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HLE Glascoat Ltd.

BSE: 522215 Sector: Engineering
NSE: HLEGLAS ISIN Code: INE461D01010
BSE 13:43 | 07 May 2733.00 -69.30
(-2.47%)
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2911.60

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NSE 13:33 | 07 May 2800.00 -4.65
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OPEN

2671.00

HIGH

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OPEN 2740.00
PREVIOUS CLOSE 2802.30
VOLUME 5337
52-Week high 2997.40
52-Week low 705.05
P/E 81.29
Mkt Cap.(Rs cr) 3,679
Buy Price 2761.55
Buy Qty 10.00
Sell Price 2775.00
Sell Qty 8.00
OPEN 2740.00
CLOSE 2802.30
VOLUME 5337
52-Week high 2997.40
52-Week low 705.05
P/E 81.29
Mkt Cap.(Rs cr) 3,679
Buy Price 2761.55
Buy Qty 10.00
Sell Price 2775.00
Sell Qty 8.00

HLE Glascoat Ltd. (HLEGLAS) - Auditors Report

Company auditors report

Report on the Audit of the Standalone IND AS Financial Statements To the Member of HLEGlascoat Limited Opinion

We have audited the accompanying Separate IND AS Financial Statements (Also known asstandalone IND AS financial statements) of HLE Glascoat Limited (hereinafterreferred to as "Company") which comprise the Balance Sheet as at 31st March2020 and the Statement of Profit and Loss (including Other Comprehensive Income) theCash flow statement and the Statement of Changes in Equity for the year then ended and asummary of the significant accounting policies.

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 Act in the manner so required and give a true and fair view in conformitywith the accounting principles generally accepted in India including the IND AS of thestate of affairs (financial position) of the Company as at 31st March 2020 and itsprofit(financial performance including other comprehensive income) its cash flows and thechanges in equity for the year ended on that date.

Basis for Opinion

We conducted our audit of the standalone IND AS financial statements in accordance withthe Standards on Auditing (SAs) specified under Section 143(10) of the Companies Act2013. Our responsibilities under those Standards are further described in the Auditor'sResponsibilities for the Audit of the Financial Statements section of our report. We areindependent of the Company in accordance with the Code of Ethics issued by the Instituteof Chartered Accountants of India together with the ethical requirements that are relevantto our audit of the financial statements under the provisions of the Companies Act 2013and the Rules thereunder and we have fulfilled our other ethical responsibilities inaccordance with these requirements and the Code of Ethics. We believe that the auditevidence we have obtained is sufficient and appropriate to provide a basis for ouropinion.

Emphasis of Matters

We draw attention to Note 26(m) to the Standalone IND AS financial statements for theyear ended March 31 2020 which describes the impact of the outbreak of Coronavirus(COVID-19) on the business operations of the Company. In view of the highly uncertaineconomic environment a definitive assessment of the impact on the subsequent periods ishighly dependent upon circumstances as they evolve.

Our opinion is not modified in respect of these matters.

Key Audit Matters

Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the financial statements of the current period. These matterswere addressed in the context of our audit of the financial statements as a whole and informing our opinion thereon and we do not provide a separate opinion on these matters.

Sr. No. Key Audit Matters Our Response
1 Evaluation of Provisions and Contingent Liabilities w.r.t. litigations and claims Principal Audit Procedures
The Company has material uncertain positions including matters under dispute which involves significant judgment to determine the possible outcome of these disputes. We performed the following substantive procedures:
Testing the design implementation and operating effectiveness of key internal controls around the recognition and measurement of provisions and re-assessment of development of contingent liabilities.
We have assessed the value of significant provisions and contingent liabilities in light of the nature of the exposures applicable regulations and related correspondence with the authorities.
Evaluating judgements made by the Company by comparing the estimates of prior year to the actual outcome.
Assessing the Company's disclosures in the financial statements in respect of provisions and contingent liabilities.
Conclusion
2 Defined benefit obligation
The valuation of the retirement benefit schemes in the Company is determined with reference to various actuarial assumptions including discount rate rate of inflation and mortality rates. Due to the size of these schemes small changes in these assumptions can have a material impact on the estimated defined benefit obligation We agree with management's evaluation. We have examined the key controls over the process involving member data formulation of assumptions and the financial reporting process in arriving at the provision for retirement benefits. We tested the controls for determining the actuarial assumptions and the approval of those assumptions by senior management. We found these key controls were designed implemented and operated effectively and therefore determined that we could place reliance on these key controls for the purposes of our audit.
We tested the employee data used in calculating the obligation and where material we also considered the treatment of curtailments settlements past service costs remeasurements benefits paid and any other amendments made to obligations during the yearif any. From the evidence obtained we found the data and assumptions used by management in the actuarial valuations for retirement benefit obligations to be appropriate.

