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Hil Ltd.

BSE: 509675 Sector: Industrials
NSE: HIL ISIN Code: INE557A01011
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VOLUME 331
52-Week high 2057.20
52-Week low 1075.00
P/E 12.73
Mkt Cap.(Rs cr) 1,088
Buy Price 1445.60
Buy Qty 6.00
Sell Price 1452.05
Sell Qty 27.00
OPEN 1439.35
CLOSE 1463.60
VOLUME 331
52-Week high 2057.20
52-Week low 1075.00
P/E 12.73
Mkt Cap.(Rs cr) 1,088
Buy Price 1445.60
Buy Qty 6.00
Sell Price 1452.05
Sell Qty 27.00

Hil Ltd. (HIL) - Auditors Report

Company auditors report

To the Members of HIL Limited

Report on the Audit of the Standalone Ind AS Financial Statements

Opinion

We have audited the standalone Ind AS financial statements of HIL Limited ("theCompany") which comprise the standalone balance sheet as at 31 March 2019 and thestandalone statement of profit and loss (including other comprehensive income) standalonestatement of changes in equity and standalone statement of cash flows for the year thenended and notes to the standalone Ind AS financial statements including a summary of thesignificant accounting policies and other explanatory information.

In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone Ind AS financial statements give the informationrequired by the Companies Act 2013 ("Act") in the manner so required and give atrue and fair view in conformity with the accounting principles generally accepted inIndia of the state of affairs of the Company as at 31 March 2019 and profit and othercomprehensive income changes in equity and its cash flows for the year ended on thatdate.

Basis for Opinion

We conducted our audit in accordance with the Standards on Auditing (SAs) specifiedunder Section 143(10) of the Act. Our responsibilities under those SAs are furtherdescribed in the Auditor's Responsibilities for the Audit of the Standalone Ind ASFinancial 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 thestandalone Ind AS financial statements under the provisions of the Act 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.

Key Audit Matters

Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the standalone Ind AS financial statements of the currentperiod. These matters were addressed in the context of our audit of the standalone Ind ASfinancial statements as a whole and in forming our opinion thereon and we do not providea separate opinion on these matters.

Revenue recognition

See note 3(i) and note 22 to the standalone Ind AS financial statements

The key audit matter How the matter was addressed in our audit
The Company's revenue is principally derived from sale of products of roofing solutions building solutions polymer solutions and others. In view of the significance of the matter we applied the following audit procedures in this area among others to obtain sufficient appropriate audit evidence:
• We assessed the appropriateness of the revenue recognition accounting policies by comparing them with applicable accounting standards;
We identified revenue recognition as a key audit matter because the Company and its external stakeholders focus on revenue as a key performance indicator. • We evaluated the design of controls and operating effectiveness of the relevant controls with respect to revenue recognition;
• We performed substantive testing on samples selected using statistical sampling of revenue transactions recorded during the year by testing the underlying documents;
• We tested manual journal entries posted to revenue to identify unusual items;
This could create an incentive for revenue to be recognised before control has been transferred. • We carried out year on year product wise variance analysis on revenue recognised during the year to identify unusual variances;
• We obtained external confirmations of debtors' outstanding balance as at the financial year end date selected on a sample basis directly from customers and
• We tested on a sample basis specific revenue transactions recorded before and after the financial year end date to determine whether the revenue had been recognised in the appropriate financial period.

Impairment for investment in a subsidiary

See note 3(g) and note 7 to the standalone Ind AS financial statements

The key audit matter How the matter was addressed in our audit
The Company has significant investment in a subsidiary which is recorded at cost. In view of the significance of the matter we applied the following audit procedures in this area among others to obtain sufficient appropriate audit evidence:
We considered impairment of investment in a subsidiary as a key audit matter due to their materiality in the context of the financial statements. Management applies judgment in evaluating whether indicators of impairment are present and if yes in assessing the future performance and prospects of the subsidiary and in determining the appropriate discount rate. • We tested the design of controls over the review of the impairment analysis for investment;
• We assessed management's assessment of indicators of impairment (both internal and external factors) for reasonableness;
• We assessed the reasonableness of forecast inputs growth assumptions by comparing against the historical trends to assess the reliability of management's forecast and
• We have evaluated the adequacy of the disclosures in accordance with requirements of Ind AS.

