The Directors have pleasure in presenting 27th Annual Report of the Companytogether with the Audited Financial Statements for the financial year ended 31stMarch 2019.
1. Financial Highlights
The Company's financial performance for the year ended 31st March 2019alongwith previous year's figures is summarized below:
|Particulars ||Standalone ||Consolidated |
| ||2018-19 ||2017-18 ||2018-19 ||2017-18 |
|Revenue from Operations ||110259.11 ||102336.43 ||115847.46 ||106135.62 |
|Other Income ||398.13 ||381.57 ||470.27 ||442.78 |
|Operating Profit before Finance Costs Depreciation Tax and ||12133.09 ||10055.27 ||13822.34 ||11429.79 |
|Extraordinary items || || || || |
|Less: Finance Cost ||5276.15 ||4615.67 ||5814.67 ||5101.83 |
|Less: Depreciation and amortization expenses ||2986.61 ||2137.00 ||3203.65 ||2279.04 |
|Profit before Exceptional Expenses and Tax ||3870.33 ||3302.60 ||4804.02 ||4048.92 |
|Profit before tax ||3870.33 ||3302.60 ||4804.02 ||4048.92 |
|Less: Tax Expenses ||1231.81 ||1020.56 ||1532.81 ||1291.16 |
|Profit for the year ||2638.52 ||2282.04 ||3271.21 ||2757.76 |
|Other comprehensive income for the year net of tax ||(20.88) ||(1.08) ||(20.49) ||(1.36) |
|Total comprehensive income for the year net of tax ||2617.64 ||2280.96 ||3250.72 ||2756.40 |
|Profit for the year attributable to || || || || |
|Equity holders of the parent Company ||2638.52 ||2282.04 ||3252.89 ||2742.87 |
|Non-controlling interest ||- ||- ||18.32 ||14.89 |
|Total comprehensive income for the year attributable to || || || || |
|Equity holders of the parent Company ||2617.64 ||2280.96 ||3232.39 ||2741.52 |
|Non-controlling interest ||- ||- ||18.33 ||14.88 |
|Earnings per Share (in Rs ) Not Annualised || || || || |
|Basis ( Rs ) ||4.10 ||3.55 ||5.06 ||4.27 |
|Diluted ( Rs ) ||4.10 ||3.55 ||5.06 ||4.27 |
2. State of Company's Affairs
The company has witnessed a robust improved financial performance in FY19 with apositive growth trajectory across all three major business metering Switchgear andlighting. The performance during FY19 was marked by higher double-digit growth in allthree major businesses YoY growth of 16% in metering 17% in switchgear and 15% inlighting business. partially off set in wires & cables business.
Operating margins improved in metering and switchgear business driving the overallimprovement in_ EBITDA margin. We successfully delivered on our commitment of double-digitgrowth operational cost control and lower working capital days in FY19. Metering businessclocked highest quarterly revenues with improved operating margin. The overall order bookas on May 2019 was Rs 575.4 crores ( net of GST) and metering order book of Rs. 554.6crores gives us good revenue visibility for the coming year.
Further tenders for over 2mn meters are currently being evaluated by a couple ofstates. Enquiry base for Metering tenders are at a healthy level which provides goodvisibility and positive outlook for the coming quarters.
Switchgear and lighting business continued to witness strong traction in the tradebusiness. Our brand building and marketing initiatives significantly picked up during lastyear as we doubled our advertising & promotion spend. We received an overwhelmingresponse as the Official LED and Switchgear Partner' of Delhi Capitals IPL team. Weaim to leverage on our brand building efforts to aggressively grow our consumer businessesover coming years. It is expected to sustain the double digit growth in all businesssegments in coming years.