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

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 standalone financial statements and our Auditors'Report thereon.

Our opinion on the standalone financial statements does not cover the other informationand we do not express any form of assurance conclusion thereon.

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

Responsibilities of Management for the Standalone Financial Statements

The Company's Board of Directors is responsible for the matters stated in section134(5) of the Companies Act 2013 ("the Act") with respect to the preparation ofthese standalone financial statements that give a true and fair view of the financialposition financial performance changes in equity and standalone cash flow statements ofthe Company in accordance with the accounting principles generally accepted in Indiaincluding the accounting Standards specified under section 133 of the Act. Thisresponsibility also includes maintenance of adequate accounting records in accordance withthe provisions of the Act for safeguarding of the assets of the Company and for preventingand detecting frauds and other irregularities; selection and application of appropriateaccounting policies; making judgments and estimates that are reasonable and prudent; anddesign implementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the financial statements thatgive a true and fair view and are free from material misstatement whether due to fraud orerror.

In preparing the financial statements management is responsible for assessing theCompany's ability to continue as a going concern disclosing as applicable mattersrelated to going concern and using the going concern basis of accounting unless managementeither intends to liquidate the Company or to cease operations or has no realisticalternative but to do so.

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

Auditor's Responsibility for the Audit of the standalone financial statements

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

A further description of our responsibilities for the audit of the financial statementsis included in appendix A of this auditor's report.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government in terms of Section 143(11) of the Act we give in "AnnexureA" a statement on the matters specified in paragraphs 3 and 4 of the Order.

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 Balance Sheet the Statement of Profit and Loss including Other ComprehensiveIncome the Cash Flow Statement and Statement of Changes in Equity dealt with by thisReport are in agreement with the books of account.

d) In our opinion the aforesaid standalone IND AS financial statements comply with theIndian Accounting Standards prescribed under section 133 of the Act.

e) On the basis of written representations received from the directors as on 31stMarch 2020 taken on record by the Board of Directors none of the directors aredisqualified as on 31st March 2020 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".

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 the remuneration paid by the Company to its Directors during the yearis in accordance with the provisions of Section 197 of the Act. The remunerationspaid/provided are not in excess of the limits laid down under 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 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 on its financialposition in its standalone IND AS financial statements- under Note No. 26 (j) of theFinancial Statements ii. The Company did not have any long-term contracts includingderivative contracts for which there were any material foreseeable losses iii. There hasbeen no delay in transferring the amounts required to be transferred to the InvestorEducation Protection Fund by the Company.

For M. M. NISSIM & CO

Chartered Accountants (Firm Regn. No. 107122W)

(N. Kashinath) Partner Mem. No.: 036490

UDIN: 20036490AAAACP6232

Date: 20th June 2020 Mumbai.

APPENDIX A- AUDITOR'S RESPONSIBILITIES FOR THE

AUDIT OF THE FINANCIAL STATEMENTS

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

a) Identify and assess the risks of material misstatement of the financial statementswhether due to fraud or error design and perform audit procedures responsive to thoserisks and obtain audit evidence that is sufficient and appropriate to provide a basis forour opinion. The risk of not detecting a material misstatement resulting from fraud ishigher than for one resulting from error as fraud may involve collusion forgeryintentional omissions misrepresentations or the override of internal control.

b) Obtain an understanding of internal control relevant to the audit in order to designaudit procedures that are appropriate in the circumstances.

