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Company Information

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HIL Ltd.

Oct 26
4991.10 +194.50 (+ 4.05 %)
VOLUME : 1271
Prev. Close 4796.60
Open Price 4700.00
Bid PRICE (QTY.) 0.00 (0)
Offer PRICE (Qty.) 0.00 (0)
Oct 26
4997.25 +205.50 (+ 4.29 %)
VOLUME : 14377
Prev. Close 4791.75
Open Price 4790.00
Bid PRICE (QTY.) 0.00 (0)
Offer PRICE (Qty.) 0.00 (0)
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Market Cap. ( ₹ ) 3744.21 Cr. P/BV 3.77 Book Value ( ₹ ) 1,324.57
52 Week High/Low ( ₹ ) 6758/1660 FV/ML 10/1 P/E(X) 14.41
Bookclosure 30/07/2021 TTM EPS ( ₹ ) 412.40 Div Yield (%) 0.80
You can view the entire text of Notes to accounts of the company for the latest year
Year End :2019-03 

1. Operating segments

The Company has presented segment information in the consolidated financial statements which are presented in the same financial report. Accordingly, in terms of paragraph 3 of Ind AS 108 'Operating Segments' no disclosures related to segment are presented in this standalone financial statements.

2. Employee benefits

The Company has the following post-employment benefit plans:

(a) Defined contribution plan

The following amount has been recognized as an expense in standalone statement of profit and loss on account of contribution to provident fund and other funds. There are no other obligations other than the contribution payable to the respective authorities.

3. Employee benefits (Continued)

b) Defined benefit plan

In accordance with the 'The Payment of Gratuity Act, 1972' of India, the Company provides for Gratuity, the Employees' Gratuity Fund Scheme (the Gratuity Plan), covering eligible employees. Liabilities with regard to such Gratuity Plan are determined by an actuarial valuation as at the end of the year and are charged to the standalone statement of profit and loss. This defined benefit plans expose the Company to actuarial risks, such as longevity risk, currency risk, interest rate risk and market (investment) risk.

The Gratuity plan managed by a trust is a defined benefit gratuity plan which is administered through Group Gratuity Scheme with Life Insurance Corporation of India ("LIC”). Every employee who has completed five years or more of service gets a gratuity on departure at 15 days salary (last drawn salary) for each completed year of service or part thereof in excess of six months.

The Company has determined that, in accordance with the terms and conditions of the gratuity plan, and in accordance with statutory requirements (including minimum funding requirements) of the plan of the relevant jurisdiction, the present value of refund or reduction in future contributions is not lower than the balance of the total fair value of the plan assets less the total present value of obligations. As such, no decrease in the defined benefit asset is necessary at 31 March 2019 (31 March 2018: no decrease in defined benefit asset).

i) Reconciliation of the net defined benefit (asset)/ liability

The following tables summarizes the components of net benefit expense recognized in the standalone statement of profit and loss, the funded status and amount recognized in the standalone balance sheet for the gratuity plan:

The discount rate indicated above reflects the estimated timing and currency of benefit payments. It is based on the yields/ rates available on applicable bonds as on the current valuation date.

The salary growth rate indicated above is the Company's best estimate of an increase in salary of the employees in future years, determined considering the general trend in inflation, seniority, promotions, past experience and other relevant factors such as demand and supply in employment market, etc.

Attrition rate indicated above represents the Company's best estimate of employee turnover in future (other than on account of retirement, death or disablement) determined considering various factors such as nature of business, retention policy, industry factors, past experience, etc.

iii. Sensitivity analysis

Reasonably possible changes at the reporting date to one of the relevant actuarial assumptions, holding other assumptions constant, would have affected the defined benefit obligation and current service cost by the amounts shown below:

Although the analysis does not take account of the full distribution of cash flows expected under the plan, it does provide an approximation of the sensitivity of the assumptions shown.

Expected contributions to the plan for the next annual reporting period

The Company expects to contribute a sum of H 355.78 lacs to the plan for the next annual reporting period.

