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Company Information

Home » Market » Company Information

HSIL Ltd.

Jun 11
227.95 -1.00 ( -0.44 %)
 
VOLUME : 4838
Prev. Close 228.95
Open Price 226.00
TODAY'S LOW / HIGH
226.00
 
 
 
232.10
Bid PRICE (QTY.) 0.00 (0)
Offer PRICE (Qty.) 0.00 (0)
52 WK LOW / HIGH
48.05
 
 
 
248.00
Jun 11
228.00 -1.40 ( -0.61 %)
 
VOLUME : 133886
Prev. Close 229.40
Open Price 229.90
TODAY'S LOW / HIGH
226.00
 
 
 
232.90
Bid PRICE (QTY.) 0.00 (0)
Offer PRICE (Qty.) 0.00 (0)
52 WK LOW / HIGH
47.95
 
 
 
247.90
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Market Cap. ( ₹ ) 1475.10 Cr. P/BV 1.20 Book Value ( ₹ ) 190.67
52 Week High/Low ( ₹ ) 248/48 FV/ML 2/1 P/E(X) 16.75
Bookclosure 24/09/2021 TTM EPS ( ₹ ) 13.61 Div Yield (%) 1.75
NOTES TO ACCOUNTS
You can view the entire text of Notes to accounts of the company for the latest year
Year End :2018-03 

Nature and purpose of other reserves:

1. Capital reserve was created on amalgamation of certain entities/undertaking into the Company.

2. Securities premium reserve is used to record the premium on issue of shares. The reserve is utilised in accordance with the provisions of the Act.

3. Under the erstwhile Companies Act 1956, general reserve was created through an annual transfer of net income at a specified percentage in accordance with applicable regulations. The purpose of these transfers was to ensure that if a dividend distribution in a given year is more than 10% of the paidup capital of the Company for that year, then the total dividend distribution is less than the total distributable results for that year. Consequent to introduction of Companies Act 2013, the requirement to mandatorily transfer a specified percentage of the net profit to general reserve has been withdrawn. It, inter alia, includes a sum of ' 10,000 lakh transferred from Business Reconstruction Reserve which cannot be used for issuance of bonus shares and distribution of dividend.

4. Capital redemption reserve is created against redemption of preference shares of the Company.

5. Business reconstruction reserve was created in accordance with a scheme of arrangement approved by the Hon'ble High Court of Calcutta. This reserve can neither be utilised towards issuance of bonus shares nor towards distribution of dividend.

6. FVOCI equity instruments: The Company has elected to recognise changes in the fair value of certain investments in equity securities in other comprehensive income. These changes are accumulated within FVOCI equity investments reserve within equity. The Company transfers amounts from this reserve to retained earnings when the relevant equity securities are derecognised.

7. Dividends paid (including dividend distribution tax) during the year ended 31 March 2018 of ' 3,480.57 lakh (' 4 per equity share of ' 2/- ) were approved for payment.

Warranty claims:

The provision for warranty claims represent the present value of best estimate of the future outflow of economic benefits that will be required under the Company obligations for warranties under the local sale of goods. The estimate has been made based on historical warranty trends and may vary as a result of new materials, altered manufacturing process or other events. Assumptions used to calculate the provision for warranties were based on current sales levels and current information available about returns based on the 2 to 12 years warranty period.

Details of security and term of repayment of each

type of borrowing:

Secured borrowings

Cash credit facilities:

a) Cash credit facilities from banks carrying interest rate ranging from 8.70% to 10.88% p.a. is repayable on demand and is secured by hypothecation of all current assets including stocks and book debts, present and future, and further secured by second pari-passu charge on all the movable fixed assets (both present and future) of the Company situated at Bahadurgarh plant, Bibinagar plant, Sanathnagar plant and Bhongir plant.

b) Cash credit facility from banks carrying interest rate ranging from 11.00% to 11.70% p.a. and was repayable on demand. This facility is secured by hypothecation against stocks, goods in transit, receivables and all other current assets (both present and future) of the Company's retail business and also having corporate guarantee of the Company.

