05:30 | 01 Jan High Energy Batteries (India) Ltd
OPEN 780.00
PREVIOUS CLOSE 779.00
VOLUME 1119
52-Week high 1039.35
52-Week low 180.20
P/E 10.68
Mkt Cap.(Rs cr) 139
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 780.00
CLOSE 779.00
VOLUME 1119
52-Week high 1039.35
52-Week low 180.20
P/E 10.68
Mkt Cap.(Rs cr) 139
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

High Energy Batteries (India) Ltd. (HIGHENERGYBAT) - Director Report

Company director report

Your Board hereby presents the 59th Annual Report and the Audited Accountsfor the year ended 31st March 2020.

OPERATING RESULTS

The Company has adopted the Indian Accounting Standards (IndAS) from Financial Year2017-18 as mandated. Accordingly the financial statements for current year includingcomparative figures of previous year are based on IndAS and in accordance with therecognition and measurement principles stated therein as well as other accountingprinciples generally accepted in India. While this has no major impact for the Statementof Profit and Loss there is and would be periodical impact for "Other ComprehensiveIncome" in measuring and restating investments at fair value.

(Rs in lakhs)

Particulars

For the year ended

2019-20 2018-19
Sales
(Net of GST) 6116.51 4585.42
Other Operating Income 32.71 76.27
6149.22 4661.69
Other Income 16.80 13.34
Total Income 6166.02 4675.03
Profit / (Loss) before Finance Cost Depreciation and Tax 1563.42 732.77
Less:
Finance Cost 566.35 552.58
Depreciation 115.98 123.63
682.33 676.21
Profit / Loss before Tax 881.09 56.56
Less:
Provision for Taxation :
Current Tax - -
Deferred Tax 320.90 12.93
Net Profit / (Loss) 560.19 43.63
Other Comprehensive Income (46.49) (7.04)
Total Comprehensive Income 513.70 36.59

The Company adopted the new corporate tax under Section 115BAA of Income Tax Act 1961from the FY 2019 - 2020.

The Company recorded a turnover of ' 6116.51 lakhs in the year as compared to '4585.42 lakhs (an increase of 33.39%) during the previous year. With good order positionthe Company could improve the turnover substantially and record a Net Profit of ' 560.19lakhs compared to ' 43.63 lakhs in the previous year.

The Company's efforts to achieve even a higher level of turnover for Financial Year2019-20 itself was thwarted by unexpected lockdown imposed by the Government during thelast week of March 2020 to contain spread of Covid-19 pandemic. This impacted Batteryassembly Customer testing and evaluation as well as dispatch of batteries.

DIVIDEND

In the absence of distributable profits under Section 123 of the Companies Act 2013no dividend is proposed for the year ended 31st March 2020.

COMPANY'S PERFORMANCE SILVER ZINC BATTERIES

The Company achieved a turnover of ' 6032.18 lakhs through Silver Zinc Battery suppliesduring the year as against ' 4071.91 lakhs during the previous year.

Achieving this higher turnover was made possible by regular inflow of Orders fromDefence establishments uninterrupted production and completion of inspection and testingwithout undue delays.

NICKEL CADMIUM BATTERIES

During the year the turnover of Nickel Cadmium Division was ' 81.35 lakhs as against' 405.60 lakhs during the previous year. For

procurement of Aircraft Batteries Government is now opting for rate contract and hencethe ordering cycle is getting skewed depending upon requirement cum Budget allocation.

LEAD ACID BATTERIES (LAB)

Lead Acid Battery division operations were temporarily suspended since April 2019 dueto competitive market conditions and nonremunerative prices. However a revival plan isbeing drawn to effectively utilise the Plant capacity.

exports

During the year the export turnover was only ' 24 lakhs. Export potential for ourrange of products is dwindling since some of the earlier vintage systems are now becomingobsolete both in India and abroad. The newly developed battery systems are mostly forIndian Defence and are in our regular production. However the Company is having a goodscope for development of new products. All efforts are being made to secure orders forregular as well as for development of new products.

COVID -19 - IMPACT

Consequent to Covid-19 pandemic the Central Government proclaimed a nationwidelockdown since 24th March 2020 and the State Government also followed suit.Hence the Company had to suspend its operations and resumed normal operations from 20thMay 2020 upon partial relaxation of lock down norms.

Besides the loss in production suffered during lockdown the Company had to withholddespatch and billing of finished goods as Government accredited Labs that remained closedcould not do the inspection. This in turn affected the turnover and profit leading toWorking Capital constraints.

