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High Energy Batteries (India) Ltd.

You can view the entire text of Notes to accounts of the company for the latest year
Market Cap. (₹) 34.42 Cr. P/BV 1.85 Book Value (₹) 103.86
52 Week High/Low (₹) 376/142 FV/ML 10/1 P/E(X) 78.91
Bookclosure 28/07/2018 EPS (₹) 2.43 Div Yield (%) 0.00
Year End :2018-03 

d. Capita/ Management

The Company follows conservative capital management with the objective of maximising shareholders' value. For the purpose of the company capital management, capital includes issue capital and ail other equity reserves attributable to the shareholders of the company. The Company has been funding its growth and working capital requirements through a balanced approach of intern at accruals and external debt from the banks and long term loans from companies. The Company monitors the capital structure on The basis of net debt to equity ratio and maturity profile of the eve rail debt component of the company.

General receive is created from time to time by way of transfer of profits from renamed earnings for appropriation purposes. General reserve is treated by a transfer from one component of equity to anointer and is no! an item of other comprehensive income. I! is a free reserve creates 10 enhance the Met wonk of the company.

The company’s financial liabilities comprise mainly of viz., working capital borrowings from banks, bills payable, inter corporate loans from companies, trade payables and other payables. The company's financial asset comprises mainly cash equivalents, other balances with banks, trade receivables. other receivables and investments.

The Company has financial risk exposure in the form of viz.. market risk, credit risk and liquidity risk. The risk management policies of the Company are monitored by the Board of Directors. The present disclosure made by the Company summarizes the exposure to the financial risks.

1) Market Risk:

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market price comprises three types of risk: Currency risk and other price risk. The financial instruments affected by market risk include rupee term loan and loans & advance.

a) Interest Rate Risk exposure

The Company does not have any Long Term Loans from Financial Institutions. The Company is having Working Capital facility limit of fish. 2700 lakhs facility with Banks. The company also discounts its receivables to meet its short term fund requirements. The interest rate Is @ 11,25% depending upon the change in MCRL Rate. Interest on loans from companies is at a fixed rate of 12% and hence there is no interest risk on the loan.

Interest Rate Sensitivity analysis

The Company considering the economic environment in which it operates has determined the interest rate sensitivity analysis (interest exposure at the end to the reporting period). The interest rates for the Company are floating rate and hence the analysis is prepared assuming the amount of the borrowings outstanding at the end of the reporting period was outstanding for the whole year. A 50 basis points 0-50% fluctuation in interest rate is used for disclosing the sensitivity analysis.

The interest rate sensitivity analysis is done holding on the assumption that all other variables remaining constant.

The increase/decrease in interest expense is chiefly attributable to the Company s exposure to interest rates on is variable rate of borrowings.

b) Foreign currency risk exposure

The Company imports Silver Bullion, Silver Foil, Magnesium Sheets, other raw materials and Stores and spares for which payables are denominated in foreign currency. The Company is exposed to foreign currency risk on these transactions. The Company is having outstanding of USS 3.07 is equivalent to Indian Fls.20Q.49 as on 31.03,2018.

In respect of batteries, exports are made against advances received or against confirmed LCs of since period not exceeding 30 days. Hence, the Company is not exposed to any significant Foreign currency risk in respect of its exports.

1) Credit Risk

The credit risk refers 1o risk that counterparty will default on its contractual obligations resulting in financial loss to the Company. Credit risk arises primarily from financial assets such as trade receivables, bank balances, other balances with banks other receivables.

The credit risk arising from the exposure of investing in other balances with banks and bank balances is limited and there is no collateral held against these because the counterparties are public sector banks.

The Company sells its products of Aerospace Naval and Power System Batteries to Defence Customers where the payment terms are definite. The Defines Organisation of Government of India and payments are all received as per the terms of the contracts. The risk is restricted to the Liquidated damages clause for late supplies as per the contract terms and there is no irrevocable credit loss risk.

The Lead Acid Batteries Division is sells its products through Private Labelling arrangements. Customer pays 70% of its order value through opening LC for procuring raw material s. Balance 30% payments received alter 90 days of credit and it is also protected to the extent of raw materials received.

Liquidity risk

Liquidity risk is the risk that the Company will encounter difficulty in meeting obligations associated with financial liabilities that a:e settled by delivering cash or another financial asset. Liquidity risk may result from an inability to sell a financial asset quickly to meet obligations when due. The Company's exposure to liquidity risk arises primarily from mismatches of maturities of financial assets and liabilities.

The Company manages the liquidity risk by -

[i] maintaining adequate and sufficient cash and cash equivalents including investments in mutual funds, and

(ii) making available the funds from realizing timely maturities of financial assets to meet the obligations when due.

The management monitors rolling forecast of the Company's liquidity position and cash and cash equivalents on the basis of expected cash flows. Also, the company manages the liquidity risk by projecting cash flows considering the level of liquid assets necessary to meet the obligations by matching the maturity profiles of financial assets and financial liabilities and monitoring balance sheet liquidity ratios. Further, liquidity risk management involves matching the maturity profiles of financial assets and financial liabilities.