Buyer's credit facilities:

c) Buyer's credit facilities from banks carrying interest ranging between LIBOR plus 54bps to LIBOR plus 75 bps per annum (p.a.) is repayable within 12 months from the date of origination and is secured by hypothecation of all current assets including stocks and book debts and further secured by second pari-passu charge on all the movable fixed assets (both present and future) of the Company situated at Bahadurgarh plant, Bibinagar plant, Sanathnagar plant and Bhongir plant.

Short term loan facilities:

d) Working capital demand loan and Short term loans from banks carrying interest rate ranging from 7.80% to 8.30% p.a. is repayable within 7 days to 31 days and is secured by hypothecation of all current assets including stocks and book debts present and future, and further secured by second pari-passu charge on all the movable fixed assets (both present and future) of the Company situated at Bahadurgarh plant, Bibinagar plant, Sanathnagar plant and Bhongir plant.

e) Working capital demand loan and Short term loans from banks carrying interest @ 9.15% p.a. was repayable within 31 days from disbursements. This facility is secured by hypothecation against stocks, goods in transit, receivables and all other current assets (both present and future) of the Company's retail business and also having corporate guarantee of the Company.

Packing credit:

f) Packing credit in foreign currency facilities from banks carrying interest LIBOR plus 70 bps per annum (p.a.) was repayable within 6 months from the date of origination and was secured by hypothecation of all current assets including stocks and book debts and further secured by second pari-passu charge on all the movable fixed assets (both present and future) of the Company situated at Bahadurgarh plant, Bibinagar plant, Sanathnagar plant and Bhongir plant.

g) Packing credit facilities from bank carrying interest 8% per annum (p.a.) was repayable within 7 days from the date of origination and was secured by hypothecation of all current assets including stocks and book debts and further secured by second pari-passu charge on all the movable fixed assets (both present and future) of the Company situated at Bahadurgarh plant, Bibinagar plant, Sanathnagar plant and Bhongir plant.

Unsecured short term borrowings

a) Working capital demand loans:

Short term loan from bank amounting to ' 7680 lakh carrying interest @ 7.60% to 7.80% p.a. is repayable within 3 months from the drawdown date.

b) Commercial papers :

Commercial paper from various banks ' 30,000 lakh (previous year ' 25,000 lakh) carrying discount rate of 7.45% to 7.85 % p.a. is payable within 88 to 91 days from the date of origination.

(e) There is no change in statutory enacted income-tax rate during the financial year.

(f) There is no temporary differences associated with investment in subsidiaries.

NOTE 8- FINANCIAL INSTRUMENTS AND RISK REVIEW Capital management

The Company manages its capital to be able to continue as a going concern while maximising the returns to shareholders through optimisation of the debt and equity balance. The capital structure consists of debt which includes the borrowings as disclosed in note 22 and 27; cash and cash equivalents as disclosed in note 15 and current investment and equity attributable to equity holders of the Company, comprising issued share capital, reserves and retained earnings as disclosed in the Statement of changes in equity. For the purpose of calculating gearing ratio, debt is defined as non-current and current borrowings (excluding derivatives). Equity includes all capital and reserves attributable to equity holders of the Company. The Company is not subject to externally imposed capital requirements. The Board reviews the capital structure and cost of capital on an annual basis but has not set specific targets for gearing ratios. The risks associated with each class of capital are also considered as part of the risk reviews presented to the Audit Committee and the Board of Directors.

Financial risk management objective

The Company is exposed to various risks in relation to financial instruments. The main types of risks are market risk, credit risk and liquidity risk. The Company is not engaged in speculative treasury activities but seeks to manage risk and optimise interest and commodity pricing through proven financial instruments.

The use of any derivative is approved by the management, which provide guidelines on the acceptable levels of interest rate risk, credit risk, foreign exchange risk and liquidity risk and the range of hedging requirement against these risks.

Credit risk:

Credit risk is the risk that a counter party will not meet its obligations under a financial instrument or customer contract, leading to financial loss. The Company is exposed to credit risk for receivables, cash and cash equivalents, short term investments, financial guarantee and derivative financial instruments.