(h) There are other civil matters against the Company of which one such case is pertaining to certain mining activity performed by the Company in the past. During the year, Tribunal has referred the case to concerned state authorities to evaluate the cost of restoration of the affected area and submit the report to recover the cost from the parties involved. Further, claims from other affected parties, if any, would have to be examined. Considering no action has been taken with respect to the above and no demand for cost of the aforesaid has been made to the Company, Management believes it is not possible to

ascertain the financial impact on the Company._

* Income-tax demand comprises of demand from the Indian tax authorities upon completion of their assessment for the financial years 2008-09 to 201415. The tax demands are mainly on account of disallowance of the benefit on research & development expenses, depreciation expenses on wind mill, other expenses not allowed and capital gain on relinquishment of right on leasehold land.

** The demands raised by the sales tax authority are mainly towards enhancement of turnover due to certain disallowances, entry tax on stock transfers and local sales tax demand upon completion of assessment and various other miscellaneous cases raised by the respective state authorities.

*** The demand raised by the excise authority is mainly towards excise duty demand including interest and penalty towards disallowance of availment of CENVAT credit and wrong classification of products as taxable versus exempt product.

**** Other claims against the Company not acknowledged as debt mainly includes liability towards fuel surcharge adjustment disputed with electricity board for the financial year 2008-09 and 2009-10.

The Company is contesting the demands and the Management believe that its position will likely be upheld in the appellate process and accordingly no expense has been accrued in the standalone financial statements for the demand raised/ show cause notice received as the ultimate outcome of these proceedings will not have a material adverse effect on the Company's standalone financial statements.

4. B. On 28 February 2019, the Hon'ble Supreme Court of India has delivered a judgment clarifying the principles that need to be applied in determining the components of salaries and wages on which Provident Fund (PF) contributions need to be made by establishments. However, considering that there are numerous interpretative issues relating to retrospective application of this judgement, the Company has made a provision for provident fund contribution based on the best estimate. The Company will evaluate its position and update its provision, if required, on receiving further clarity on the subject.

Name of the related party Nature of relationship

Key Management personnel

Mr. Dhirup Roy Choudhary Managing Director and Chief Executive Officer ("CEO")

Mr. KR Veerappan Chief Financial Officer

Mr. G Manikandan Company Secretary and Financial Controller Non-Executive Directors and Independent Directors

Mr. CK Birla Chairman (Non-Executive Director)

Mr. Desh Deepak Khetrapal Non-Executive Director

Mrs. Gauri Rasgotra Independent Director

Mr. V.V. Ranganathan Independent Director (joined on 19 March 2019)

Mr. Arvind Sahay Independent Director (joined on 08 February 2019)

Mr. P. Vaman Rao Independent Director (resigned w.e.f. 08 February 2019)

Mr. Yash Paul Independent Director (resigned w.e.f. 19 March 2019)

#During previous year, the Company made provision for the dividend receivable amounting to H 9.01 lacs from Supercor Industries Limited (''Supercor'') as the receipt of same is considered to be doubtful. Further, the Company has also made provision for value of investment in Supercor in the books of account amounting to H 142.60 lacs.

*As the future liabilities for gratuity and leave encashment is provided on an actuarial basis and payment of insurance costs are made for the Company as a whole, the amount pertaining to the key management personnel is not ascertainable, therefore, not included above.

All related party transactions entered during the year were in ordinary course of business and are on arm's length basis.

5. Details of dues to Micro Enterprises and Small Enterprises as per Micro, Small and Medium Enterprises Development (MSMED) Act, 2006

The information as required under the MSMED Act, 2006 has been determined to the extent such parties have been identified on the basis of information available with the Company and has been relied upon by the auditors.

(a) The wage agreements at one of the manufacturing locations (31 March 2018: at four) of the Company are pending as at 31 March 2019. It is expected that agreement will be entered in next year and arrears would be paid based on the agreement. The provision for wage arrears have been made on the basis of expected outflows.

(b) Provision for litigations represents provision towards potential liability against various ongoing indirect tax cases based on Company's internal assessment.

(c) Provision- others represents provision towards possible obligation against certain past events for which the expected outflow is certain.