36; First Time Adoption of ind A5

For all periods up to and including the year ended 31" March, 2017, the Company had prepared its financial statements In accordance with the accounting standards notified under Section 133 of The Companies Act, 2013, read together with Rule 7 of the Companies {Accounts) Rules, 2014 (''Previous I GAAP"}, This note explains the principal adjustments made by the Company in restating its financial statements prepared under Previous GAAP for the following:

a) Balance Sheet as at 1stApril. 2016 (Transition date);

b) Balance Sheet as at 31st March, 2017,

c) Statement of Profit and Loss for the year ended 31" March, 2017; and

d) Statement of Cash flows for the year ended 31=f March, 2017.

Exemptions availed:

Ind AS 101 First time adoption of Indian Accounting Standards, allows first-time adopters, exemptions from the retrospective application and exemption from application oi certain requirements of other Ind AS. The Company has availed the following exemption as per Ind AS 101:

t. The Company has elected to consider the carrying value of all its items of property, plant and equipment recognized in the financial statements prepared under Previous I GAAP and use the same as deemed cost in the opening Ind AS Balance Sheet except land, far which fair value as on date of transition is taken as deemed cost.

ii. The Company elected not to apply "Ind AS 103 - Business Combinations" retrospectively for past business combinations.

Foot Notes for First Time adoption of Ind AS:

a) Materiality

The company has applied The standards only to items / transactions which are material,

b) Non-Current Investments:

In the financial statements prepared under Previous GAAP, Nan-current Investments of the Company were measured at cost less provision for diminution, Ind AS requires investments to be recognized at Fair Value. Under Ind AS, the Company has recognised such investments at Fair Value through Other Comprehensive Income (FVTOCI) through an irrevocable option.

On the date of transition to Ind AS, the difference between the fair value of Non-Current Investments as per Ind AS and their corresponding carrying amount as per financial statements prepared under Previous IGAAP, has resulted In an increase in the carrying amount of these investments by Rs.23.73 lakhs which has been recognized as Effect of Measuring Investments at fair value - under Other Comprehensive Income (OCI),

On 31s1 March, 2017, the difference between the fair value of Non-Current Investments as per Ind AS and their corresponding carrying amount as per financial statements prepared under Previous IGAAP, has resulted in an increase in the carrying amount of these investments by Rs.e0.04 lakhs which has been recognized as Effect ot Measuring Investments at fair value - under Other Comprehensive Income (OC!}.

The above has resulted in increase in equity by Rs.23.7B Lakhs as at the date of transition to ind AS and by Rs.56.26 Lakhs as at 31 * March, 2017.

c) Property, Plant and Equipment:

The company has adopted the fair value of find Rs. 1987.82 Lakhs as on the transition date as deemed cost, with title impact of Rs,1963.36 lakhs. In accordance with Ind AS the same is recognized directly under retained earnings.

The consequent deferred tax impact is Rs.382.13 lakhs is also adjusted to retained earnings with other adjustment for deferred tax.

Out of The impairment provision on Trade Receivables of Rs. 279.18 Lakhs, Rs. 100.98 Lakhs was provided under the Previous IGAAP and consequently the provisions recognized in the financial statements prepared under IGAAP for the year ended 31st March, 2017 is reversed and the restatement of Inter Corporate Loans at Amortized Cost using EIR method has resulted in gain of Rs.75.75 Lakhs, recognized in retained earnings as on 31st March. 2017. '

e) Deferred Tax

In the financial statements prepared under the previous GAAP deterred tax was accounted as per Income Approach, which required creation of deferred tax asset/liability on timing differences between taxable profit and accounting profit. Under Ind AS, deferred tax is accounted as per Balance Sheet approach, which requires creation of deferred tax asset/ liability on temporary differences between the carrying amount of an asset liability in the Salience Sheet and its corresponding tax base.

The transitional adjustments have led to temporary differences and creation of deferred tax the rein.

The above changes have resulted in creation of deferred lay liabilities amounting to Rs.250.79 Lakhs as at the date of transition to Ind AS.

The applicable tax rate for the company has come down to 25.75% from 30.9% from FY 2017-18. As the applicable tax rate got enacted on 31.03.2017, the deferred tax asset liabilities were reassessed at the new rate and the net deferred tax asset written off Lakhs is adjusted in the comparative Financial period FY 2016-17,

f) Revenue from Sale of Products:

Under the previous GAAP, Revenue from sale of products was presented net of excise duty while under ind AS, excise duty is presented separately on the face of Profit and Loss. Hence the revenue amount as on 31st March, 2017 is increased by Rs.82.93 Lakhs and shown as expense in the Statement of Profit and Loss.

g) Re-measurement of Defined Benefit Plans:

In the financial statements prepared under Previous IGAAP. re-measurement benefit of Defined Plans (Gratuity), arising primarily due to change in actuarial assumptions was recognized as employee benefit expense in the Statement of Profit and Loss. Under Ind AS, such re-measurement benefit relating to defined benefit plans is recognized in OCI as per the requirements of ind AS 19 - Employee benefits. Consequently, the related tax effect of the same has also been recognized in OCI.