Under section 143(3)(i) of the Companies Act 2013 we are also responsible forexpressing our opinion on whether the Company has adequate internal financial controlssystem in place and the operating effectiveness of such controls.

c) Evaluate the appropriateness of accounting policies used and the reasonableness ofaccounting estimates and related disclosures made by management.

d) Conclude on the appropriateness of management's use of the going concern basis ofaccounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the Company'sability to continue as a going concern. If we conclude that a material uncertainty existswe are required to draw attention in our auditor's report to the related disclosures inthe financial statements or if such disclosures are inadequate to modify our opinion.Our conclusions are based on the audit evidence obtained up to the date of our auditor'sreport. However future events or conditions may cause the Company to cease to continue asa going concern.

e) Evaluate the overall presentation structure and content of the financialstatements including the disclosures and whether the financial statements represent theunderlying transactions and events in a manner that achieves fair presentation.

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

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

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

"ANNEXURE A" TO THE INDEPENDENT AUDITOR'S REPORT OF EVEN DATE ON THE

STANDALONE IND-AS FINANCIAL STATEMENTS OF HLE GLASCOAT LIMITED

Report on the Order issued under Section 143 (11) of the Companies Act 2013

(i) In respect of its Property Plant and Equipment's: a) The Company has maintainedproper records showing full particulars including quantitative details and situation ofProperty Plant and Equipment's.

b) The fixed assets have been physically verified by the management at reasonableintervals (covering all the assets in a period of three years) which in our opinion isreasonable having regard to the size of the Company and nature of its assets. No materialdiscrepancy was noticed on such physical verification.

c) On the basis of our examination of the records of the Company the title deeds ofimmovable properties are held in the name of the Company.

(ii) The physical verification of inventory has been conducted at reasonable intervalsby the management. No material discrepancy was noticed on such physical verification.Necessary confirmations have been obtained in respect of material lying with the thirdparties.

(iii) The Company has not granted any loans secured or unsecured to companies firmslimited liability partnerships or other parties covered under the register maintainedunder section 189 of the Companies Act 2013. Accordingly the clauses (iii) (a) (b) and(c) of the order are not applicable.

(iv) The Company has complied with provisions of section 186 of the Act in respect ofinvestments made. The Company has furnished guarantees amounting to Rs. 200 lakhs tofacilitate loan to subsidiary in compliance with section 185 and 186 of the Act. TheCompany has not given any loans during the year.

(v) The Company has not accepted any deposits from the public hence the directivesissued by the Reserve Bank of India and the provisions of sections 73 to 76 or any otherrelevant provisions of the Companies Act and the rules framed there under are notapplicable.

(vi) We have broadly reviewed the books of account maintained by the Company pursuantto the rules made by the Central Government for the maintenance of cost records undersection 148 (1) of the Act and are of the opinion that prima facie the prescribedaccounts and records have been made and maintained.

(vii) (a) The Company is regular in depositing undisputed applicable statutory duesincluding provident fund employees' state insurance income-tax sales-tax goods andservice tax service tax duty of customs cess and any other statutory dues with theappropriate authorities to the extent applicable. According to the information andexplanations given to us and based on our examination there were no outstanding ofaforesaid statutory dues as on 31st of March 2020 for a period of more thansix months from the date they became payable.

(b) According to the records of the Company there are no dues outstanding in respectof income-tax service tax duty of customs goods and service tax and cess on account ofany dispute except as stated below;

Statute Nature of Dues/Matter Amount (in lakhs) Forums where the dispute is pending
Central Excise Act 1944 and For the period 2008- 2013 9.55 CESTAT
Finance Act 1994 (Service Tax) For the period 2012- 2015 23.98 CESTAT
For the period 2013- 2017 24.32 CESTAT

(viii) The Company has not defaulted in repayment of its loans or borrowings to afinancial institution banks or government.

(ix) The Company has applied moneys raised by way of term loans for the purposes forwhich those were raised. The Company has not raised any moneys by way of Initial publicoffer.

(x) On the basis of our examination and according to the information and explanationsgiven to us no fraud by the Company or any fraud on the Company by its officers oremployees has been noticed or reported during the year.

(xi) In our opinion the managerial remuneration has been provided in accordance withthe provisions of section 197 read with Schedule V to the Act.

(xii) The Company is not a Nidhi Company and accordingly provisions of clause (xii) ofPara 3 of the order are not applicable to the Company. (xiii) On the basis of ourexamination and according to the information and explanations given to us we report thatall the transaction with the related parties are in compliance with Section 177 and 188 ofthe Act and the details have been disclosed in the Financial statements in Note No. 26(f) as required by the applicable accounting standards.