While so the Government has suo moto extended delivery schedule for all defencesuppliers and on the supply side most of the key vendors have confirmed supplies as perschedule. Therefore in the opinion of the management no provision towards contractualobligations or impairment losses is considered necessary at present.

However the Company would be reviewing the impact on a continuous basis as thepandemic is yet to be brought under control.

FINANCE

Working Capital availability has improved and all the Banks have renewed theirsanctioned limits for this year. Canara Bank has imposed a margin of 25% for Non FundBased limits against NIL margin so far that resulted in lock up of funds for a longduration. This resulted in strain on our working capital. Payments from most of thecustomers were received on time. The Company effected payments to suppliers and serviceproviders almost on time thereby bringing down the level of outstanding.

ISO 9001 / ISO 14001 ACCREDITATION

Our Quality Management Systems (QMS) ISO 9001:2015 and Environmental Management Systems(EMS) ISO 14001:2015 continue to be accredited for Aerospace and Naval Battery Division.For the Lead Acid Battery Division QMS accreditation and EMS certification werecompleted.

OHSAS 45001 CERTIFICATION

Over the last two years our Company implemented the required systems and procedures toimprove the overall Health and Safety aspects. During this year the Company secured ISO45001:2018 certification pertaining to Occupational Health and Safety (OH&S)Management System.

RESEARCH AND DEVELOPMENT

Development activities including Design cum Proto evaluation of a high power highenergy underwater propulsion Battery were completed during the year. As a continuationperformance that can be achieved as a full size Battery needs to be demonstrated throughelectrical load testing in the presence of Customer / Inspection representatives. DuringFY 2020-21 this Battery type will clear the R&D phase and will become one of themajor products for manufacture and supply in future.

The Hon'ble Finance Minister had announced that all contracts will be extended by sixmonths due to Covid-19 lock down.Hence the Company will complete the existing developmentcontract within this extended period.

DEPOSITORY SYSTEM

As on March 31 2020 Shares of 2612 Shareholders are held in Demat form and 1741075shares have been dematerialised representing 97.12% of the total Equity Share Capital.

CURRENT YEAR (2020-21)

With the orders on hand and expected orders the Company as stated earlier isconfident of achieving higher turnover and profitability in the current year despiteCovid-19 lock down restrictions and its consequent effects. The pending order position ofSilver Zinc Division is comfortable this year. Negotiations are in progress for securingorders from NSTL and Navy as well as for supplies to Missile programs. With all thesepositive developments the Company will catch up with a better and forward lookingperformance during the current year.

CORPORATE GOVERNANCE

Compliance with the provisions of Corporate Governance is not mandatory to the Company.The Company voluntarily takes steps to comply with the provisions of Corporate Governanceand the Report on the above is enclosed as Annexure - 1.

Section 134(3) of the Companies Act 2013 requires the Board's Report to includeseveral additional contents and disclosures. The applicable contents and disclosures haveaccordingly been made in the Corporate Governance Report at the appropriate places whichforms an integral part of this Report.

EXTRACT OF ANNUAL RETURN

Details forming part of the extract of the Annual Return in Form MGT-9 is given inAnnexure - 2.

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to Section 134(3)(c) of the Companies Act 2013 with respect to the Directors'Responsibility Statement your Board confirms that:

(a) in the preparation of the annual accounts the applicable Accounting Standards havebeen followed;

(b) the Directors have selected such accounting policies and applied them consistentlyand made judgements and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the Company at the end of the financial year and ofthe profit of the Company for that period;

(c) the Directors have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act

2013 for safeguarding the assets of the Company and for preventing and detecting fraudand other irregularities;

(d) the Directors have prepared the annual accounts on a 'going concern' basis.

(e) the Directors have laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and operating effectively.

(f) the Directors have devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems are adequate and operating effectively.

PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS

The Company did not give any Loan or Guarantee or provided any security or makeinvestment covered under Section 186 of the Companies Act 2013 during the year.

PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTY

Since the Company remains outside the purview of Section 188(1) read with Rule 15 ofCompanies (Meeting of Board and its Power) Rules 2014 the reporting requirementsthereunder are not applicable.

MATERIAL CHANGES AND COMMITMENTS

There was no change in the nature of business of the Company during the year.

There are no material changes and commitments in the business operations of the Companysince the close of the financial year as on 31st March 2020 to the date of thisReport.