Other Information

The Company's Management and Board of Directors are responsible for the otherinformation. The other information comprises the information included in the Company'sannual report but does not include the financial statements and our auditors' reportthereon.

Our opinion on the standalone Ind AS financial statements does not cover the otherinformation and we do not express any form of assurance conclusion thereon.

In connection with our audit of the standalone Ind AS financial statements ourresponsibility is to read the other information and in doing so consider whether theother information is materially inconsistent with the standalone Ind AS financialstatements or our knowledge obtained in the audit or otherwise appears to be materiallymisstated. If based on the work we have performed we conclude that there is a materialmisstatement of this other information we are required to report that fact. We havenothing to report in this regard.

Management's Responsibility for the Standalone Ind AS Financial Statements

The Company's Management and Board of Directors are responsible for the matters statedin Section 134(5) of the Act with respect to the preparation of these standalone Ind ASfinancial statements that give a true and fair view of the state of affairs profit andother comprehensive income changes in equity and cash flows of the Company in accordancewith the accounting principles generally accepted in India including the IndianAccounting Standards (Ind AS) specified under Section 133 of the Act. This responsibilityalso includes maintenance of adequate accounting records in accordance with the provisionsof the Act for safeguarding of the assets of the Company and for preventing and detectingfrauds and other irregularities; selection and application of appropriate accountingpolicies; making judgments and estimates that are reasonable and prudent; and designimplementation and maintenance of adequate internal financial controls that were operatingeffectively for ensuring the accuracy and completeness of the accounting records relevantto the preparation and presentation of the standalone Ind AS financial statements thatgive a true and fair view and are free from material misstatement whether due to fraud orerror.

In preparing the standalone Ind AS financial statements Management and Board ofDirectors are responsible for assessing the Company's ability to continue as a goingconcern disclosing as applicable matters related to going concern and using the goingconcern basis of accounting unless Management either intends to liquidate the Company orto cease operations or has no realistic alternative but to do so.

Board of Directors is also responsible for overseeing the Company's financial reportingprocess.

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

Our objectives are to obtain reasonable assurance about whether the standalone Ind ASfinancial 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 Ind AS 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 standalone Ind ASfinancial 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 control relevant to the audit in order todesign audit procedures that are appropriate in the circumstances. Under Section 143(3)(i) of the Act we are also responsible for expressing our opinion on whether the Companyhas adequate internal financial controls with reference to financial statements in placeand the operating effectiveness 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 Ind AS financial statements or if such disclosures are inadequate tomodify our opinion. Our conclusions are based on the audit evidence obtained up to thedate of our auditor's report. However future events or conditions may cause the Companyto cease to continue as a going concern.

• Evaluate the overall presentation structure and content of the standalone IndAS financial statements including the disclosures and whether the standalone Ind ASfinancial statements represent the underlying transactions and events in a manner thatachieves 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 standalone Ind AS financialstatements of the current period and are therefore the key audit matters. We describethese matters in our auditors' report unless law or regulation precludes public disclosureabout the matter or when in extremely rare circumstances we determine that a mattershould not be communicated in our report because the adverse consequences of doing sowould reasonably be expected to outweigh the public interest benefits of suchcommunication.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditors' Report) Order 2016 ("the Order")issued by the Central Government in terms of Section 143(11) of the Act we give in the"Annexure A" a statement on the matters specified in paragraphs 3 and 4 of theOrder to the extent applicable.