3. Performance of subsidiaries associates and joint venture companies and theircontribution to the overall performance of the company
As on 31st March 2019 the company is having only one subsidiary namelyHimachal Energy Private Limited and two Joint Ventures (JVs) namely HPL Electric& Power Pvt. Ltd. Shriji Designs (JV) and HPL Electric & Power Pvt. Ltd. Trimurthi Hitech Co. Pvt. Ltd. - Shriji Designs (JV). These JVs are established asAssociation of Person (AOP) and not registered under the Companies Act and accordingly arenot Associate Companies as per section 2(6) of the Companies Act 2013. Himachal EnergyPvt. Ltd. is engaged in the manufacturing of energy saving meters and other relatedproducts. The Gross Revenue of the Company for the FY 2019 stood at Rs. 10518.83 lakhs(P.Y. Rs. 10245.67 lakhs). Profit after tax for the year stood at Rs. 642.88 lakhs (P.Y.Rs. 522.60 lakhs). The Company continues its performance momentum and recorded steadygrowth during the year. This performance is a result of the Company's persistent focus onfundamentals. Further pursuant to the provisions of Section 136 of the Act the financialstatements of the Company consolidated finanacial statements alongwith relevant documentsand separate financial statements in respect of Subsidiary company are available on thewebsite of the Company i.e. www.hplindia.com.
4. Consolidated Financial Statement
The Consolidated Financial Statements of the Company are prepared in accordance withrelevant Indian Acccounting Standards issued by the Institute of Chartered Accountants ofIndia and forms an integral part of this Report.
Pursuant to Section 129(3) of the Act read with Rule 5 of the Companies (Accounts)Rules 2014 a statement containing the salient features of the financial statement of acompany's subsidiary or subsidiaries associate company or joint venture or ventures inForm AOC-1 is annexed as Annexure I.
5. Material Changes affecting the Company
There have been no material changes and commitments affecting the financial position ofthe Company between the end of the financial year and date of this report. There has beenno change in the nature of business of the Company.
During the period under report the company do not propose to transfer any amount tothe General Reserve.
The Directors are pleased to recommend a dividend of Rs. 0.20 per equity share (2%) forthe financial year ended 31st March 2019 subject to the approval of theshareholders at the ensuing Annual General Meeting of the Company. The dividenddistribution would result in cash outflow of Rs. 15503528 (including tax on dividend ofRs. 2643431). The dividend would be payable to all those Shareholders whose names appearin the Register of Members as on 19th September 2019.
8. Public deposits
During the period under report the Company has not accepted any deposit within themeaning of Sections 73 and 74 of the Companies Act 2013 read together with the Companies(Acceptance of Deposits) Rules 2014.
9. Directors and Key Managerial Personnel and change therein
During the period under report Mr. Vinod Ratan Gupta (DIN: 07401017) ceased to be theWhole-time Director/Director of the Company w.e.f. 21st January 2019 onaccount of attaining the age of superannuation. The Board places on record itsappreciation towards valuable contribution made by Mr. Vinod Ratan Gupta during histenure as Whole time Director of the company. The Board on the recommendation of theNomination & Remuneration committee by way of circulation appointed Mr. HargovindSachdev (DIN: 08105319) as an Additional (Independent) Director w.e.f. 13thApril 2018 and thereby his appointment was approved by the shareholders at their meetingheld on 27th September 2018 to hold office for the term of 2 consecutive yearsw.e.f 13th April 2018. The company has received consent in writing from Mr.Hargovind Sachdev to act as director in the form DIR-2 and intimation in the Form DIR- 8to the effect that he is not disqualified U/s 164 (2) of the Companies Act 2013 to act asDirector and confirmation that he meets the criteria of independence prescribed under theAct and the SEBI Listing Regulations. Pursuant to the provisions of Section 152 of theCompanies Act 2013 and other applicable provisions of the Act Mr. Chandra PrakashJain (DIN: 00311643) Whole- time Director of the Company who retires by rotation at theensuing Annual General Meeting and being eligible off ers himself for re-appointment.