CONSERVATION OF ENERGY

Information relating to Conservation of Energy Technology Absorption and ForeignExchange Earnings and Outgo as required under Section 134(3)(m) of the Companies Act2013 read with Rule 8(3) of the Companies (Accounts) Rules 2014 is given in Annexure -3.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

Section 135 of the Companies Act 2013 has imposed CSR mandate on companies havingminimum threshold limit of net worth turnover or net profit as prescribed. Since thecompany does not fall under any of these criteria it remains outside the purview ofSection 135 and consequently the reporting requirements thereunder are not applicable.

PARTICULARS OF EMPLOYEES

The information required pursuant to Section 197 read with Rule 5 of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 is furnished inAnnexure - 4.

CLASSIFICATION OF MICRO SMALL AND MEDIUM ENTERPRISES (MSME)

On 13th May 2020 the Honbl'e Finance Minister Mrs. NirmalaSitharamanannounced the revised MSME classification.

The definition of MSME has been revised based on Investment and Annual Turnover.

Further the Ministry of Micro Small and Medium Enterprises vide its Notificationdated 1st June 2020 notified the criteria for classification of MSME.

Based on this the Company has come under the MSME classification from 01.07.2020.

ADEQUACY OF INTERNAL FINANCIAL CONTROL WITH REFERENCE TO FINANCIAL STATEMENTS

(i) The Company has laid down adequate systems and well drawn procedures for ensuringinternal financial controls. It has appointed an external audit firm as Internal Auditorsfor periodically checking and monitoring the internal control measures.

(ii) Internal Auditors are present at the Audit Committee meetings where internal auditreports are discussed alongside of management comments and the final observations of theInternal Auditor.

(iii) The Board of Directors have put in place budgetary control and monitoringmeasures for ensuring the orderly and efficient conduct of the business of the Companythe safeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completeness of the accounting records and the timely preparation of reliablefinancial information.

INDIAN ACCOUNTING STANDARDS (IndAS)

The Financial Statements of the current year are prepared under IndAS which was adoptedsince FY 2018-19.

CASH FLOW STATEMENT

As required under Regulation 53 of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 a Cash Flow Statement is attached to the Balance Sheet.

INDUSTRIAL RELATIONS

Relations between the Management and Employees were cordial throughout the year underreview.

DIRECTORS

In accordance with Article 106 of the Articles of Association of the Company Mr MIgnatius whole time director designated as Director (Operations) retires by rotation atthis meeting and being eligible offers himself for reappointment.

Necessary resolution is placed before the members for their approval.

The current term of Dr G A Pathanjali as Managing Director expired on 31stMarch 2020. The Board of directors at their meeting held on 28th March 2020reappointed Dr G A Pathanjali as Managing Director of the company for a further period ofthree years from 1st April 2020 to 31st March 2023 based on therecommendation of the Nomination and Remuneration Committee.

Necessary resolution for reappointment of Dr G A Pathanjali as Managing Director isplaced before the members for their approval.

AUDITORS

M/s. Maharaj N R Suresh and Co Chartered Accountants Chennai (Firm RegistrationNo.001931S) was appointed as Statutory Auditors by the shareholders in the 56thAnnual General Meeting for a period of five years till the conclusion of the 61stAnnual General Meeting of the Company on such remuneration to be fixed by the Board ofDirectors on the recommendation of Audit Committee from time to time. The requirement forannual ratification at AGM had been dispensed with by the Companies (Amendment) Act 2017.Accordingly no ratification is required henceforth and the Statutory Auditors wouldcontinue in the normal course till the conclusion of 61st AGM.

Particulars of Statutory Auditor Internal Auditor and the Secretarial Auditor aregiven in the Corporate Governance Report that forms an integral part of this Report.SecretarialAudit Report as required by Section 204(1) of the Companies Act 2013 isattached as

Annexure - 5.

ACKNOWLEDGEMENT

Your Directors wish to express their sincere thanks to:

(i) all the valued customers viz. Defence Services VSSC NSTL DRDO Laboratories andMinistry of Defence (MOD) BDL BAPL HAL ADE ADA and other defence based organisationsfor the whole-hearted support and encouragement towards indigenous sourcing of Batteriesfor strategic applications;

(ii) the Overseas customers who have reposed utmost faith and confidence in ourproducts;

(iii) the Consortium of Bankers viz. UCO Bank Indian Bank and Canara Bank forextending timely financial support for the continued positive performance of the Company;

(iv) the Employees at all levels of the company for their co-operation and improvedperformance ;

(v) to all suppliers service providers and Shareholders for their continued trust andsupport.

(For Board of Directors)
Chennai N GOPALARATNAM
June 27 2020 Chairman

.