2. As required by Section 143(3) of the Act we report that:

a) We have sought and obtained all the information and explanations which to the bestof our knowledge and belief were necessary for the 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 standalone balance sheet the standalone statement of profit and loss (includingother comprehensive income) the standalone statement of changes in equity and thestandalone statement of cash flows dealt with by this Report are in agreement with thebooks of account.

d) In our opinion the aforesaid standalone Ind AS financial statements comply with theInd AS specified under Section 133 of the Act.

e) On the basis of the written representations received from the directors as on 31March 2019 taken on record by the Board of Directors none of the directors isdisqualified as on 31 March 2019 from being appointed as a director in terms of Section164(2) of the Act.

f) With respect to the adequacy of the internal financial controls with reference tofinancial statements of the Company and the operating effectiveness of such controlsrefer to our separate Report in "Annexure B".

3. With respect to the other matters to be included in the Auditors' Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinionand to the best of our information and according to the explanations given to us:

i. The Company has disclosed the impact of pending litigations as at 31 March 2019 onits financial position in its standalone Ind AS financial statements. Refer Note 37(A) tothe standalone Ind AS financial statements.

ii. The Company has made provision as required under the applicable law or accountingstandards for material foreseeable losses if any on long-term contracts includingderivative contracts. Refer Note 51 to the standalone Ind AS financial statements.

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

iv. The disclosures in the standalone Ind AS financial statements regarding holdings aswell as dealings in specified bank notes during the period from 8 November 2016 to 30December 2016 have not been made in these standalone Ind AS financial statements sincethey do not pertain to the financial year ended 31 March 2019.

4. With respect to the matter to be included in the Auditors' Report under Section197(16):

In our opinion and according to the information andexplanationsgiventoustheremunerationpaidbytheCompany to its directors during the currentyear is in accordance with the provisions of Section 197 of the Act. The remuneration paidto any director is not in excess of the limit laid down under Section 197 of the Act. TheMinistry of Corporate Affairs has not prescribed other details under Section 197(16) whichare required to be commented upon by us.

Annexure A

to the Independent Auditors' Report on the standalone Ind AS financial statements ofHIL Limited for the year ended 31 March 2019

With reference to the Annexure A referred to in Paragraph 1 in Report on Other Legaland Regulatory Requirements of the Independent Auditors' Report of even date to theMembers of HIL Limited ("the Company") on the standalone Ind AS financialstatements for the year ended 31 March 2019 we report that:

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

(b) The Company has a regular programme of physical verification of its fixed assets bywhich all fixed assets are verified in a phased manner over a period of three years. Inour opinion the periodicity of physical verification is reasonable having regard to thesize of the Company and the nature of its assets. Pursuant to the program certain fixedassets were physically verified during the year and no material discrepancies wereobserved on such verification.

(c) According to the information and explanations given by the Management the titledeeds of immovable properties included in fixed assets and investment property are held inthe name of the Company except freehold land and investment property of I 1.27 lacs and I427.60 lacs respectively title of which is not registered in the name of the Company.Also refer Note 4(a) and 5(c) to the standalone Ind AS financial statements.

ii. The inventory except goods-in-transit have been physically verified by theManagement during the year. In our opinion the frequency of such verification isreasonable. The discrepancies noticed on verification between the physical stock and thebook records were not material and have been appropriately dealt with in the books ofaccounts.

iii. The Company has granted unsecured loan to its wholly owned subsidiary companywhich is covered in the register maintained under Section 189 of the Companies Act 2013("the Act"). The Company has not granted any loans secured or unsecured tofirms limited liability partnerships or other parties covered in the Register maintainedunder Section 189 of the Act.

a) The terms and conditions of the grants of such aforesaid loans are not prejudicialto the interest of the Company.

b) The schedule of repayment of principal and payment of interest has been stipulatedand the repayments are not yet due. c) There are no overdue amounts in respect of theaforesaid loans.

iv. The Company has not granted any loans or provided any guarantees or security to theparties covered under Section 185 of the Act. The Company has complied with the provisionsof Section 186 of the Act in respect of investment made or loan provided to the partiescovered under Section 186 of the Act. According to the information and explanations givento us the Company has not provided guarantee or security to any party covered underSection 186 of the Act.