The Company has received declarations from all the Independent Directors of the Companyconfirming that they meet the criteria of independence prescribed under the provisions ofSection 149(6) of the Act and Regulation 16 of the SEBI Listing Regulations. Brief detailsof the directors being recommended for reappointment as required under SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 have been furnished in theNotice dated 12th August 2019 convening the 27th Annual GeneralMeeting.
10. Number of meetings of the Board
During the period under report the Board of Directors of the Company met 5(Five) timeson 21st May 2018 2nd August 2018 29th October 201819th January 2019 and 13th February 2019. Particulars ofattendance of each director are mentioned in the Corporate Governance Report.
11. Board Evaluation
Pursuant to the provisions of Section 178 of the Companies Act 2013 read withCompanies (Amendment) Act 2017 and SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 the Nomination and remuneration committee has laid down the manner foreffective evaluation of_ performance of Board its committees and individual directors andaccordingly the Board of directors has carried out an annual evaluation of its ownperformance board committees and individual directors. While evaluating the performanceof Board the Board had considered the composition and structure of the Board in terms ofsize experience diversity effectiveness of the board process dissemination ofinformation etc.
The performance of the committees was evaluated by the board taking into considerationthe factors such as composition of the committee; effectiveness of committee meetings;independence of the committee from the Board and contribution in decision making by theBoard etc. The performance evaluation of all the individual directors was carried outafter taking into account their individual contribution to the board and committeemeetings such as preparedness on the issues to be discussed effective contribution in thediscussion on the various agenda items whether the independent directors fulfill theindependence criteria as specified in the Companies Act 2013 and SEBI Listing Regulationsand their independence from the management. Therefore the outcome of the performanceevaluation for the period under report was satisfactory and reflect how well thedirectors board and committees are carrying their respective activities. The independentdirectors in its separate meeting without the attendance of non-independent directors andmembers of management reviewed -(a) the performance of non-independent directors and theBoard as a whole; (b) the performance of the Chairperson of the company taking intoaccount the views of executive directors and non-executive directors; (c) assess thequality quantity and timeliness of flow of information between the company management andthe Board that is necessary for the Board to effectively and reasonably perform theirduties.
12. Policy on Appointment and Remuneration of Directors and Key Managerial Personneland other employees
The Board of Directors has framed a policy which lays down a framework in relation toremuneration of Directors Key Managerial Personnel and Senior Management of the Company.
The Policy broadly lays down the guiding principles philosophy and the basis forpayment of remuneration to Directors Key Managerial Personnel Senior Management andother employees. The policy also provides the criteria for determining qualificationspositive attributes and Independence of Director and criteria for appointment of KeyManagerial Personnel / Senior Management while making selection of the candidates. Theabove policy has been posted on the website of the Company at www.hplindia.com.
13. Extract of Annual Return
As per the requirements of Section 92(3) of the Act and rules made thereunder theextract of the Annual Return for the year ended 31st March 2019 is annexed as AnnexureII in the prescribed Form No. MGT-9 which is a part of this report. The same isavailable on the website of the Company at www. hplindia.com.
The equity shares of the Company are listed on the National Stock Exchange of IndiaLtd. and BSE Limited. The listing fee for the financial year 2019-20 has been paid to boththe Stock Exchanges.
15. Audit Committee
The details pertaining to the composition of the Audit Committee are included in theCorporate Governance Report which is a part of this Annual Report.
16. Vigil mechanism/ Whistle Blower Policy
Pursuant to the provisions of Companies Act 2013 and SEBI Listing Regulations theCompany has established a robust vigil Mechanism for directors and employees to report tothe management instances of unethical behavior actual or suspected fraud or violation ofthe Company's code of conduct. The Vigil Mechanism Policy provides that the companyinvestigates in such incidents when reported in an impartial manner and shall takeappropriate action as and when required to do so. The policy also provides the mechanismfor adequate safeguard against the victimization of Director(s)/employees who avail themechanism and also provide for the direct access to the Chairman of the Audit Committee inexceptional cases. A vigil Mechanism policy is available on the website of the companyi.e. www.hplindia. com.