Cash and cash equivalents and short term investments

The Company considers factors such as track record, size of institution, market reputation and service standard to select the banks with which deposits are maintained. Generally the balances are maintained with the institutions with which the Company has also availed borrowings. The Company does not maintain significant deposit balances other than those required for its day to day operations.

Trade receivables

The Company extends credits to customer in normal course of the business. The Company considers the factors such as credit track record in the market of each customer and past dealings for extension of credit to the customer. The Company monitors the payment track record of each customer and outstanding customer receivables are regularly monitored. The Company evaluates the concentration of risk with respect to trade receivables as low, as its customers are located at several jurisdiction and industries and operate in large independent markets. The Company also takes advances and security deposits from customers which mitigate the credit risk to an extent.

The average credit period taken on sales of goods is 30 to 60 days. Generally, no interest has been charged on the receivables. Allowances against doubtful debts are recognised against trade receivables based on estimated irrecoverable amounts determined by reference to past default experience of the counterparty and an analysis of the counterparty's current financial position. Before accepting any new customer, the Company uses an internal credit system to assess the potential customer's credit quality and defines credit limits by customer. Limits attributed to customers are reviewed periodically. There are no customers who represent more than 5 per cent of total net revenue from operations. The Company does not hold any collateral or other credit enhancements over any of its trade receivables nor does it have a legal right of offset against any amounts owed by the Company to the counterparty.

Liquidity risk:

Liquidity risk reflects the risk that the Company will have insufficient resources to meet its financial liabilities as they fall due.

The Company's objective is to maintain optimum levels of liquidity to meet its cash and collateral requirements. The Company relies on a mix of borrowings, capital infusion and excess operating cash flows to meet its needs for funds. The current committed lines of credit are sufficient to meet its short to medium term expansion needs. The Company monitors rolling forecasts of its liquidity requirements to ensure that it has sufficient cash to meet operational needs while maintaining sufficient headroom on its undrawn committed borrowing facilities so that it does not breach borrowing limits.

The table below provides undiscounted cash flows towards non-derivative financial liabilities into relevant maturity based on the remaining period at the balance sheet date to the contractual maturity date and, where applicable, their effective interest rates.

Market risk

The Company's activities expose it primarily to the financial risks of changes in foreign currency exchange rates and interest rates. The Company enters into a variety of derivative financial instruments to manage its exposure to foreign currency risk, including :

Forward foreign exchange contract to hedge the exchange rate risk arising on the export of its products.

Forward foreign exchange contract to hedge the exchange rate risk arising on translation of the foreign currency loans.

Currency risk

The Company undertakes various transactions denominated in foreign currencies, consequently, exposure to exchange rate fluctuations arise. Exchange rate exposures are managed within approved policy parameters utilising forward foreign exchange contracts.

The Company transacts business primarily in Indian Rupee, USD, Euro and GBP. The Company has obtained foreign currency loans and has foreign currency trade payables and receivables and is therefore, exposed to foreign exchange risk. Certain transactions of the Company act as a natural hedge as a portion of both assets and liabilities are denominated in similar foreign currencies. For the remaining exposure to foreign exchange risk, the Company adopted a policy of selective hedging based on risk perception of the management. Foreign exchange hedging contracts are carried at fair value.

This is mainly attributable to the exposure outstanding on foreign currency receivables and payables in the Company at the end of each reporting period.

Interest rate risk

The Company's exposure to the risk of changes in market interest rates relates primarily to long term debts. Its objective in managing its interest rate risk is to ensure that it always maintain sufficient head room to cover interest payment from anticipated cash flows which is regularly reviewed by the board/nominated committee as well.

Commodity risk

The Company is exposed to the movement in the price of key raw material and other traded goods in the domestic and international markets. The Company has in place policies to manage exposure to fluctuation the prices of key raw materials used in operations. The Company enter into contracts for procurement of raw material and traded goods, most of the transactions are short term fixed price contract and a few transactions are long term fixed price contracts.

Segment information, as required under Ind AS 108 "Operating Segment", has been provided in the consolidated financial statements of the Company and therefore, no separate disclosure on segment information is given in these standalone financial statements.