v. The Company has not accepted any deposits from the public within the meaning of thedirectives issued by the Reserve Bank of India provisions of Section 73 to 76 of the Actany other relevant provisions of the Act and the relevant rules framed thereunder.Accordingly paragraph 3(v) of the Order is not applicable to the Company.

vi. We have broadly reviewed the books of account maintained by the Company pursuant tothe Rules made by the Central Government for the maintenance of cost records under Section148(1) of the Act and are of the opinion that prima facie the specified 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 amounts deducted/ accrued in the books ofaccount in respect of undisputed statutory dues including Provident Fund Employees' StateInsurance Income-tax Duty of Customs Goods and Service Tax Cess and other materialstatutory dues have generally been regularly deposited during the year by the Company withthe appropriate authorities. According to the information and explanations given to us noundisputed amounts payable in respect of Provident Fund Employees' State InsuranceIncome-tax Duty of Customs Goods and Service Tax Cess and other material statutory dueswere in arrears as at 31 March 2019 for a period of more than six months from the datethey became payable. As explained to us the Company did not have any undisputed statutorydues on account of Sales tax Service tax Duty of Excise and Value Added Tax. Also refernote 37 to the standalone Ind AS financial statements.

(b) According to the information and explanations given to us and on the basis of ourexamination of records of the Company the dues outstanding of Income-tax Sales taxService tax Duty of Customs Duty of Excise and Value added tax on account of any disputeare as follows

Statute/ Nature of dues Amount in Rupees lacs* Period to which the amount relates Forum where dispute is pending
Sales tax/ Value added 103.10 1988-89 1990-91 1997-98 2007-08 Supreme Court
tax 302.81 1981-82 1985-86 2001-02 2002-03 2011-12 High Court(s)
63.70 1989-2006 Tribunal(s)
3032.06 1991-2017 Appellate Authority up to
Commissioner's level
Excise duty (including service tax) 1.28 2007-08 High Court(s)
296.50 2004-2017 CESTAT(s)
509.28 2003-2017 Appellate Authority up to Commissioner's level
Income-tax - 2005-06 High Court
280.01 2008-09 2009-10 2010-11 2012-13 Income-tax Appellate Tribunal
938.97 2011-12 2013-14 Appellate Authority up to Commissioner's level
Wealth tax 56.98 1993-94 1994-95 1995-96 1996-97 Hon'ble High Court of
1997-98 Telangana and Andhra Pradesh

*The amounts disclosed are net of payments and include interest and penalties whereverapplicable viii. In our opinion and according to the information and explanations given tous the Company has not defaulted in repayment of loans or borrowing to a financialinstitution bank or Government. The Company does not have any outstanding dues todebenture holders.

ix. In our opinion and according to the information and explanations given to us theCompany did not raise any money by way of initial public offer or further public offer(including debt instruments) during the year. In our opinion and according to theinformation and explanations given to us the term loans taken by the Company and appliedduring the year were for the purpose for which they were raised.

x. According to the information and explanations given to us no material fraud on theCompany by its officers and employees or fraud by the Company has been noticed or reportedduring the course of our audit.

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. According to the information and explanations given to us and based on ourexamination of the records of the Company the Company is not a Nidhi Company prescribedunder Section 406 of the Act. Accordingly the provisions of Clause 3(xii) of the Order isnot applicable 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 Sections 177 and 188 of the Act where applicable and details of suchtransactions have been disclosed in the standalone Ind AS financial statements asrequired by the applicable accounting 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. Accordingly the provisions of Clause 3(xiv) of the Order is not applicable tothe Company.

xv. According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not entered into any non-cashtransactions with directors or persons connected with them as referred to in Section 192of the Act.

xvi. According to the information and explanations given to us and based on ourexamination of the records of the Company the Company is not required to be registeredunder Section 45-IA of the Reserve Bank of India Act 1934. Accordingly the provision ofClause 3(xvi) of the Order is not applicable to the Company.