17. Risk Management
The Company has in place a robust risk management policy to anticipate identifymeasure manage mitigate monitor and report the risk and uncertainties that may have animpact to achieve the business objective of the company. The Company recognizes theserisks which need to be managed and mitigated to protect the interest of the stakeholdersto achieve business objectives and enable sustainable growth. The risk managementframework is aimed at effectively mitigating the Company's various business andoperational risks through strategic actions. The Company believes that managing riskshelps in maximizing returns.
An extensive program of internal audits and regular reviews by the Audit Committee iscarried out to ensure compliance with the best practices.
18. Policy on Material Subsidiary
The Company has framed a Policy on Material Subsidiary under Regulations 16(c) of SEBI(Listing Obligations and Disclosures Requirements) Regulations 2015 which is available onthe website of the company i.e. www.hplindia.com.
19. Corporate Social Responsibility (CSR)
It is the responsibility of the corporations operating within society to contributetowards social and environmental development that will help in creating a positive impacton society at large.
The Corporate Social Responsibility committee comprises of Mrs. Madhu Bala Nath asChairperson Mr. Lalit Seth Mr. Rishi Seth and Mr. Jainul Haque as members of thecommittee. The company discharges its CSR obligations directly and by making contributionthrough Seth Inder Narain Foundation Trust and SUTRA an implementing agency appointed bythe Company towards supporting projects in Eradicating hunger poverty and malnutritionpromoting health care; promoting education including special education and employmentenhancing vocation skills especially among children women elderly and the differentlyabled and livelihood enhancement projects. The company also extends its objective towardsCSR in supporting the rural development projects.
The Board of Directors have approved the CSR Policy of the Company as formulated andrecommended by the CSR Committee which is available on the website of the Company i.e.www.hplindia.com. A report on Corporate Social Responsibility is annexed as AnnexureIII.
20. Particulars of Contracts or Arrangements with related Parties
All the transactions entered into with related parties as defined under the CompaniesAct 2013 and Securities and Exchange Board of India (Listing Obligations and DisclosureRequirements) Regulations 2015 during the financial year ended 31st March2019 were in the ordinary course of business and on arm's length basis. As per theprovisions of Section 188 of the Companies Act 2013 and Rules made thereunder read withRegulation 23 of Securities and Exchange Board of India (Listing Obligations andDisclosure Requirements) Regulations 2015 the Company had obtained the necessary priorapproval of the Audit Committee for all the related party transactions. Further there areno material related party transactions with promoters directors or Key ManagementPersonnel during the year under report.
None of the transactions with any of the related parties were in conflict with theinterest of the Company rather they synchronize and synergies with the Company'soperations. The Company has framed a Policy on Related Party Transactions in accordancewith Securities and Exchange Board of India (Listing Obligations and DisclosureRequirements) Regulations 2015 and as per the amended provisions of the Companies Act2013. The Policy intends to ensure that proper reporting; approval and disclosureprocesses are in place for all transactions between the Company and related parties. Thepolicy is available on the website of the company i.e. www. hplindia.com and the Detailsof Related Party Transactions are annexed as per Form AOC-2 in Annexure IV.
A) Statutory Auditors
As per the provisions of Section 139(1) of the Act the Company has appointed M/s.Kharabanda Associates Chartered Accountants (Regn. No. 003456N) as Statutory Auditors fora period of 5 (Five) years in the Annual General Meeting of the company held on 28thSeptember 2017. Pursuant to the amendments made to Section 139 of the Companies Act 2013by the Companies (Amendment) Act 2017 effective from May 7 2018 the requirement ofseeking rati_cation of the Members for the appointment of the Statutory Auditors has beenwithdrawn from the Statute. Hence the resolution seeking rati_cation of the Members forcontinuance of their appointment at this AGM is not being sought.