NOTE 9 - EMPLOYEE BENEFITS A. Defined contribution plan

The Company operates defined contribution retirement benefit plans for all employees. The assets of the plans are held separately from those of the Companies in funds under the control of trustees. Where employees leave the plans prior to full vesting of the contributions, the contributions payable by the Company are reduced by the amount of forfeited contributions.

The Company's contribution to Provident Fund and Superannuation Fund aggregating to ' 917.84 lakh (net of amount capitalised and reimbursement received from government) (previous year ' 886.05 lakh) has been recognised in the Statement of Profit and Loss under the head Employee Benefits Expense.

B. Defined benefit plans Gratuity

The Company operates a gratuity plan covering qualifying employees. The benefit payable is greater of the amount calculated as per the Payment of Gratuity Act, 1972 or the Company scheme applicable to the employee. The benefit vests upon completion of five years of continuous service and once vested it is payable to employees on retirement or on termination of employment. In case of death while in service, the gratuity is payable irrespective of vesting. The Company makes annual contribution to the group gratuity scheme administered by the Birla Sun Life Insurance Company Limited.

List of related parties

Relationship_Name of related party_

Key management personnel (KMP) Dr. Rajendra Kumar Somany (Chairman and Managing Director)

Mr. Sandip Somany (Vice Chairman and Managing Director)

Mr. Sandeep Sikka (CFO)

Ms Payal M Puri (CS)

Relative of key management Mrs. Sumita Somany (Non Executive Director)

personnel (KMP)

Subsidiaries Hindware Home Retail Private Limited

Somany Home Innovation Limited (incorporated on 28 September 2017)

Brilloca Limited (incorporated on 2 November 2017) (Subsidiary of Somany Home Innovation Limited)

Luxxis Heating Solutions Private Limited (incorporated on 26 December 2017)

Halis International Limited, Mauritius

Alchemy International Cooperatief U.A. (subsidiary of Halis International Limited) Haas International B.V. (subsidiary of Alchemy International Cooperatief U.A.)

KS 615 Limited (formerly Barwood Products Limited (ceased to be subsidiary of

Haas International B.V. as dissolved on 30 January 2018)...................

Queo Bathroom Innovations Limited, UK (subsidiary of Haas International B.V.) _ _ Entities where significant influence is Textool Mercantile Private Limited _

exercised by KMP and/or their relatives _PacoJxpots_Limited..................................................................................................................................................................................................................................................

having transactions with the Company .New. ..D.e.l.h.i...I.n.d_ustrial.Pl°m°torsand iQv.§stors_Limited....................................................................................................................

Soma Investments Limited

Murlidhar Rajendra Kumar _

Post employment benefit plan HSI Employees Gratuity Fund

Somany Provident Fund Institution

The following transactions were carried out with related parties in the ordinary course of business and on arm's length basis.

# Including bonus, sitting fee, commission on accrual basis and value of perquisites.

$ including provident fund, leave encashment paid and any other benefit

* As the liability for gratuity and leave encashment are provided on actuarial basis for the Company as a whole, amounts accrued pertaining to key managerial personnel are not included above.

NOTE 10 - CORPORATE SOCIAL RESPONSIBILITY

In accordance with the provisions of section 135 of the Act, the Board of Directors of the Company had constituted a Corporate Social Responsibility (CSR) Committee. In terms, with the provisions of the said Act, the Company was to spend a sum of ' 337.78 lakh (previous year ' 290.77 lakh) towards CSR activities during the year ended 31 March 2018. The CSR Committee has been examining and evaluating suitable proposals for deployment of funds towards CSR initiatives, however, the committee expects finalization of such proposals in due course. During the year ended 31 March 2018, the Company has contributed the following sums towards CSR initiatives.