Annexure B to the Independent Auditors' Report on the standalone Ind AS FinancialStatements of HIL Limited for the year ended 31 March 2019

Report on the internal financial controls with reference to the aforesaid standaloneInd AS financial statements under Clause (i) of Sub-section 3 of Section 143 of theCompanies Act 2013

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

Opinion

We have audited the internal financial controls with reference to financial statementsof HIL Limited ("the Company") as of 31 March 2019 in conjunction with our auditof the standalone Ind AS financial statements of the Company for the year ended on thatdate.

In our opinion the Company has in all material respects adequate internal financialcontrols with reference to standalone Ind AS financial statements and such internalfinancial controls were operating effectively as at 31 March 2019 based on the internalfinancial controls with reference to standalone Ind AS financial statements 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 (the "Guidance Note").

Management's Responsibility for Internal Financial Controls

The Company's Management and the Board of Directors are responsible for establishingand maintaining internal financial controls based on the internal financial controls withreference to standalone Ind AS financial statements criteria established by the Companyconsidering the essential components of internal control stated in the Guidance Note.These responsibilities include the design implementation and maintenance of adequateinternal financial controls that were operating effectively for ensuring the orderly andefficient conduct of its business including adherence to company's policies thesafeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completeness of the accounting records and the timely preparation ofreliable financial information as required under the Companies Act 2013 (hereinafterreferred to as "the Act").

Auditors' Responsibility

Our responsibility is to express an opinion on the Company's internal financialcontrols with reference to standalone Ind AS financial statements based on our audit. Weconducted our audit in accordance with the Guidance Note and the Standards on Auditingprescribed under Section 143(10) of the Act to the extent applicable to an audit ofinternal financial controls with reference to standalone Ind AS financial statements.Those Standards and the Guidance Note require that we comply with ethical requirements andplan and perform the audit to obtain reasonable assurance about whether adequate internalfinancial controls with reference to standalone Ind AS financial statements wereestablished and maintained and whether such controls operated effectively in all materialrespects.

Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls with reference to standalone Ind AS financial statementsand their operating effectiveness. Our audit of internal financial controls with referenceto standalone Ind AS financial statements included obtaining an understanding of suchinternal financial controls assessing the risk that a material weakness exists andtesting and evaluating the design and operating effectiveness of internal control based onthe assessed risk. The procedures selected depend on the auditor's judgment including theassessment of the risks of material misstatement of the standalone Ind AS financialstatements whether due to fraud or error.

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 withreference to standalone Ind AS financial statements.

Meaning of Internal Financial controls withReferencetoStandaloneIndASFinancialStatements

A Company's internal financial controls with reference to standalone Ind AS financialstatements is a process designed to provide reasonable assurance regarding the reliabilityof financial reporting and the preparation of standalone Ind AS financial statements forexternal purposes in accordance with generally accepted accounting principles. A Company'sinternal financial controls with reference to financial statements include those policiesand procedures that (1) pertain to the maintenance of records that in reasonable detailaccurately and fairly reflect the transactions and dispositions of the assets of theCompany; (2) provide reasonable assurance that transactions are recorded as necessary topermit preparation of standalone Ind AS financial statements in accordance with generallyaccepted accounting principles and that receipts and expenditures of the Company arebeing made only in accordance with authorisations of Management and directors of theCompany; and (3) provide reasonable assurance regarding prevention or timely detection ofunauthorised acquisition use or disposition of the Company's assets that could have amaterial effect on the standalone Ind AS financial statements.

Inherent Limitations of Internal Financial controls with Reference to Standalone Ind ASFinancial Statements

Because of the inherent limitations of internal financial controls with reference tostandalone Ind AS financial statements including the possibility of collusion or impropermanagement override of controls material misstatements due to error or fraud may occurand not be detected. Also projections of any evaluation of the internal financialcontrols with reference to standalone Ind AS financial statements to future periods aresubject to the risk that the internal financial controls with reference to standalone IndAS financial statements may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.

forB S R & Associates LLP

Chartered Accountants

ICAI Firm Registration No.: 116231W/ W-100024

Vikash Somani

Partner

Membership No. 061272

Place: New Delhi

Date: 27 May 2019