Statutory Auditors Report
There are no observations (including any qualification reservation adverse remark ordisclaimer) of the Auditors in their Audit Report that may call for any explanation fromthe Directors. Further the notes to accounts referred to in the Auditors' Report areself-explanatory. There was no instance of fraud during the year under reportwhichrequired the Statutory Auditors to report to the Audit Committee and / or Board underSection 143(12) of Act and Rules framed thereunder.
B) Cost Auditors
Pursuant to the provisions of Section 148 of the Companies Act 2013 read withCompanies (Cost Records and Audit) Rules 2014 and other applicable provisions of the Actas amended from time to time the company is required to maintain the cost records asspecified by the Central Government and accordingly such accounts and records were madeand maintained and M/s Bikram Jain
& Associates Cost Accountants (Firm Registration No. 101610) has beenre-appointed as Cost Auditor of the Company to conduct audit of Cost Records maintained bythe Company for the financial year 2019-20.
The company has received his consent and certificate under Section 139 141 and 148 ofthe Companies Act 2013 read with the Companies (Audit and Auditors) Rules 2014 to thiseffect.
The remuneration payable to the Cost Auditor of the Company has been proposed for therati_cation by the members of the Company and shall form part of the notice of the 27thAnnual General Meeting.
C) Secretarial Auditors
Pursuant to the provisions of Section 204 of the Companies Act 2013 read withcorresponding rules made there under M/s. AVA Associates Company Secretaries has beenre-appointed as Secretarial Auditors of the Company to conduct Secretarial Audit of theCompany for the financial year 2019-20.
Secretarial Audit Report
The Secretarial Audit Report for the FY 2018-19 as submitted by Secretarial Auditor inForm MR-3 is annexed to this Report as Annexure V.
There are no observations (including any qualification reservation adverse remark ordisclaimer) of the Secretarial Auditors in their Secretarial Audit Report that may callfor any explanation from the Directors.
22. Particulars of Loans Guarantees or investments
The investment made by the company in the subsidiary company in the form of equityshare capital is disclosed in the notes to the Audited Financial Statements forming partof this Annual Report. The company has not given any loans guarantees or provided anysecurity in connection with a loan to any body corporate or person as per section 186 ofthe Companies Act 2013 during the period under report.
23. Particulars of remuneration of Directors/ KMP/ Employees
The information required to be disclosed in the Director's Report pursuant to Section197 of the Companies Act 2013 read with Rule 5 of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 is set out in Annexure VI to thisreport.
24. Research and Development:
HPL with its passion for innovation has under taken many initiatives to acceleratethe business growth curve in the upward direction. Company has been regularly investing ininfrastructure and its R&D centers to make word class products meeting stringentQuality standards. All the R&D labs in various units have been focusing on design anddevelopment of innovative products in the field of Switchgear Lighting and Metering etc.to meet the growing technological challenges of the times. The R&D team has beencontinuously working on improving the reliability and life cycle of HPL products. Most ofthe products are "CE" marked. All the plants are RoHS complaint to meet thedemands of the new era of business globally. Timely delivery of new products underdevelopment is of primary focus of R&D department. It works on a cohesive approach tonarrow the gap between Design and Manufacturing by investing money in 3D model prototypesbefore commencing tool manufacturing. This saves a lot of time energy and money whiledeveloping new products thereby increasing the efficiency of the company.
Company is continuously working on many more smart engineering electrical products tomeet the future demand.
25. Conservation of Energy Technology Absorption foreign Exchange Earnings and Outgo
The information on conservation of energy technology absorption and foreign exchangeearnings and outgo as stipulated under Section 134(3)(m) of the Companies Act 2013 readwith Rule 8 of the Companies (Accounts) Rules 2014 is attached as Annexure VII tothis report.