(xiv) On the basis of on our examination of the records of the Company the Company hasmade preferential allotment of shares during the year as per the Scheme of Arrangement forDemerger approved by the National Company Law Tribunal (NCLT) by order dated 24th October2019. Details of the allotment made during the year are disclosed in Notes to financialstatements. (Refer Note 26 (l)). The Company has not made any private placements duringthe year.

(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 him. Accordingly provisions ofclause (xv) of Para 3 of the Order are not applicable to the Company.

(xvi) The Company is not required to be registered under Section 45-IA of the ReserveBank of India Act 1934 and accordingly this clause is not applicable.

For M. M. NISSIM & CO

Chartered Accountants (Firm Regn. No. 107122W)

(N. Kashinath) Partner Mem. No.: 036490

UDIN: 20036490AAAACP6232 Date: 20th June 2020 Mumbai.

Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Companies Act 2013 ("the Act")

We have audited the internal financial controls over financial reporting of HLEGlascoat Limited as of March 31 2020 in conjunction with our audit of the financialstatements of the 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 Reporting (theGuidance Note) issued by the Institute of Chartered Accountants of India. Theseresponsibilities include the design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the orderly and efficientconduct of its business including adherence to Company's policies the safeguarding ofits assets the prevention and detection of frauds and errors the accuracy andcompleteness of the accounting records and the timely preparation of reliable financialinformation as required under the Act.

Auditors' Responsibility

Our responsibility is to express an opinion on the Company's internal financialcontrols with reference to standalone financial statements based on our audit. Weconducted our audit in accordance with the Guidance Note and the Standards on Auditing anddeemed to be prescribed under section 143(10) of the Companies Act 2013 to the extentapplicable to an audit of internal financial controls both applicable to an audit ofInternal Financial Controls and both issued by the Institute of Chartered Accountants ofIndia. Those Standards and the Guidance Note require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetheradequate internal financial controls over financial reporting was established andmaintained and if such controls operated effectively in all material respects. Our auditinvolves performing procedures to obtain audit evidence about the adequacy of the internalfinancial controls system over financial reporting and their operating effectiveness. Ouraudit of internal financial controls over financial reporting included obtaining anunderstanding of internal financial controls over financial reporting assessing the riskthat a material weakness exists and testing and evaluating the design and operatingeffectiveness of internal control based on the assessed risk. The procedures selecteddepend on the auditor's judgement including the assessment of the risks of materialmisstatement of the financial statements whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the internal financial controls system withreference to standalone financial statements.

Meaning of Internal Financial Controls Over Financial Reporting

A Company's internal financial control with reference to standalone financialstatements is a process designed to provide reasonable assurance regarding the reliabilityof financial reporting and the preparation of financial statements for external purposesin accordance with generally accepted accounting principles. A Company's internalfinancial control over financial reporting includes those policies and procedures that (1)pertain to the maintenance of records that in reasonable detail accurately and fairlyreflect the transactions and dispositions of the assets of the Company; (2) providereasonable assurance that transactions are recorded as necessary to permit preparation offinancial statements in accordance with generally accepted accounting principles in Indiaand that receipts and expenditures of the Company are being made only in accordance withauthorizations of management and directors of the Company; and (3) provide reasonableassurance regarding prevention or timely detection of unauthorized acquisition use ordisposition of the Company's assets that could have a material effect on the financialstatements.

Inherent Limitations of Internal Financial Controls over Financial Reporting

Because of the inherent limitations of internal financial controls with reference tostandalone 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 financial statements to future periods are subjectto the risk that the internal financial control with reference to standalone financialstatements may become inadequate because of changes in conditions or that the degree ofcompliance with the policies or procedures may deteriorate.

Opinion

In our opinion the Company has in all material respects an adequate internalfinancial controls system with reference to standalone financial statements and suchinternal financial controls with reference to standalone financial statements wereoperating effectively as at March 31 2020 based on the internal control with referenceto standalone financial statements criteria established by the Company considering theessential components of internal control stated in the Guidance Note on Audit of InternalFinancial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India.

For M. M. NISSIM & CO

Chartered Accountants (Firm Regn. No. 107122W)

(N. Kashinath) Partner Mem. No.: 036490

UDIN: 20036490AAAACP6232 Date: 20th June 2020 Mumbai.

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