For the year ended 31st March, 201 £ re-measurement of gratuity liability resulted in a net loss of Rs.4.52 lakhs which has now been removed from employee benefits expense in the Statement of Profit and Loss and recognized separately in OCI, This has resulted in decrease in employee benefits expense by Rs.4.52 lakhs and the loss recognized in OCI is Rs.4.52 lakhs for the year ended 31st March, 2017. Consequently, tax effect of the same amounting to Rs. 1.16 lakhs is also recognized separately in OCI.

The above changes do not affect Equity as at date of transition to Ind AS and as at 31st March, 2017.

h) Effect of Ind AS adoption of Statement of Cash Flow:

According to the provisions of Ind AS 7, Interest received which was earlier grouped under Financing Activity has been grouped under Investing Activity.

41 Employee Benefits

(i) Defined Contribution Plans :

The Company makes Provident Fund and Superannuation Fund contributions which are defined contribution plans, for qualifying employees. Under the Schemes the Company is required to contribute a specified percentage of the payroll costs to fund the benefits. The Company recognised Rs 29.75 Lakhs (Year ended March 31. 2017 Rs 31,70 Lakhs) for Provident Fund contributions and Rs 12.96 Lakhs (Year ended March 31. 2017 Rs 4.00 Lakhs) for Superannuation Fund contributions in the Statement of Profit and Loss. The contributions payable to these plans by the Company are at rates specified in the rules of the schemes.

(ii) Defined Benefit Plans:

Gratuity (Funded)

In respect to Gratuity, the most recent actuarial valuation of the plan assets and in respect of Gratuity the present value of the defined benefit obligation were carried out by actuarial valuation . The present value of the defined benefit obligation and the related current since cost and past service cost, were measured using the projected unit cost method. The following table sets forth the status of the Gratuity Plan and the benefit Scheme of the Company and the amount recognised in the Balance Sheet and Statement of Profit and Loss. The Company provides the gratuity benefit and through annual continuations to the funds managed by the Life Insurance Corporation of India,

The Company is exposed to various risks in providing the above gratuity benefit and Leave which are as follows:

Interest Rate risk: The plan exposes the Company to the risk of fall in interest rates. A fall in interest rates will result in an increase In The ultimate cost of providing above benefit and will thus result in an increase in the value of the liability (as shown in financial statements).

Investment Risk :

The probability or likelihood of occurrence of losses relative to the expected return on any particular investment.

Salary Escalation Risk :

The present value of the defined benefit plan is calculated with the assumption of salary increase rate of plan participants in future, based on past experience. Deviation in the rate of increase of salary in future for plan participants from the rate of increase in salary used to determine the present value of obligation will have a bearing on the plan's liability. Demographic Risk ;

The Company has used certain mortality and attrition assumptions in valuation of the liability. The Company is exposed to the risk of actual experience turning out adverse compared to the assumptions

The Company pays contributions to the insurer as statetermtried by them The insurance company has invested the plan assets in Government Securities, Debt Funds, Equity shares. Mutual Funds and Money Market instruments, The expected rate of return on plan assets based on expectation of the average long term rate of return expected on investments of the fund during the estimated term of the obligation. Significant actuarial assumptions for the determination of the defined benefit obligation are as discussed above.

Sensitivity analysis presented above may not be representative of the actual change in the defined benefit obligation as it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumptions may be correlated.

Furthermore, in presenting the above sensitivity analysis, the present value of the defined benefit obligation has been calculated using the projected un>t credit method at the end of the reporting period, which is the same as that applied in calculating the defined benefit obligation liability recognised in The balance sheet.

The Company has purchased insurance policy, which is basically a year-on-year cash accumulation plan in which the interest rate is declared on yearly basis and is guaranteed for a period of one year. The insurance Company, as part of the policy rules, makes payment of all gratuity outgoes happening during the year (subject to sufficiency of funds under the policy). The policy, thus, mitigates the liquidity risk. However, being a cash accumulation plan, the duration of assets is shorter compared to the duration of liabilities. Thus, the Company is exposed to movement in interest rate (in particular, the significant fall in interest rates, which should result in an increase in liability without corresponding increase in the asset)

The Company's best estimate of the contribution expected to be paid to the plan during the next year is Rs,20.00 Lakhs ( Previous year 2017 Rs,20.00 Lakhs).

1.Segment Reporting

Factors used to identify Reporting Segments:

The company has the following reporting segments, which are its reporting segments. These segments offer different types of batteries to different types of customers and are managed separately because they require different technology and production process. Operating segment disclosures are consistent with the information provided to and reviewed by the Chief Operating Decision Maker.

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