NOTE 11

a) The Hon'ble National Company Law Tribunal of Kolkata, West Bengal, vide its order dated 4 May 2017 approved the Composite Scheme of Arrangement (the "Scheme") between the Company and its wholly owned subsidiary Hindware Home Retail Private Limited (HHRPL), their shareholders and creditors. Pursuant to the Scheme, all the properties, assets, rights, claims and obligations of the Retail Business of HHRPL (the "Demerged Undertaking") has been transferred and vested in the Company on a going concern basis with effect from the Appointed Date i.e., 1 April 2015. The Scheme has been accounted for as a business combination of entities under the common control.

b) Further, pursuant to the Scheme, the Company has also reorganised and adjusted the cost of equity and preference shares held in HHRPL to an amount equivalent to the remaining net assets of the HHRPL as on the appointed date, post demerger. Therefore, the investment in HHRPL has been reorganised from 32,000,000 equity shares to 640,000 equity shares as on the appointed date.

NOTE 12

a) The Board of Directors of the Company has approved utilisation of Business Reconstruction Reserve (BRR) by '210.64 lakh pertaining to impairment of investment during the year ended 31 March 2018. The aforesaid utilisation against BRR is as per the Scheme of Arrangement approved by the Hon'ble High Court of Calcutta vide its order dated 26 March 2010.

b) The Board of Directors of the Company has approved utilisation of Business Reconstruction Reserve (BRR) by ' Nil (previous year ' 838.63 lakh) pertaining to write off of old, non-moving and slow inventory done by the Demerged Undertaking during the year ended 31 March 2017. The aforesaid utilisation against BRR is as per the Scheme of Arrangement approved by the Hon'ble High Court of Calcutta vide its order dated 26 March 2010.

NOTE 13

The Boad of Directors of the Company, in its meeting held on 10 November 2017 had approved a composite Scheme of Arrangement under section 230 to 232, read with section 66 and other applicable provisions of the Companies Act 2013 and the provisions of other applicable laws, amongst the Company, Somany Home Innovation Limited, a wholly owned subsidiary of the Company ("Resulting Company 1") and Brilloca Limited, a wholly owned subsidiary of Resulting Company 1 ("Resulting Company 2") and their respective shareholders and creditors ("Scheme'). The Scheme provides for the demerger of, (i) the Consumer Products Distribution and Marketing Undertaking ("CPDM Undertaking") and Retail Undertaking of the Company into Resulting Company 1, and (ii) the Building Products Distribution and Marketing Undertaking ("BPDM Undertaking") of the Company into Resulting Company 2. The Appointed Date for the Scheme is 1 April 2018 or such other date as directed by the Hon'ble Kolkata Bench of the National Company Law Tribunal ("NCLT"). The Scheme is subject to necessary regulation, approval and sanction by Hon'ble NCLT. The Company has received approval from BSE Limited and the National Stock Exchange of India Limited and is in the process of filing the application with Hon'ble NCLT for approval.

NOTE 14

A portion of the company's Kaharani unit engaged in manufacturing of faucets, a part of building products division, had fire on the night of 12 November 2017. The necessary surveys by the insurance company has been conducted and unit is duly covered by insurance including reinstatement value clause. The insurance company is in process of assessing the quantum of claims for settlement. Adjustments, if any relating to fire would be carried out upon its final assessment by the insurance company. Based on provisional estimates made by the management, the value of assets and inventories affected by fire is ' 1445 lakh and '205 lakh respectively, for which insurance claim has been lodged. In the opinion of management there will not be any material impact on this account on state of affairs and profit of the company.

NOTE 15 - DIVIDEND

In respect of the current year, the directors propose that a dividend of ' 4/- per share to be paid on equity shares of ' 2 per share. This equity dividend is subject to approval by shareholders at the Annual General Meeting and has not been included as a liability in these financial statements. The proposed equity dividend is payable to all shareholders on the Register of Members. The total estimated equity dividend to be paid is '2891.86 lakh. The payment of this dividend is estimated to result in payment of dividend tax of '594.43 lakh on the amount of dividends grossed up for the related dividend distribution tax.

NOTE 16 - EXCEPTIONAL ITEM

On 17 October 2017, one of the warehouses relating to the Retail Business division had fire which resulted in a loss of ' 654.15 lakh and has been duly provided in the books of accounts for the year ended 31 March 2018. Insurance claims relating to the loss has been filed and the settlement amounts of insurance claims as received would be accounted for on receipt.

NOTE 17

Previous period figures have been regrouped /re-arranged wherever considered necessary to confirm to the current year's classification.