26. Corporate Governance Report
The Company is committed to maintain the highest standards of Corporate Governanceand adhere to the Corporate Governance requirements set out by Securities and ExchangeBoard of India. The report on Corporate Governance as stipulated under the Securities andExchange Board of India (Listing Obligations and Disclosure Requirements) Regulations2015 forms an integral part of this Report. The requisite certificate from M/s. KharabandaAssociates Statutory Auditors of the Company confirming compliance of conditions ofcorporate governance is also annexed to the Corporate Governance Report.
27. Directors' Responsibility Statement
Pursuant to Section 134(3) (c) and 134(5) of the Companies Act 2013 the Directorsconfirm that: a. in the preparation of the annual accounts the applicable accountingstandards had been followed alongwith proper explanation relating to material departures;b. the directors had selected such accounting policies and applied them consistently andmade judgments and estimates that are reasonable and prudent so as to give a true and fairview of the state of affairs of the Company at the end of the financial year and of theprofit of the Company for that period; c. the Directors had taken proper and sufficientcare for the maintenance of adequate accounting records in accordance with the provisionsof this Act for safeguarding the assets of the Company and for preventing and detectingfraud and other irregularities; d. the Directors had prepared the annual accounts on agoing concern basis; e. the Directors had laid down internal financial controls to befollowed by the Company and that such internal financial controls are adequate and wereoperating effectively; and f. the Directors had devised proper systems to ensurecompliance with the provisions of all applicable laws and that such systems were adequateand operating effectively.
28. Disclosure under the sexual harassment of women at workplace (PreventionProhibition And Redressal) Act 2013
The Company has always believed in providing a safe and harassment free workplace forevery individual working in the Company premises through various interventions andpractices. The Company always endeavors to create and provide an environment that is freefrom discrimination and harassment including sexual harassment.
The Company has in place robust policy on prevention prohibition and redressal ofcomplaints relating to sexual harassment at workplace which is applicable to all employeesof the company as per the provisions of Sexual Harassment of Women at Workplace(Prevention prohibition and Redressal) Act 2013. The company has complied with theprovisions relating to the constitution of Internal Complaints Committee under the SexualHarassment of Women at Workplace (Prevention prohibition and Redressal) Act 2013.
During the year under report the company has not received any complaints pertaining tosexual harassment.
29. Significant/material orders passed by the regulators
There are no significant/material orders passed by the Regulators or Courts orTribunals impacting the going concern status of the Company and its operations in future.
30. Internal Financial Control Systems and their adequacy
The Company has adopted policies and procedures for effective internal controls system.This ensures that all transactions are authorized recorded & timely preparation ofreliable financial information the safeguarding of its assets the prevention anddetection of frauds and errors. The Company has an Internal Control System commensuratewith the size scale and complexity of its operations.
31. Management Discussion and Analysis Report
Management Discussion and Analysis Report for the year under report as stipulatedunder the Companies Act 2013 and Securities and Exchange Board of India (ListingObligations and Disclosure Requirements) Regulations 2015 is also presented in a separatesection forming part of this Annual Report.
32. CEO and CFO Certificate
CEO and CFO Certificate as prescribed under Schedule II part B of Securities andExchange Board of India (Listing Obligations and Disclosure Requirements) Regulations2015 is annexed to the Corporate Governance Report forming part of this Annual Report.
33. Disclosure of commission paid to managing or whole time directors
There is no commission paid or payable by the company to the managing director or thewhole time directors.
The Board of Directors acknowledges the continued cooperation assistance and supportthe Company has received from various Government Departments Banks/ financialInstitutions and shareholders. The Board also places on record its appreciation for thesincere services rendered by employees of the company at all levels and the support andco-operation extended by the valued business associates and the continuous patronage ofthe customers of the Company.
| ||For and on Behalf of the Board |
| ||For HPL Electric & Power Limited |
| ||Lalit Seth |
|Date: 12th August 2019 ||Chairman and Managing Director |
|Place: Noida ||DIN: 00312007 |