6. Share based payments

A. Description of share-based payment arrangements

Employee stock option scheme (equity-settled)

The Company provides share-based payment schemes to its eligible employees as identified in the "HIL Employees Stock Option Scheme 2015 (HIL ESOS)". The relevant details of the scheme and the grant are as below:

On 12 May 2015 the Nomination and Remuneration cum Compensation Committee of the Board of Directors of the Company approved the HIL Employees Stock Option Scheme 2015 ("HIL ESOS”) for issue of stock options to identified employees of the Company.

7. Service concession arrangement

On 21 March 2011, the Company entered into a service concession agreement with Gujarat Urja Vikas Nigam Limited (the grantor) to provide the service of generation of electricity and selling the same to grantor. The Power Plant was commissioned and available for use on 18 April 2011. Under the terms of the agreement, the Company will sell all available capacity of electricity generated from the 1.8 MW wind power plant at village Vandhiya, Gujarat for a period of 25 years at a fixed rate of H 3.56 per kwh for delivered energy as certified by state electricity authority of Gujarat state load dispatch center ("SLDC”), starting from 18 April 2011 (commercial operation date). The Company will be responsible for any maintenance services required during the concession period. The Company does not expect major repairs to be necessary during the concession period.

On 24 September 2014, the Company entered into a service concession agreement with Ajmer Vidyut Vitran Nigam Limited (the grantor) to provide the service of generation of electricity and selling the same to grantor. The Power Plant was commissioned and available for use on 30 September 2014. Under the terms of the agreement, the Company will sell all available capacity of electricity generated from the 2 MW wind power plant at village Rajgarh, district Jaisalmer for a period of 25 years at a fixed rate of H 5.31 per kwh for the delivered energy conforming the standards as approved by Rajasthan Electricity Regulatory Commission ("RERC”), starting from 30 September 2014 (commercial operation date). The Company will be responsible for any maintenance services required during the concession period. The Company does not expect major repairs to be necessary during the concession period.

The Company recognized service concession arrangement with Gujarat Urja Vikas Nigam Limited and Ajmer Vidyut Vitran Nigam Limited under intangible asset model, on the basis that the Company will receive variable amount of revenue from the respective discoms in Gujarat and Rajasthan depending upon the actual amount of electricity generated and supplied to the respective discoms. The discoms has not assured any minimum amount of proceeds to the Company. The Company bears the demand risk and the right to receive cash from the Discoms is not unconditional i.e. it depends upon the actual amount of electricity generated and supplied to the discoms.

The service concession agreements with the Gujarat Urja Vikas Nigam Limited and Ajmer Vidyut Vitran Nigam Limited does not contain a renewal option. The standard rights of the grantor to terminate the agreement in both the arrangements include poor performance by the Company and the event of a material breach of the terms of the agreement by the Company. The standard rights of the Company to terminate the agreement in both the arrangements include failure of the grantor to make payment under the agreement and a material breach by the grantor of the terms of the agreement.

During the year, the Company has recorded revenue of RS, 260.74 lacs (31 March 2018: RS, 282.04 lacs) on generation of power, and recorded profit of RS, 123.89 lacs (31 March 2018: RS, 182.29 lacs).

8. Investment

a) Interest in subsidiary

The Company incorporated a wholly owned subsidiary "HIL International GmbH” at Germany on 04 July 2018 which acquired 100% shareholding of Parador Holding GmbH, Germany through sale and purchase agreement dated 11 July 2018 and completed the acquisition on 27 August 2018.

During the year ended 31 March 2019 and 31 March 2018, the Company did not receive any dividend from Supercor Industries Limited.

c) The Company holds 33% stake in Supercor Industries Limited ("Supercor”) and its investment in Supercor as at 31 March 2019 amounts to H Nil (31 March 2018: H Nil), after considering the provision for diminution in value of investments amounting to H 142.60 lacs (31 March 2018: H 142.60 lacs). Supercor suspended its operations from November 2015, none of the employees of Supercor are attending office and the power connection at the office of Supercor has also been discontinued. On account of this reason, Supercor has been unable to prepare its year end accounts. Therefore, due to non-availability of any information from Supercor and the unusual circumstances mentioned above, which is beyond the control of the Company, the Company is unable to present the required information.

During earlier years, the Company had filed a winding up petition in Nigeria for Supercor and made 100% provision against the investment value and outstanding receivable balances. As informed by Management, the winding-up petition filed by the Company in 2016 has been dismissed in Nigerian Court. An interim Board has been set up by the Nigerian Government for assessing the revival of the operations. However, detailed plan of action from the interim Board of Supercor is awaited. The Management does not foresee any future liability on account of any claim, with respect to Supercor over and above the amount invested in Supercor.

ii. Operating lease in the capacity of lessee

a) The Company has certain operating leases for office facilities and residential premises (cancellable leases). Such leases are generally with the option of renewal against increased rent and premature termination of agreement. Rental expenses of RS, 498.81 lacs (31 March 2018: RS, 446.00 lacs) in respect of obligation under operating leases have been recognized in the standalone statement of profit and loss.

b) The Company had certain cancellable arrangements with the parties (which conveys a right to use an asset in return for a payment or a series of payments) identified to be in the nature of lease and have been classified as operating lease arrangements. Rental expense of H Nil (31 March 2018: H 1921.06 lacs) in respect of obligation under operating leases have been recognized in the standalone statement of profit and loss. It includes payment for non-lease elements in the arrangement as the same is impracticable to separate the payments reliably.

9. Capital management

The Company aims to maintain a strong capital base so as to maintain the confidence of all stakeholders and to sustain future development of the business.

In order to maintain the capital structure, the Company monitors the return on capital, as well as the level of dividends to equity shareholders. The Company aims to manage its capital efficiently so as to safeguard its ability to continue as going concern and to optimize returns to all its shareholders. For the purpose of the Company's capital management, capital includes issued capital and all other equity reserves and debt includes long-term borrowings (including current maturities) and short-term borrowings.

10. Expenditure incurred on research and development

Revenue expenditure debited to respective heads of account includes expenditure incurred on Research and Development during the year amounting to RS, 357.83 lacs (31 March 2018: RS, 329.87 lacs) and assets/ equipment purchased for research activities of RS, 108.61 lacs (31 March 2018: RS, 79.00 lacs) disclosed under Property, plant and equipment.

11. The Company has entered into transactions amounting to RS, 439.70 lacs (31 March 2018: RS, 377.65 lacs) during the year ended 31 March 2019 and having outstanding payable balance amounting to RS, 18.50 lacs as at 31 March 2019 (31 March 2018: RS, 71.89 lacs) with CK Birla Corporate Services Limited. As the Company and CK Birla Corporate Services Limited use the same 'CK Birla' brand and are disclosed as being part of the same 'group' on the website operated by CK Birla Corporate Services Limited, from a good governance perspective the transaction and outstanding payable balances are disclosed in the standalone Ind AS financial statements.

12. The Company has a process whereby periodically all long term contracts (including derivative contracts) are assessed for material foreseeable losses. At the year end, the Company has reviewed and ensured that adequate provision as required under any law/ accounting standards for material foreseeable losses on such long term contracts (including derivative contracts) has been made in the books of accounts.

13. Change in significant accounting policies:

Ind AS 115 has impact on customer loyalty programme. Under Ind AS 18, revenue was allocated between the loyalty programme and the Company's products using the residual value method i.e., consideration was allocated to the loyalty programme based on the fair value of the loyalty points and the remainder of the consideration was allocated to the Company's products. Under Ind AS 115, this allocation is based on the relative stand-alone selling prices. Accordingly, a lower proportion of the consideration is allocated to the loyalty programme, and therefore less revenue is deferred. The impact of these changes on items other than revenue is that revenue which was presented as deferred income earlier is now included, at a lower amount, in a new balance -

i.e. contract liability against performance obligation.

For additional information about the Company's accounting policies relating to revenue recognition, see note 3(i).

The following table summarizes the impact, net of tax, of transition to Ind AS 115 on retained earnings (cumulative effect) as on 01 April 2018.

The following tables summaries the impacts of adopting Ind AS 115 on the Company's standalone statement of financial position as at 31 March 2019 and its standalone statement of profit and loss and OCI for the year then ended for each of the line items affected. There was no material impact on the Company's standalone statement of cash flows for the year ended 31 March 2019.

14. Financial instruments - fair values and risk management (Continued)

B. Measurement of fair values

i. Valuation technique and significant unobservable inputs

Derivative assets/ liabilities: The fair value is determined using forward exchange rates at the reporting date.

Investment in equity instruments: The fair value is determined based on the average of value determined as per discounted cash flows approach and intrinsic value per share as on the reporting date.

ii. Transfer between Level 1 and 2

There have been no transfers from Level 2 to Level 1 or vice-versa in 2018-19 and no transfers in either direction in 2017-18.

C. Financial risk management

The Company has exposure to the following risks arising from financial instruments:

a) Liquidity risk

b) Market risk

c) Credit risk

i) Risk management framework

The Company's Board of Directors has overall responsibility for the establishment and deployment of risk management framework. The Board of Directors has adopted a Risk Policy, which empowers the management to access and monitoring the risk management parameters along with action taken and the same is updated to Board of Directors.

The Company's risk management policies are established to identify and analyse the risks being faced by the Company, to set appropriate risk limits and controls and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Company's activities. The Company, through its training and management standards and procedures, aims to maintain a disciplined and constructive control environment in which all employees understand their roles and obligations.

15. Financial instruments - fair values and risk management (Continued)

C. Financial risk management (Continued)

The Company's audit committee oversees how management monitors compliance with the Company's risk management policies and procedures, and reviews the adequacy of the risk management framework in relation to the risk faced by the Company. The audit committee is assisted in its oversight role by internal audit. Internal audit undertakes both regular and adhoc reviews of risk management controls and procedures, the result of which are reported to the audit committee.

ii) Liquidity risk

Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Company's approach to managing liquidity is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when they are due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company's reputation.

The Company aims to maintain the level of its cash and cash equivalents at an amount in excess of expected cash outflows on financial liabilities (other than trade payables). The Company also monitors the level of expected cash inflows on trade receivables and loans together with expected cash outflows on trade payables and other financial liabilities.

Exposure to liquidity risk

The following are the remaining contractual maturities of financial liabilities at the reporting date. The amounts reflect the principal amounts that are gross and undiscounted, and exclude the impact of netting agreements.

31 March 2019

(H in lacs)

iii) Market risk

Market risk is the risk that results from changes in market prices - such as foreign exchange rates, interest rates and others - will affect the Company's income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimizing the return.

The Company uses derivatives to manage market risks.

a) Foreign currency risk

The Company is exposed to currency risk to the extent that there is a mismatch between the currencies in which sales and purchases are denominated. The functional currency for the Company is INR (H). The currencies in which these transactions are primarily denominated is US dollars and Euros. The Company does not enter into any derivative instruments for trading or speculative purposes.

Currency risks related to the principal amounts of the Company's US dollar trade payables and EURO loan receivables have been partially hedged using forward contracts that mature on or before the same dates as the payables and receivables are due for repayment. These contracts are designated as derivatives.

Generally, borrowings are denominated in currencies that matter the cash flows generated by the underlying operations of the Company. In addition, interest on borrowings is denominated in the currency of the borrowing. This provides an economic hedge without derivatives being entered into and therefore, hedge accounting is not applied in these circumstances.

In respect of other monetary assets and liabilities denominated in foreign currencies, the Company's policy is to ensure that its net exposure is kept to an acceptable level by buying or selling foreign currencies at spot rates when necessary to address short-term imbalances.

16. Financial instruments - fair values and risk management (Continued)

C. Financial risk management (Continued)

Sensitivity analysis

A reasonably possible strengthening (weakening) of the INR (H), US dollar or Euro against all other currencies at 31 March would have affected the measurement of financial instruments denominated in a foreign currency and affected equity and profit or loss by the amounts shown below. This analysis assumes that all other variables, in particular interest rates, remain constant and ignores any impact of forecast sales and purchases.

The interest rate sensitivity is based on the closing balance of term loans from banks.

iv) Credit risk

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Company's receivables from customers.

17.Financial instruments - fair values and risk management (Continued)

Trade receivables:

Customer credit risk is managed by the respective department subject to Company's established policy, procedures and control relating to customer credit risk management. Credit quality of a customer is assessed based on individual credit limits as defined by the Company. Outstanding customer receivables are regularly monitored.

An impairment analysis is performed at each reporting date on an individual basis. The calculation is based on historical data of credit losses.

The ageing analysis of the receivables has been considered from the date the invoice falls due.